Parliament expresses “grave concerns” over lack of progress on Brexit in the Department for Business.

London

The Public Accounts Committee report, just released, expresses “alarm that the Department for Business, Energy and Industrial Strategy (DBEIS) has made virtually no attempt to re-order its priorities, given the scale of the Brexit task facing the Department.”

Since the last published update in February 2018, there remains a “paucity of information in the public domain about what departments are doing to prepare for Brexit”.  This is undermining scrutiny of progress - and the Committee demands that they, Parliament, and the public should be kept “meaningfully informed on what progress is being made - and at what cost.”

Committee Chair, Meg Hillier MP:  "The Department for Business, Energy & Industrial Strategy appears to be operating in a parallel universe where urgency is an abstract concept with no bearing on the Brexit process.

“The Department is responsible for around a fifth of the work streams that the Government must complete as the UK leaves the EU.  It is an extremely important, challenging and time-sensitive workload.

“Yet, the Department told us, it has not re-prioritised its overall programme of work; has not begun procurement for around a dozen essential digital systems; and cannot provide vital information about its workforce.

“We have grave concerns about this apparent complacency - compounded by the lack of transparency on the Department’s progress with what will, in some cases, be critical projects.

“Sensitivities around negotiations with the EU must not be used as an excuse to keep taxpayers and Parliament in the dark.  We urge the Government to provide us with a swift update on the issues raised in our report."

Summary of key issues in the report (full version available on request):

Recruitment: It is crucial that DBEIS recognises the importance of its role in making a success of Brexit - particularly as UK moves from Brexit planning to implementation – and where the task is even greater.  The Department has recruited less than 90% of the staff needed to carry out its Brexit work – and the Committee is concerned that the mix of staff so far recruited lack the required level of experience and expertise to deliver a “very challenging programme of work at pace”.

Workload and Prioritisation:  DBEIS has one of the largest Brexit portfolios of any government department - responsible for 22 of the 58 economic sectors that the government has identified as impacted by Brexit.  This cascades into 68 Brexit-related areas of work - ‘work streams’ - to be completed as a consequence of the UK leaving the EU.  Well before March 2019, DBEIS must plan for scenarios including a ‘negotiated transition’ and a ‘no deal’.  This includes: preparing and publishing necessary secondary legislation; and establishing new processes and systems, including building new IT systems.

In parallel with Brexit readiness, DBEIS already had a substantial portfolio of domestic policies and projects - eight of which are listed on the Government’s ‘Major Projects’ Portfolio.  The scale of these programs is substantial.

Conclusions and recommendations

1.     DBEIS conveyed no clear sense of the need or urgency to re-prioritise its overall program of work.  The Committee had previously reported that departments across government have yet to face up to the need to re-prioritise existing activity to make space for Brexit work.  This concern is reinforced by hearing that the Department has not taken steps to re-prioritise its work, despite it now being responsible for 68 of the 300 plus work streams that its departments need to complete.  The Department’s Brexit workload will only increase as it moves from planning to implementation, but the Department insists that there is very little of its workload it can stop or postpone, and that it expects to deliver all of the policies that fall within its remit.

Recommendation: The Department should look again at its priorities for business as usual and its Brexit portfolio to reassess which programmes could be stopped, paused or slowed down, taking into account its capacity and skills. It should update us within 2 months confirming that it has done so and what has changed as a result.

2.     The Committee doubts the realism of the Department’s plans to deliver the numerous IT systems required to support the implementation of its Brexit work streams, especially when it has yet to start procurement.  The Department needs to build upwards of 12 new digital systems, such as a database to register trademarks.  The Department has not yet started to procure any of these systems despite them being required by March 2019 in the event of a ‘no deal’ scenario - required if UK-EU Brexit negotiations should break down. The Department hopes to begin procurement in the next few months - and is confident that it could acquire and test the systems by March 2019.  Given the government’s generally poor track record in delivering IT projects, the Committee is extremely sceptical that the Department will be able to deliver these systems in time.  The Department has been relying too heavily on a transition period for the UK’s departure if it is to properly test the new IT systems.  The Department may prove to have been lucky with the Draft Agreement now including a transition period.  However, the Committee is concerned that, given the number of IT systems involved and the Department’s other competing demands, these procurements may prematurely slip down its list of priorities.

