Brexit implications for local government

With just a few days to go until the UK’s referendum on membership of the European Union the Leave and Remain campaigns are stepping up a gear. But there are likely implications for local government if the UK votes to part company with the EU. Olwen Dutton explores the big issues for Room151.

The Brexit campaign is building up momentum, although the result is probably too close to call and likely to remain so until the polls close and the counting begins.  Whatever the result, life has to go on and it’s an interesting exercise to indulge in a little bit of speculation.   So, if there was to a Brexit vote, what might be some of the differences (or not) Councils would be facing?

We can’t pretend this is a comprehensive list, but let’s look at a few issues councils will have to take into account.

Human Rights

Councils have been in the courts many times in recent years facing judicial reviews based, or purporting to be based, on breaches of the Human Rights Act 1998.  It’s been expensive and time consuming, not to mention reputationally damaging.

Would this change?  Probably not. The European Convention on Human Rights, which was incorporated into English law by the 1998 Act, is British and not European legislation.

Accordingly, the future of Human Rights issues is not likely to be significantly affected by the outcome of the Referendum, but more likely to be affected by the proposals coming forward from the Government for a new “British Bill of Rights”.

The economy

The Core Cities group has estimated EU membership has created more than 63,000 jobs and protected at least 16,800 jobs across the ten core cities, as well as providing £1.8bn of infrastructure investment, which has, at least in part, enabled major investment on the back of this to grow city economies.

The EU is also our biggest trading partner.  If EU membership was lost, the economy of cities (and other places) would suffer and the economies upon which councils increasingly rely would stagnate, leaving them with further demands to facilitate growth in a more difficult market

Rural areas

It is estimated that farmers currently earn 50% of their income from European benefits and subsidies through the Common Agricultural Policy (CAP) and it is unlikely that post Brexit this level of subsidy can continue for any length of time.

This could have serious consequences for authorities with large rural and often relatively poor populations.   Many of the most beautiful parts of the country are rural and not intensively farmed, with farmers responsible for maintaining the countryside, which then in itself creates income for areas through tourism.

If the farmers’ income suffers and they cannot afford to maintain the land, tourism will decline, income will fall further and so it goes on.  Remember the impact of the Foot and Mouth Crisis on rural areas, anyone?

Benefits

Figures also suggest that a Brexit vote could mean benefit cuts for poor families, and again this would be likely to have a significant effect upon some authorities, particularly those who have poorer populations, and could lead to a much higher need for spend on matters such as children’s services for local authorities.

Procurement

It is probably unlikely that leaving the EU will make all that much difference to the procurement regime particularly in the short term.

This is because even if we negotiated our own trade treaty or followed countries such as Iceland, Lichtenstein and Norway into the European Free Trade Association agreement (and surely we would have to do one or the other?) we would still have to comply with very similar procurement rules as relevant EU legislation, including the procurement laws, are included into the EFTA areas.

We would, however, be able to relax some EU state aid rules and provide additional support to some industries, which could mean it is easier in some circumstances to support with public funding when warranted, although we would still have to comply with restrictions imposed as part of the EFTA agreement.

Investment and housing

Other financial matters relate to funding which will be lost from the European Investment Bank, and the

potential adverse implications on the funding market, in which councils are increasingly interested.

Moodys has said that it would consider putting the UK on negative outlook if it leaves the EU which could have knock on effects on organisations who wished to raise money on the capital markets and indeed (an important matter given the housing emphasis at present) on the appetite of lenders for the social housing sector as a whole, which could have a serious impact on the ability of authorities to develop as much as they can.

Furthermore, many economists believe that house prices could go down because of a potential fall in inward investment which would not help those councils who are setting up development companies and building more properties to sell as part of the plan to find alternative sources of income, helped significantly by the present buoyant housing market.

Workers

Leaving aside workers rights, much of which has come from the EU but now probably too enshrined to easily disappear, there are some fairly significant concerns around some of the work force on which councils rely following a Brexit vote.

The biggest risk is likely to be in social care, whether domiciliary or in care homes. Around 6%, overall, of care workers (which equates to 80,000 people)  have come from other countries in the EU.

It is unlikely that the current demand for care workers can be met within the home UK population, or, given the reduced immigration focus of the Brexiteers, from the rest of the world.

If these workers decide to go home following a Brexit vote, they will be very difficult to replace, especially in a period of growing demand and near crisis in the care sector.

Politics

There is one further aspect to a Brexit vote.  This is the impact upon the current government and the Conservative Party and where its attention will be likely to be based both immediately post vote and over the next few years.

The purpose of this article is not to make political predictions, but it would be interesting to see whether this will cause any changes to the potential legislation affecting local government currently being proposed by the current government if there was either a change in the leadership of the Conservative Party or indeed a change in government as a result of a general election.

We live in interesting times.

Olwen Dutton is a partner at law firm Anthony Collins.