UK Government still “taking limited responsibility” for Brexit readiness with 4 weeks to go and “risk of serious disruption and delay” at Channel crossings, say MPs

Four and a half years after the Brexit vote, with preparations for EU exit costing £4.4bn so far and involving 22,000 civil servants - and many more paid consultants - the UK still faces “the risk of serious disruption and delay at the short Channel crossings” when the transition period ends in 4 weeks.

In a report published today, the Public Accounts Committee says there are still significant risks to the country being ready for the end of the transition period on 31 December 2020, but government still only seems to be taking limited responsibility for that readiness.

In 12 reports on preparations for EU exit since the 2016 vote, the PAC has repeatedly raised concerns about the readiness of key border systems and been assured that they are on track or that delays are being managed. And yet, with a few weeks to go, border systems remain in development and plans for managing disruption or prioritisation of key goods are unclear.

The impact of the summer 2019 ‘Get ready for Brexit’ campaign - which cost £46 million before it was abandoned when an extension was agreed - is unclear, and the government is still not doing enough to ensure businesses and citizens are ready for the end of the transition period. A recent government survey showed 36% of SMEs still expect the transition period to be extended again, and the Cabinet Office admitted it has no knowledge of how many of the remaining 64% of small and medium sized British businesses will actually be ready.

EU exit and the Covid-19 response have shown up critical gaps in the civil service’s approach to planning, particularly for unexpected events or undesired outcomes. The Cabinet Office keeps a national risk register, with input from across government and particularly the Treasury, but recent events have shown up the limitations in this crucial governance system.

Ministers specifically limited the amount of contingency planning the civil service was to carry out ahead of the EU exit referendum in 2016. This meant Government only began to formulate policy, negotiating positions and preparations after the vote. In its programme of work on Covid-19 the Committee uncovered the shocking lack of economic planning for a pandemic, even though that risk has been on Government’s “most likely” list for years.

Government continues to spend too much on consultants to undertake work that could be better done by civil servants, and in so doing does not utilise or develop skills and experience in-house, risking further, ongoing waste of taxpayers’ money. The Committee has also repeatedly raised concerns about government’s grip on cross-government spending and use of consultants, and action in these areas is still too slow.

Meg Hillier MP, Chair of the Public Accounts Committee, said “Pretending that things you don’t want to happen are not going to happen is not a recipe for government, it is a recipe for disaster.

“We’re paying for that approach in the UK’s response to the Covid-19 pandemic and can only hope that we are not now facing another catastrophe, at the border in 4 weeks’ time. But after 12 PAC reports full of warnings since the Brexit vote, the evidence suggests that come January 1^st we face serious disruption and delay at the short Channel crossings that deliver a majority of our fresh food supplies.

“The lack of definite next steps and inability to secure a deal adds to the challenge. A year after the oven ready deal, we have more of a cold turkey and businesses and consumers do not know what to be prepared for.”

PAC report conclusions and recommendations

7. We remain extremely concerned about the risk of serious disruption and delay at the short Channel crossings. There are multiple dates in 2021 from which new requirements for businesses on importing and exporting to the EU will take effect. Industry bodies have said that government has not provided key information needed by businesses to prepare, such as detailed guidance on how to apply for simplified customs procedures. New systems, including the core Goods Vehicle Movement Service (GVMS), are still in the testing and development stage and this testing is expected to be ongoing right up into December, leaving little margin before they must be operational. The market for customs agents is not expanding at the pace it needs to meet the increased demand post transition despite an additional £50 million in funding announced by the government. In the event of major delays at the short Channel crossings, there are plans to prioritise certain goods, such as exports of day-old chicks and fish for human consumption and additional freight capacity has been procured for the imports of critical goods. A border impact centre is being developed to manage disruption but is facing issues in securing access to data. The infrastructure in Kent to hold HGVs in case of delays is also still in development, with one of the two sites still to be acquired when we took evidence in early October.

Recommendation: The Committee will shortly be reporting separately and more fully on border preparations.

8. Government is not doing enough to ensure businesses and citizens will be ready for the end of the transition period, and it is unclear what has been learnt from the previous ‘Get ready for Brexit’ campaign. The Cabinet Office launched a new communications campaign, ‘The UK’s new start: let’s get going’, in July. Its aim is to inform businesses and the public about what actions they need to take to be ready for the end of the transition period. Government survey data suggests that 36% of SMEs still believe the transition period will be extended, and the Cabinet Office does not know whether the remaining 64% have taken action to be ready. The Cabinet Office acknowledges the key lesson from its ‘Get ready for Brexit’ campaign is that it should track actions taken in response, rather than just measuring public awareness. The Cabinet Office plans to intensify communications as the deadline approaches but it is unclear if it has the necessary information on levels of readiness among businesses and individuals to successfully target this campaign. Current levels of readiness and a decrease in travel due to the COVID-19 pandemic mean some businesses and members of the public may not look for help or guidance until they plan to travel or import/export goods, which could be some time after the transition period has passed.

Recommendation: Government must maximise all remaining opportunities for getting businesses and individuals to act in the time remaining to January 2021. It must ensure it has adequate information on what third parties are doing to take action, not just relying on surveys of awareness.

Government needs to ensure ongoing communications and support for businesses and individuals who may only consider taking action well after 1 January 2021, such as when COVID-19 travel restrictions are eased.

