Written evidence submitted by Cornwall Council and the CIOS Futures Group [BRX 032]
Summary answers:
1. What are the greatest risks, and opportunities, for local government posed by Brexit?
The greatest risks relate to: potential negative impacts on key sectors having knock-on effects for public services, uncertainty over future regional funding which is especially important in a relatively poor region like Cornwall, uncertainty over our ability to maintain partnerships with European regions, possible strict limits on migration from EEA countries leading to pressures on our key sectors, and lack of resources and information to help local authorities to plan for Brexit. This is especially important in an area such as Cornwall, where public sector organisations are the largest employers in the region and have a major impact on the economy. In Cornwall 99% of employees work for SMEs, and in many instances micro enterprises, and a contraction of the economy could very quickly start to impact on the workforce and place additional pressures on public services that will need to be factored in.
The greatest opportunities relate to: the reinvigoration of devolution to English local authorities, the design of the UK Shared Prosperity Fund (SPF) so that it builds on our experiences of administering European funding programmes and is devolved and driven by local determination, and opportunities for key sectors. Local Government should become a key arbiter for change in a post Brexit UK, and the default setting of Government should be to empower local authorities to drive growth through genuine devolution – both fiscal and functional. Local government can also support the rationalisation of regulations and enforcement activity, supporting both business and efficiencies across the public sector to make British business more competitive. Only through genuine devolution can the strengths of regions be genuinely unleashed with enhanced productivity, and the strategic leadership of local authorities, coupled with that of local enterprise partnerships, will allow the UK to adapt to a very different trading environment.
2. What measures should the Government take to provide more certainty and stability for local government in light of Brexit?
In order to provide more certainty and stability for local government, the UK Government should improve their communications with local authorities on Brexit and help local authorities to plan for Brexit. While there is a lot of talk about scenarios including no deal, a mid-range or a largely free trade deal, local government has been largely left out of all of the discussions. The ability of local government to forward plan with a range of projections is almost non-existent, and from the Cornwall perspective we have tried on a number of occasions to engage with DExEU and received minimal contact in return. While there is acknowledgement of the complexity of the negotiations, local Government will be key to what happens after March 2019 in terms of providing stability and certainty to residents, to the lack of engagement and involvement in the process is a worrying trend.
Additionally, Government should be sure-footed on issues that are within its gift to control, such as post-regional funding, the roll out of the Industrial Strategy and genuine devolution. Local government will have a major role in delivering all of these initiatives, so pace must be maintained.
3. What powers could be devolved from the EU directly to local authorities?
Given the complexity of the negotiations and the lack of information that has been provided to date, it is difficult to accurately breakdown which powers should be devolved to local authorities. However, provided that the proposals are cost neutral, the repatriation of powers should not be seen solely through the prism of Brussels to Whitehall. More discussion needs to be had on this issue as a matter of priority. As a general rule, we would like to see the following devolved:
4. The extent to which local government’s voice is being heard in the Brexit negotiations and how representation can be improved
Cornwall has a lot at stake in terms of the outcome of the Brexit negotiations. As a recipient of around 10% of the English allocation of European structural funds, what happens in terms of funding and the final agreement with the EU matters. Local government is barely mentioned in Government speeches and publications related to Brexit. Engagement with DExEU has been difficult, and our experience of wider engagement has not been at the level that we would have expected.
One significant problem with local government representation in the Brexit process is that at present there is no forum through which representatives of English local authorities can engage directly with Government Ministers on the implications of Brexit for local government in England. We believe that a forum (similar to the Joint Ministerial Committee to which the devolved administrations are invited) would provide local authorities with regular and direct access to Government Ministers so that local government can contribute to the Brexit process.
Introduction
Cornwall Council and the Cornwall & Isles of Scilly (CIOS) Futures Group are pleased to have the opportunity to contribute to the Communities & Local Government Committee’s inquiry into Brexit and Local Government. Ensuring that Cornwall is ‘Brexit ready’ is one of the key priorities of Cornwall Council[1], and the Council is working in partnership with the CIOS Futures Group to deliver this priority. We have been extremely proactive in understanding our local risks and opportunities, bringing together strong cross-sector partnerships to provide leadership in this area.
