In October 2015, we published a report in which we urged the Treasury to protect the FCO budget for the period covered by the 2015 Spending Review, and we welcomed the Chancellor’s November 2015 announcement that the budget of the FCO would be protected in real terms up to 2019-2020. As we outlined in our April 2016 report on the implications of the referendum on EU membership for the UK’s role in the world, however, the decision to leave the EU now requires the Government to boost the FCO’s capacity significantly. In particular, the FCO will need to reverse the recent trend of down-sizing its operations in Europe, which it will struggle to do if its funding continues to become ever more dependent on expenditure that can be classed as Official Development Assistance. We therefore recommend that the new Government commits to a substantial increase in the funding available to the FCO commensurate with the enormity of the task it now faces. The FCO should be able to use this additional funding wherever in the world and in whatever capacity it deems necessary.
It is also essential that the Foreign Secretary and the Secretaries of State for Exiting the EU and International Trade form an effective triumvirate as quickly as possible, with close working relations and clear delineation of responsibilities. It is expected that key personnel will be transferred from across Whitehall to support the work of the Department for Exiting the European Union. While it is essential that the Whitehall officials with relevant expertise are identified and put at the centre of managing the exit process, this cannot come at the expense of an already-overstretched FCO or it will threaten other aspects of the UK’s bilateral relations with some of its most important partners. The Prime Minister should give the FCO the resources it needs to fill any gaps in its capacity left by the departure of officials to other Departments. When the exit process comes to an end, moreover, those officials should be able to return to the FCO or the Department for International Trade, as their expertise and institutional knowledge will be critical in shaping and managing relations with our European partners far beyond the conclusion of the exit negotiations.
Finally, in our April 2016 report on the implications of the referendum on EU membership for the UK’s role in the world, we described the FCO’s apparent lack of any contingency planning for a vote to leave the EU as “regrettable”. Since the referendum, the extent of the Government’s lack of preparation for a potential “leave” vote has become more evident. In the light of the appointment of the new Prime Minister on 13 July, the previous Government’s confidence that basic planning for the practicalities of implementing Brexit could be undertaken at a leisurely pace after the vote now appears at best naïve and at worst negligent. The previous Government’s considered view not to instruct key Departments including the FCO to plan for the possibility that the electorate would vote to leave the EU amounted to gross negligence. It has exacerbated post-referendum uncertainty both within the UK and amongst key international partners, and made the task now facing the new Government substantially more difficult.
The lack of contingency planning inevitably means that the Government’s plans are tentative and just emerging. We intend to examine these at the earliest available opportunity, including how the Government plans to consult other interested parties in the UK.
20 July 2016