Exiting the European Union: The Department for Business, Energy and Industrial Strategy Contents

1Preparing to implement Brexit

1.On the basis of a report by the Comptroller and Auditor General, we took evidence on 31 January 2018 from the Department for Business, Energy & Industrial Strategy (the Department).1 The Department was established in July 2016 following the merger of the Department for Business, Innovation & Skills with the Department of Energy & Climate Change.2

2.The Department leads on 68 of the over 300 Brexit work streams identified across government, the highest number of any other government department. Of the 68, 21 are considered critical by the Department for Exiting the European Union. It also leads government policy in 22 of the 58 economic sectors that will be impacted by Brexit. Alongside this challenging task, the Department must also deliver a significant domestic policy agenda. This includes major projects, eight of which are listed on the Government Major Projects Portfolio, and significant policies that will shape the UK’s economy after Brexit, including implementing a new industrial strategy.3

3.The Department for Exiting the European Union (DExEU) has provided guidance to departments on what they should do to plan and implement their Brexit workload. In line with this guidance, the Department must develop delivery plans to support a range of scenarios that are dependent on the outcome of Brexit negotiations. It must also formulate new policies, establish new systems to replace those currently administered by the EU and prepare draft primary and secondary legislation. The nature and scale of the task varies significantly across the work streams; some for example require new digital systems to be developed.4 The Department has recruited new staff to support its increased workload.5

4.On 19 March 2018 the DExEU published the ‘Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community’. The draft agreement includes a transition period running to 31 December 2020. DExEU stated that the UK and the EU negotiating teams aim to finalise the entire Withdrawal Agreement by October.6


5.In February 2018, we reported that despite the pressing need to re-prioritise work to make space for Brexit, departments have not yet undertaken this with the speed or scale needed to meet the challenges. In December 2017, the Cabinet Office had told us that within the next six months departments would need to have “serious conversations” about prioritisation and these conversations should cover all of a department’s activities.7

6.This Department is just one example of the lack of prioritisation across government. When we asked the Department about the approach it is taking to prioritisation, it insisted there is very little of its statutory duties, policies or major projects that it can discontinue.8 Despite responding positively to the Infrastructure and Projects Authority’s (IPA) offer to support prioritisation, the Department was unable to point to any real progress on this. Instead, it said that assurance conducted jointly with the IPA pointed out areas where the Department’s governance structure and project management capability could be simplified and strengthened. This does not amount to a credible response to the prioritisation challenge.9

7.The Department told us it has reallocated 100 staff from existing duties on to higher priority Brexit work.10 The Department explained that where projects are coming to an end, it would redeploy freed up staff to Brexit work. For example, it expects that when its project to establish a new body, UK Research and Innovation, comes to an end in April 2018, it would move approximately 30 people working on that project to support Brexit work. It added that it has asked its partner organisations to take a similar approach of reallocating staff where possible before asking for any additional staff.11

IT requirements

8.The scale and requirements of the implementation task varies significantly across the Department’s 68 Brexit work streams. The Department told us that over a dozen of its work streams require new digital systems to replace many of the current databases currently shared by the UK and EU. It has only recently started the process of setting out the system requirements, and told us it will need to begin the procurement process over the next two or three months. This leaves little time for designing, building and testing these systems. The Department explained that the systems it needs are not “cutting edge,” as most of the systems it requires are simple databases such as those to register trademarks or to record funding of companies from Horizon 2020. The Department told us that “a proper implementation period” would allow users to have more time to test the systems. It commented that “if we are up against a hard deadline of March [20]19, there is less opportunity for that testing”.12

9.As the Department has to consider a range of scenarios tied to the outcome of the negotiations, it does not yet know what the exact requirements of any IT systems will need to be. For example, the Department explained that if the outcome of the negotiations on the emissions trading scheme means it has to build a trading system, then a much more complicated IT system will be required. The Department acknowledged the added challenge of working with multiple scenarios and the implication on procuring its IT systems, but maintained its IT systems will be ready on time.13 A further challenge the Department must overcome is a historical lack of digital skills: it told us it does not have a big digital development team as it has not been necessary for the work it has done in the past.14

10.We questioned whether, given the Government’s track record on the delivery of IT systems on time, and the short time now available, it could really be confident that IT would not be an impediment to delivering relevant work streams on time. The Department agreed that it is difficult always to feel confident that IT systems will be set up on time, given experiences that very often they do not.15 Yet the Department said it was currently “very confident” the projects would be ready for when the UK leaves the EU in March 2019.16

Skills and resources

11.To carry out its Brexit related activities in 2017–18 the Department identified it needed 350 additional staff and it received supplementary funding of £35.1 million from HM Treasury.17 By the end of December 2017, the Department had recruited 305 staff and said it was on track to recruit another 45 staff by the end of the financial year.18 The Department told us that it was “pleasantly reassured” to see that its estimated requirement of £35.1 million in supplementary funding was a good estimate for the funding it needed.19

12.The Department told us that, so far, it has mainly hired people with policy skills. It expects that as its Brexit work progresses, it will need people with experience of digital skills, knowledge of particular sectors and subject matter experts.20 The Department agreed with our view that these skills are in high demand but told us it has not had an issue in recruiting so far.21

13.The Department has recruited a mix of permanent staff, fixed-term contracts, and secondments. The Department told us it recruited about 150 people a year through the civil service fast stream programme, but it was unable to specify how many of those were working on Brexit-related activities.22 Overall, the Department was not clear on what skill sets it has recruited, and whether new recruits had the experience required for the complexity of the Brexit task. For example, it had little understanding of the extent of negotiating experience amongst its staff, and it has only provided a two day course on negotiation and influencing skills to inexperienced staff. It indicated it has been recruiting more people with EU knowledge but was unable to put a number on how many.23

14.At the time of the session, the Department had not yet agreed with HM Treasury what, if any, additional funding it will receive for its Brexit work in 2018–19. It hoped that it would come to an agreement with HM Treasury on this “in a matter of weeks” after which it could begin recruiting for the staff it needs in the months ahead.24 The Department acknowledged that the range of scenarios for which it was planning might change. As an example, the Department explained that there are three possible options following the outcome of the emissions trading scheme negotiations. It may need to build an entirely new IT system for the UK to use; it may be able to continue using the current EU system; or it may transpire that there is no time for building a new system and the Department has to find a workaround that does not disrupt the market. Each scenario will require a different number and set of skills. The Department assured us that its resourcing plans cover all three of these possible scenarios.25

1 Report by the Comptroller and Auditor General, Implementing the UK’s exit from the European Union: The Department for Business, Energy and Industrial Strategy, Session 2017–19, HC 608, 30 November 2017

2 C&AG’s Report, page 7

3 C&AG’s report, pages 5, 8

4 C&AG’s Report, page 5

5 Qq 40, 41

7 Committee of Public Accounts, Exiting the European Union, Eighteenth Report of Session 2017–19, HC 467, 7 February 2018, paras 2, 8–10

8 Qq 22, 23

9 Q 33

10 Qq 1, 36

11 Qq 36–39

12 Qq 10, 12–13

13 Qq 11, 62–64

14 Q 59

15 Q 13

16 Qq 11

17 Qq 1,61

18 Q 41

19 Q 61

20 Q 42

21 Qq 45–46

22 Qq 46, 50

23 Qq 52–55

24 Q 48

25 Qq 63–67

Published: 25 April 2018