9. Government continues to spend too much on consultants to undertake work that could be better done by civil servants, and does not do enough to utilise or develop skills and experience in-house. At the peak, more than 22,000 civil servants worked on EU exit, and at present that number is around 15,000. The civil service responded to this demand by moving staff between departments – two thirds of staff in DExEU came on secondment from other departments. A similar approach has been taken on a larger scale to respond to the COVID-19 pandemic. There has been high turnover among staff working on EU Exit, particularly at senior levels. Government has made extensive use of consultants to support preparations for EU Exit, and is also doing so on COVID-19, to fill supposed gaps in the capacity and skills of the civil service. The Treasury anticipates that consultancy and contingent labour will be an area of focus in the 2020 spending review to ensure departments are making the best use of spending in this area. The Cabinet Office intends to reduce government’s spending on consultants, by developing additional capacity and skills in-house to reduce the need for consultants.

Recommendation: Government should set out how it will ensure it has a full and frank assessment of the impact of cross-government working/working on complex issues on civil servants. This should include both likely positive outcomes in terms of skills or experience gained from working in different departments, and also negative impacts such as workload, resilience and the likelihood of burnout.

Government should accelerate its plans to reduce its reliance on consultants. It needs better challenge of spending on consultants; clear plans to transition skills in-house where there isn’t obvious business need for short-term staff; and then monitoring of progress both in terms of decreasing spending and increasing skills levels in the civil service.

10. EU Exit preparations involved more than 22,000 civil servants at the peak and have cost at least £4.4 billion. But there has been no serious attempt to reflect and capture lessons for other challenges that government faces. Every government department has been affected by preparations for EU Exit and this has put pressure on government’s ability to manage cross-government coordination and decision-making. Government has made changes to the way the process has been managed. The ministerial structure now consists of just two committees, one focused on operations and one focused on strategy, and it is clearer where to go for decisions. The Cabinet Office reports that it shares more information on preparations with departments. The key oversight functions, particularly the Transition Task Force and the Border and Protocol Delivery Group now all sit together within the Cabinet Office, which we are told has resulted in a closer working relationship. Government has recognised that other challenges it faces, such as the response to COVID-19, will also require cross-government working, working at pace, or working in new ways. The Cabinet Office feels that it has learnt a lot from EU Exit and put it into a practice via a process of continuous improvement. However, it has no plans to conduct a formal review of the preparations, relying on the National Audit Office’s work to identify lessons, rather than also choosing to do its own significant review of what it can learn for the future.

Recommendation: The Cabinet Office should conduct a formal review, including seeking input from third parties (particularly the devolved administrations and local government) and covering the whole period of preparations. This should be done early in 2021 when there’s a chance to see how plans have held up in reality post-transition. It should cover structures, communications and oversight – areas which can be applied to other cross-government undertakings.

11. EU Exit and the COVID-19 response have shown up critical gaps in the civil service’s approach to planning, particularly for unexpected events or undesired outcomes. The Cabinet Office keeps a national risk register, with input from across government and particularly the Treasury. The risk register includes “unexpected events” in terms of those that are irregular but known to occur, and those which may not have occurred before but which there may be a chance of occurring. However, in practice, recent events have shown up the limitations in these plans. Ministers specifically limited the amount of contingency planning the civil service was expected to carry out ahead of the EU Exit referendum in 2016. This led to a delay on negotiating positions and preparations as government had to take time after the referendum to formulate policy and determine what type of agreement they wanted to have with the EU. Our previous work on COVID-19 has highlighted the gaps in economic planning for pandemics, even though the risk of a pandemic was one of the most likely risks government had identified. The government has announced that there will be a review of its response to COVID-19, but so far only initial discussions have been held and no date has been set.

Recommendation: The civil service has a duty to plan for multiple scenarios, even those which it or Ministers considers unlikely or undesirable. Civil servants should seek formal instruction if told not to plan by Ministers. Planning should be proportionate to the risk, but there should be mechanisms for activity to ramp up as risks get bigger. For example, on EU Exit, we would have expected increasing levels of planning from when the referendum commitment appeared in the Conservative Party manifesto. The civil service should consider the development of standard principles, particularly for planning for unexpected scenarios, which would put government in a better position to respond quickly.

12. Government still does not have a good grip on how much taxpayers’ money is being spent on cross-government priorities. The Treasury has acknowledged the need for more timely, transparent financial information on cross-government areas of work, including both EU Exit and the COVID-19 response. Before the NAO’s analysis, it did not have its own comprehensive information on government spending on EU Exit for 2019-20 or any earlier period, although it is now tracking information in-year for 2020-21. It has relied on departmental processes to ensure money on EU Exit has been used as expected. Departments are expected to publish information on EU Exit spending in their 2019-20 Annual Reports, but these have been delayed due to COVID-19 and the Treasury has identified inconsistencies in what has been presented so far. The Treasury plans to use its new OSCAR II finance system to collect better information from departments in the future, and this functionality is planned to be introduced in phases over the next year. It is not clear how this system will overcome difficulties in recording data from multiple bodies, especially that which does not fit into accounting categories, such as spending on COVID-19 or EU Exit.

Recommendation: The Treasury should set out how it plans in future to have the additional tools needed to deal with cross-government spending issues, over and above the existing Accounting Officer framework of control. This should cover how it will assure the quality and consistency of information departments provide, and how its systems will provide meaningful information on areas of spending which don’t meet “accounting definitions”.