What might post-Brexit public services look like?

22 May 17

A Conservative government looks likely for the next few years. What might public services look like given the effects of Brexit and a (probably) sluggish economy?

Nothing is ever certain in politics but a Conservative majority in June is looking likely. We are probably going to have this government for five years, seeing us through Brexit and beyond. So what might public services look like in 2022?

Economic forecasting is never easy and we all know it can be disastrously wrong. Look back to Labour’s forecasts in its 2007 comprehensive spending review and wince at how wrong that proved to be – and how quickly.

The government’s economic and fiscal forecasting has been largely delegated to the Office of Budget Responsibility. Its GDP growth forecast reflected the deep uncertainty after we leave the EU, hence the wide spread of their “fan” chart. The central estimate is that GDP will grow at about 2% – well below the long-term UK average of 2.6% since 1948. They admit it is almost impossible to estimate the impact of Brexit – although they assume there will be less trade with the EU (a fairly safe assumption).

The consequences for public finances are fairly obvious – a sluggish economy means less money for services. Moreover, the government is continuing the austerity policies of George Osborne, while making less of a fuss about it. Public spending is set to fall to 37.9% of GDP by 2021-22 from the current 40% and a long run average of nearer 43%.

It is hard to foresee public sector reforms. Theresa May has said very little about the nuts and bolts of public sector structures and systems and, while she was home secretary for six years, appeared to show little interest in such reforms. She seems far more interested in politics and what you might call “high policy” than in the tedious job of making it all work.

Some big changes are inevitable because of Brexit. We now have a Department for International Trade that is set to get bigger and has a huge job for the next decade or longer. Myriad regulatory functions done in shared EU institutions will have to be (re)established. The most notable is the European Medicines Agency in London, which will soon be moved out of the UK.

In many other areas, such as agriculture and migration, reform, restructuring and, in many cases, expansion will be needed. It has been estimated it would take the immigration service 144 years to process all the EU27 nationals living in the UK at current rates. We still do not have a “count them in and count them out” migration system that works.

Besides these changes to cope with Brexit, will we see big changes to other core public services?

Health and social care is clearly the biggest challenge but remember the Tories got their fingers burnt rather badly with Andrew Lansley’s Health and Social Care Bill during the coalition years. Given May’s seeming indifference to big structural changes, the appetite for radical reform in this area is not clear.

Education has come to the fore with May’s pet grammar schools project. It’s unclear how far this is a symbolic gesture to capture Ukip voters and how much it is serious – it already looks scaled back. We don’t know if further education reforms will take place. Universities may experience some upheaval with a combination of external factors, such as lower overseas student numbers because of migration policy and tech competitors.

So, on current form, what we are likely to see is death by a thousand cuts rather than amputations or restructurings. But we never expected a general election this summer either.


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