The process for exiting the European Union and the Government's negotiating objectives Contents

2What the Government needs to do before triggering Article 50

Capacity

8.The new Department for Exiting the EU is charged with leading the UK’s negotiations and leading the effort across Whitehall to deliver Brexit. We visited the Department for Exiting the European Union (DExEU) on 8 November, and discussed progress with Robin Walker MP, Parliamentary Under Secretary of State at the Department and members of the senior management team.

9.As of 14 December, the Department had a complement of 330 staff all on secondment from elsewhere in Whitehall.2 When asked whether the Department needed some expertise from outside the civil service, the Secretary of State told us that it was “gradually bringing some in”.3 The Department also works with 120 staff at UKRep (the UK Representation to the EU) in Brussels. Where UKRep staff work on bilateral relations with other Member States, they report to the Foreign and Commonwealth Office. When engaged in day-to-day business with the EU, they report to DExEU. The Rt Hon David Jones MP, Minister of State, Department for Exiting the EU, represents the Government on the General Affairs Council in Brussels, the Council body responsible for co-ordinating and preparing the work of the European Council.4 We were told on our visit to the Department that the DExEU team had begun their work in scoping policy areas and providing analysis to Ministers to help them decide what negotiating approach to take.

10.In evidence to us, Sir Simon Fraser, former Permanent Secretary at the Foreign and Commonwealth Office, described the Government as being in “information-gathering mode”.5 The Secretary of State described his Department as initially taking on a policy coordinating role and said that the Department was undertaking a substantial programme of policy analysis and consultation and was:

in the midst of carrying out 57 sets of analyses, each of which has implications for individual parts of 85 per cent of the economy. Some of those are still to be concluded. We have work still to be done on justice and home affairs, so there is a fair number of things still to do.6

11.We heard evidence on the sheer scale of the task facing the Government in circumstances where there is a great deal of uncertainty. Sir Simon Fraser described this initial scoping work as involving an “extraordinarily complex range of activity across a wide range of domestic and international policies”.7 Professor Catherine Barnard, Professor of European Law at the University of Cambridge, told us that this was a “gargantuan exercise”.8

12.In terms of preparations for the negotiations, the Institute for Government was complimentary about the work of officials in the Department for Exiting the European Union:

The Department for Exiting the EU (DExEU) has established itself quickly, putting new teams in place and developing cross-government structures. Teams working across government are doing so with energy, optimism and professional dedication.9

13.However, Dr Hannah White, Director of Research at the Institute for Government (IfG), warned that the Government needed to be clear where its priorities lay:

The Civil Service cannot do everything. It is 19 per cent smaller now than it was in 2010. It has all of the manifesto commitments from the Government when they came into power. It has some new things that the Prime Minister has said she wants to do. It is dealing with these cuts and Brexit is an additional burden.10

14.The IfG raised some broader concerns about Whitehall’s capacity to deliver both Brexit and the Government’s “business as usual”. It identified potential problems in:

Uncertainty in some Departments about what they were required to do before Article 50 was triggered;
Lack of clarity about how negotiations would be managed; and
Insufficient focus on preparation for day one outside the EU.

It concluded that Whitehall had the skills but not the capacity or resources to deliver Brexit.11

15.The IfG’s Report focussed on the challenges facing five particular Departments—Environment, Food and Rural Affairs, Health, HM Revenue and Customs, Home Office and Ministry of Justice—in meeting pre-referendum manifesto commitments and managing and implementing the decisions required, subject to negotiations, to effect exit from the EU. For example, the Report notes that HMRC is already engaged in work on the One Government at the Border programme (sharing data on the movement of goods), the Making Tax Digital programme and a major tax office restructuring. It may need to establish a new customs regime following the Brexit negotiations as well as considering whether to repeal, amend or retain existing EU legislation, including tax legislation, after the UK leaves the EU. It will be expected to address these challenges with a budget that, by 2020, will be 26 per cent lower than it was in 2011. Its staff headcount has already reduced by 12 per cent.

