Brexit could cost departments £65m a year to implement, says Institute for Government

IfG says civil service is responding quickly to prepare for Brexit — but warns that ministerial conflict and uncertainty over the process could undermine this work

By Suzannah Brecknell

29 Sep 2016

Planning and negotiating Britain’s exit from the European Union could cost up to £65m in administration a year, according to a new report from the Institute for Government.

The think tank estimates that around 500 new staff will be needed in the new Brexit and trade departments, and says costs could be even higher if departments are “compelled to offer higher salaries than departments with comparable grade structures – for instance to attract global talent”.

The report argues that although the civil service is responding quickly to prepare for Brexit, ministerial conflict and uncertainty over the process for agreeing a negotiating position could undermine this work.

Although it acknowledges that the UK may wish to keep details of its negotiating position confidential, the report says that the prime minister must at least “clarify the process and timescales through which she intends her government to agree the UK’s initial negotiating position”. 

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“This will need to involve both effective external engagement – not traditionally a strength of the UK civil service – and strong internal coordination, to ensure that her government develops, and sticks to, agreed positions,” it adds.

The IfG also calls for a better consultation process ahead of Brexit to ensure adequate engagement with the different sectors likely to be impacted by Britain’s withdrawal from the EU.

“That [engagement] process needs to be set out clearly so that people know how and when they can expect to be consulted,” it says. “The current ad hoc approach to engagement risks confusion, duplication and some constituencies falling through the gaps.”

To reduce the impact of ministerial conflict, the report urges May to ensure that there is a strong, common evidence base for cabinet discussions.

The report’s co-author Jill Rutter said: “Ministers will be faced with a series of difficult choices over the shape of Brexit. These are too important to be left to normal interdepartmental wrangling and horse-trading.

“Whitehall in general and the new Department for Exiting the EU (DExEU) in particular will need to make sure ministers can make those choices on the best shared analysis the civil service can produce.”

The report says that while there be “debate” among ministers about the trade-offs Brexit will involve, it says the “scale of these wins and losses should be a matter of common understanding across Whitehall” to stop departments working at odds with each other.

“This will require DExEU to pool analysis from across Whitehall, without reverting to the ‘lowest common denominator’ approach that too often characterises the Cabinet Committee process (whereby what emerges are the simplest, most uncontroversial things that everyone can agree on),” the report adds.

To support strong cross-government co-ordination, the report calls for May's new Brexit cabinet committee to, like the National Security Council, be “underpinned by a committee of very senior officials”.

“This is to ensure it receives high-quality papers and its decisions are communicated directly to relevant departments, then followed up,” says the report.

“The NSC also benefits from having lead officials attend, not just as observers, but as participants. It is not clear whether the Brexit Cabinet Committee is following this model, but it would be beneficial for it to do so.”

The IfG's estimate of administration cost is based on David Davis' statement that DexEu will eventually have around 400 staff – likely to add between £28m and £40m to the department’s budget. The researchers also assumed that the new trade department will grow in size by around 200 staff, costing around £17m to £25m additional administration costs each year.

Since the estimates are calculated using administration costs in other departments, the report notes that these costs could rise if DexEU and DIT rely more heavily on consultancy or legal services than other departments.

Conversely, the costs could be offset across government if staff are moved from other Whitehall departments and then not replaced with the original department.

The report notes that the process of Brexit will continue to change the shape of Whitehall. For example it could mean a closer relationship, or even merger, between departments and delivery agencies.

“Detailed policy knowledge will also be needed to develop the UK’s post-Brexit policy regime,” the report says, while pointing out that much of this is currently held in arm’s-length bodies and delivery agencies.

It adds: “In the past, some ministers have been reluctant to accept policy advice from organisations they do not see as directly working for them. Where that is an issue, departments may need to reabsorb the expertise in those bodies into core departments.”


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