Latest Public Sector News

23.06.16

How could a Brexit affect the public sector?

Victoria Brambini, interim managing director of Scape Procure, looks at how a Brexit could impact on the sector.

The ‘Remain’ and ‘Leave’ campaigns have been running at fever pitch ahead of today’s EU referendum, emotions are high, and it has become increasingly difficult to get beyond the two big issues for the public – the economy and immigration. But we need to drill down in to what a ‘Brexit’ vote could really mean for the public sector.

The single biggest risk to public sector organisations is the security of government-funded and EU-funded projects. In an age of austerity, public spending cuts have already put local authorities and government departments under pressure – public sector spending has fallen by around 4% since 2010 – and they now need stability in order to deliver services under these challenging circumstances.

Government funding, however, depends upon the underlying strength of the economy, and the extent of any economic impact from a Brexit is the great unknown of the coming vote. Recent analysis from the Treasury predicts that if Britain votes to leave the EU our GDP could be up to 6.2% lower in 15 years’ time than if we remain a member.

The threat of further budget reductions has already resulted in key decisions being put on hold until after the vote. This uncertainty could well continue for some time, whilst Britain’s relationship with Europe continues to be renegotiated.

A ‘Brexit’ vote could also create an enormous challenge for those charged with planning long-term services. Any economic shocks or significant shifts in migration patterns would throw the public sector’s predictions about future public service requirements into flux. This would make it extremely difficult for local authorities to plan essential provisions such as school places, or for NHS trusts to shape their primary care facilities – this is no easy task and relies upon detailed population, movement and demographic projections in each region.

Our recent school places research demonstrates how effective planning is key for the public sector. The research found that as many as 11,000 new primary school classrooms are needed by 2024 to meet the rising number of primary school pupils, and many local authorities are already working on building these. A Brexit, resulting in a significant drop in EU migration could mean these classrooms become underutilised. It is, therefore, understandable that public sector decision-makers might choose to postpone commissioning them until after the future of the UK has been decided.

From a procurement perspective, however, Brexit may have less of an impact on how the public sector operates. Although OJEU is a system designed and managed by the EU, the UK would still require a robust system for public sector procurement to ensure taxpayers’ money is spent appropriately on major public sector contracts. Even if the UK leaves the current EU regulatory system, the procurement principles are already enshrined in UK legislation.

Comments

Marianne Overton MBE   24/06/2016 at 10:29

The concern about a smaller GDP (Total amount of money swishing round) and classrooms not being needed is only a problem is you believe that having more people makes us richer. The GDP has only gone up by about the same percentage as the population. We are not individually richer. The government hopes more people means more tax in but that only helps if they don't spend it on essential services. Bigger is not always better! more important is the balance of money in compared to money out.

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