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The morning after that referendum
Trowers Public Insight

The morning after that referendum

You might be relieved to know that that this blog contains no dodgy statistics; fails to speculate about the relative merits of the Norwegian versus North Korean trading models and absolutely does not tell you how to vote. No doubt David Cameron, Boris Johnson and others will make up for these oversights.

What this blog does provide is some guidance on the public sector's somewhat tricky position on procurement, state aid and EU structural funds during any transitional period to Brexit. Media, politicians and other supporters of leave might expect or even demand an immediate bonfire of all things European following a referendum victory. However, public sector bodies are bound to comply with the law, irrespective of external pressure, and they will be vulnerable to domestic judicial challenge if they fail to do so.


Public procurement regulations, though of EU parentage, are technically domestic legislation made respectively in Westminster and Edinburgh.  Unless and until the UK and Scottish parliaments repeal or amend them they remain in force. Even following a UK withdrawal from the EU, it would be possible to make relatively minor amendments: for instance, substituting references to the EU with the UK. Interestingly, Scotland and the rest of the UK, for now bound by the same EU requirements, could in a post Brexit world adopt different public procurement rules.

In any event, the EU and most countries' procurement regimes ultimately derive from the Agreement on Government Procurement (GPA). If the UK negotiated trade treaties with different countries then another form of the public procurement rules would inevitably apply- probably  also modelled on the GPA and giving freedom of access to whichever  new countries with which the UK had negotiated the trade deals possibly, with similar provisions regarding non-discrimination.

State aid

Unlike procurement, state aid as a branch of competition law, is made in the EU and applies directly in each EU member state. If Brexit happens, it will cease to be UK law on the repeal of the European Communities Act 1972. The UK will need to adopt some form of replacement competition law and this may include regulations about state subsidies for public services, business and public sector commercial activity.

Public sector in-house lawyers are most likely to come under pressure to ignore this particular aspect of EU law during any Brexit transitional period. Tata's ongoing UK steel problems at Port Talbot demonstrated how future public and media pressure is likely to be applied 'to do something' for ailing industries. However, failing to comply with state aid law will be grounds for judicial review in domestic courts against UK public bodies for breach of their general obligation to comply with the law.

EU structural and investment funds

EU funds such as European Regional Development Fund (ERDF) are a significant source of investment for a number of UK regions such as Cornwall. The EU will have to provide this support during any transition. However, uncertainty of what happens post Brexit (including knowing the exit date) may make it difficult for business recipients to manage the risks of funding being abruptly turned off. The EU auditors also strictly apply procurement and state aid conditions, and a failure to comply may lead to the claw-back of funds. Any British replacement funds will be complicated by the UK and devolved governments each being responsible for, and likely to adopt distinct replacement schemes.

To ensure this public investment continues during transition, the UK authorities should quickly address transitional provisions and replacement funds.

European Economic Area or Remain

If Parliament opts to 'do a Norway' and negotiates the UK's continued access to the EU's single market then most existing EU inspired regulations (including procurement and state aid) will continue to apply as now. In fact from a legal perspective (as opposed to a constitutional one) there might be little difference between this option and the situation, if there is a remain vote.


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