Brexit has decreased public sector productivity, report finds

Findings follow chancellor Jeremy Hunt's Spring Budget call for return to pre-pandemic efficiency levels
Photo: Zefrog/Alamy Stock Photo

By Jim Dunton

14 Mar 2024

A report from research organisation UK in a Changing Europe has flagged the connection between decreased public-sector productivity and the impact of delivering Brexit.

Last week's Spring Budget saw chancellor Jeremy Hunt launch a new drive to improve the value for money delivered by the public sector, against the backdrop of productivity languishing at 5.9% below pre-pandemic levels, according to the Office for National Statitstics.

UK in a Changing Europe's new report, Brexit and the State, makes a direct link between the effort required to deliver on 2016's referendum decision to leave the European Union and the increased size of government.

Figures published this week show the civil service's full-time equivalent headcount grew to 503,000 in December – up from 384,000 immediately before the EU referendum, which was a post-war low.

The UKICE report says Brexit is the principal reason for civil service staff numbers growing by around 100,000 over the intervening period, although it acknowledges staff increases connected to the Covid-19 response and migration that is seemingly unrelated to Brexit.

The report notes that the first wave of recruitment to deal with Brexit was an expansion of policy roles in the wake of the referendum result, but that demands have since altered.

It says the Department for International Trade had grown from no staff in June 2016 to more than 4,000 by the time it was merged into the new Department for Business and Trade in last year's machinery of government changes.

The report adds that the Department for Environment, Food and Rural Affairs nearly doubled in size from 6,450 in June 2016 to 12,610 in June last year.

The Home Office also grew significantly. The report observes that the department had to design and implement the settled-status scheme for EU nationals and also manages the new global migration regime, with all migrants from overseas now requiring paperwork.

It notes that it is still "unclear" how the department will handle the transition of 2.8 million EU and European Economic Area nationals from "pre-settled status" to "settled status".

UKICE also highlights increased burdens faced by devolved government and the creation of new bodies as a direct result of Brexit, such as the Independent Monitoring Authority for the Citizens Rights Agreements, the Trade Remedies Authority and the Office for Environmental Protection.

It concludes that while government has now "more or less adapted to the shape it needs to be after Brexit", it is still working out to how to move with "finesse".

The report says that despite repeated efforts by ministers to reduce the size of the civil service in recent years, there is litle clarity on what the "right size" is.

"Taking back control, it transpires, is a long and iterative process, consuming significant time and effort, with some of those pressures being felt even more acutely by the devolved governments than in Whitehall," it says.

'A lot of additional cost for little economic gain'

Report co-author Jill Rutter said it was clear that some areas of Brexit work were vital but did not involve productivity gains.

She said work on new trade deals was necessary to prevent a deterioration in the UK's post-Brexit trade position, but had so far delivered "potentially negligible" economic improvements. Rutter added that other post-Brexit tasks – such as managing the settled-status scheme – were critical enablers that added to costs with no benefit.

"Jeremy Hunt may want to take bureaucracy numbers back to levels pre-Covid and express desires to boost public sector productivity," she said.

"But he needs to accept that the impact of the big achievement of the government to date has been to create a lot of additional public (and private) cost for little economic gain."

A government spokesperson said ministers were continuing to deliver post-Brexit freedoms at "every opportunity".

They said: "Since leaving the EU we have overhauled our immigration system, laying the path for us to deliver the largest ever drop in migration; revoked and reformed over 2,000 laws, with over 1,000 more planned this year, delivering more than £1bn in savings for businesses and customers; increased the speed of access to key medicines for patients whilst capitalising on tax freedoms – including getting rid of the VAT on women’s sanitary products; and struck new trade deals with 73 countries, as well as the EU itself.

"We have done all this whilst continuing to drive forward a more productive and efficient public sector, and recently introduced a cap on civil service headcount to further drive efficiencies across government."

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