EU public procurement rules

The EU public procurement rules have been implemented in the UK by the Public Contracts Regulations 2015 (along with the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016, which come into force on 18 April 2016). If the UK were to leave the EU, although the EU Procurement Directives would cease to apply to UK contracting authorities and utilities, the UK legislation that implements the EU rules would continue to apply unless and until repealed. Given the current scrutiny of the use of public money in the UK and the pressure to use public funds effectively and efficiently, the EU procurement regime principles of seeking to obtain value for money for public sector spending by running some form of competition for works, supplies and services is likely to remain, although the cross border interest test may no longer apply. The UK has supplemented the EU Procurement Directives in a number of areas, including specific provisions on ensuring accessibility for SMEs. The Government is therefore unlikely to adopt a wholesale repeal of the legislation. It is also unlikely that simplification of the current UK procurement legislation will be a top priority for the Government if the UK leaves the EU. Public procurement is likely to remain “business as usual” for UK contracting authorities, while UK businesses competing in the EU may lose the benefit of the application of the EU public procurement rules by EU contracting authorities, although the UK may negotiate a separate trade treaty to give some protection to UK businesses trading in the EU.  

EU funding

Many public sector projects and activities involve an aspect of EU funding and public and other bodies in the UK can currently apply for regional and social funding through the European Regional Development Fund and European Social Fund. In the current round of funding (2014 to 2020), the EU has emphasised research and innovation, transport and energy as key areas for the EU’s future where funding is available through the European Structural and Investment Funds. In order to qualify for such EU funding, applicant organisations must be established in the EU so such funding would no longer be available to UK bodies, although a non-EU organisation can still participate as a subcontractor or collaborating partner. Whether an exit from the EU would trigger clawback of any EU funding already granted to UK public bodies (as the recipient would no longer be established within the EU) would depend on the terms and conditions of each individual grant and whether the EU would seek to enforce the terms of such grant funding.

State aid

The main aim of the EU State aid rules is to maintain a level playing field between competing businesses from different EU member states. The rules do this by seeking to prevent public money from being used to unfairly support or otherwise advantage any business or other trading entity where such support could potentially distort competition and affect trade between the EU member states. Whether the UK would continue to have a State aid regime post-Brexit would depend on the eventual trading model that the UK adopted. For example, an EEA/EFTA model would mean retaining a broadly equivalent State aid regime to that which currently applies to the UK under the EU rules. Even the World Trade Organisation has subsidies rules that the UK would need to comply with if it sought to rely on the WTO regime alone. The issue, therefore, would be whether public authorities in the UK would have to continue to consider the State aid implications of their actions and what effect this would have on competition within the UK, post-Brexit.  

Human rights

As a member of the Council of Europe, the Government is a signatory to the European Convention for the Protection of Human Rights and Fundamental Freedoms (Convention). Under the Human Rights Act 1998 (HRA), public authorities and other organisations when they are carrying out functions of a public nature have a duty not to act incompatibly with the Convention. An exit from the EU does not mean that the UK would cease to be a member of the Council of Europe nor cease to be a signatory to the Convention so the repeal of the HRA is a separate issue to exiting the EU. The duty on public authorities is likely to remain in some form if the UK remains a signatory to the Convention.