16.On top of its existing commitments, DEFRA will need to develop a replacement for the Common Agricultural Policy; develop an approach to trade policy and relations with the EU; work through the implications for devolution of repatriating legislative competences in agriculture and environmental regulation; and decide its approach to existing EU legislation. This will be expected with a budget that by 2020 will be 34 per cent lower than it was in 2011 and with a staff headcount already 35 per cent smaller than it was in 2011.

17.Sir Simon Fraser told us that, depending on the outcome of negotiations, new demands would be placed on the civil service, requiring in some cases more staff or staff with different skills:

If we leave the customs union, we may need more people to monitor the movement of goods. We may need more people on the borders as well. [ … ] there are a range of ways in which we may need to reinforce.12

18.Whilst Sir Simon Fraser suggests that the process of exiting the EU will require a substantial increase in civil servants, it has also been argued that departure opens up opportunities for greater efficiencies in the public sector. Although some additional functions will be required within the public sector, the UK will be able to take more decisions about its own regulatory framework and may have the potential to offset these increases with savings elsewhere.

19.The Secretary of State told us that the Department’s work was proceeding at a “hell of a pace” and he expressed great confidence in the commitment of the Department’s officials:13

this Department is at the pivot of a historic change in our country. They all want a part of that. I tease civil servants as well as the next man—remember, I used to be PAC Chairman and am fairly familiar with the syndrome—but these people want the best for their country, as do I and as does everybody in this room. They will do their best for their country.14

20.Crucial to the success of DExEU and its work preparing for and supporting the negotiations is successful integration with UKRep in Brussels. On 3 January 2017 the outgoing UK Permanent Representative to the European Union, Sir Ivan Rogers, told his staff that “serious multilateral negotiating experience is in short supply in Whitehall” and that “the structure of the UK’s negotiating team and the allocation of roles and responsibilities to support that team, needs rapid resolution. The working methods which enable the team in London and Brussels to function seamlessly need also to be strengthened.”15 He also revealed that “we do not yet know what the government will set as negotiating objectives for the UK’s relationship with the EU after exit.”

21. Coordinating the policy analysis, putting in place the staff required and ensuring necessary coordination to support the UK’s negotiations to exit the EU and managing and implementing the decisions required to prepare the public service for life outside the EU represent a significant challenge for the civil service. The work required to “deliver Brexit” will be the highest priority across the civil service for some years and it must be properly resourced and structured by Ministers.

22.We welcome early reports of the strength of the team assembled at the Department for Exiting the European Union and the work clearly being undertaken. We also note the resignation of Sir Ivan Rogers from his key role as UK Permanent Representative to the EU. We wish his successor, Sir Tim Barrow, well in his challenging new role. We will wish to take evidence on the issues raised in Sir Ivan’s letter.

23.We note that evidence has emerged of the strain that preparation for exiting the EU is placing on Government, not just on the Department for Exiting the EU but on other Departments with responsibilities in “delivering Brexit”. It is essential that all those involved are clear about the objectives. This will be a matter which we, and our counterpart committees, will continue to keep under close watch.

24.It is not yet clear what the long term impact of Brexit will be on civil service headcount, but the additional burden of delivering Brexit and the new functions that the public service will need to take on may well require, at least in the short to medium term, an increase in numbers of civil servants. The Government should also identify where the gaps in the knowledge and experience of the civil service lie and consider bringing in people from a range of backgrounds to ensure that it is up to the task at hand.

