Whichever way you voted in the recent EU referendum, the prevailing sentiment is that now is the time to take stock and get on with the job at hand – Brexit. Although leaving the European Union causes challenges, it also presents opportunities for engineering and industry. The focus is now on the government to make sound policy decisions and provide the foundations for the UK to continue to prosper.
The Royal Academy of Engineering and the 38 professional engineering institutions have formed an ‘engineering task force’ to consult industry and advise the government’s Brexit Office. Colin Brown, director of engineering at the institution, who represents the IMechE on the task force, suggests that leaving the EU may not be as catastrophic as some politicians portrayed the process during referendum campaigning.
“We’ve not been cast off into the middle of nowhere after the referendum,” he says. “The EU is 7% of the world’s people and 25% of its GDP. There is the rest of the world. But there are two main issues: how we will trade with the EU and how we will work with it.”
The task force has identified several aspects of Brexit that are important to engineering and industry, such as access to research funding, environmental regulation and industrial strategy. Members of the task force are now visiting and researching at different companies and organisations, to find out the potential concerns and assess how to make Brexit work best for engineering. The initial output will be a series of briefing notes and position statements at the end of September.
Focus on education
The institution’s theme managers are contributing to the task force and the ongoing policy debate, and have already started research.
Peter Finegold, head of education and skills, says that the government needs to focus on improving the performance of the UK’s technical education system. “The importance of skills is going to be heightened, because of Brexit, across all departments,” he says.
“There is more uncertainty about where skilled workers will come from. We are not producing sufficient numbers of homegrown engineers and technicians. If there are fewer EU migrants, we have to be careful not to cause a shortage among the lower-skilled technical roles, along with the current shortage in high-skilled technicians.”
There may be a need to overturn or relax migration rules in areas such as skilled technicians if there is a shortage, he adds.
The referendum coincided with the publication of some significant reports on technology education. The report from the Independent Panel on Technical Education and the government’s skills plan were both published in early July, and the government’s careers education strategy is expected imminently. All seek to solve the ‘disconnect’ between technology and education that happens after the age of 16, and to address skills shortages.
It remains to be seen how the new Department for Business, Energy and Industrial Strategy (BEIS) will develop the plans, and Finegold says it’s more important than ever that we endeavour to grow our technical talent better. “We’re a big enough and brilliant enough nation to do it on our own, and that needs to be reflected by both the ideologues and the pragmatists,” he says.
The other issue he considers vital is scientific research. In many ways, the UK “punches above its weight” in research. Just 1.67% of GDP is spent on scientific research compared with an OECD average of 2.36%. The UK represents just 0.9% of the global population and 4.1% of researchers. Yet UK-based researchers account for 11.6% of citations and 15.9% of the world’s most highly cited articles. Aside from concerns about research funding, Finegold says it is vital that the intellectual open-access culture of science is protected in the future. The free movement of academics both within the EU and outside is also crucial.
“It’s imperative this open culture in science is protected and expanded internationally,” he says. “Britain is a successful scientific nation, not because of inherent scientific ability, but because it’s a great place to come and do research. Any moves that prevent that would be detrimental culturally, economically
and socially.”
Concern about standards
Another sector that is intrinsically international is healthcare. The medical technology, biotechnology, and pharmaceutical sectors employ 183,000 people in the UK and have an estimated turnover of £56 billion. Here, the main Brexit concern is regulation and standards, focusing on the CE mark.
Under the current set-up, companies work with notified bodies, such as the Lloyd’s Register Quality Assurance and British Standards, to comply with standards. The Medicines and Healthcare Products Regulatory Agency oversees and accredits the notified bodies. It works to EU directives and regulations for accreditations such as the CE mark.
Helen Meese, IMechE head of healthcare, says: “It’s a highly regulated industry, and as a lone nation we will have to negotiate with Europe and the US for accreditation. If this isn’t dealt with now, the sector could be left hanging, with a number of companies not knowing what to do.”
Other nations outside the EU have arrangements for accreditation, although it increases the amount of red tape. There is a danger, then, that companies will move to an EU country to avoid the problem. However, the medical technology sector is quite a stable industry and, once the arrangement for important standards is established, there is no reason why improved regulation that supports innovation shouldn’t enable the sector to flourish.
Another area where engineers will feel the impact of Brexit is the NHS, where extra financial pressure is expected to compound existing challenges, such as rising patient numbers and inefficient service provision. For example, analysts have already warned the weaker pound could add an extra £900 million to NHS costs, as overseas suppliers increase prices.
