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The cost of EU Exit preparations

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Today’s 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.

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.

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.

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.

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

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