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13.03.18

Cost of Brexit preparations set to hit £900m across six gov departments next year

The cost of Brexit preparations for the six most affected government departments will reach £900m in 2018-19, a new report warns.

The Institute for Government’s report, published yesterday, ‘Costing Brexit: What is Whitehall spending on exiting the EU?’ examines Whitehall’s spending on leaving the EU.

It looks at spending by the Department for Exiting the EU (DExEU), the Department for International Trade (DIT), the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Environment, Food and Rural Affairs (Defra), the Home Office and Her Majesty’s Revenue and Customs (HMRC).

It found that these six departments will have spent £400m on preparations to leave the EU in 2017-18, and that this figure will more than double next year, but that the full cost of Brexit will not be clear “for some time.”

Over £250m has already been shared by the Treasury in 2017-18, and a further £3bn has been set aside to fund Brexit over the next two years, but the report estimates that at least £400m has already been spent on Brexit in these six departments alone.

Article 50 expires in March 2019, by which time the report estimates that the government will have spent at least £1.3bn across these six departments, and that the total across the government could reach £2bn.

For Defra, the Home Office and HMRC, Brexit will effectively reverse the reductions in the number of civil servants since 2010, the report found - with half of the money spent on Brexit to date going on new staff.

The largest spending increase has been by Defra, with almost £100m approved by the Treasury for its EU exit work in 2017-18, and an increase in staff numbers of 65% since June 2016.

HMRC spending set to hit £450m in 2018-19

Spending for HMRC, which will play a critical role in preparing the border for Brexit, is expected to reach £450m for 2018-19 alone.

The Home Office is using around 50% more on agency staff per month than before the referendum and is likely to rack up £40m more spending on agency staff in 2016-17 than it did in the year leading up to the referendum.

According to the report, the six departments have already signed contracts worth £5.5m with consultancy firms.

Jill Rutter, Brexit programme director at the Institute for Government, said: “We look only at costs incurred ahead of the UK’s formal exit from the European Union.

“But the true scale of those costs will not be clear until the future relationship starts to take shape. Details still to be determined, like the UK’s relationship with EU regulators or its access to EU-wide customs systems, will affect the scale of the task in Whitehall – and the size of bill for delivering it.”

Joe Owen, senior researcher, added: “Brexit will have a big impact on the size and shape of Whitehall departments, as well as their budgets.

“If the UK fails to negotiate the access to EU regulators that the prime minister wants, costs are likely to grow again – new arm’s length bodies and new border functions will need to be put in place.”

Top image: Andrej K

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