Decision-making processes within Government

25.The Prime Minister has said that she will not be delivering a “blow by blow” account of negotiations. However, she has also said that she will share more detail before triggering Article 50. We asked witnesses what level of detail should be provided in the Government’s articulation of its negotiating objectives and where the line should be drawn between informing the public about the most significant change in governance in the UK for decades and revealing too much of the Government’s negotiating hand. Dr White argued that:

You would not go into things like what your assessment was of the other party’s view on things. You would not talk about what your fallback positions were. You would not distinguish between the things that were your absolute priority and the things that you were willing to give way on—all those things that come into the category of a negotiating strategy.16

However, what should be disclosed was:

more likely to include what the Government’s objective was in terms of some sort of future relationship. [ … ] It is the objective in terms of where we want to end up, in our relationship with the EU.17

26.Sir Simon Fraser outlined why it was important to provide information to the public on what the Government was seeking to achieve in the negotiations, ie to help them:

to understand what is at stake and [ … ] have a sense that the Government has mastered the issues, has a clear sense of the national interest and is in a position to pursue those interests effectively in negotiation, both in terms of our separation and the clarification of the future relationship. That will affect all of us because the outcome of that negotiation could lead to different trading arrangements, different economic relationships and therefore potentially impacts on jobs across the economy in different sectors in different ways.18

27.We were told on our visit to the Department about the huge exercise that the Government has embarked on in trying to engage with stakeholders. However, Dr White argued that the Government needed to be clearer about the processes by which decisions on its negotiating objectives were being reached:

there could be a great deal more clarity about [ … ] the process that the Government plans to use to get to its negotiating position before it triggers article 50. [ … ] What we want and think would be really useful, both for external stakeholders of the Government and Whitehall Departments more generally, is to understand the process for getting to the position where the Government is happy to trigger article 50.19

28.Others have argued that the Government needs to provide more clarity about its negotiating objectives as uncertainty, in itself, could be damaging to UK business or could cause some businesses to pre-empt the outcome of any negotiations and leave the UK. Robin Niblett, Director, Chatham House, argued that “uncertainty” was a major concern for business. There was concern about when there would be certainty around the UK’s relationship with the EU as “decisions need to be made in a matter of months, not years”.20 Gary Campkin, Director for Policy and Strategy, CityUK, told us that the most important objective was ensuring “minimum disruption to customers and clients.”21 CityUK’s top priorities were delivering “clarity and stability”.22

29.During our visit to Sunderland, Ross Smith, Director of Policy at North East England Chamber of Commerce told us that businesses needed to be given more confidence that Government understood the concerns of both importers and exporters. He complained that much of the debate about the impact of Brexit was

still in referendum mode, where people are either certain it will be a disaster or certain it will be a triumph. The fact of the matter is it could be either and it will probably be somewhere in between. Where on that scale we end up depends on the decisions that are taken in the next couple of years and how effectively they are implemented. I think businesses just need to see a bit more confidence that the people who are taking those decisions understand that, understand that range of possibilities, are willing to listen to the implications that their decisions may have and are up for the challenge of making sure that they do that in the most successful way possible for our members.23

30.Shanker Singham, Director of Economic Policy and Prosperity Studies at the Legatum Institute, agreed that more could be done to set out the framework of what the Government would be looking to achieve during the negotiations:

The outlines of what you are going to do are triggering Article 50, entering a withdrawal agreement, and looking for interim measures in certain areas. You can do a lot of that without giving your negotiating hand away at all. Frankly, a lot of that is well known by Europe anyway, but it does enable people to talk to manufacturers, investors, and people who hold UK gilts and equities, and suggest that there is a pathway forward. There does need to be a little light shown on the pathway forward, probably now.24

31.The Government has committed to publishing its “plan for leaving the EU” before Article 50 is triggered. We asked the Secretary of State when this would be and were told that publication would not be before the end of January.25 He declined to be drawn on whether the plan would be published in the form of a White Paper or on the level of detail that it would contain. However, he did clarify that his key criterion for publication would be:

what can I put in the public domain without jeopardising the negotiating brief? That is it. As much as I can, I will put in under that criterion. At this stage I don’t know what that will be.26

The Prime Minister told the Liaison Committee that she would be setting out more of the Government’s plan in a speech in the new year.27

32.A common request from witnesses has been for greater clarity from the Government about its plans for exiting the EU so that those affected can plan accordingly. We welcome the Prime Minister’s commitment to set out more detail on the UK’s objectives in January and we look forward to publication of the Government’s plan. Article 50 envisages two years for negotiation and ratification of any agreement on exit. There is no timescale that limits negotiations on a new relationship between the UK and the EU. If the latter negotiations are not concluded within the two years envisaged by Article 50 then the UK would leave the EU without a new relationship in place.

