Autumn Statement "won't boost departmental resources for Brexit", says leaked memo

Next week's set piece fiscal statement will not include extra resources to cope with Brexit, according to a memo leaked to The Times

By Matt Foster

15 Nov 2016

Next week's Autumn Statement "will not provide resources for the civil service to grow its Brexit capacity and capability", according to an assessment reportedly prepared for the Cabinet Office by consultants.

The Times has obtained a leaked memo, dated November 7, which the newspaper reports has been drafted by a consultant working for the department, and which lays bare concerns over civil service resourcing in the wake of Britain's vote to leave the European Union. Ministers have said the report is "not something we recognise".

The memo – the text of which has been published by The Times in full – says that while individual departments have been "busily developing their projects to implement Brexit", these are "beyond the capacity and capability of government to execute quickly" and have "no link to the overall negotiation strategy" which remains a subject of debate among cabinet ministers.

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According to the report, one department believes it needs a 40% increase in staff to cope with the extra demands of Brexit – and there are "expectations of increased headcount" across the civil service ranging from 10,000 to 30,000.

Civil service chief executive John Manzoni told a seminar last week that government was already doing "30% too much" before the Brexit vote, and said departments would need to re-prioritise in the wake of the vote to leave.

But he said prime minister Theresa May had told departmental leaders the "fiscal context won't change" in light of the Brexit challenge, with departments expected to handle withdrawal within existing spending plans.

"The fact is we need to go back, we need to re-plan, we need to be realistic, we can't do it all – it won't all happen within the existing envelope," Manzoni said.

However, the new memo questions whether the Treasury's position on resource spending will hold.

It says efforts to build civil service capability are making only "slow progress" because of "deliberate control by the Cabinet Office" and the Treasury's position "that departments will meet Brexit costs from existing settlements", a position it says "no one" is treating as "sustainable".

The Autumn Statement, set for November 23, provides new chancellor Philip Hammond with the first opportunity to alter the government's spending plans in response to the decision to leave the EU.

Hammond has said he may use the statement to "reset" government policy – but the memo makes clear that departments should not expect a loosening of departmental spending plans agreed at last year's government wide Spending Review.

"The Autumn Statement on 23rd November is expected to provide some headlines in terms of infrastructure investment, making the UK fit for growth and the inclusive economy," the memo says.

"It will not provide resources for the civil service to grow its Brexit capacity and capability. In fact, we are more likely to see a further squeeze on departmental operating costs to compensate for new spending."

"This unsolicited document has nothing to do with the government at all" – Number 10

The memo does, however, say that some initiatives to build civil service capability "are getting off the ground", singling out the Foreign Office's Diplomatic Academy, which last week launched a hunt for an experienced dean to lead classes on trade negotiation, an area where Whitehall is seen to lack clout after years of handing over responsibility to the EU. The memo says the Cabinet Office is also "discussing system-wide capability programmes".

Ministers have already sought to distance themselves from the concerns expressed in the report.

Transport secretary Chris Grayling told Sky News on Tuesday that he did not know where the document came from.

He added: "It's certainly not a government report and I certainly haven't seen evidence and I sit on the Cabinet Committee that is planning the Brexit process.

"I haven't seen any evidence of the kind of splits discussed. This is not a report we commissioned. It is not a report we have seen. It is not something we recognise."

"Shooting the messenger"

The Cabinet Office has yet to respond to CSW's request for comment on the origin of the document or whether a leak inquiry is now underway.

A statement from Number 10 said: "This unsolicited document has nothing to do with the government at all.

"It was produced by an individual from an external accountancy firm. It has no authority and we don't recognise any of the claims it makes. We are getting on with the job of delivering Brexit and making a success of it."

Deborah Haynes, defence editor of The Times and co-author of the story, continued to stand by the paper's report, however. She tweeted on Tuesday. "Brexit memo was seen and aided by senior civil servants. @Number10gov should stop shooting the messenger and start addressing the challenges."

And the report has already been seized on by the Public and Commercial Services union boss Mark Serwotka, who said it was "obvious to everyone that too many civil service jobs have been cut" and said Hammond "must begin to reverse this in the Autumn Statement".

The PCS general secretary added: "We wrote to government departments and the head of the civil service after the referendum to ask for early talks on the impact Brexit would have, but we have still not had a satisfactory answer. It's a disgrace that political rows within the cabinet appear to be frustrating this process."

Civil service headcount has fallen sharply since 2010, with the latest figures showing that the number of full-time equivalent staff has dropped by 103,000 – or 21% – since the coalition government came to power six years ago.

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