Brexit a "catalyst" for public service reform, says CIPFA

BREXIT will have an immeasurable impact on all aspects of public services and will provide a catalyst for "much-needed" reform, a new CIPFA report has said.

The study, the Brexit Balance Sheet: Weighing Up the Public Sector Costs, the body argued that the "profound" legal, technical and financial implications for public services mean the sector must be kept in the foreground during negotiations.

While ministers must use the "most effective negotiation choices" are made to ensure the sector's sustainability is not undermined, they must also explore opportunities for service reform during the disentangling process, it added.

The report notes that as a result of the Brexit process, many policies and regulations are being scrutinised for the first time since their inception. This presents an opportunity to look afresh at expensive and complex regulations, such as those governing waste collection and procurement, to make them more efficient.  

To compensate any loss of income from any negative economic consequences and a decrease in capacity due to the loss of EU staff, there will have to be a "radical increase" in public expenditure on infrastructure.

In order to ease any economic fluctuations during the negotiation process, investment in public services is likely to remain low, CIPFA said. This will put additional strain on many services already struggling with tightening budgets, including the NHS.

The report adds that post-Brexit, higher rather than lower rates of immigration could ease the pressure on public services. CIPFA said the evidence shows immigrants pay more in taxes than they take in services and benefits. If the UK adopts policies that limit immigration, such as a system based on permission to work, there will likely be "economic trade-offs" for the public sector.  

The report also calls on the UK to examine regional funding to assess whether it is meeting its objectives and boosting local economies. Any scheme that is introduced to replace the EU funding model could seek to reduce existing regional disparities.

"Ensuring the sustainability of public services isn’t a choice, it’s a necessity. Brexit will be the largest-scale policy and legislation exercise we’ve undertaken and will inevitably change the delivery of public services. We must make sure that this is a positive, and not a negative, change," said CIPFA chief executive Rob Whiteman.

"Public service leaders must assert themselves throughout the Brexit process and play a visible role throughout the negotiations. CIPFA's Brexit Advisory Commission will provide the means to do so by representing the interests of the sector."