Our activity to prepare Cornwall for Brexit has included:
In addition to the information provided in the links above, we provide the following responses to the four questions posed by the Communities & Local Government Committee:
1) What are the greatest risks, and opportunities, for local government posed by Brexit?
1.1 Risks
1.1.1 Sectoral Risks
The CIOS Futures Group organised a series of roundtables in late 2016 to gauge the views of businesses and other stakeholders on the risks and opportunities of Brexit for key sectors in Cornwall and the Isles of Scilly. Sectors covered by the roundtables include tourism, agriculture, fisheries, higher education and public services. The findings of the roundtables were published in the Catalyst for Change report.
Although some of the risks highlighted (below) in the roundtables refer to specific sectors, it should be recognised that the realisation of any of these risks will have implications for Cornwall Council. For example, any outcome of the Article 50 negotiation or any decision made by the Government about post-Brexit UK policy that leads to difficulties for businesses and supply chains (e.g. business closures, reduced investment in the local economy) could result in increased pressure on public services.
Risks identified in the Catalyst for Change report include the following:
1.1.2 Risks to structural funding and regional investment
Our current estimate for what CIOS would have received for the period 2021 to 2028 for structural funds is £350m. There is currently no guarantee that CIOS will receive this amount of funding under the UK Shared Prosperity Fund.
Background to the £350m figure:
Whatever criteria is used for the new Shared Prosperity Fund, £350m would have been the minimum figure CIOS would have received based on our current knowledge, and it may be that under new UK criteria the funding figure based on local need and growth priorities could be a higher figure. We are working with colleagues in Brussels to get more information on what is being proposed for the remaining EU27 on structural funds. A failure to build on our existing investments could lead to a retraction of the significant progress that our economy has made during the last few years (median earnings have increased by 5.7% during the last twelve months, compared to a UK average of 1.7%).
1.1.3 Risks to EU partnerships
There is currently no certainty as to whether the UK will continue participation in European programmes such as Interreg, Erasmus+ and Horizon 2020 (and successor R&D programmes). Cornwall has many strong research and sector links with regions of the EU, many of which are more relevant than our relationships with UK regions. This is particularly the case in low carbon technologies, and has been built on strong collaborations developed during the last 20 years.
Cornwall has strong links with Brittany through our shared heritage and close geographical location, and Cornwall Council co-funds an office in Brussels for Cornwall to maintain close relationships with European partners. In the past, links between Cornwall and other European regions (such as Finistère) have been reinforced by joint participation in European programmes such as Interreg.
We believe that the outcome of the Brexit negotiations should not limit our continued collaboration with partners in Finistère, Brussels and beyond, and consideration should be made to what contributions the UK Government continues to make in specific European collaborative programmes where there are strong economic and academic reasons to do so
1.1.4 Workforce Risks
In August 2017, Cornwall Council and the CIOS LEP commissioned S4W Ltd to research the economic and social impacts of European Economic Area (EEA) workers in Cornwall and the Isles of Scilly. S4W’s research is now complete and has been submitted to the Migration Advisory Committee (MAC) as part of Cornwall Council’s response to the MAC’s call for evidence on EEA workers in the UK labour market.
Below is a summary of key headlines from the report:
Headline Sector Specific points for Cornwall:
Potential implications of Brexit for rural / peripheral areas:
Recommendations from the researcher to Cornwall Council, the CIOS LEP and the UK Government:
1.1.5 Resources
Resourcing is a key risk in Local Government’s efforts to prepare for Brexit. At Cornwall Council, we have only one part-time member of staff (0.8 FTE) whose job is solely related to Brexit. Other Council officers are required to develop work on Brexit in addition to their existing responsibilities.