Role of Parliament

33.Dr White emphasised the important role that Parliament and its Select Committees could play. She agreed that greater clarity about the Government’s undertakings in relation to provision for debates in Parliament would be of assistance in this respect. Advanced notice of dates of debates would help the Select Committees to carry out scrutiny work that would help to inform those debates.28

34.The Government has undertaken that it will hold a number of debates in Parliament before Article 50 is triggered. So far, four debates have been held in Government time in the House of Commons on the implications of exiting the EU on worker’s rights, science and research, fisheries and transport. However, no more notice has been given of these than the regular business statement in the House of Commons. In addition debates have been scheduled in the Chamber and in Westminster Hall by the Backbench Business Committee and adjournment debates have been secured by individual Members.

35.As noted above, a number of Departmental Select Committees have undertaken substantial inquiries or gathered a great deal of evidence since the referendum. It would assist the Select Committees in planning their work if the Government published a schedule of when these debates will be held in advance. Committees will then be in a position to arrange evidence sessions and consider reports so that they can best contribute to these debates.

36.The Secretary of State has also committed to ensuring that Members of Parliament are “at least as well informed as the European Parliament as negotiations progress”.29 This Committee will expect:

Appropriate access to relevant documents, including draft negotiating objectives, draft amendments to those objectives, draft negotiating texts, agreed articles and draft agreements;
Provision of these documents in sufficient time for the Committee to be able to express its view (or elicit views from other Committees), and for the Government to take account of the Committee’s views;
The Government to respond to Committee recommendations in a timely manner and to explain fully where any recommendations are not accepted; and
Consideration to be given to information being provided on a confidential basis to the Committee.

37.The Prime Minister told the Liaison Committee that Parliament “need have no concerns about having the opportunity” to scrutinise the Government’s negotiating plan but was unable to say when the plan would be published.30

38.We welcome the Prime Minister’s assurance that Parliament will have the opportunity to scrutinise the Government’s negotiating plan, but in order to do that the plan must be published in sufficient time before the triggering of Article 50. We therefore expect to see the plan by the middle of February 2017 at the very latest. It should be published in the form of a White Paper given its huge significance, and we will call the Secretary of State to give evidence on it. When the Government does produce its plan, it should declare its position in relation to membership of the Single Market and Customs Union.

39.The Government has pledged to hold a series of debates in the run up to the triggering of Article 50. However, it has given no advance indication of when future debates will take place. A great deal of work is going on in the Committees of both Houses to identify opportunities and risks arising from Brexit which should be taken into account in preparing the Government’s negotiating plan. The Government should now publish a timetable of the further debates that it will be scheduling. This will help the Committees of both Houses to time their work to help to inform these debates.

40.Once the negotiations begin, Parliament will need to be kept fully informed about progress. We welcome the Government’s stated commitment to ensuring that the UK Parliament is kept as well-informed throughout the negotiation process as the European Parliament will be. We ask the Secretary of State to set out exactly how the Government intends to meet this commitment.

Involving the devolved governments

41.The importance of ensuring a reflection of the voices of each of the component parts of the UK is reflected in this Committee itself. Uniquely for a House of Commons Select Committee, Members from all four nations of the UK are represented. We are committed, in the course of our work and in our visits around the UK, to ensuring that the specific concerns of all parts of the UK are carefully examined and will look to take evidence from Ministers in each of the devolved governments in the coming weeks.

