BREXIT - opportunities and challenges in public sector infrastructure
What does Brexit mean for local government and its supply chain whilst the UK is putting in place its strategy?
Most of us involved in public sector infrastructure know that now is the critical time to help provide a clear and positive message which will help promote economic stability, facilitate inward investment and drive economic growth.
The key message at this stage is that it is business as usual in terms of UK legislation. The UK is still part of the EU and so, whilst local government (and its supply chain) should understand how EU legislation affects its day-to-day business, this is not something that requires immediate action. However, it is wise to consider some form of future-proofing in the coming months. We outline aspects of this below.
Effects on EU funding
For the time being, projects funded by say, the European Structural and Infrastructure Fund or the European Regional Development Fund, will continue under their existing arrangements. This not only means that local government should continue to comply with any funding conditions, but it should also consider a more diligent approach, as clawback may become more of a risk as we move closer to exit.
Continuity of funding will inevitably be linked to the outcome of exit negotiations. Whilst the UK government is being encouraged to step in and provide guarantees of continuity, if, as a local government body, you are receiving funding it would be wise to consider some form of audit and future-proofing of your infrastructure contracts in the event that funding is removed. More careful scrutiny of funding agreements should also be considered.
EU Procurement Regulations
The UK Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations will still apply to your procurements, unless and until expressly amended or repealed. So, local government should continue to ensure it has adequate compliance measures in place wherever practicable.
It is likely that the UK will remain subject to some form of open competition and public procurement regulation: not least because the public sector is mandated to provide value for money and show their decisions are in the public interest, and also because international trade rules tend to operate on a basis of reciprocal agreement. Whilst construction companies might benefit from changes in UK procurement legislation to allow a larger pool of work to be directed at local companies, for those with a European order book or aspirations, there might be corresponding detriment. So, balance is key.
Exit terms, when agreed, may allow local government the opportunity to help re-model legislation which has become burdensome over time. However, in the short term, it is important that councils start putting plans in place to take the lead on how the effects of Brexit can be managed in their area. This should help them to deliver a clear and positive message as negotiations proceed during the uncertain 'twilight' period.
If you would like any further information on the issues raised in this article, please contact Brian Hitchcock on 01392 687712 or email@example.com. Brian is a partner and member of Michelmores' public sector team.