However, Meese says these issues also provide an opportunity for engineers in the NHS: “One of the biggest problems that will cascade down to engineers is the potential loss of clinical staff. The NHS will need new, innovative ways of replacing them, and will have to draw on the skills and experience of the people embedded in its organisation. It’s an opportunity for biomedical engineers to make a difference and change the way the NHS works.”
These changes could include improving process procedures using manufacturing methods and technologies, such as lean and the RFID tagging of equipment and patients.
Signs of confidence
Philippa Oldham, the institution’s head of manufacturing and transport, says the firms she has spoken to have become more upbeat since the referendum, despite reports such as the CBI’s industrial trends survey showing a drop in confidence over delays to investment and concern over the economy. “Everyone is a bit fed up with the doom and gloom,” she says. “Unlike government, a lot of the large OEMs had prepared for both consequences. There’s been no knee-jerk reactions, and people seem fairly confident. We could get better trade deals, but these discussions need to happen quickly.”
The reorganisation of government following the referendum, with the creation of BEIS, was a good move, believes Oldham, and presents an opportunity to reinvigorate industrial strategy. Germany is perceived to be leading Europe with its overarching Industry 4.0 plan. Would such a single-vision approach work in the UK? She says the bigger challenge is how we “manage the development of different technologies”.
An example is the government effort to promote autonomous vehicle technology. The research does not consider work in the aerospace, rail and manufacturing sectors, although the technologies and ideas are often similar. “If you want to know how vehicle-to-vehicle communication could work, that already exists on the shop floor between machines,” she says.
“A more joined-up industrial strategy could add more value. There are lots of independent innovation hubs, with their own separate strategies. If we get all those groups in one room, government could create a holistic approach and prioritise investments.”
Oldham is more cautious about the appointment of a more engineering-focused ‘business tsar’. The tsar, who acts as a high-level adviser to government, is a role that would be better suited to a group of individuals, she believes. A formal arrangement for communication between industry and government on industrial strategy and Brexit is expected in coming weeks.
There are also some areas in which she believes government needs to act to allay concerns. Many companies are worried their businesses will be damaged, and growth restricted, if they lose access to the skilled technicians and engineers from Europe. And uncertainty about the apprenticeship levy needs to be addressed. Also, as in other areas, transport and manufacturing have EU standards and regulations that will need to be substituted when the UK leaves the EU, and there are concerns about intellectual property rights.
Need for certainty
The government should also prioritise investment in infrastructure projects that are already under way – such as HS2, Crossrail 2 and the east-
west Northern Powerhouse rail link – to provide stability, she says. “Brexit adds more importance to the work of the National Infrastructure Commission. These large projects provide certainty during uncertain times.”
The energy sector also has big-ticket projects planned, both nuclear plants and renewables schemes. Dr Jenifer Baxter, the IMechE’s head of energy and environment, says the freer hand that government will have over energy policy and funding should make some of the challenges in the sector easier to manage. “There is a real opportunity to grow an industry around power generation, redefining how it works, building supply chains and skills around what the UK needs, adjusting licensing and regulation that has been controlled by EU directives. We could move the whole sector forward faster.”
Regulation on incineration, storage licensing, capacity mechanisms and state aid could be tweaked to suit the UK better, as long as government engages in more “visionary planning”, she adds. Trading in interconnectors could be a problem, but should be solved easily by agreements made before their construction or by extensions of existing arrangements. The government also needs to ensure that climate change, low emissions and pollution remain intrinsic in policy.
There are concerns over environmental policy, says Baxter. Areas such as water pollution, landfill, incineration, hazardous waste, fishing and agriculture have seen lots of positive legislative changes by the EU, and transferring these into UK law should be a priority. “There’s nothing stopping us bringing EU law into UK law, but I’m concerned these regulations could be eroded by the need for the market to deliver,” she says. “Although some laws could be repealed, the government has to be careful here.”
While it’s important not to lose focus on local pollution problems, Baxter adds that larger-scale environmental issues such as commitments to climate change agreements, made in partnership with EU members, need to be clarified and reinforced.
“We need to decide what kind of country we are. It’s a positive social impact that Brexit will force us to make that collective decision.”
• Have your say
If you have an opinion or idea about the impact of Brexit on engineering, or think there are issues being missed that need to be examined, please email the task force at euprojectteam@raeng.org.uk