It is difficult for local authorities to allocate further resources to Brexit work when we do not have a ‘seat at the table’ where the Government develops its overall strategy and plans for the Article 50 negotiations and post-Brexit policy. At Cornwall Council, we have had some dialogue with a small number of Government Departments, but our Brexit strategy is generally determined by our small Brexit team monitoring news on the Internet and incorporating information shared by sector representatives on the CIOS Futures Group. We cannot afford to allocate resources to Brexit projects (e.g. scenario planning for ‘no deal’) that risk becoming irrelevant as the negotiations progress.
1.2 Opportunities
1.2.1 Devolution
We believe that Brexit and devolution are intrinsically linked. Devolution is integral to the successful implementation of Brexit. As highlighted by the former Communities and Local Government Secretary of State, the Rt Hon Greg Clark MP, in his speech to the LGA Conference in July 2016: “When we are transferring powers from the EU to Britain I think it is essential that Whitehall is not the default destination for them. For years we have been urging subsidiarity – the principle that power is held as close to the people as possible – on the European Union. We now must apply it at home and ask first whether powers and funds can be transferred to local government.” [7]
This view was more recently expressed by Derek Thomas MP (St Ives) during the second reading debate on the European Union (Withdrawal) Bill on 11th September 2017:
“Does the Minister welcome that local authorities are rising to the challenge following the referendum result? Local authorities want to address these problems. Cornwall Council, for example, set up the Cornwall futures group after the referendum to look at the opportunities and benefits our exit will bring to Cornwall and Scilly specifically. That work includes considering areas of legislation that the council would like to see passported down to Cornwall and tailored to meet local demographic and geographic demands, such as the ability to strengthen water quality on our beaches, fishing policy for our unique mixed fishery in the south-west and other environmental legislation. Getting back this control is perhaps why so many Cornish people voted to leave the EU last year…. I would like to know what aspirations Ministers have on devolving further powers to regions and counties such as Cornwall and the Isles of Scilly. I know my constituents would like to know what kind of legislation will be decided closer to home.”[8]
Brexit is an opportunity for devolution to the English regions to be reinvigorated. Research by Exeter University found that people in Cornwall voted for Brexit because they want to have more say in the decisions that affect their own lives. Further devolution provides an opportunity to give communities more local control and contribute to the aim of the Industrial Strategy to re-balance the UK economy by promoting inclusive growth as well as focusing on place-based strengths. Cornwall Council is currently developing more detailed proposals for a post-Brexit devolution settlement for Cornwall.
Any additional responsibilities devolved to local government after Brexit must be fiscally neutral.
1.2.2 Regional Funding
Cornwall Council has administered European funding programmes for many years. We are currently sharing our experiences of what works well and what could be improved in the design and delivery of funding programmes in order to assist the Government’s planning for the UK Shared Prosperity Fund (SPF).
Based on our experiences, we believe that the SPF should be based on a ‘single pot’ principle in order to develop a more integrated approach to economic development that aligns more effectively with local priorities. We also believe that the UK SPF should focus on local accountability (within a national framework) that builds on Cornwall Council’s Intermediate Body status in order to make access to the fund simpler for local beneficiaries. Greater local determination of funds would ensure that the UK SPF could be focused on outcomes rather than outputs.
Under the SPF, we would like to see CIOS receive the same amount of funding initially, but with a redesigned, improved and more flexible programme to help us continue to grow our economy and productivity with the long-term goal of reducing the amount of regional funding we will need in the long term.
1.2.3 Sector Opportunities identified in Catalyst for Change
2) What measures should the Government take to provide more certainty and stability for local government in light of Brexit?
Local government needs to start planning now in order to prepare local areas for Brexit. However, it is difficult for local government to plan for Brexit when there is significant uncertainty as to the final outcome of the Brexit negotiations, communication between the UK Government and local authorities on Brexit is generally poor, and local government has to rely on its employees to undertake Brexit work on top of their existing responsibilities.
While there is a lot of talk about scenarios including no deal, a mid-range or a largely free trade deal, local government has been largely left out of all of the discussions. The ability of local government to forward plan with a range of projections is almost non-existent, and from the Cornwall perspective we have tried on a number of occasions to engage with DExEU and received minimal contact in return. While there is acknowledgement of the complexity of the negotiations, local Government will be key to what happens after March 2019 in terms of providing stability and certainty to residents, and the minimal involvement of local government in the Brexit process to date is a worrying trend.
