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The cost of EU Exit preparations

The recent (06 March 2020) report by the National Audit Office (NAO) examines how much government departments have spent preparing for the UK’s exit from the EU and what the money was spent on. It finds that by 31 January 2020, departments had spent at least £4.4 billion, while £6.3 billion was made available for EU Exit.1

Full report

The cost of EU Exit preparations

Since June 2016, departments have undertaken work to prepare for EU Exit, planning for both a ‘deal’ and ‘no deal’ scenario. This study gathers information from across government departments to assess the cost of preparations.

Of the money spent, £1.9 billion was on staffing costs; £288 million on expertise and external advice; and £1.5 billion on activities such as building new systems and infrastructure.2

Overall spending was broadly in line with funding in 2016-17, 2017-18 and 2018-19. Departments reported spending £1 billion less up to 31 January 2020 than their allocation for the 2019-20 financial year. Departments may spend additional amounts in February and March on EU Exit-related activities. HM Treasury made £2 billion of additional funding available to departments in 2019-20 specifically for no deal preparations. When the prospect of no deal diminished, spending was scaled down.

Some departments have had to supplement their EU Exit allocations from existing departmental budgets. Eleven of the eighteen central government departments spent more than their allocation in 2017-18 and twelve in 2018-19. Departments estimate that £301 million of expenditure on EU Exit preparations was funded from existing departmental budgets.3

Over 22,000 staff were working on EU Exit at the peak in October 2019. This included more than 1,500 people who were moved within government to prepare for a possible no deal exit.4

Departments allocated £442 million of their funding to arm’s-length bodies to prepare for EU Exit. For example, Defra gave £111 million to the Rural Payments Agency, the body responsible for administering the EU’s Common Agricultural Policy schemes in England. Local government organisations also received £104 million in funding from departments to prepare for a range of EU Exit scenarios.

Departments have already reported to Parliament £92m in specific EU Exit costs which have been defined as losses. This includes the Department for Transport’s payments of £50m to ferry companies and £33m to Eurotunnel.

HM Treasury requires departments to produce accurate in-year monthly outturns and forecasts of spending, and to publish annual financial statements. During preparations for EU Exit, HM Treasury data provided a limited picture of cross-government EU Exit spend. In 2018-19, HM Treasury first asked departments to provide supplementary reporting on specific areas of EU Exit spend. The type of data provided was not consistent across departments, meaning it was not possible for HM Treasury to compile total figures across government. 

“In preparing for EU Exit, government departments planned for multiple potential outcomes, with shifting timetables and uncertainty. This report provides, for the first time, a clear picture of how much government has spent and what that money has been spent on. “Producing this report has highlighted limitations in how government monitored spending on EU Exit specifically, and cross-government programmes more generally. Our previous work has recommended that government continues to improve the way it plans and allocates money, linking spending to objectives.”

Gareth Davies, the head of the NAO

Notes for Editors

Key facts

£6.3 billion
made available to government including devolved administrations to prepare for EU Exit, between June 2016 and 31 March 2020

£4.4 billion
minimum amount departments reported they had spent preparing for EU Exit between June 2016 and 31 January 2020

22,000
peak number of staff working on EU Exit preparations  

  1. All departments undertook work to prepare for the EU Exit, but the scale of preparation and amount spent varied greatly between departments. Three departments – the Department for Environment, Food & Rural Affairs; the Home Office; and HM Revenue & Customs – account for more than half of government’s total EU Exit spending, at around £2.4 billion.
  2. These figures are based on unaudited cost information provided to us by all 18 government departments and two non-ministerial departments (the Competition and Markets Authority and the Food Standards Agency). There are limitations in the information departments have provided. As a result, the figures included in this report represent a minimum level of spend which can be attributed to preparations for EU Exit. More details on our audit approach, our evidence base and its limitations are available in Appendix One of this report.
  3. For more information about spending against EU Exit allocations, page 12.
  4. Not all departments could provide staff information for the 2016-17 and 2017-18 financial years. Most departments were only able to provide information on staff working exclusively on EU Exit and the reported figures will not reflect other staff who have spent part of their time on EU Exit work or whose usual work has been affected by EU Exit.
  5. For example, see Improving government’s planning and spending framework, November 2018.
  6. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
  7. The National Audit Office (NAO) helps Parliament hold government to account for the way it spends public money. It is independent of government and the civil service. The Comptroller and Auditor General (C&AG), Gareth Davies, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether government is delivering value for money on behalf of the public, concluding on whether resources have been used efficiently, effectively and with economy. The NAO identifies ways that government can make better use of public money to improve people's lives. It measures this impact annually. In 2018 the NAO's work led to a positive financial impact through reduced costs, improved service delivery, or other benefits to citizens, of £539 million.

Contact

NAO Press Office
+44 (0)20 7798 7400 or email pressoffice@nao.org.uk

 

Channel website: https://www.nao.org.uk/

Original article link: https://www.nao.org.uk/press-release/the-cost-of-eu-exit-preparations/

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