Lack of Whitehall Brexit planning "not an oversight", says foreign secretary Philip Hammond

Foreign secretary tells MPs that government wanted to avoid making "an unwarranted intervention in the course of the campaign" over Britain's place in the European Union

By matt.foster

07 Jul 2016

Government departments did not draw up contingency plans for Britain leaving the European Union because such a move could have prompted claims of "scaremongering", foreign secretary Philip Hammond has said.

In the run-up to June's referendum on the EU, Downing Street stressed that no plans for the aftermath of Brexit were being drawn up by civil servants, with only limited contingency planning taking place between the Treasury and the Bank of England to deal with the immediate financial shock of a 'Leave' vote.

A dedicated Whitehall unit has been set up in the wake of voters' decision to quit the bloc, with a team of Foreign Office, Treasury, Cabinet Office and Department for Business officials asked to draw up options for withdrawal in preparation of David Cameron's successor as prime minister taking up post in the autumn.

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Appearing before MPs on the Foreign Affairs Committee on Thursday, Hammond defended what he said had been a conscious decision not to ask departments to plan for a Brexit vote.

"Throughout the referendum campaign I drew attention, as did others in the campaign, to the likely consequences of a leave vote – and the reaction that I heard was that this was scaremongering," the foreign secretary said.

He added: "I think if we had sought to engage departments of state in preparing evidence of the likely consequences of a leave vote and that information had found its way into the public domain that would have been seen as an unwarranted intervention in the course of the campaign."

But committee chair Crispin Blunt pointed out that the civil service routinely made "substantial" preparations for different general election outcomes, adding: "None of that stuff ever leaks."

The FCO's most senior official, permanent secretary Sir Simon McDonald, said the referendum presented the civil service with a "fundamentally different situation" to an election, where officials needed to be ready to serve "a completely different government".

"One thing we knew through this campaign was that the government would remain in place until 2020," McDonald added.

Blunt – whose committee took evidence this week from Oliver Letwin, the Cabinet Office minister heading up the new Whitehall Brexit unit – said the government had made "a serious oversight" in not planning for a Leave vote. 

Hammond, however, pushed back against that suggestion – and said the government had not felt it "appropriate" to make wider contingency plans.

"Of course we discussed this question before the referendum campaign began" – Philip Hammond

"Chairman, I can assure you it wasn't an oversight," the foreign secretary told Blunt. "Of course we discussed this question before the referendum campaign began, whether there should be contingency planning done or not.

"We concluded that it was not appropriate to carry out contingency planning other than planning that was focused on the very immediate pressures that might come on the financial markets."

Hammond also argued that it would be unwise for the UK government to have a publicly-stated negotiating position in the aftermath of a Brexit vote, saying such a move could strengthen the hand of other EU countries in complex talks on the terms of withdrawal.

"When we are in a negotiation it is very unwise to lay all our cards on the table for our negotiating partners to see," he said. "And I think, as the government prepares its position and builds on the negotiation that already took place earlier [...] I do not think it would be be helpful to have all of this to be displayed openly for those we are negotiating with to examine."

Scholar "completely confident" new PM will have Brexit plans

Hammond's evidence came as the separate Public Accounts Committee of MPs quizzed the Treasury's new permanent secretary, Tom Scholar (pictured), on his finance ministry's preparations for the UK's departure from the EU.

The Treasury perm sec – who only started work on Monday after moving from the European and Global Issues Secretariat in the Cabinet Office – rejected a suggestion from committee member Stephen Phillips that “no significant work” had been done to prepare for Brexit, pointing to Treasury and Cabinet Office analysis of the likely impact of a Leave vote.

“As a country what we need to do and what the government will need to do is to formulate an objective for the desired end-state of the UK’s relationship with the EU and there are some clear trade-offs in that," Scholar said.

“What the Treasury document did – admittedly only talking about the economic side of things – was to make the economic case for the openness and closeness of economic connections.

“There is then a question of how that will be reconciled with objectives that the government may have – and what the Treasury has already done is provide a huge amount of analysis on which that judgement can be based.

He added: “I’m completely confident that when the new prime minister asks for advice she or he will get that advice."

Scholar confirmed that an "urgent" resource reveiew was now underway across Whitehall to identify any skills shortages facing the civil service as it grapples with the consequences of Britain's vote to leave.

“There is a civil service-wide exercise that was set in place last week to ask that question precisely,” he said.

“We are part of that as well. I think it’s clear that in some areas we’ll need new people and new skills. I think the most obvious area is trade negotiators because we haven’t been negotiating our own deals for the past 40 years."

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