On the horns of a dilemma – how should Welsh public services be planning for Brexit?

Recent comments from Michael Bloomberg and the row over the letter from MP Chris Heaton-Harris to universities serve to confirm that the debate over Brexit is, if anything, intensifying, argues Michael Trickey. Here he considers how public services in Wales should plan for Brexit.

It is now 16 months since the 2016 Referendum and the hotly contested argument continues about whether Brexit will collapse under the weight of its complexities or herald a new dawn for the UK and its economy.

We are still no clearer about the terms of disengagement, transition period or financial implications. All of which leaves public services in an increasingly difficult bind about when and how to prepare for an eventuality which could have significant implications for them, financially, legally, strategically  and operationally.

Given that the clock is ticking remorselessly, there is a growing possibility that when decisions eventually come, they will come in a rush, late, thick and fast. If public services are not prepared, they risk being caught on the hop, without the capacity to handle the change required.

But how do they prepare when the range of possible outcomes is so wide? Of course, as the CBI and others have made very clear, the private sector faces very similar dilemmas albeit in a different sphere.

All this makes the new inquiry by the National Assembly for Wales’s External Affairs Committee, into  how the public sector and businesses in Wales are preparing for Brexit, particularly timely.

So what exactly are the issues and risks for public services?

Wales Public Services 2025 published a discussion paper just before the Referendum on the possible implications for local public services, such as the NHS, social care, education, transport, environment, fire and police, culture. The list of high-level issues still looks much the same 16 months on but work by the various policy communities has deepened our understanding.

Leaving aside the significant constitutional issues raised by European Union (Withdrawal) 2017-19 Bill, issues on the agenda for public services in Wales include:

  • the impact on the economy and public finances and what that might mean for future funding and, more widely, the economic and social well-being of local communities. The Office for Budget Responsibility forecast for the health of public finances was downgraded as a result of the Brexit vote but subsequent forecasting is proving extremely difficult in the current context;
  • whether and how far the £680 million a year funding which Wales currently receives through EU programmes, some of which feeds through to public services in a variety of ways, will be sustained under any successor UK programmes, such as the UK Shared Prosperity Fund, and on what basis;
  • the impact of restrictions to freedom of movement of EU (and other) workers on the labour market, especially in health and social care (where there are already concerns about labour shortages), and higher education amid concerns about the recruitment of talent;
  • the future regulatory and trading environment for the £6 billion spent each year by Wales on public procurement;
  • what will happen with constraints such as State Aids rules;
  • the implications for environmental policy and regulation, food standards and other aspects of consumer protection – largely based on EU frameworks – where Wales has a growing track record;
  • future participation in European networks in the fields of public health, environment and research;
  • implications for the demand for public services by EU nationals (including students) and community cohesion.

These are just examples, the Institute for Government identifies 64 areas where EU law and the competencies devolved to Wales currently intersect.

Some of these are more susceptible of contingency planning than others. The implications for public finances are interlocked with other aspects of economic and fiscal strategy such as deficit reduction.

Notwithstanding promises made in the Referendum campaign, public services might be wise not to defer choices and difficult decisions which they already face in the expectation of substantial post-Brexit increases in public spending.  Beyond minimising such planning blight, the spectrum of possibilities may be just too wide for public services to undertake meaningful financial planning until there is more clarity, perhaps in the Chancellor’s Autumn Budget in November?

But there is much more scope to engage on some of the other issues.

Welsh Government papers have covered many of them at a national level and there is work to be done at the delivery level, especially by larger organisations, to investigate their data and research the risks (and opportunities) they face on workforce recruitment and retention, procurement, environmental and public health regulation and so on. Dialogue between government and public services will be crucial in building a Wales response.

There appear to be examples of this happening but discussions suggest that many public service organisations are not confident about the understanding they have of what Brexit might mean for them and what kind of response they may need to make.

Getting the timing right on this kind of engagement is a difficult judgement. A two-year transition period post Brexit Day, if agreed, would certainly provide more breathing space but reliance on that looks itself quite a risk at the moment. Either way, high quality communication between government, public services and stakeholders over Brexit will be more, rather than less, important. Upping the collective game on this will be essential.

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