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What Does Brexit Mean for Social Policy in the UK?

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What Does Brexit Mean for Social Policy in the UK? What does Brexit mean for social policy in the UK? An exploration of the potential consequences of the 2016 referendum for public services, inequalities and social rights Kitty Stewart, Kerris Cooper and Isabel Shutes SPDO research paper 3 February 2019 The Social Policies and Distributional Outcomes in a Changing Britain research programme The central objective of the SPDO research programme is to provide an authoritative, independent, rigorous and in-depth evidence base on social policies and distributional outcomes in 21st century Britain. The central question to be addressed is: What progress has been made in addressing social inequalities through social policies? The research programme is ambitious and comprehensive in scope, combining in-depth quantitative analysis of trends in social inequalities and social divides with detailed and systematic public expenditure and social policy analysis across ten major social policy areas over the period 2015-2020, together with broader reflection on the changing nature of social policies and distributional outcomes over the 21st century. The programme of research adds to (and will reflect on) the previous Social Policies in a Cold Climate (SPCC) research programme covering the period 1997-2015. The SPDO programme will update, extend and broaden our analysis of public expenditure, social policies and distributional outcomes using the most recent datasets available, resulting in a unique evidence base on trends in social inequalities and social policies going back to 1997. Innovative extensions included within the SPDO research programme include: coverage of additional areas of social policy (e.g. physical safety/security and complex needs/homelessness); emphasis on the new context for social policy making (e.g. devolution and BREXIT); assessment of a broader range of multidimensional outcomes within our quantitative analysis; and the inclusion of additional breakdowns (e.g. migration status). This programme will also have a forward looking component, identifying the key challenges for social policy in the 2020s. More information and other publications in the series are available at the project webpage: http://sticerd.lse.ac.uk/case/_new/research/spdo/default.asp Acknowledgements The authors thank the Nuffield Foundation for funding this project. They are also grateful to members of the Advisory Board and members of the SPDO team, and in particular to Tania Burchardt, Nicole Busby, Carl Emmerson, Linda Hantrais, John Hills, Waltraud Schelkle and Polly Vizard, all of whom took the time to read and comment on earlier versions of this paper. Responsibility for errors and interpretation remains with the authors. The Nuffield Foundation is an endowed charitable trust that aims to improve social well-being in the widest sense. It funds research and innovation in education and social policy and also works to build capacity in education, science and social science research. The Nuffield Foundation has funded this project, but the views expressed are those of the authors and not necessarily those of the Foundation. More information is available at www.nuffieldfoundation.org The paper draws on Office for National Statistics (ONS) statistics which are subject to Crown copyright and are reproduced under the Open Government Licence v.3.0. 2 Contents Summary ....................................................................................................... 5 Introduction................................................................................................. 12 Part I: Politics, economics, and the knock-on effects on social policy .......... 15 1.1 The political consequences of the referendum and their implications for social policy ................................................................................................. 15 A new focus on social, economic and geographical divides? ............................. 17 Brexit bandwidth ....................................................................................... 19 Changes in the political environment ............................................................ 21 Summary .................................................................................................. 23 1.2 The economic consequences and their implications for social policy ..... 24 The short-term economic effects of the referendum result .............................. 24 The long-term: Poorer, no matter what? ....................................................... 26 Consequences for living standards ............................................................... 30 The fiscal implications of lower growth .......................................................... 31 Distributional effects across region, sector, skill and earnings level .................. 32 Summary .................................................................................................. 36 Part II: Direct implications of leaving the EU for social policy ..................... 37 2.1 Withdrawing from European labour, social protection and human rights instruments: the implications for citizens’ freedoms, rights and principles . 37 Box 1 What is the Charter of Fundamental Rights and how important is it? ...... 39 Protection of human rights in Britain after Brexit............................................ 40 A focus on workers’ rights ........................................................................... 42 A British Bill of Rights? ............................................................................... 43 Summary .................................................................................................. 44 2.2 EU citizens in the UK and UK citizens in the EU: the implications of an end to free movement for the rights of mobile citizens ...................................... 46 The rights of EU citizens living in the UK and UK citizens living in another EU country ..................................................................................................... 48 The rights of EU citizens and UK citizens who move in the future ..................... 50 Summary .................................................................................................. 51 2.3 Withdrawing from the single market and free movement of workers: the implications for public services .................................................................... 53 Net contributors or net beneficiaries? ........................................................... 53 Health and social care ................................................................................ 55 Social housing ........................................................................................... 60 Education ................................................................................................. 61 Summary .................................................................................................. 65 3 2.4 Taking back control: new powers over resources and procurement rules .................................................................................................................... 67 EU Structural and Investment Funds and other funding to reduce inequalities ... 67 State intervention in the economy ............................................................... 71 Summary .................................................................................................. 74 3. Conclusions .............................................................................................. 75 References ................................................................................................... 78 4 Summary On 23rd June 2016 the UK voted to leave the European Union. This paper explores the potential consequences of this decision for domestic social policy. Drawing on existing research and evidence, it sheds light on the many ways in which social policy in the UK has been affected by EU membership, and hence the likely implications and challenges arising from the decision to leave. We conceive social policy broadly, to encompass policies affecting employment, working conditions and living standards as well as the traditional pillars of the welfare state – health, education, housing. The paper explores the consequences of Brexit understood in two ways – as the referendum result itself and as the eventual outcome of negotiations over the exit process and shape of future relations with Europe. Regardless of where the process ends up, the result changed British politics. The evidence the vote presented of deep disaffection with the status quo, the change of administration, and the time and resources focused on withdrawal negotiations and scenario planning have all had ongoing implications for social policymaking. In terms of the eventual outcome, huge uncertainty remains and may well continue for years to come. Against this backdrop, the paper maps out the implications of likely alternatives, including a central scenario in which the UK leaves the single market and brings an end to the free movement of workers. We consider the implications under five broad headings i) the effects on the economy, with knock-on consequences for living standards and public spending; ii) withdrawal from European labour, social protection and human rights legislation; iii) the implications of an end to free movement for the social rights and entitlements of EU citizens in the UK and UK citizens in the EU; iv) implications of leaving the single market for public service delivery more widely; and v) implications
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