Recommendation: The Department should take the necessary steps to get procurement and testing of its IT projects back on track.  It should set out what it has done in its update to us by June 2018.

3.      DBEIS has recruited more staff to undertake the work needed for Brexit, but we are not convinced it has yet got the right mix of skills and experience in place to implement its Brexit work effectively.  It cannot even explain the skills in its existing workforce.  The Department says it is on track to recruit the staff it needs to deliver its Brexit work in 2017–18.  It recruited - up to December 2017 - 305 of the 350 full-time equivalent staff it requires.  The DBEIS was unable to tell the Committee vital information about its workforce, such as the breakdown of experienced staff compared to new recruits, the skills it has recruited so far, or the skills it is finding more difficult to recruit.  The Committee was not reassured that the Department has recruited people with the sufficient negotiating expertise or is providing adequate training to strengthen these skills.  The Department was unable to specify how many more staff it will need to recruit for its Brexit work in 2018–19, because it had not yet agreed with HM Treasury what additional funding it would receive for 2018–19.  There will be challenges ahead for the Department in recruiting specialist skills in areas such as digital, where demand outstrips supply and where it will be competing with other public and private sector employers for the same set of skills.

Recommendation: The Department should set out how the skills and experience of the staff it recruited in 2017–18 met its needs, identify any gaps, and set out the number, skills and experience of those it needs to recruit in 2018–19. It should update us accordingly by June 2018.

4.     The Department’s Brexit task is significant and complex, but the lack of transparency over its activities undermines proper scrutiny of the progress and pace of its Brexit work.  Many of the Department’s 68 Brexit work streams are very complex and it will require significant time to implement the new policies and structures required. The Committee reported in February 2018 that it expected much greater transparency from the Department for Exiting the European Union (DExEU) on the over 300 Brexit related work streams and on the progress that is being made.  Similarly, there is a lack of information on the DBEIS 68 work streams, including which of them are considered critical and whether projects are being delivered in line with expectations. We reiterate here that sensitivities around negotiations with the EU should not be used as an excuse for keeping the public and Parliament in the dark.

Recommendation: Given that DBEIS has one of the most significant and important workloads of any department with 68 workstreams - including 21 priority ones - it is imperative that it should set out, in its update to us by June 2018 the full details of progress with these workstreams, including current risks ratings and progress against high-level milestones.

5.     The Committee is not confident that existing cross-department processes for preparing secondary legislation for Brexit will be able to cope with the volume required in the short timescale available.  To implement its Brexit-related work, the Department needs to pass around 150 statutory instruments through Parliament.  In addition, as negotiations progress, the situation is likely to change rapidly and require decisions to be made at speed. The Department says its programme of legislation is achievable, provided it has good cooperation from other parts of government. The Department agreed however that the current processes to consult with other government departments to gain consensus will need to be reviewed to ensure they are agile enough to keep up with the pace of work.  The Department’s 150 statutory instruments will be just the tip of the iceberg compared to government as a whole.  Without new ways of working, current processes are likely to hinder the pace at which all government departments are able to deliver.

Recommendation: The Cabinet Office, working with the Department for Exiting the EU, should carry out an urgent review of the planned processes in place, including a timeline to develop draft legislation.  These departments should write to the Committee with the results of the review by the end of May 2018.

Brexit Partners shares the concerns of the Select Committee in both the paucity of information for industry, commerce and business on what they need to do to prepare for Brexit.  Even if DBEIS is able to complete its program, organisations need time to plan and implement their own responses.  It is a terrifying prospect that late and potentially untested Government IT systems will be rushed into operation – with the chaotic and potentially catastrophic consequences for businesses of all size and scope.  No business will be unaffected and the Committee has arrived at the same conclusions as Trade Bodies such as the CBI and Confederation of Chambers of Commerce, that perhaps one third of the country’s SMEs will not survive the tsunami of regulatory and legislative changes arising from the UK’s Withdrawal from the European Union.

John Shuttleworth is a Partner in Brexit-Partners

John ShuttleworthComment