Brexit: what lies on the horizon for the NHS?

Many of the implications of the UK’s vote to leave the EU remain unclear. Elisabetta Zanon, director of NHS Confederation’s European Office, discusses the potential financial, recruitment and research implications on the NHS.

The EU Referendum Leave vote is now more than two months behind us, but a cloud of uncertainty still hangs over precisely when negotiations with the EU will start and what kind of new relationship the UK government will seek. This is not surprising, as extricating the United Kingdom from the European Union and establishing a new relationship with it will be a gigantic undertaking.

The reach of the EU on UK policy and regulation has increased incrementally in the course of the last four decades, with many aspects of domestic and EU affairs now being closely intertwined. This also includes health policy, with the NHS resembling a microcosm illustrating the far-reaching and subtle effects of EU affairs on domestic policy.

Brexit could therefore have significant implications for the NHS in a range of different areas including funding, recruitment and retention, procurement, and collaborative research. Whilst at this stage it is impossible to predict the level of impact in these areas, as we do not know what type of new relationship the UK government will seek, how long negotiations with the EU will last and what the outcome will ultimately be, this article explores some of the possible implications.

Funding
The NHS’s funding depends largely on the overall performance of the economy. The major risk for the NHS arising from Brexit is therefore linked to a possible prolonged period of economic slowdown. Leading economists are almost unanimous in concluding that leaving the EU will have a negative effect on the UK economy, which in turn will impact on public spending. The impact of Brexit on the UK’s economy is however very difficult to quantify at the moment, as the situation will evolve constantly and hard data on the economy will not be available for many months.

NHS funding also depends on political decisions and Vote Leave pledged to invest additional funds in the NHS as a result of the UK leaving the EU. Commentators have however warned that this scenario, coupled with an economic slowdown, would require difficult political decisions such as increasing taxation, raising the public finance deficit, or further cuts to other areas of public spending. It should also be noted that if the UK were to maintain full access to the EU single market after Brexit – the so-called ‘Norwegian option’ – we would still have to contribute to the EU budget: therefore only a smaller saving to be invested domestically would result from our exiting the EU.

Recruitment and retention
The NHS is heavily reliant on EU workers, with around 10 per cent of our doctors and five per cent of our nurses being EU migrants. The biggest danger in the short term is that the prospect of Brexit could discourage EU citizens from staying or coming to the UK, due to fears of being unwelcome and concerns around employment rights. There is also speculation about the impact of a less favourable exchange rate, making the UK a less attractive destination for healthcare workers to live and work.

In the longer term, everything will depend on the outcome of the negotiations between the EU and the UK. The critical factor is whether or not the UK continues to have access to the single market, entailing freedom of movement for EU citizens to live and work in the UK and vice-versa. Under this scenario, probably not much would change for NHS employers and staff. At the other extreme, a total exit from the single market would leave the UK completely free to determine its own policies on immigration and employment issues, with possibly much greater implications for the NHS.

Procurement
As public bodies, NHS organisations have to abide by EU procurement rules when they purchase goods and services from the market. While the full regulatory regime has to be complied with when NHS bodies purchase medical equipment, furniture, uniforms, building works and a broad range of other supplies, a light touch regime applies for the procurement of clinical services, because of the limited cross-border interest of EU operators in this market. It is important to clarify that nothing in EU law requires member states to open up public services to competition from the independent sector – that is entirely a matter for domestic policy decision. However, when a member state decides to introduce the market into the provision of public services, those activities then become subject to EU procurement law.

Whether procurement rules will continue to apply as now, or might be amended post-Brexit, will once again depend primarily on the type of relationship which the UK negotiates with the EU and the extent to which the UK continues to have access to the EU single market. Full access to the single market should normally entail the continued application of EU procurement legislation as now. In the case of a ‘hard’ Brexit, some policy choices in this area could be possible. But it should be stressed that international trade agreements also require compliance with procurement rules and that these obligations are in many aspects substantially the same as in EU law. Some flexibility in this area after Brexit seems therefore possible, but limited, if the UK wants to maintain access for UK businesses to international procurement markets.

Collaborative research
UK organisations are the largest beneficiary of EU health research funds in Europe, with €760 million in EU funding having supported health research in the UK between 2007 and 2013. The NHS has benefitted from this funding, as well as from EU collaboration in clinical research more generally.

We welcome the clarification given by the Treasury that the UK government will underwrite payments under Horizon 2020 – the EU Programme for Research & Innovation - even when projects continue beyond the UK’s departure from the EU. This announcement will help reassure partner institutions in other EU countries who have raised concerns about whether to continue to collaborate with UK institutions on EU funding bids. This guarantee however only covers bids which will be submitted under the existing EU Programme (until 2020), with uncertainty emerging on how to ensure that the NHS can continue to play a leading role internationally in medical science and research beyond that date.

Uncertainty has also been expressed on whether, after Brexit, the UK will continue to be subject, or not, to EU regulation which provides for a harmonised approach for clinical research studies. As for other policy areas mentioned above, maintaining access to the EU single market would require compliance with these rules, while the ‘hard’ Brexit option would leave the UK free to decide which rules to apply for the authorisation and conduct of clinical studies. In the latter scenario, it would be crucial to ensure that sufficient regulatory convergence is maintained, so that our ability to take part in multi-national clinical trials is not constrained.

The complexity of extricating the United Kingdom from the European Union is gradually coming to light as the debate about Brexit progresses. Leaving the EU will involve many different and overlapping processes, with negotiations for our exit preceding and being separate from those regulating the UK’s future dealings with the EU, as well as a possible ‘transitional arrangement’ in between the two agreements. In addition, formalities relating to the UK’s membership of the World Trade Organization will have to be handled, as our membership is currently through the EU.

Alongside these complex international negotiations, the UK government will be confronted with extensive domestic debate with key stakeholders and interest groups which will result in difficult trade-offs being made. As one of the most cherished and trusted institutions in the UK, it will be crucial for the NHS to take an active part in these discussions, with the aim of mitigating possible risks for the service and ensuring the best possible deal for our patients.