Brexit: More Planning as Huge Costs Are Predicted
The Government might have to pay £65 million a year for hiring 500 new civil servants for Brexit planning. And this is only for the first stage of Brexit. There will be more staff needed for negotiations and dealing with the consequences of leaving the EU.
But, instead of working for the common good, politicians are wasting time on “turf wars”, a new document released by the Institute for Government reported.
On Thursday (29/09/2016), the Institute for Government published “Planning for Brexit: Silence is not a strategy”, written by Jill Rutter and Hannah White. The briefing paper evaluates the government’s progress on Brexit plans. It critiques the government’s lack of information about the UK’s intentions and negotiations. The report warned that the government needs to act quickly to deliver a clear plan that defines the UK’s relation to every other sector and level of government that will be affected.
Theresa May created two new departments in 2016 to manage Brexit. The Department for Exiting the European Union (DExEU) is run by the Secretary of State for Exiting the European Union, David Davis MP. The other department to help deliver Brexit is the Department for International Trade (DIT) which will develop the UK’s new trade policy. Liam Fox MP is the Secretary of State for International Trade and President of the Board of Trade.
If this is any consolation, do you remember back in June when David Cameron appointed Oliver Letwin to lead the Brexit Unit? He was subsequently considered unsuitable and replaced by David Davis, whom Theresa May has appointed in July. If you do remember, then you understand that things could have been a lot worse.
The report said that the new authorities created for negotiating Brexit have caused “distractions and delayed work on Brexit.” The authors warned that May will need to move swiftly and explain to her Brexit ministers what each one of them has to do.
Brexit Negotiations: Plans, anyone?
While it is agreed that certain things need to remain confidential, Theresa May still needs to explain the process and timescales that her government is going to follow for the initial negotiations. Unless there is a clear plan that her government is going to develop, no one will be able to tell what they have agreed upon and whether they stick to it.
Dr Hannah White, Programme Director & co-author, said:
“Silence is not a strategy. The current situation – where we are left to interpret personal musings of individual ministers – is frustrating those looking for an early exit, perplexing those with whom we have to negotiate and unsettling those looking to do business in the UK. The Prime Minister has sworn she will not give a running commentary on negotiations, but she needs rapidly to clarify how and when the Government intends to go about making decisions on Brexit”.
Jill Rutter, Programme Director & co-author, added:
“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.”
Brexit Costs, Expertise and Dialogue
One thing is clear. DExEU, DIT and the Foreign and Commonwealth Office (FCO), led by Boris Johnson and responsible for the exchanges between the UK and Member States, are the three main organisations responsible to deliver Brexit. This, at least, is settled.
The authors outlined three phases for Brexit: preparing for the negotiations, undertaking them and executing the deal. They also pointed out that if Brexit was led by the Cabinet Office, instead of the newly-found departments DExEU and DIT, it would have saved time and money. Rutter and White believe that the creation of these departments will create huge administrative costs. They argue that if anyone were to compare this situation to one before it, that would be the 2008 financial crisis where the government’s use of consultants at short notice cost up to £100 million (Asset Protection Scheme).
At the same time, it is necessary that the right people are at the right position. Numbers are less important the authors said. While there is no one in the UK or EU that has experience in negotiating an EU exit, knowledge of joining the EU and the negotiation deals with other countries are valuable experience.
Theresa May has said that she wants all parts of the UK to be involved in the Brexit discussions. The Scottish and Welsh governments and the Northern Ireland Executive will be important contributors, in particular, in understanding how different places will be impacted. While in the past engaging with other regions’ interests had been a weakness, with Brexit many authorities, businesses and institutions which will be affected by Brexit would demand to have a say. Many sectors, such as the financial services sector, have organised mechanisms so that they can have a direct engagement with ministers. For example, there is the Financial Services EU Taskforce, chaired by Baroness Shriti Vadera, the chairwoman of Santander UK. But while wealthy organisations have the power to initiate such groups, others unable to do so will probably be ignored and forgotten.
Italy will support the withdrawal process but there won’t be any special treatment
In the meantime, in an interview with the BBC, the Italian Prime Minister, Matteo Renzi, or “frenzied Renzi”, said that the UK won’t be getting a better deal than other people outside the EU. It will be a “very difficult process”, but he is ready to work with Theresa May to develop a strong alliance. He blamed David Cameron for using the EU referendum to solve his own party’s conflicting voices:
"When David Cameron decided to use a referendum to solve some internal problems of the Conservative Party, this was the problem. We cannot use foreign affairs to solve internal problems."
Theresa May’s vow of silence
Echoing the “Planning for Brexit” report’s criticisms to May, former education secretary Nicky Morgan, and the former chancellor Ken Clarke, are pressing the Prime Minister to give a clearer image of what her plans for Brexit are before her upcoming speech to next week's Tory conference. As Clarke said: “Nobody in the government has the first idea of what they’re going to do next on the Brexit front.”
And it is this uncertainty that is affecting businesses. Capita, a professional services company, after issuing a profit warning early on Thursday (29/9), watched its shares drop 28%, affecting the rest of the sector as Serco and G4S shares also fell.