Brexit and the business of government

by Professor Colin Talbot and Dr Carole Talbot

For many years now, academic experts on British government have been arguing that it has been “hollowed out” by various changes – including the pooling of powers and governmental activity through the growth of the European Union.

Borrowing a term from medieval English history, one set of authors even called this “the Hollow Crown” to connote the (supposed) loss of power of ‘core executives’ of government. Various forces and changes were said to responsible for this: the rise of ‘networks’ and the decline of hierarchy; ‘post-bureaucracy’; devolution and fragmentation with British government; the rising power of multi-national corporations and markets; and finally the rise of inter-governmental organisations like the WTO, IMF, World Bank and chief culprit for the UK – the EEC/EU. Overall the movement became known as the switch from ‘government’ to ‘governance’.

Nor was this just a UK development – there was a whole academic and other literature devoted to the “retreat of the state” thesis led by academics like Susan Strange, who authored a book of that title in 1996. There have been many more similar claims since.

So will Brexit have a significant effect on this, alleged, ‘hollowing out’? Will ‘taking back control’ really mean a significant increase in the power of central government?

Our new project – Brexit|Org|Gov – is going to look at this under-explored aspect of Brexit.

So how might we measure the impact of Brexit on UK Government? We distinguish between three levels of possible effects.

The LEVEL 1, or first order effects are mainly about new and adapted government and public agencies as a result of Brexit.

Examples of this are already happening.

The creation of The Department for Exiting the EU (DExEU) with around 600 staff maybe a short-lived change, but the creation of the Department for International Trade (DIT – with over 3,000 staff already, and growing) will likely be a more permanent change.

HM Revenue and Customs (HMRC) is due for major expansion. New border checks on goods for tariffs, certificates of origin, and regulatory compliance could add 4,300 staff according to the National Audit Office. HMRC also cooperates with the Home Office in running the Border Force, which will probably need another 3,000 staff as the UK ‘takes back control’ of movements from the EU27 countries.

The Home Office (HO) also has two major tasks being created as a result of Brexit. First, registering the more than 3 million EU27 nationals currently living in the UK, deciding who can stay, and issuing them with some form of ID to say they can. Although this is a short-term headache, it won’t go away once the “3 million” are processed, because many of them, and their future children, could be here for decades or even longer.

The second HO problem will be how many of these EU27 nationals decide to apply for UK citizenship. There has already been a surge in applications.

Taken together estimates are the HO will have to expand, short-term, by up to 5,000 or more staff.

Then there are all the regulatory and payment functions carried out by the EU that will devolve back to the British government. Most symbolic of these European Medicines Agency which is currently based in London but is due to leave with Brexit and relocate to Amsterdam.

Two UK agencies will lose work they currently do on behalf of EMA – Medicines & Healthcare Regulatory Agency (MHRA) and Veterinary Medicines Directorate (VMD). But they will likely also both have to expand substantially to duplicate all the functions of the EMA in the future. We asked MHRA what work has been done on estimating the impact but they refuse to say – unlike the EMA which is forging ahead with plans – see here.

There are dozens more functions and agencies that will have to change, adapt and mostly gorw in the UK as a result of Brexit. We are creating a database of these changes as they happen or are expected to happen.

The LEVEL 2, or second order, effects we want to look at are the impact on public finances and labour regulations and labour markets?

There is already a lively debate about the possible economic impact of Brexit. Much less attention is being paid, so far, to issues like the possible loss of tax revenue from lower growth and what effect this could in turn have on the provision of public services?

Nor are the effects all one-way. If one result of Brexit is lowering of the numbers of EU27 nationals in the UK – so-called “brexodus” – there would be lower demand on public services – e.g. NHS and education.

But this could also cause further problems. We know that around 6% of NHS staff and 7% of social care staff come from EU27 countries – 157,000. We do not know the numbers for teachers as the DfE claim they don’t collect them.

The LEVEL 3, or third order, effects we will be investigating relate to the issues raised at the start of this article – possible changes to the overall scope, style and strata of government and governance?

These could include issues like changes to the size of government – there are already pressures building to expand in some areas, whereas the public finance issues mentioned above could push towards further austerity in others?

Brexit could also be changing relations between the executive side of Government and Parliament, as Andrew Rawnsley argues recently in the Observer: “Since this government can’t govern, parliament must take charge of Brexit”.

The ‘core executive’ in Westminster/Whitehall has already been re-shaped with the House of Commons Public Accounts Committee identifying possible confusions between the roles of DExEU, Cabinet Office, No. 10 and HM Treasury in organizing for Brexit. The growth in ‘quango-land’ that will result from the devolutions mentioned above will further re-shape Whitehall.

And, of course, Brexit will impact on the vertical relationships between central Government, the devolved administrations and local government.

Our initial work at Cambridge with Brexit|Org|Gov is concentrating on building a database of actual and expected changes at LEVEL 1 and some at LEVEL 2. We are also seeking to build a network of collaborators including academics, journalists, parliament, the NAO and practitioners – this is a mammoth task.

If you want to discuss any of this further or have insights to share please contact Colin Talbot at [email protected].