Cornwall Council was disappointed to see that ‘local government’ was not one of the 58 sectors analysed by the UK Government.[9] Local government services, such as waste and social care, appear separately on the list, but the Government appears to have done no modelling on how Brexit would affect the operations of a local authority.
Additionally, Government should be sure-footed on issues that are within its gift to control, such as post-regional funding, the roll out of the Industrial Strategy and genuine devolution. Local government will have a major role in delivering all of these initiatives, so pace must be maintained.
In order to provide more certainty and stability for local government, the UK Government should improve their communications with local authorities on Brexit. This is particularly relevant for local authorities in England, as England does not have its own devolved administration situated between the levels of national and local government.
A suggestion as to how communication could be improved is made in answer to the inquiry’s fourth question.
3) What powers could be devolved from the EU directly to local authorities?
Given the complexity of the negotiations and the lack of information that has been provided to date, it is difficult to accurately breakdown which powers should be devolved to local authorities. Provided that the proposals are cost neutral, the repatriation of powers should not be seen solely through the prism of Brussels to Whitehall. More discussion needs to be had on this issue as a matter of priority with an ethos of promoting a genuine approach to devolution. As a general rule, we would like to see the following devolved:
The appointment of local authorities as a single point of contact for the above regulatory areas would improve compliance, improve business competitiveness and potentially allow local authorities to make changes to some regulations in order to boost local economic growth. Cornwall Council is developing more specific proposals on devolution in the above regulatory areas at present.
We would also like to see any new public bodies created as a result of Brexit to be located outside London in order to benefit the regions. We know that a Cabinet Office Minister (Chris Skidmore MP) shares this view[10] and we look forward to receiving the Government’s plans on locating new public bodies outside London in due course as Cornwall is interested in bidding to host at least one of the new bodies.
4) The extent to which local government’s voice is being heard in the Brexit negotiations and how representation can be improved
Cornwall has a lot at stake in terms of the outcome of the Brexit negotiations. As a recipient of around 10% of the English allocation of European structural funds, what happens in terms of funding and the final agreement with the EU matters. Local government is barely mentioned in Government speeches and publications related to Brexit. Engagement with DExEU has been difficult, and our experience of wider engagement has not been at the level that we would have expected.
We do not believe that Local Government’s voice is being heard to any meaningful extent in the Brexit negotiations to date. Key Brexit speeches (Lancaster House and Florence) do not mention local government once, while the Brexit White Paper contained one reference to local government within the chapter on the devolved administrations: “We will also continue to champion devolution to local government and are committed to devolving greater powers to local government where there is economic rationale to do so.”[11] Devolution to local government has not been mentioned in the context of Brexit since the White Paper was published.
We were concerned by the Secretary of State for Communities & Local Government’s assertion when he appeared before the Communities & Local Government Committee on 11th October that “we [DCLG] are not one of the lead Departments in this [Brexit].”[12] As Mr Javid acknowledged, DCLG is leading on the design of the SPF, feeds the views of local government into the Government’s Brexit plans and works with other departments on the new immigration system and European Union (Withdrawal) Bill. These are important subjects for local government in the Brexit process, and DCLG should be seen as one of the lead Government Departments in this process in order to ensure that Brexit works for all parts of the UK.
Cornwall and the South-West in general have not had their voice heard by DExEU in the Brexit process compared to other parts of the UK. A written answer by former DExEU Minister Lord Bridges of Headley[13] revealed that DExEU Ministers had only visited the South-West twice in their UK-wide programme of events before 5th April 2017. Cornwall’s first engagement with a DExEU Minister came during Steve Baker MP’s visit in late September 2017, six months after the Prime Minister started the Article 50 negotiations. Cornwall Council and the CIOS Futures Group sent the Secretary of State for DExEU a copy of our Catalyst for Change report in early 2017 to contribute to his planning for the Brexit negotiations, but it was not clear from the letter we received from DExEU whether the Secretary of State would even see the report.
