Leaked Memo Reveals Tories Have No Clue How to Implement Brexit

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Leaked Memo Reveals Tories Have No Clue How to Implement Brexit

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Is anyone really surprised that, in a leaked memo, a consultant from the global financial services company Deloitte, working for the Cabinet Office, has concluded that the Tory government is in disarray when it comes to implementing Brexit?

The consultant highlighted that “no common strategy has emerged” between government departments regarding how to implement Brexit, despite what the Guardian, reporting on the memo, which was leaked to the Times, described as “extended debate among the permanent secretaries who head Whitehall departments.” The Guardian and also explained that the various government departments are working on “well over 500 projects, which are beyond the capacity and capability of Government to execute quickly,” adding that the government may need to hire an extra 30,000 civil servants to deal with the additional work.

The consultant added:

One Department estimates that it needs a 40% increase in staff to cope with its Brexit projects. In other words, every Department has developed a “bottom up” plan of what the impact of Brexit could be — and its plan to cope with the “worst case”. Although necessary, this falls considerably short of having a “Government plan for Brexit” because it has no prioritisation and no link to the overall negotiation strategy.

The consultant also noted that there is a fundamental split between, on one side, the three Brexit ministers — David Davis, Boris Johnson and Liam Fox, putting their enthusiasm for Brexit above the economy — and on the other the chancellor, Philip Hammond, and business secretary Greg Clark, who appear to be demonstrating an unfashionable desire to protect the economy, and that Theresa May is developing a reputation as a control freak; as the consultant described it, she “is rapidly acquiring the reputation of drawing in decisions and details to settle matters herself — which is unlikely to be sustainable.”

The consultant also mentioned Nissan, noting that, as a result of the deal that the Japanese carmaker has secured, in which, last month, as the Guardian described it, the company “announced that two new car models would be built in Sunderland, safeguarding 7,000 jobs, after receiving “support and assurances” from the government about the UK’s future outside the EU, “[o]ther major players can be expected to, similar to Nissan, point a gun at the Government’s head.”

As well as concluding that “there will be no clear economic-Brexit strategy any time soon because it is being developed on a case-by-case basis as specific decisions are forced on Government,” the consultant also explained that “the Government’s priority remains its political survival, not the economy” — something I think many of us knew, but will be alarmed to see spelled out so clearly.

No wonder the government responded with what the Daily Telegraph described as an “excoriating attack on Deloitte” in which Theresa May’s spokeswoman described it as “a firm touting for business aided by the media” — a rather desperate claim, it seems to me, considering that it actually appears to be rather difficult to argue with the consultant’s conclusions.

Tim Farron, the leader of the Liberal Democrats, said that the leaked memo showed a “shambles at the heart of government” over the direction of Brexit. He added, “It’s time for the Prime Minister to stop being led astray by her warring cabinet. Otherwise her government is heading for the worst possible outcome: a reckless, destructive Brexit that will do untold damage to British jobs and the economy.”

Brexit criticism by the Institute for Government

In related news, the Belfast Telegraph reported how the Institute for Government, which is publishing a report on Brexit next month, has also just revealed some of its fears and criticisms:

The Institute for Government, which has been talking to key figures inside and outside Whitehall ahead of a report next month, said it had been told that Brexit represented an “existential threat” to the operation of departments whose budgets and staffing have been sharply reduced in recent years.

A “secretive approach” at the top of Theresa May’s administration was causing “significant uncertainty” for Whitehall departments and preventing civil servants from planning far enough ahead. To some outsiders, the process appears “chaotic and dysfunctional”, said the thinktank, which warned the Prime Minister: “Silence is not a strategy”.

Although a Deloitte spokesman conceded that the consultant’s memo “was a note intended primarily for internal audiences,” Joe Owen of the Institute for Government said that, “while he may not recognise all of the accountancy firm’s figures, some of its claims did chime with the thinktank’s findings,” as the Belfast Telegraph described it.

In an article on the IFG’s website, he stated:

Whitehall has most of the technical skills required to deliver Brexit … What Whitehall does not have is the capacity to deliver Brexit on top of everything else to which it is already committed. The work required to deliver Brexit has been described to us as an existential threat to how some departments operate. Managing this whilst continuing to deliver existing priorities with the smallest Civil Service in decades is unsustainable.

He added:

Departments like Defra are in the middle of a transformation programme that was ambitious before Brexit came along – achieving a 25% cut to resource budgets over the next five years must now be considered undeliverable.

There are departments upon which Brexit will have a huge impact. We hope the Autumn Statement will show the commitments the Government intends to keep, and what it will drop, so resources can be focused on the Brexit task.

Owen added, “There is a huge amount of work already underway, in both DExEU and the rest of Whitehall, but the lack of publicly visible direction and secretive approach at the top means much of it is too reactive.” He also stated, “Those leading Brexit in departments know little more than the general public — an Article 50 trigger some time by March 2017 and a two-year negotiating window. There is no understanding of what the process of reaching a negotiating position looks like or even the criteria required to get there, even on specific issues, which make departmental planning of activity and analysis very difficult.”

On business, Owen noted that “Brexit has caused significant uncertainty for businesses and departments, and in the absence of certainty there is a need for confidence and clarity about the process. The current political approach and the absence of a clear overarching plan for exiting the EU means there is neither.”

In conclusion, Owen echoed the Deloitte consultant’s conclusion that “the Government’s priority remains its political survival, not the economy,” noting that, for Theresa May, “with a slim majority and a need to satisfy ‘Remainers’ and ‘Leavers’ in her own party (as well as across the country), the more [she] reveals the more difficult her job of party political management becomes.”

