Brexit – informal briefing by Tony West

Brexit informal briefing to GHP NPC at Strategy session held at Unite’s training centre in Esher. Provided by Tony West, ex Council member and ex EAHP Board member.

The first comment from Tony was a declaration of interest… he voted ‘remain’ and had tried to persuade many others to do the same. Obviously with limited success. The opinions expressed are his own, but where possible links to factual information has been provided.

Now that there is a result, albeit one where the majority of the electorate have not actually voted to leave, the primary question is ‘what next?’ This question though is series of sub-questions:

EU membership – everything stays the same for the time being, in fact not much likely to change for 2 years following the trigger of Article 50. That said, our EU partners are unlikely to be happy about Brexit given the economic woes within the EU.
Prime Minister – change will just add to uncertainty and not sure where we will be constitutionally if the final ‘winner’ had been an active remain supporter.

Scotland – and to a certain extent NI, clearly voted to stay and that raises yet more uncertainty over the future of the Union… and unlikely to be helpful in any way to the economy. Will also be useful to see how Boris Johnson handles the ‘sorry Ma’am but I seem to have lost you Scotland’.
Official Opposition – also in a mess, which is exceptionally poor timing. Also there is an issue on what is the ‘opposition’ for now… as almost certain whoever is the next Chancellor will have to abandon ‘austerity’ as GDP is likely to fall and every chance the UK entering a technical recession. MPs – it is estimated that around 75% of MPs were for remain, if that is true it adds to the constitutional issues resulting from David Cameron’s resignation and potential for a second Scottish referendum on independence.

UKIP – one MP but probably responsible for at least a third of the vote achieved by ‘vote leave’, if you go by results at the last election. They have a mandate, but clearly stand on an issue which none of us is likely to be comfortable about. If UKIP is involved with the exit negotiation, yet another constitutional issue.

Probably the single largest challenge for the UK though is likely to be managing the negotiation itself. Having reduced the civil service at every opportunity just where will capacity for this negotiation come from, and it will clearly have a significant cost impact in respect of public sector costs to fund it that were absent in the Brexit discussions. Also, if you think about all the inquiries held recently, how many have actually completed inside two years, been on budget or for that matter delivered anything useful? Those inquiries have also been single issue.

The Brexit debate focussed on two main issues… immigration and trade. This briefing will not dwell on the first other than to make one important observation, the NHS would not have been able to function without staff (qualified and unqualified) from both within the EU and without. While one can understand those communities who feel they have been over-run because of immigration (and in particular the lack of integration) there was no rational discussion during the Brexit debate on what would happen. The third issue was around ‘sovereignty and law making’. This briefing concentrates on this third issue along with trade.

A direct consequence of the scare tactics from the remain camp plus misinformation from the vote leave lot probably left voters somewhat confused… especially as there were no ‘manifestos’. The shambles is best illustrated by the promises made during the campaign (control immigration and funding for the NHS as two examples) that are already been rolled back by prominent ‘leavers’, who almost certainly expected to be narrowly defeated and hence had no plans.

A few facts, with the official website links so people can check for themselves if they are that way inclined.

Incidentally, one of my colleagues at EAHP, a Spaniard, let me know that the most common search question put in to Google in the UK on the Friday following the referendum was ‘what is the EU?’. So let us start by making sure we all understand the various abbreviations… important because some of the ‘quicker’ routes to a trade agreement may mean adopting wat was often referred to as the ‘Norway model’.

EU – you can use the official sites, but if all you want is a clear overview of what it is and the links to the various treaties then:
https://en.wikipedia.org/wiki/European_Union
is as good a place to start as any, providing the history.

EFTA – UK used to be a member but left when it joined what is now the EU. It comprises just four countries now, Norway, Switzerland, Iceland and Lichtenstein.
http://www.efta.int/
As you find from the EFTA website, as a grouping they make trade deals with a wide variety of countries. In respect of the relationship with the EU, three of them are ‘within the EEA’ while Switzerland remains outside having voted in the early 90s to not join.

EEA – this is therefore the grouping of EU + Norway, Iceland and Lichtenstein. The best description is probably provided through the official Norwegian site: http://www.eu-norway.org/eeaforside/#.V3um3-Tgahc
as this also identifies which bits of the EU machinery do not apply… and as you read through you can quickly understand why ‘Norway model’ was put forward very early as potential way forward by many in the ‘vote leave’ camp… but, probably without really understanding some of the key issues:

  • Yes, Norway gets access to the ‘common market’
  • Yes, Norway doesn’t participate in some programmes that have always been contentious for the UK… such as common agricultural and fisheries policies… but:
  • No, Norway still has to accept freedom of movement of people (to go with goods, services and capital)
  • No, Norway doesn’t get access to the market for free… it still makes a significant contribution. Unlike the UK during Brexit campaign, what Norway pays and for what is completely transparent: http://www.eu-norway.org/eu/Financial-contribution/#.V3unpuTgahc

    Many observers, including officials and politicians in Norway, have indicated that the cost per capita to Norway is much the same as the UK contribution… and Norway gets NO say within EU and has NO veto on anything and any legislation relating to trade etc has to be enacted.

