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NAO on EU exit preparations: Government has a lot to learn

4 September 2020: The National Audit Office has highlighted the lessons it thinks the UK Government should take from its preparations to exit from the EU.

The National Audit Office (NAO) has issued a total of 28 reports to date scrutinising preparations for the UK’s departure from the EU. In this 29th and most recent report (available here), the NAO has gathered together the key lessons it believes need to be learned in how to effectively work across government and looks at how the Government can learn from previous mistakes – a novel thought!

One of the key points the NAO makes is on the topic of financial management, with the NAO itself having to put together the most definitive analysis of the £4.4bn spent up until 31 January 2020 on getting ready to leave the EU. Thus, filling a gap in the Government’s financial reporting processes that does not allow it to track major cross-governmental initiatives very easily.

Costs continue to mount as the Government gets ready for the end of the transition period on 31 December 2020 and the implementation of new procedures in 2021 – some of which are still uncertain depending on the outcome of the trade negotiations with the EU.

So, what insights has the NAO drawn from its review?

Perhaps easier said than done is that government should plan for all possible scenarios and must have in place robust contingency plans. In the case of Brexit, no planning was made until after the decision was taken to leave the EU, while the changing prospects of deal or no deal hampered departmental planning efforts over the last four years. Despite that, the NAO believes better planning could have improved outcomes and value-for-money for the spending incurred. 

From the beginning, the scale, nature and complexity of the task should be identified. Having a central function to collect information from across the different departments should help form a consistent view of the challenges and potential solutions. Taking the bigger picture view means that the scale of the task is captured early on.

Using new and faster ways of working creates opportunities and risks. Departments thought creatively and took pragmatic decisions to get things ready in time – a positive outcome. However, staff turnover in EU exit roles was higher than for the civil service as a whole – particularly in the senior roles. For example, in just four years there were three different permanent secretaries at the Department for EU Exit (DExEU), and the Border Delivery Group saw three different directors general in just two years. Value for money issues arose on procurement contracts, taken out in haste, being terminated when contractors were unable to fulfil the contracts.

There is significant criticism about the lack of oversight and decision-making structures for working across government. The establishment of DExEU did not prevent departments from not knowing where to turn to for information or for cross-government decisions to be made, with a lack of clarity resulting in delays by departments in taking actions. The report recommends a simpler structure for decision-making and accountability be put in place to fit with the pace and priority of the work, noting the improvements that occurred in late 2019 with the replacement of multiple cabinet committees with just two – one for strategy and one for implementation – and how this had a positive impact on governance structures further down.

The report states that expertise should be drawn on at an early stage to highlight delivery risks. Reviews of milestones and monitoring of work cross-government did not take place at the right time with project assurance often provided towards the end of the process rather than at the beginning. For example, the expertise of the Infrastructure & Projects Authority could have been more effective if brought in earlier.

One of the key criticisms that the NAO repeats in its reports is the lack of structures that enable effective cross-government working, noting that it is vital that departments work together to meet new challenges which do not fit into existing boundaries. This is especially the case where the impact on business-as-usual work of moving staff between departments is significant. Clear and timely communication across departments is also an important part of responding to the challenge, which was hampered in this case by the tight rein on communications maintained by DExEU due to the nervousness of exposing the UK’s negotiating position. This created barriers to collaboration and a lack of urgency in progressing towards a common goal.

As with any initiative or activity, it is paramount to engage with stakeholders at the outset and understand what their role is in delivering the outcome. Businesses and taxpayers were not involved early enough, or in enough detail, on what they needed to do to be ready for exit – particularly if there was no-deal. The time and effort that businesses and individuals need, to respond positively to policy or legislation changes, should not be underestimated.

Last, but by no means least, is the importance of good financial management when delivering policy. Strong financial management is necessary for informed decision making and accountability. It may seem an obvious comment, but clearly one that the NAO felt they needed to make, that the basic principles for managing public money should underpin what government does, even in unusual circumstances or times of crisis. 

The Government is criticised for not having sufficient financial information to direct the £6.3bn made available to departments for EU Exit work to where it was most needed. This made it difficult to assess where reprioritisation of either EU Exit work or business-as-usual activity might be necessary to deliver outcomes as planned, in addition to delivering value for money. There are lessons to be learned about how a consistent approach between departments in tracking expenditure and monitoring project goals would improve governmental responses to future crises. Transparency is key to making the best decisions.

Alison Ring, director for public sector at ICAEW, commented: “The NAO makes some very important points about how lessons learned from exiting the EU can be used to improve the way government operates – particularly in addressing challenges that require the whole of government to work together effectively. 

“It is also clear from the 28 – now 29 – reports that the NAO has written on the UK’s departure from the EU that the basics of effective project planning and financial management were often lost in the disjointed way the government sought to deliver on the decision of the referendum. Learning from the mistakes that have been made will be important in implementing the new relationship with the EU, in dealing with the coronavirus pandemic, and in being better prepared for future crises.”

Read the full report here.