01 August 2019

Joe Owen says the new no-deal Brexit money is about sending a message and covering the cost of delay.

When Boris Johnson stood on the steps of Downing Street for the first time as prime minister, the Treasury officials down the road who had just waved goodbye to their boss (seen by some as the government’s “gloomster-in-chief”) were no doubt wondering how they could pivot to support the new government.

One week later, the purse strings have loosened, and the Treasury is “turbo-charging” Brexit.

The announcement of an additional £2.1 billion for no-deal preparations – around twice what Hammond had already allocated for this financial year – is a sign government is getting serious about readiness. But with 90 days to go, it is not clear it can be much more than that.

Most of the extra cash is a gesture rather than a serious plan to improve Brexit readiness for October

Just under half of the extra money is sitting in an unallocated pot. To access the cash, Whitehall departments will need to come up with spending plans and pass through the spending controls process. Even after the spending controls process was streamlined for Brexit, it was still taking weeks. Odds are that little of this money will be spent by the end of October.

It is not clear how much the £1.1 billion already allocated will help by 31 October either. Around a third is going on the border and customs. But the UK cannot recruit, train and deploy 500 new border force officers in 90 days, so either this work was already underway and it’s a non-announcement or the plan is to try and inject extra resource in the months after no deal.

It is the same story when it comes to the extra money for infrastructure at the border. Procurement alone will push most timelines beyond October.

Doubling support available to customs agents (the people who help business comply with customs procedures) is a positive step. But the chances of these – often small – businesses implementing new IT systems or hiring new staff before October looks remote. Our research into customs showed some of these businesses did not want to scale up.

The UK passport office must be relieved it has been given a boost after their website crashed in the run up to March when panicked Brits tried to renew their passports to have the necessary six-months validity for EU travel after Brexit. 

The extra cash also shows the cost of Brexit delay is close to half a billion

The second largest tranche of cash that has been allocated is on the continuity of vital medicines and medical products. But most of this money is going on things that the UK had already done in March and now needs to do again as a result of delay: buying freight capacity, warehousing space and stockpiling goods.

Of the £434 million announced this week, the government had already announced around £300 million for new ferry capacity to replace the contracts that were in place for March and April. The new secretary of state at the Department for Transport, Grant Shapps, will hope he doesn’t suffer a ferry fiasco like his predecessor.

The additional warehousing and replacing stocks will again be replicating what was done in March. But this time officials will find it harder to get the warehousing space they need, with lots likely to be booked up for Christmas.

Extra money for communications and business support could have biggest impact

Branding the new Brexit information campaign "the biggest communications campaign since the Second World War" is meant to elicit fear or confidence. But to be successful, the £138 million must do both.

Business readiness was one of the biggest issues for the UK government in the run up to March. Improving that – and convincing business this isn’t another example of government crying wolf – will be the biggest challenge for a government serious about readiness. And the tone of the campaign will be scrutinised if it strays beyond straight facts.

The government must also recognise that businesses are being asked to splash cash to improve the UK’s negotiating position. Offering financial incentives or support will be important to persuade the thousands of businesses with plenty else to worry about that getting ready for no deal will be worth it.

The £100-million fund will be welcomed by business groups who’ve been explaining this to government for some time. But we don’t know what they plan to spend the new money on. The Dutch and Irish have been offering support, for example in the form of vouchers, for some time already.

Government must answer why this is value for money now if it wasn’t in March

Labour has already fired a warning shot at permanent secretaries who, as departmental accounting officers, will be required to sign off Brexit readiness spending. Preparing for no deal does not per se require a 'direction' – it's the policy of the government of the day – and the civil service is honour bound to serve that government. 

But permanent secretaries should be asking searching questions before they spend any money which is not delivering real improvements to UK capability to deal with no deal and offer only symbolic value; they need also to question any spend where delay is both manageable and makes effective delivery more feasible.  

And every permanent secretary, however gung-ho their minister is now (and however light touch the Treasury decides to become) will want to make sure that they fulfil their accounting officer responsibilities before they sign off any no deal spend. 

Comments

One of the most shocking aspects of this is the failure to prepare Kent.

On a number of days each year there are problems around Dover, either owing to the port's inability to cope with peak demand or strikes in Calais. We have known since June 2016 that there could be need to park lorries (not just waiting to get to the port but owing to restrictions on driving hours forced to park) and to handle documentation. The former airfield at Manston is large enough to provide secure parking (with toilets, cafe and shower and other facilities) and offices for processing of documentation. Something needs to be done about overnight lorry parking in Kent anyhow so investment in Manston would have been useful in all circumstances.

It would clearly have made sense to make Ramsgate fully operational.

There are already frequent delays at the M2/A2 junction at the Dover end of the M2. Any use of Manston or Ramsgate would add to the problems so providing a grade separated link between the M2 and A2 would have both reduced regular congestion and have meant faster access to Manston and Ramsgate. Although some work has been done to improve the Sandwich bypass, it could and should have been upgraded to dual carriageway as should the remained of the A2 going towards Dover.

All of this could have been achieved if work had started in 2016. This would have minimised the need to use the M20 as a parking lot (and Kent is already suffering from delays caused by preparatory work). It is obviously too late now.

This failure reflects badly on our democratic institutions. It is unsurprising that Kent's Conservative MPs and county councillors (who should had the example in 2017 of what the DUP could achieve) are anything other than a squadron of monstrous barrage balloons - inert, defenceless, full of gas.

The new spending on the continuity of vital medicines and medical products is, no doubt informed by some of the Civil Service thinking (I tend to discount most Ministerial thinking in this context) conducted during Operation Yellowhammer. It remains, however, that the only transparent impact assessment of, and issuance of public guidance on, the effects of a No-Deal Brexit have been on (trade in) medicinal precursor chemicals (many of which the UK manufactures). No impact assessment has been carried out of, or guidance issued on, vital medicines and medical products as such (most of which we import), nor of effects on disabled (or other sick) members of the population, e.g. because they are dependent on vital medicines and medical products.
In my opinion, an impact assessment of the effects on the disabled, some of the poorest and most vulnerable in society: per Philip Alston, UN Special Rapporteur on extreme poverty and human rights), is required under the Equality Act 2010. In my opinion too, the Equality and Human Rights Commission has the powers under the Equality Act 2006 to ensure implementation of this aspect of the public sector equality duty, powers similar to those exercised in its Labour anti-Semitism case. I have been pressing them to exercise them for several weeks.