Switzerland is different, it works through a range of bilateral agreements with the EU. The link below explains this. http://ec.europa.eu/trade/policy/countries-and-regions/countries/switzerland/index_en.htm

The Swiss still pay money to the EU and crucially, given the UKIP component of the leave vote, they are still committed to freedom of movement.

Canada was also mentioned… but no deal has been signed:

http://ec.europa.eu/trade/policy/in-focus/ceta/

Then there is TTIP:

http://ec.europa.eu/trade/policy/in-focus/ttip/index_en.htm

Lots of commentary that there is an ‘opt out’ in respect of UK NHS, although as always that will be down to courts to decide.

So, what has all of this to do with GHP and its parent body Unite… if we opt for EEA or try and replicate something similar to the Swiss, possibly not a lot. However, to illustrate potential complexity just look at one part of the commercial sector that is critical to us… medicines.

We are currently part of the EU, so medicines are seen as goods and therefore those move freely within the market.

The majority of medicines used by the NHS are approved through the European Medicines Agency (EMA). The EMA is a body that reports through to the EU and is therefore accountable to the Council of Ministers. So what of Norway and Switzerland… the former is within the EEA, so has places on all the committees within the EMA… but it has no say at EU/Council of Ministers… so it has to accept every decision made by the EMA and all legislation (directives and regulations) from the EU. For the Swiss it is a different set up as their pharma industry is a truly massive influence on their economy… so they have no place within the EMA, instead relying on confidentiality agreements between their own regulator (which they fund well) and the EMA for sharing of information. The Swiss, however, still have to enact any legislation from the EU relating to medicines in order to secure access to the market.

As the discussions unfold on where the UK will sit (if indeed it is the UK by that time) there are a number of questions that GHP/Unite should consider:

  • What will happen to the EMA HQ, currently in London and employing close to 800 people who contribute to our economy… we will be outside of the EU and there is no precedent for official bodies of the EU being situated in non-EU members
  • What impact will the type of trade agreement have:

o EEA will give access to market but little influence over legislation
o If something like the Swiss, is the UK willing to invest in its regulator as we would have to licence everything from scratch
o If truly independent, what would that mean… in particular for production within the UK as it would be ‘outside’ of the market

  • How will pharma see this, many are global businesses but generally they concentrate efforts on two key areas… FDA and EMA, yes Canada, Japan and Australia are important but how important would the UK be in world terms. Pharma will need to consider:

o Where they base production?

o Where they do clinical trials?

o Where they invest in research?

Many observers have already concluded that at best, UK citizens will see slower access to new medicines unless part of EEA… but if in EEA then UK would be subject to everything already discussed.

Pharma will also need to consider costs of licencing… already a problem for many EU countries as while EMA approves it is the individual member state, through the National Competent Authority, that finally grants marketing rights. For many companies it is simply not worth paying… hence the growth of a very different form of parallel trade. You can find fees through the following links:

EMA

http://www.ema.europa.eu/ema/index.jsp?curl=pages/regulation/document_listing/document_listi ng_000327.jsp

MHRA
https://www.gov.uk/government/publications/mhra-fees

As mentioned above, pharma is so important to the Swiss that they have heavily invested in their regulatory system.

There we have it… just one sector and lots of unknowns and this is without discussion on where companies might choose to invest going forward, decisions generally taken at a global level and linked to availability (and movement) of capital, taxation (corporation tax and the like) and ‘importance’ of the market… the UK will certainly be down the list from FDA and EMA, and just because of geography it is likely that Japan and/or Australia was seen as more important.

As a Trade Union, and given the sectors where Unite has a presence:

  • Working time directive…. So we really believe that Tories are on the side of employees here, given past history with opt-outs etc it does not look good
  • Erasmus et al… just where does this leave universities, both research and teaching
  • Staffing… the NHS has been heavily dependent on staff being willing to move to the UK to help provide services… there is no evidence to suggest that any future UK government would be able to address staffing problems internally to UK

    What should also cause us concern, if GDP does fall then the amount of cash available for public services also falls (assuming prudent management of the economy). History shows us that in such circumstances it is the poor who suffer most… and that is only likely to widen the existing gaps within our society so ably illustrated by the Brexit referendum.

    The lesson, so far not learned, is that that are a lot of citizens out there who feel they are not being listened to, and that as a consequence there is an active distrust of ‘Westminster’ (also the issue for the first Scottish referendum). With Tories more engaged in electing a leader and Labour in no better a position… what chance?

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