Hard facts about a soft Brexit and the NHS

With Brexit still dominating the news agenda and the UK yet to come to a final agreement with the European Union, Mark Dayan looks at what the so-called "Norway model" might mean for the NHS.

Blog post

Published: 22/02/2019

As Theresa May’s Brexit deal continues to teeter on the brink of oblivion, one regularly mentioned alternative in the wings is the “Norway model”. A large cross-party group of MPs have been trying to promote this softer form of Brexit as “Common Market 2.0”. Arguably, Labour’s demand for “close alignment with the single market” with “shared institutions” points in the same direction.

All these refer to essentially the same model – for the UK to leave the EU but remain in a shared single market, either through the European Economic Area (EEA) agreement that gives this status to Norway and Iceland, or a new similar agreement.

In practical terms, this would require voting through the Prime Minister’s withdrawal agreement and entering the agreed transition period, but renegotiating the declaration about our future relationship to set the course for a much less dramatic break in the long term.

Freedom of movement

Compared to a harder Brexit, the most obvious implications for the NHS would be on supplies. Leaving the single market would create a list of new requirements and barriers, as medicines and medical devices coming from the EU suddenly have to deal with two regulatory systems, not one. The negotiated exit envisaged in the current deal could deal with some of these, but not others. No deal would mean they came in immediately at full force, probably accompanied by a steep fall in the pound that pushes up the price of imports further.

On top of the real risk of some vital supplies not arriving at all in a no deal scenario, this would carry a very literal cost. The unprecedented situation makes it impossible to be precise, but I have estimated that a no deal exit could add £2.3 billion to annual NHS costs. The deal laid out in the declaration could add around £400 million.

Academic and government assessments of a “Norway style” Brexit imply the costs of medicines and medical devices would still rise. However, this would only be by around 2%, implying extra costs of about £150 million across generic medicines and medical devices.

But it is important to note that these analyses assume that, despite staying in the single market, the UK leaves the customs union that coordinates tariffs and quotas. If we were to stay in the customs union as well, as Labour demands, it is not clear costs would rise at all.

Norway is also part of the European Medicines Agency system for approving medicines. Continued membership would stop the UK suffering the delays in getting the newest innovations that tend to affect smaller markets. Unfortunately it could not stop the agency itself leaving London for Amsterdam: only full EU members host bodies like this.

New rules, same as the old rules

With the free movement of goods and services would come the free movement of labour. That would be a relief for the NHS: the new migration system otherwise planned after Brexit, with a proposed salary floor of £30,000, would block the entry of many nurses at a time of alarming staffing shortages. It offers almost nothing for social care, a financially crippled sector with growing staff problems.

Closely connected to this would be the right for British citizens to keep using EHIC cards to access care as retirees abroad under the S1 scheme, and to use EU cross-border health care rights. Recognising the difficulty in replacing these, the government has long aimed for continued access. But the EU has not signed up to this in the current deal – perhaps because it smacks of cherry-picking the parts of free movement we like.

Across clinical trials, research funding, and public health, a single market Brexit would again secure continuity and alignment.

Of course this comes at a cost. The UK would have to continue paying into EU coffers – although probably not as much as if we remained full EU members.

And packaged in with all the rules that the NHS would want to keep will come a couple whose passing some in the service would not have mourned. For example, it is unclear how far NHS England’s ambition to free local bodies from an “overly rigid” procurement requirements is compatible with keeping EU rules that aim to give companies from all member states fair access to contracts.

Firing up the fax democracy?

Perhaps the biggest disadvantage usually cited for a single market Brexit is that it relegates the UK to being what Norwegians call a “fax democracy”: a country bound to follow rules made by the European Council, Commission and Parliament, but without representation in those organisations. EEA states can refuse to implement new rules, but this is a rare event – because the other states can retaliate by reducing rights and access.

This loss of influence could affect some important decisions. For example, over the last 15 years, many UK science bodies and the NHS Confederation successfully pushed with allies from other countries to reform EU law on clinical trials. Eventually the unpopular 2001 Clinical Trials Directive was replaced with a more consistent and streamlined alternative. UK bodies were perhaps especially pleased with the replacement of the Directive, because its application was especially severe in this country. Might the result have been less ideal or slower if the UK had not had a seat at the top table?

The UK could only be an associate member of the EU’s major science funding programme, losing our vote on the direction of research. However, UK representatives could sit on the committees of the European Medicines Agency, which effectively call the shots as to which drugs get approved across.

Like all Brexit options at this stage, the Norway model is far from perfect. But it would clear away a whole gallery of disruptions and uncertainties that have been raising concerns in the NHS. As we enter the closing rounds of this stage of the Brexit process, it would be nice to see considerations like this come to the fore.

Suggested citation

Dayan M (2019) “Hard facts about a soft Brexit and the NHS”, Nuffield Trust comment. https://www.nuffieldtrust.org.uk/news-item/hard-facts-about-a-soft-brexit-and-the-nhs