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Brexit: what now for Whitehall?

On Thursday 30 June, the Institute for Government held the first in a series of Brexit events. This one focused on the implications of the UK’s decision to leave the EU for Whitehall. Oliver Ilott sets out four questions to which we now have at least partial answers.

The panel included Bernard Jenkin MP, Chair of the Public Administration and Constitutional Affairs Committee; Lord Andrew Turnbull, former Cabinet Secretary; Melanie Dawes, Permanent Secretary for DCLG; Jane Dudman, from the Guardian; and Julian McCrae, Deputy Director of the Institute for Government.

‘This is going to be one of the biggest changes, I think, that the Civil Service has ever experienced’  Melanie Dawes, DCLG Permanent Secretary

1) Who is in charge of the negotiation preparations? We know that a new EU Unit is being set up in the Cabinet Office. It will report to the whole Cabinet (with day-to-day political oversight provided by Oliver Letwin) and will be headed by Oliver Robbins – previously the second Permanent Secretary at the Home Office. At the event we learned that the EU Unit is likely to comprise around 250 people, drawn from across the Civil Service. In particular, it will include the European and Global Issues Secretariat (based in the Cabinet Office), HM Treasury, the Foreign & Commonwealth Office and the residual trade negotiations team at the Department for Business, Innovation & Skills. Melanie Dawes argued that there will be a ‘balancing act’ between centralising this expertise and ensuring that individual departments still retain the capacity – and take on responsibility – to respond adequately to Brexit. Dawes suggested that the unit should adopt an operating model similar to that of UKRep – the UK’s unified point of representation in the EU – ‘a really good example of how you orchestrate a genuinely cross-Whitehall, genuinely cross-government’ work programme.

2) Which government departments will be most affected? The impact on government departments will be uneven. Dawes explained that ‘some departments, such as for example Defra and BIS, are going to be very affected. Other departments, such as my own, DCLG are affected to some extent, but not in everything that we do.’ Six departments are likely to face the biggest impact:

  • Defra may have to negotiate access for UK agricultural products to EU markets and determine its own England agricultural support policy to replace the Common Agricultural Policy; it may have to determine and negotiate a new deal on fisheries, including with the devolved administrations. Large bodies of regulation on the environment, plant health, and animal health and welfare may have to be translated into English law and may be amended to reflect English priorities.
  • BIS may have to replicate the extensive body of existing EU regulations in UK law. It may also have to manage the impact of Brexit on the higher education sector, where providers get 2.6% of their total income from the EU, or around 16% of their research income. There are also 400,000 overseas students at UK universities, including 125,000 from the EU. BIS may have to negotiate a new follow-on trade agreement with the EU and other countries.
  • HO faces a potentially huge administrative task to register the 3m EU migrants already in the UK, and will need to set up a new system for new EU migrants (assuming a modification to free movement) and establish revised system of border controls. It will also need to introduce new UK passports to replace current EU passports. Elsewhere within the brief, the scale of change will depend on whether we retain the European Arrest Warrant – if not, the Home Office may be required to negotiate new extradition treaties. Similarly, withdrawal from Europol may require substitute arrangements to be made. Further changes will depend on whether existing security co-operation continues.
  • At DECC, the EU 2020 and 2030 climate change targets might no longer apply, plans to participate in an EU Single Energy Market might be scrapped and the removal of the Industrial Emissions Directive is likely to affect the Government’s planned phase out of coal. The UK may also leave the EU Emissions Trading Scheme.
  • DfT may need to replicate EU regulations on freight and on vehicle emissions, and much will depend on whether the UK retains its membership of the European Common Aviation Area.
  • HMT will be involved across negotiations for Brexit. The department may have to develop UK regulations on financial services where these are currently set by EU. It is already signalling that it may seek to increase its headcount (see below).

The impact on departments will depend to a large extent on the result of the Brexit negotiations. A deal resembling Norway’s European Economic Area (EEA) membership, for example, would likely mean that EU Single Market regulations still applied to the UK, significantly reducing the work required at BIS. Elsewhere in Whitehall, departments such as MoD, MoJ and DfE are likely to be least affected.

3) Does the Civil Service require new skills? External comment has focused on the lack of experienced trade negotiators in the Civil Service. But our panel felt that the negotiators, lawyers and policy specialists required could be brought into the Civil Service from outside, potentially on a consultancy basis. If so, one of the key issues will be cost, with reports on Tuesday that firms are already warning that these services will not come cheap. Lord Turnbull highlighted this opportunity, but also the need for the new Brexit Unit to have a proper HR function to manage such arrangements. As Julian McCrae argued, Whitehall is in a better position to think about the skills it needs than it was a few years ago. Reforms in how Whitehall runs it professional capabilities – covering areas like finance, commercial and legal skills – have all involved thinking about needs for the Civil Service as a whole, rather than relying on separate (and sometimes competing) plans in each department.  4) Does the Civil Service require greater capacity? The Civil Service is 19% smaller than it was in 2010, having shed around 90,000 staff:
There are 30,000 staff working in the European Commission across 44 directorates – many of which cover areas that will not need to be transferred to the UK. But as the work of the relevant directorates does transfer to the UK, Bernard Jenkin MP was clear that the Civil Service will ‘need more resources; I can’t see how else it is possible’. The Treasury has already has already publicly stated in their annual report that it expects to see a change in staffing levels For Dawes, the capability required was not necessarily a question of increasing the overall size of the Civil Service, but rather redeploying or making more effective use of existing resources. Jane Dudman commented that it was ‘a shame that the Civil Service Reform Plan – the idea of creating a more agile civil service – hasn’t been implemented more quickly’. Rather than abstract arguments about numbers, the size and shape of the Civil Service is best determined by the work that it has to do. In this context, ideologically-motivated reductions in civil service headcount, or simplistic calls for the service to expand, will not be useful. The circumstances demand that decisions about the size and pay of the Civil Service should be driven by an evidence-based understanding of the resources required to undertake the work at hand, rather than by political posturing. There is a job to be done, and the Civil Service needs the right people to do it.

Topic
Brexit

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