Whitehall’s handling of the UK’s decision to leave the European Union has exposed a need for better contingency planning across the whole of the civil service, according to the National Audit Office.
The public spending watchdog said that while officials had risen to multiple challenges related to 2016’s Brexit vote, departments could not blame delays in creating and implementing policy entirely on political uncertainty.
Published on the same day that UK supply chains warned of “severe” disruption to the flow of goods when the post-Brexit transition period ends on 31 December, the NAO report also said the civil service had failed to properly engage stakeholders in its Brexit preparations.
The NAO praised the way civil servants had mobilsed to meet the challenge of EU exit, noting that as of October last year some 22,000 officials were directly working on Brexit tasks. But it said the civil service’s response to the referendum vote could have been better.
It said that while the challenge of delivering Brexit was unprecedented when it began and required significant cross-departmental working, dealing with the Covid-19 pandemic and preparing to meet zero-carbon ambitions placed similar demands on departments.
“The uncertain political climate and delays to some significant policy decisions made it challenging for departments to take early action in some specific areas during the preparations for EU exit,” the report said.
“However, we also found that, even where there was no such constraint on action, the civil service could have been quicker to develop plans and progress to implementing them.
“Several of our 2018 reports set out areas where internal decisions or processes, such as developing business cases, took longer than planned. These delays, whether there was a clear cause or not, curtailed the time departments had in which to take action.”
The report suggested that the civil service could improve how it dealt with uncertainty by planning for multiple scenarios, “including robust contingency plans for those scenarios which will have a significant impact and could reasonably occur, even if some of these may not be the desired outcome”.
It added: “In this way, officials can be in a better position to present ministers with options, to enable quick decisions and immediate action.”
The NAO praised elements of the Department for Exiting the European Union’s approach to co-ordinating Whitehall’s preparedness for Brexit – particularly in its work as a focal point for gathering department-level detail on the impact and opportunities posed by Brexit.
But the watchdog said the fact that DExEU’s responsibilities were “effectively shared from the start” with the Cabinet Office’s Europe Unit and the Treasury meant that departments were often confused about where to go for information or when decisions needed to be made.
“A central function with responsibility for gathering a comprehensive view across government helps ensure that issues are captured consistently and also makes it easier to identify interdependencies and risks early on,” the report said.
“Simple, clear structures are essential for quick decision-making and clear accountability, but they can risk being a bottleneck or limit wider engagement. It is important to find a balance which fits with the pace and priority of the work, and which can be adjusted over time.”
The NAO also identified that staff churn had been a significant issue in departments with the most significant Brexit burdens.
“Staff turnover in EU exit roles, and particularly in DExEU itself, was higher than for the civil service in general,” it said. “The problem was particularly acute at more senior grades. In its less than four years in existence, DExEU had three permanent secretaries.
“The Border Delivery Group (now the Border Protocol and Delivery Group) has had three directors general between 2017 and 2019. Other departments most affected by EU exit have also seen changes at permanent secretary level, including Defra and HMRC.”
The NAO identified in March that departments had spent “at least £4.4bn” on Brexit work. Today’s report said many departments had found it challenging to track the cost of preparations for EU exit, especially where work involved adapting existing programmes and funding and working alongside business-as-usual priorities.
“Since departments do not have this information, they are not able to assess the impact of EU Exit on the resources available for their other priorities, or whether their spending on preparations was achieving value for money,” the NAO said.
NAO head Gareth Davies said the report – the watchdog’s 28th on the subject of Brexit – could help the government learn from its experience.
“Preparing for EU exit continues to be a highly complex and challenging task for government and stakeholders,” he said.
“Government can draw on this learning in preparing for the end of the transition period and beyond, and in managing other cross-government challenges including its response to Covic-19 and net zero.”
Another point underscored in the report was a failure on the part of government to evaluate the challenge of preparing businesses and taxpayers for Brexit, particularly a no-deal scenario.
“DExEU’s own monitoring of progress focused on what departments needed to do and did not consider who else needed to take action and whether they were ready,” the report said.
“This meant that departments simply didn’t put enough thought, or give enough time, to what their stakeholders needed.”
It added: “Crucial parts of systems development, such as operational testing, were limited in scope because of the time available or were only able to be carried out after the deadline for EU Exit was extended.”
The NAO report came as eight of the UK’s leading logistics trade groups wrote to ministers calling for "urgent" meetings to discuss the "enormous challenge" facing the industry at the end of the Brexit transition period.
The group, which includes the Road Haulage Association, said they were increasingly concerned there were "significant gaps" in the government's efforts to provide a functional cross-border trade system, including fears over a shortage of customs officials and the use of untested IT systems.
In a letter to Cabinet Office minister Michael Gove, the group said: "As key participants in the supply chain who will be required to deliver a functional operating border for GB and EU traders next year, we have visibility of the current state of preparedness which as it stands has significant gaps.
"If these issues are not addressed disruption to UK business and the supply chain that we all rely so heavily on will be severely disrupted."