42.The Prime Minister visited Belfast, Cardiff and Edinburgh in July 2016 to meet the leaders of the devolved governments. One of the Prime Minister’s first public statements on Brexit after taking office was that she would not trigger Article 50 “until I think that we have a UK approach and objectives for negotiations”.31 It was also reported that the Prime Minister said that she was “willing to listen to options” on Scotland’s future relationship with the EU.32

43.The Prime Minister and the leaders of the devolved governments agreed in October to establish the Joint Ministerial Committee on EU Negotiations (JMC(EN)) as the central forum for engagement between the UK and devolved governments on the UK’s withdrawal from the EU. The Committee notes that the Prime Minister also committed to holding a session of the Joint Ministerial Council Plenary before Article 50 is triggered. Its Terms of Reference state that the governments will work collaboratively through the JMC(EN) to:

Discuss each government’s requirements of the future relationship with the EU;
Seek to agree a UK approach to, and objectives for, Article 50 negotiations;
Provide oversight of negotiations with the EU, to ensure, as far as possible, that outcomes agreed by all four governments are secured from these negotiations; and
Discuss issues stemming from the negotiation process which may impact upon or have consequences for the UK Government, the Scottish Government, the Welsh Government or the Northern Ireland Executive.33

44.Dr White emphasised the importance of ensuring that all parts of the UK were involved in a meaningful way in establishing the UK Government’s negotiating position:

That means joint working at ministerial level, [ … ] but also at an official level, with a thorough exchange of information, which I understand is under way, and also, as I say, a seat [at the] table so that views are clearly understood and explained.34

45.The Secretary of State told us that:

The purpose of the JMCEN is to get input from all the devolved Administrations on their views on what the policy aim should be. [ … ] It will help to inform the decision on what the aim should be.[ … ]

Of course there may well be conflicting aims. [ … ] I would be surprised if there were not different views around the table on some elements of immigration, for example, and there will be other matters. We will have to resolve them as best we can in the overall national interest.35

He concluded that “you cannot give one part of the country a veto over the outcome, but you can do everything possible to make sure it gets the best outcome”.36

Scotland

46.The Scottish Government set out its proposals last month in its report on “Scotland’s place in Europe”.37 The report concludes that:

The UK Government has made a firm commitment to the people of Scotland. The Prime Minister says the UK is a partnership of equals, that the Scottish Government will be fully engaged in the Brexit process, and that Article 50 will not be triggered until there are agreed UK objectives for negotiations.

47.The report also calls on the UK Government to seek to remain a member of the Single Market or agree to support Scotland in remaining a member. This would be a “shared endeavour” for the Scottish and UK Governments and the paper sets out the Scottish Government’s position on how this “differentiated” solution could be made to work.

48.The Committee will take evidence from the Scottish Government in the near future on the specific implications that Brexit may have for Scotland.

49.The Supreme Court is currently considering the potential statutory application of the legislative consent procedure.

Wales

50.The Committee will take evidence from the Welsh Government on the specific implications that Brexit may have for Wales. We note that the Welsh Government will be publishing its own White Paper on this subject.

England

51.It is also important that different views in the English regions are taken into account in the process. One of the reasons behind our decision to launch a programme of visits around the UK was to ensure that we could meet individuals and businesses not only in each nation of the UK but also across the regions of England to discuss their hopes and concerns around the UK’s exit from the EU. Our visit to Sunderland provided us with particularly valuable evidence on the views of manufacturers in the city and the region, many of whom were connected with the automotive industry. The formal evidence that we took during the visit has already been published.38 A note of our informal meetings is published as an annex to this report. We will also be taking evidence from the Mayor of London.

52.While it is clear that no part of the UK has a veto over the outcome of the negotiations, it is essential that all the devolved governments, and the different regions of England, are duly involved in the process and have their views taken into account.

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4 This role was previously carried out by the Minister for Europe within the Foreign and Commonwealth Office.

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9 Whitehall’s preparation for the UK’s exit from the EU, Institute for Government, Joseph Owen and Robyn Munro, Briefing paper December 2016

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11 Whitehall’s preparation for the UK’s exit from the EU, Institute for Government, Joseph Owen and Robyn Munro, Briefing paper December 2016

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