Brexit: the options for trade Contents

Chapter 7: The Government’s approach

Analysis of the impact of Brexit on the UK’s economy

216.There is general agreement that, as part of the process of preparing for Brexit, there has to be thorough analysis of the impact on the UK’s economy of the various possible future trading relationships with the EU. Lord Bridges confirmed the Government was carrying out such an analysis. The Government had looked at over 100 production sectors. It had then consolidated its analysis into 51 sectors, taking into account “the size and contribution that each of these sectors makes to the economy”, and “the way those sectors are treated in EU law and how future negotiations might bear down on them”. The 51 sectors were not necessarily “the most important or the biggest”, but focusing on them had helped the Government to get the information into “a manageable format”.300 Lord Bridges confirmed that the Government was also considering the nature of EU regulations and different frameworks for trade with the EU, such as the customs union.301

217.Lord Bridges saw the Government’s analysis as holistic: “to ensure that we also look at building up a picture of the challenges and opportunities that the UK faces in the round.” The Government was attempting to do this work “well and with due deliberation but due speed”.302 While the Government would be “mindful” of “political noises”,303 its approach would be “a hard-headed, cool, calm look at what the impact of various options might be.”304 The Ministers did not say whether this work would be completed before Article 50 was triggered.305

218.When asked about work being done by the UK’s European partners on a future trading relationship, Lord Bridges said that the Commission had assembled “quite a considerable team” to look into it. With regard to Member States, he could not be specific, but said that “certain Member States are focusing on this a lot more than others”.306

Engagement with stakeholders

219.Ministers explained that the Government was consulting with industry stakeholders on both the UK’s future relationship with the EU, and the UK’s future FTAs with third countries. Lord Bridges said: “the entire government machine is consulting different parts of industry and civil society”. He described the Government’s work as a “wide-ranging consultation with groups that represent different bodies of the public”. This was “a good, proportionate way to approach this”.307

220.Lord Bridges also told us that Ministers were “very keen to get out and about … to talk to people who are at the cutting edge and coalface of these issues”. He wished to avoid “a real danger that we will be stuck behind our desks”, looking at “facts, figures and percentages.”308 By way of example, Lord Bridges told us that “DEFRA will talk to the NFU [National Farmers’ Union] and other organisations … agriculture Ministers [will] have open arms and doors in wanting to take ideas and views”. He said that DExEU and DEFRA had already “co-hosted a round table”, and that officials “in my department sit in round tables and other meetings with sectors to hear what specific groups and organisations are saying”.309

221.With regard to future FTAs, Lord Price said “we want to engage with industry over the free trade agreements that we are going to sign”. However, such engagement would vary because to a “large extent the input of business will depend on the country and the sector”.310 His Department was also “setting out the routes that we will take as we start to negotiate”, and using Ambassadors in various third countries as conduits for the views of businesses in those countries.311

Resources and capacity

222.We asked whether the Government had sufficient resources to manage the development of a new trade relationship with the EU, establish the UK’s WTO schedules, and negotiate the UK’s future trading relationships with third countries (a stated aim of the Government).312

223.Lord Price told us that a trade policy team of 40 people on 23 June had grown to “about 110 people”, and was likely to rise to “about 150 by the end of this year.” Lord Price said that “over 800” people had “voluntarily written” to offer their services.313 Lord Price also said the Government did not plan to hire trade negotiators for future FTAs for the “next three or four months”.314

224.Lord Price acknowledged that in comparison with the EU (which has “500 people who work in trade policy”) and Canada (which has “100 people working on the Canada-EU FTA”),315 the UK was in “the early foothills of where we need to get to”. He also agreed that more resources would be required to “press for full-blooded implementation in the years after [an agreement] has been signed”.316

225.Nevertheless, Lord Price was “confident that we will get the resource that we need to negotiate trade deals for the UK in the future”. He said: “I have been given every encouragement that whatever we require will be provided. Clearly there will be a good level of scrutiny, but the requests that have gone in so far have been met with understanding.”317

226.In written evidence, Lord Bridges and Lord Price told us: “All departments are equipping themselves with the resources they need to get the best deal for the UK.” DExEU had “over 250 staff”, but the Government was

“not in a position to give a final total for particular groups of staff as recruitment is ongoing. Our aim is to have a streamlined Department, while hiring in the right skills and experience to get the best outcome for the UK.”318

Co-ordination across Government departments

227.Lord Bridges explained that while the Department for Exiting the EU (DExEU) was “responsible for policy with regard to the EU”, the Department for International Trade (DIT) was “responsible for policy outside the EU”.319 Lord Price confirmed that DIT was focusing on the “WTO schedules” and “the FTAs to come”.320

228.Lord Bridges said that officials from DExEU were “working absolutely hand in glove” with the Business Intelligence Unit at the Department for Business, Energy & Industrial Strategy (BEIS), which is collating the views of stakeholders.321 He also referred to the “excellent officials” in the UK Permanent Representation to the EU (UKRep), who were “analysing a lot of this material in conjunction with the experts in the various departments”.322 Lord Price said that DIT was also working with DExEU by providing “specialist knowledge” through support from its trade policy team.323

229.Lord Bridges underlined the importance of close coordination between DExEU and other departments. This was partly because “otherwise our department and the four Ministers would be completely deluged” and “would not have the time to see everyone and do everything possible”, and also because “we need to draw on the expertise in departments”.324 This approach also helped to ensure the Government could move with “speed to obtain the views of everyone on board”.325 He concluded: “We cannot and should not try to create an enormous department that sucks the life blood out of Whitehall.”326

230.Lord Bridges said that such coordination was facilitated at a high level by the “Cabinet Committee on EU Exit and Trade”, which was “a core decision-making body of Ministers”. This Cabinet committee was supported by the Trade Policy Steering Board of officials, chaired by DIT, and run jointly with DExEU. They met fortnightly “to pool thinking on specific issues” and “to track the way ahead.” So far this arrangement had been “working well”, but he added that the Government was “absolutely not complacent”.327

Conclusions and recommendations

231.We recognise that the Government is engaging with industry stakeholders, but are not convinced that the level of engagement and expertise within government are commensurate with the scale of this unprecedented task, particularly given the Government’s commitment to trigger Article 50 by the end of March 2017.

232.We shall address the issue of engagement with stakeholders further in our forthcoming reports on the future trade relationships between the UK and the EU for goods and services.

233.The Government appears to be underestimating the resources required to negotiate a bespoke deal with the EU, to adopt its WTO schedules, and to agree future trading relationships with third countries. We urge the Government to increase significantly the capacity of the Department of International Trade and the Department for Exiting the EU, and we also call on the Government to provide a clear estimate of the number of staff it will need to recruit to both departments, and the cost that this will incur.

234.We are concerned that Government will not be able to recruit the necessary additional skilled personnel to undertake engagement and analysis before Article 50 is triggered. We are also concerned that this timetable is putting considerable strain on resources across government, and has resource implications for the devolved administrations.

235.At this early stage, we note the framework that the Government has put in place to co-ordinate Brexit work across departments. In a fast-moving negotiation, the pressure on cross-departmental working will be intense, and we look to the Government to continue to monitor the framework, and to make improvements whenever they are necessary.

312 For example, see Rt Hon Theresa May, ‘Britain after Brexit: a vision of a Global Britain’
(2 October 2016):
[accessed 29 November 2016]

316 Q 57 (Lord Green of Hurstierpoint)

318 Written evidence from Lord Bridges of Headley MBE and Lord Price CVO (ETG00013)

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