Brexit negotiations are conducted in London and Brussels. With so much uncertainty about the final shape of any Brexit deal, and no clear immigration policy yet, local and sub-national government is finding it very hard to plan, writes Tony Travers (LSE). The trade deals the government hopes to do will affect regions in different ways – but none can be done until after Britain has left. Perhaps there is an opportunity for a less centralised version of the UK to emerge from the current uncertainty.
Local and other sub-national government faces Brexit consequences in much the same way that all Whitehall departments do. The consequences of the UK’s departure from the EU are impossible to predict but are likely to affect regulation of services, the workforce and the local economy.
Councils, as always, face the challenge of coping with a central government policy which has not been fully developed and whose long-term implications are unpredictable.
Any consequences of Brexit will have to be handled by council departments which have faced deep spending reductions since 2010. The UK government’s policy of deficit reduction (which is only now close to completion) has required tight constraints on public expenditure for eight years. Local authorities have been faced with far greater revenue spending cuts than almost any other part of the public sector.
The Brexit negotiations are conducted by a tiny number of ministers and civil servants in London and, from time to time, Brussels. The process is highly centralised: there is little room for input from devolved and local government. Of course, Cabinet ministers have been willing to meet with the devolved governments and, in England, the Local Government Association.
City leaders recently held their own meeting with Michel Barnier, in an attempt to make their case in relation to Brexit. But the Brexit process is one where the UK’s position as a unitary state is very clear. Only the prime minister and Cabinet can make decisions about the UK’s future relationship with the European Union.
Thus far, only general preparations have been made. The Scottish and Welsh governments have published documents about their positioning relation to Brexit, as has the Mayor of London, Sadiq Khan. A number of larger councils have published position papers analysing the potential impacts of Brexit on their areas. Khan has suggested, for example, that London might have its own migration and visa policy post-Brexit, an idea that other areas have also put forward.
A reduction in EU migration would affect a number of public services, notably locally- provided social care and, in some places, education and housebuilding. In London and the South East, a significant proportion of care workers are from overseas, including the EU. School teachers and construction workers have also come in large numbers from EU countries. Of course, the government is committed to a broader migration policy (not only affecting the EU) which reduces net migration to ‘the tens of thousands’. Thus far, almost two years on from the referendum, there has been no consultation on future immigration policy.
Some devolution of further education and skills policy is already under way as the result of deals struck with London, combined authorities and city mayors. There would be opportunities to improve post-school non-university education, to provide a larger and better-trained post-Brexit workforce.
Of the policy spheres where the disruption caused by Brexit could have positive benefits, post-school and adult education is surely one of the most important. But as with migration, the government has not yet been able to formulate a detailed policy for up-skilling the existing population so as to soften the impacts of post-Brexit reduced migration.
Looking ahead, sub-national government will face challenges as a result of the UK’s new trading relationship with the rest of the world. Ministers are committed to dozens of free trade and other deals with countries around the world. Each of these deals will have effects on the domestic economy. Recently leaked official estimates of the effect of different versions of Brexit, including ‘no deal’, suggested there could be significant differences in the regional impact of leaving the EU.
The North East of England, according to these forecasts, will face a particular challenge from changes to the UK’s trading relations with Europe and the rest of the world. Thus, a trade deal with a country which dealt with chemicals and/or car manufacturers would potentially have a far greater impact in the North East than, say, the South West. Similarly, any deals done about financial services will affect London and Edinburgh more than the East Midlands.
Every deal struck with any country or bloc will have consequences for particular local economies within the UK. What matters is the relative concentration of an industry or sector within an area, and the deal that the UK government strikes with each country or bloc.
Because the UK government cannot complete detailed trade deals until the UK has left the EU, sub-national government can only watch and wait. It is hard to be certain how much progress is being made in trade. The objectives of individual ministers, many of whom have said they wish to deliver comprehensive free trade deals, clearly differ from the more protectionist demands of some sectors. Agriculture, for example, could be radically affected by liberal trade deals with New Zealand, the United States and a number of African countries. Yet the government has not only given commitments about the continuation of EU-style support till at least 2022, but is signalling protection for groups such as hill farmers who stand to lose from cheap imports of food.
Local industrial strategies can go some way towards planning for this unpredictable future, but there will need to be leadership from Whitehall departments which themselves can only guess at the final deals to be struck by the Cabinet with dozens of countries and blocs. The national industrial strategy has outlined broad aspirations for the economy, rather than a detailed roadmap.
The devolved governments, mayors, combined authorities and local councils must now plan for a range of Brexit-related ‘unknown unknowns’. The length of any transition period cannot be certain. Indeed, a ‘no deal’ Brexit is also a possibility, requiring authorities with ports and airports to adopt very rapid responses to the need to handle freight in radically different ways.
Kent, for example, might need to provide queuing facilities for trucks heading to France. Central departments appear to have made few contingency arrangements to deal with such issues. There may need to be new procedures to register EU nationals, possibly at the local level. In Northern Ireland, the complexities of the border affect several councils. Because Brexit negotiations are largely conducted behind closed doors, it is impossible to know what contingency arrangements are being made for outcomes of different kinds. Sub-national government in the UK will have to prepare for a range of possibilities and be flexible enough to cope with unexpected outcomes.
Much is at stake for local economies, as it is for the country as a whole. Perhaps there is an opportunity here for a less centralised version of the UK to emerge from the remarkable period of change which is about to affect the economy and political institutions.
This post represents the views of the author and not those of the Brexit blog, nor the LSE. It first appeared at The UK in a Changing Europe.
Tony Travers is Director of LSE London and a Visiting Professor in the Department of Government at the LSE.