However, he added, “silence is not a strategy. Failure to reveal the Government’s plan to reach a negotiating position is eroding confidence among business and investors, and encouraging unhelpful speculation about what the final destination might be.”

Below, via Sky News, is the full text of the Deloitte consultant’s memo.

Brexit memo, written on November 7 by a consultant from Deloitte working for the Cabinet Office

The Political Domain

The Prime Minister’s over-riding objective has been to keep her party from repeating its history of splitting four times in the past 200 years over global trade – each time being out of power for 15-30 years. The public stance of Government is orientated primarily to its own supporters, with industry in particular being on the radarscreen — yet.

The Government’s appeal to the Supreme Court has to be seen in this light — it is about avoiding any more public debate than necessary because it will expose splits within the predominantly “remain” Conservative MPs and intensify the pressure from predominantly “leave” constituency parties. A General Election is only a last resort for three reasons — boundary changes (that favour the Conservatives) will not be effective until 2019; the Fixed Term Parliaments Act obstructs Prime Ministerial freedom to call an election at will; and it may suit major decision makers to slowly shift away from more difficult aspects of Brexit on the grounds that Parliament has forced them to do so.

The divisions within the Cabinet are between the three Brexiteers on one side and Philip Hammond/Greg Clark on the other side. The Prime Minister is rapidly acquiring the reputation of drawing in decisions and details to settle matters herself — which is unlikely to be sustainable. Overall, it appears best to judge who is winning the debate by assuming that the noisiest individuals have lost the intra-Government debate and are stirring up external supporters.

The Supreme Court appears likely to delay its ruling until early January and, assuming it sustains the High Court, a short enabling bill will then be submitted to Parliament, permitting the Government to invoke Article 50 in March as planned. The Government will probably be able to face down wrecking amendments, but the debate in Parliament will certainly shift expectations of what will be achieved/sellable in Brexit negotiations. Remain supporters can be expected to reserve their fire until winners and losers emerge from negotiation and the political atmosphere allows more sophisticated assessment of choices.

The Government Domain

Individual Departments have been busily developing their projects to implement Brexit, resulting in well over 500 projects, which are beyond the capacity and capability of Government to execute quickly. One Department estimates that it needs a 40% increase in staff to cope with its Brexit projects. In other words, every Department has developed a “bottom up” plan of what the impact of Brexit could be — and its plan to cope with the “worst case”. Although necessary, this falls considerably short of having a “Government plan for Brexit” because it has no prioritisation and no link to the overall negotiation strategy.

However, it may be six months before there is a view on priorities/negotiation strategy as the political situation in the UK and the EU evolves. Despite extended debate among Permanent Secretaries, no common strategy has emerged, in part because the potential scope and negotiating positions have to be curtailed before realistic planning can happen, in part because of the divisions within the Cabinet. It is likely that the senior ranks in the Civil Service will feel compelled to present potential high level plan(s) to avoid further drift.

Departments are struggling to come up to speed on the potential Brexit effects on industry. This is due to starting from a relatively low base of insight and also due to fragmentation – Treasury “owning” financial services, DH-BEIS both covering life sciences, DCMS for telecoms, BEIS most other industries, DIT building parallel capability focused on trade etc.

Capability-building is making slow progress, partly through deliberate control by the Cabinet Office and partly from Treasury’s opening negotiating position that Departments will meet Brexit costs from existing settlements — although no one is treating that position as sustainable. Expectations of increased headcount are in the 10-30,000 range. Initiatives to build capability are getting off the ground — the Diplomatic Academy is providing trade training programmes, Cabinet Office is discussing system-wide capability programmes.

The Autumn Statement on 23rd November is expected to provide some headlines in terms of infrastructure investment, making the UK fit for growth and the inclusive economy. It will not provide resources for the Civil Service to grow its Brexit capacity and capability. In fact, we are more likely to see a further squeeze on Departmental operating costs to compensate for new spending.

The Industry Domain

Government expects lobbying on three levels to continue:

1. Company-specific decisions — the Nissan investment decision is a prime example. These are viewed as major opportunities/threats for Government. Other major players can be expected to, similar to Nissan, point a gun at the Government’s head.

2. Industry insights — the major challenge for industry and Government are “the unknown unknowns” where industry has to educate Government fast on the most important negotiating issues — e.g., they think they know about talent, but know they know little about data.

3. Overall business concerns — the province of CBI and largely dealt with as a PR issue.

Industry has two unpleasant realisations — first, that the Government’s priority remains its political survival, not the economy[;] second, that there will be no clear economic-Brexit strategy any time soon because it is being developed on a case-by-case basis as specific decisions are forced on Government.

Andy Worthington is a freelance investigative journalist, activist, author, photographer, film-maker and singer-songwriter (the lead singer and main songwriter for the London-based band The Four Fathers, whose debut album ‘Love and War’ and EP ‘Fighting Injustice’ are available here to download or on CD via Bandcamp). He is the co-founder of the Close Guantánamo campaign (and the Countdown to Close Guantánamo initiative, launched in January 2016), the co-director of We Stand With Shaker, which called for the release from Guantánamo of Shaker Aamer, the last British resident in the prison (finally freed on October 30, 2015), and the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (published by Pluto Press, distributed by the University of Chicago Press in the US, and available from Amazon, including a Kindle edition — click on the following for the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. He is also the co-director (with Polly Nash) of the documentary film, “Outside the Law: Stories from Guantánamo” (available on DVD here — or here for the US).