One significant problem with local government representation in the Brexit process is as follows: at present there is no forum through which representatives of English local authorities can engage directly with Government Ministers on the implications of Brexit for local government in England. The former Communities and Local Government Secretary, the Rt Hon Greg Clark MP, announced in his speech to the LGA Conference in July 2016 that he had “argued successfully […] for English local government to be part of the negotiations on the terms of our exit” and that he would work with the Local Government Association (LGA) to ensure that “we make good use of this seat at the table.”[14] Fifteen months on from this statement, it is unclear where ‘the table’ is and who sits on it.
According to a DExEU press release from October 2017, Steve Baker MP “will lead on future engagement with the English regions during negotiations with the EU.” [15] However, the three Northern Powerhouse mayors have already been offered special treatment by meeting the Secretary of State for DExEU in person in York in October 2017,[16] and it appears unlikely that non-mayoral parts of the Northern Powerhouse and other local authorities in the UK will have the opportunity to speak to the Secretary of State in person about their areas’ priorities for Brexit.
The establishment of a Joint Ministerial Committee (EU Negotiations) for the Devolved Administrations and the establishment of a Joint Ministerial Council (European Negotiations) for the Overseas Territories are positive developments in terms of engagement between the UK Government and other parts of the UK. We now ask that a similar Committee is established to promote engagement between the UK Government (including DExEU) and local authorities representing all regions of England (including representatives of local authorities as well as combined authority mayors). This would give local authorities the opportunity to sit around a ‘table’ and contribute to the Brexit negotiations to help the UK Government ensure that Brexit works for all parts of the UK.
It is crucial that Brexit is done with local government and not to local government. For this to be achieved, greater two-way communication between UK and local governments is paramount, and a forum similar to those already established between the UK Government and the devolved administrations & overseas territories would be an important step to bridge the gap that currently exists between the Government and English local authorities on Brexit.
November 2017
[1] https://www.cornwall.gov.uk/media/27344496/priorities-for-cornwall-pr4.pdf
[2] https://www.cornwall.gov.uk/media/24227365/catalyst-for-change-brexit-report.pdf
[3] http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/exiting-the-european-union-committee/the-uks-negotiating-objectives-for-its-withdrawal-from-the-eu/oral/47053.pdf
[4] https://democracy.cornwall.gov.uk/documents/s104648/9.1.1%20New%20Frontiers%20Appendix%201.pdf
[5] https://www.cornwall.gov.uk/media/29103954/economic-and-social-impacts-of-eea-area-workers-on-cornwall-and-the-isle.pdf
[6] Acorn customer insight data identifies that up to 120,117 (44%) of the 272,495 households in CIoS are ‘low income households’, meaning that total household earnings are less than £20,000
[7] https://www.gov.uk/government/speeches/greg-clarks-speech-to-the-lga-conference-2016
[8] http://hansard.parliament.uk/Commons/2017-09-11/debates/B10868CD-F096-47A2-84EE-A902C8A271BE/CommonsChamber#contribution-4FE822AA-9A9E-4136-B867-077C51D3FC91
[9] https://secondreading.uk/economy/brexit-impact-58-sectors-assessed/
[10] https://www.civilserviceworld.com/articles/news/over-20-public-bodies-will-be-created-brexit-says-cabinet-office-minister
[11] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/589191/The_United_Kingdoms_exit_from_and_partnership_with_the_EU_Web.pdf (p19)
[12] http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/communities-and-local-government-committee/work-of-dclg-2017/oral/71325.pdf (Question 88)
[13] http://www.parliament.uk/business/publications/written-questions-answers-statements/written-question/Lords/2017-03-20/HL6180/
[14] https://www.gov.uk/government/speeches/greg-clarks-speech-to-the-lga-conference-2016
[15] https://www.gov.uk/government/news/davis-every-region-must-flourish-after-brexit
[16] ibid