Latest Public Sector News

07.04.16

What would Brexit mean for UK public agencies?

Source: PSE - April/ May 16

Anand Menon, professor of European Politics and Foreign Affairs at King’s College London, looks at the potential impact of Brexit on public agencies in the UK.

Everyone wants to know what Brexit might mean for them, and answers are in short supply. In part, this is because this has not been a Referendum campaign notable for its emphasis on fact. Both sides are trading on fear rather than information. Partly too it is because, quite simply, no one knows. Would a Brexit be orderly or disorderly? Would it be fast or slow? Would it be amicable or ill tempered? Look into your crystal ball and take a guess. 

So, how to attempt a sensible answer to the question of what Brexit might mean for public agencies in the UK? An intuitively plausible starting point is the question of what membership has meant for them. 

In many sectors – electricity, gas, telecommunications, water, banking and financial services – the UK has created independent regulatory agencies to take decisions about market access, pricing and so on at arms’ length from government. There is also a major cross-sectoral authority in competition policy – the Competition and Markets Authority (CMA).

At the EU-level, these organisations form part of networks, such as the European Competition Network. And in some cases agencies – such as ACER (energy), BEREC (telecoms), and ESMA, EIOPA, EIOPA, EBA (all banking and financial services) – bring together the agencies of the member states as well as EU-level bodies and the European Commission. 

Much regulatory expertise now resides at the EU level, and in particular in the many informal networks that bring together regulators from the member states. These co-ordinate policy development and ensure consistent implementation. Although the status, powers and responsibilities of these networks vary, they enable information about practical problems, know-how, and technical and legal expertise to be shared between national agencies, while encouraging best practice to be spread.  

Clearly, there is significant variation in the extent of Europeanisation across fields of policy: how you administer unemployment benefit is up to you (and so Job Centres are unlikely to be hit). How you regulate your energy markets, on the other hand, is an issue intimately affected by EU competition rules. 

A vote to leave 

So what happens if we leave? Assume first that the UK left completely, and ended up in a ‘normal’ WTO-style relationship with its erstwhile EU partners. In this case, we would lose privileged access to the single market, and be shut out of these regulatory networks. Brexit would deprive the UK of the benefits of knowledge sharing between regulatory agencies. 

It would also, therefore, deprive the UK of a channel of influence. It’s worth noting that historically we have been quite good at wielding influence. Parts of the regime for bank supervision were written wholesale by people from the Prudential Regulation Authority – and this despite our not being members of the banking union. 

What, however, if the UK were to leave and negotiated some kind of special relationship with the EU – possibly, though not necessarily, modelled on those that link Norway and Switzerland to the Union? In this eventuality, the implications would be different. The UK would be forced to implement regulations and directives coming from Brussels as now, but would have had no direct influence over their drafting. Consequently, regulators would have no ability to stamp a British preference on European outputs. 

Finally, the EU has been very active in beefing up the transparency of member states’ public agencies – helping make them more accountable to the public and their political principals. This wouldn’t be wholly undermined by Brexit, since our own FoI laws would maintain that pressure for openness and good behaviour. On the other hand, our public agencies would likely still be subject to the EU’s data retention and protection policies, since (given the focus on data privacy at present) the UK couldn’t really deliberately weaken such standards. 

Of course it may be that a British government manages to secure a kind of relationship with the EU that no one has hitherto enjoyed. It is conceivable this may allow some market access whilst allowing the UK to ignore some EU regulations. The fact is, it is impossible to know for sure. What seems clear, however, is that, whichever one is alighted on, it will have implications for the workings of our public agencies.

Tell us what you think – have your say below or email opinion@publicsectorexecutive.com

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