Is the government prepared for a no deal Brexit?
9th Apr 2019
“I think that we are well prepared for no deal”
Liz Truss MP, 1 April 2019
“We can’t deliver no deal because parliament won’t let us, even though we’ve done enormous amounts of preparation... It’s not a question of readiness, it’s a question of parliament and whether it would be deliverable.”
Matt Hancock MP, 4 April 2019 (2:17:54) (2:23:18)
“Forget the 'end is nigh' scaremongering – Britain is officially ready for no-deal Brexit”
Chris Heaton-Harris MP, 5 April 2019
“[No deal is] not nearly as grim as many would advocate and the civil service have done an amazing job of ensuring that we minimise the problems. Now I’m not an advocate for no deal, but it would not be nearly as bad as many like to think it would be.”
Andrea Leadsom MP, 7 April 2019 (54:05)
This article was co-written with our friends at the Institute for Government.
Unless the EU accepts the UK’s request for an extension to Article 50, the UK will leave the EU with no deal on 12 April.
In recent weeks a number of current and former government ministers have expressed varying degrees of confidence that the government is ready for a no deal Brexit.
Yet there is evidence to suggest that the government has not yet met its own goals for no deal preparedness in a number of areas. Additionally, in other areas there is simply not enough evidence for the government to assert it is ready for no deal, because it hasn’t published the evidence.
Being ready for a no deal Brexit is not the same as being ready to leave the EU with a withdrawal agreement. The withdrawal agreement allows for a standstill transition period to the end of December 2020—which means the systems and processes the UK uses now as an EU member stay in place (although the UK would no longer have a say in EU decisions).
The government has been planning for how to manage the main effects of no deal, and in so doing it has set out a number of clear intentions. But many areas simply cannot be managed without EU cooperation in a no deal scenario—and in other areas which are under UK control, the UK is not yet ready.
These include passing a number of bills, taking a range of practical measures like introducing new systems and international agreements, and preparing businesses and individual citizens. On each of these measures, the government has not achieved all it has set out to, and there is serious doubt that the UK would be able to withstand the effects of no deal without significant inconvenience or disruption.
The government hasn’t passed all the laws it needs to
The government has to pass a number of bills in order to be ready for a no deal Brexit. Yet the Institute for Government’s bill tracker shows that five of these bills (covering Trade, Agriculture, Immigration, Fisheries, and Financial Services) still haven’t been finally approved by parliament. This leaves just days to get the legislation through before a potential no deal Brexit (if the EU rejects our request for an extension) and as it stands the Government has no intention of passing the bills by 12 April.
Back in February, Sir Mark Sedwill, the Head of the Civil Service, told a parliamentary committee that in some cases “detailed” work-arounds could be found if the bills aren’t passed in time. But he added that in other areas “no mitigation is possible”. For example, unless the Trade Bill is passed, the government will not be able to introduce the trade deals it has “rolled over” with non-EU countries.
In addition to these bills, parliament still needs to pass a number of statutory instruments (SIs). These instruments allow government to amend existing laws, rather than having to pass an entirely new bill in order to make a law (which takes much longer).
In late February, Mark Sedwill said there was “no reason” all necessary SIs would not be passed in time for 29 March, and that there were contingency procedures for the “small handful” of SIs the government had “genuine concerns” about.
On 29 March 2019, the independent parliamentary research group the Hansard Society found that “95% of the time available to lay the SIs before the revised exit day of April 12 has now elapsed; but only 84% of the minimum number of SIs the government says are needed for Brexit have been laid before Parliament”. Of those laid before parliament, only 76% had completed their passage through parliament.
We don’t know if the government has taken all the practical steps it needs to for no deal
Beyond passing laws, the government also has to take many practical steps to be prepared for no deal, as summarised in this chart from the Institute for Government. These steps include things like establishing new IT systems and international agreements, and cover an extremely wide number of policy areas: everything from aviation safety, to data protection, to trade deals.
The government published a series of technical notices setting out what it intended to do in August last year. Many of these depended on EU action or cooperation, but that has only happened in a few cases like aviation and road haulage - and in neither case offers the same guarantees as UK operators have now. Since August, there has been no comprehensive update. This means we don’t know whether the government has taken the necessary practical steps it needs to be ready for no deal.
And in some areas, there is explicit and serious doubt that the government will be ready. In February 2019, the National Audit Office found that six out of the eight IT systems which are most critical for managing the Irish border on Brexit “day one” are “at risk of not being delivered to time and acceptable quality”. In addition, the government stopped reporting on progress for a number of areas that were rated as unachievable or in doubt in September 2018.
When we leave the EU we will no longer be part of the EU’s trade deals with countries around the world, but the government says it wants to replicate these deals “as far as possible” in the case of no deal. These deals would allow us to keep trading with non-EU countries on largely the same terms as we currently do, as soon as we leave the EU. But analysis by BBC Reality Check finds that only nine out of a target of 40 deals have so far been agreed, and the government has also stated that deals with countries including Japan and Turkey will not be ready in time for a no deal Brexit.
Most businesses have not taken the necessary steps
The government’s technical notices also included advice for businesses on how to prepare for no deal, but stopped short of telling businesses they needed to prepare. This chart from the Institute for Government shows that businesses in a vast number of areas will also be affected by no deal, and in many cases will need to do things like register products or services in the EU, change processes to maintain access to existing markets, and comply with new UK processes.
As of February 2019, a government report found that fewer than 20% of relevant businesses had applied for an EORI number, which is needed to export goods in a no deal scenario. The report describes this as “one of the most basic and straightforward parts of the process most businesses would need to undertake to prepare for no deal”. A senior HMRC official told a parliamentary committee in February that 40% of traders have no intention of preparing for no deal.
This lack of preparation extends to individuals too. The same government report states that “UK citizens travelling to or living in the EU would need to complete a number of administrative tasks to ensure that their interactions with the EU are as unaffected as possible”. But Government communications only started in January and it is not clear whether people have taken the steps they need to be ready. Some systems found it difficult to cope with a surge in applications.
Ministers should not be saying the government is ready for no deal if they don’t have the evidence to back it up.