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Gov’t Departments Are Burning Through Billions in Readiness for Brexit: They Look Set to Overshoot Budgets

A report from the National Audit Office (NAO) today highlighted the pace at which government departments are burning through money in order to get the UK ready for its EU departure on the 31 of January 2020, with £4.4 billion already spent of an allocated £6.3 billion EU Exit fund and many forced to tap their own budgets.

Just three departments, the Home Office, HMRC and the environment department Defra account for £2.4 billion of that spend, in large part as they rush to reconfigure or develop new IT systems (£1.9 billion on staffing; £1.5 billion on new systems and infrastructure; £288 million on external expertise and contractors).

Preparations span over 300 work streams.

NAO Cost of EU Exit
Credit: NAO

The Home Office saw the largest infrastructure spend at £283 million. This was used, for example, to design, build and test the EU Settlement Scheme solution, which will register and provide status to an estimated 3.5 million EU nationals.

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Other major infrastructure spend included DfT’s spend on Operation Brock – the planned traffic management system to be used in Kent in the event of a no deal exit. Expenditure on Operation Brock was forecast to reach £69 million by the end of 2019-20, the NAO noted in its March 7 report.

Other prominent IT projects undertaken as a result of Brexit include…

Defra

The Department for Environment, Food & Rural Affairs (Defra) has been tasked with essentially building an array of new IT systems to handle the import and export of EU and UK goods.

One IT system that it has had to develop is related to the export of chemicals to the EU, which was worth £17 billion in UK exports in 2017.

Essentially the EU acted as a chemical regulator, now Defra has to take on that function and was rushing to get the IT systems in place for the original March 2019 deadline. The system needs to classify and track all chemicals moving in and out of the UK.

A previous NAO report found that: “Defra set out its preferred option of achieving a minimum operating capacity ready for March 2019, with systems that would enable enhanced functionality to be developed in the longer term.”

HM Revenue & Customs (HMRC)

HMRC is in the middle of developing the IT system Customs Declaration Service (CDS) which handles and risk-assesses customs declarations, as well as accounts for payment of duties. However, it appears that this system is in no way ready and that they have been forced to rely on the legacy Customs Handling of Import and Export Freight (CHIEF) system, leading to uncertainty among freight professionals.

The British International Freight Association director general Robert Keen commented in February of 2020 that: “When HMRC announced its proposed plan for completing delivery of the new Customs Declaration System (CDS) and migrating traders from CHIEF to the new platform, we expressed the view, shared with CSPs and other software developers, that the timetable would be challenging.”

He added: “We are reassured to hear that it is HMRC’s intention to implement dual-running of both systems until the Department is confident that the new system is fully developed, stable and tested…”

The NAO notes that many ministries had allocated substantial sums to “Arms Length Bodies (ALB) they oversee for their preparation activities.

The Department for Business, Energy and Industrial Strategy (BEIS) passed on around a third of its EU Exit allocations to its ALBs and Defra around a quarter. BEIS allocated a huge £87 million to the UK Space Agency to address how the UK’s participation in EU space programmes would be affected in a no deal scenario.

See Also: “Broken” Capita’s Own Internal Finance IT Project Delayed, Over-Budget


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CBR Staff Writer

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