During the referendum campaign and in the immediate aftermath of the result, there were many blood-curdling warnings about the effect of Brexit on the economy.
Most of these focused on the impact on public sector finances and private sector businesses. No-one thought about the potential impact on the voluntary sector. Charities are partners for councils and stakeholders in local communities, so this matters.
Many charities have relied on a steady stream of immigrants to fill job vacancies. This has contributed to a stagnation of wages that has helped charities deal with the economic downturn. If Brexit leads to significant restrictions on immigration that downward pressure on wages is likely to be relaxed. Balancing the books may become a lot more difficult.
This means councils may not be able to squeeze further ‘efficiencies’ from the voluntary sector. With significant increases in the minimum wage already planned, for the first time in nearly a decade the pressure on costs is likely to be up rather than down. Councils can no longer assume that contract retendering will lead to savings.
The crucial issue will be what happens to central government expenditure, particularly the £16bn the UK currently sends to Brussels annually for EU-funded programmes. The government has predicted economic growth will slow and in response ended its commitment to eliminating the deficit by 2020. A stimulus package to mitigate the impact of Brexit is therefore likely, focused on supporting and creating jobs and boosting skills to help people into work.
These are all already key responsibilities for local government and they have, in the past, been met in part by EU funding. Councils can make the case for the money that would have been sent to Brussels to be diverted to them as part of the stimulus package. This feels like an argument that councils can win, especially given central government’s commitment to devolution. Winning it would allow councils to make decisions on the money that is invested in their area.
This gives councils an opportunity to deliver large infrastructure projects themselves, but also to locally commission more services with an explicit focus on stimulating economic activity. The voluntary sector can be a key partner in this project. We have the skills and experience to help local government reach parts of the community that mainstream programmes struggle to engage.
There are opportunities as well as threats facing a post-Brexit UK and local authorities need to argue for central government to focus its spending on seizing them. The key will be for voluntary sector procurement strategies to be used as facilitators of a national resurgence not just another drain on national resources.
Alan Fraser, chief executive, YMCA Birmingham.