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OFFICIAL REPORT (Hansard) Committee for The Executive Office OFFICIAL REPORT (Hansard) United Kingdom's Exit from the European Union: Department for the Economy, Department of Finance and the Executive Office 5 October 2016 NORTHERN IRELAND ASSEMBLY Committee for The Executive Office United Kingdom's Exit from the European Union: Department for the Economy, Department of Finance and the Executive Office 5 October 2016 Members present for all or part of the proceedings: Mr Mike Nesbitt (Chairperson) Mr Danny Kennedy (Deputy Chairperson) Mr Cathal Boylan Mrs Pam Cameron Mr Stewart Dickson Mr Seán Lynch Mr Philip McGuigan Mr Richie McPhillips Witnesses: Mr Derek Baker Department for the Economy Mr David Sterling Department of Finance Mr Paul Brush The Executive Office The Chairperson (Mr Nesbitt): I welcome David Sterling, the permanent secretary at the Department of Finance (DOF); Derek Baker, deputy secretary of the strategic policy group at the Department for the Economy (DFE); and Paul Brush, the head of EU future relations in the Executive Office (TEO). David, I hope that you do not mind if I say something to Paul before you begin. Paul, this is a new department under this mandate. Mr Paul Brush (The Executive Office): Yes; it is a new division. The Chairperson (Mr Nesbitt): David, no papers were provided for the Committee. Mr David Sterling (Department of Finance): No. Sorry, were papers asked for, Chair? The Chairperson (Mr Nesbitt): We tend to expect them. Mr Sterling: I was not aware of that. The Chairperson (Mr Nesbitt): Over to you. Mr Sterling: Thanks very much for the invitation to outline the work being done by the Northern Ireland Departments to prepare for the UK negotiations on leaving the EU. As you noted, Sir Malcolm McKibbin cannot be here today; he is at a trilateral meeting on EU exit issues in London with officials from Dublin, London and Belfast. I am here in my capacity as one of the co-chairs of an 1 interdepartmental coordinating group set up at the behest of the Executive to coordinate a response to the EU exit. The request went to Malcolm after an Executive meeting in July. Andrew McCormick, the permanent secretary at the Department for the Economy, is my co-chair. He cannot be here today, but Derek is here in his place. Together we have been working with all Departments to pull together analysis of the potential impact of the exit from the EU and to provide advice to Ministers on how they might respond to the challenges. Each Department has put in place a Brexit team to coordinate the work in the nine Departments. That is the main structure, and we have been doing quite a lot of work through that arrangement. Significant engagement has also taken place between Executive and Whitehall officials as well as with our counterparts in Dublin, Edinburgh and Cardiff. I can give you more detail about those discussions and the arrangements for them. There is still quite a bit of uncertainty over what Brexit will mean, but we seek to assess the opportunities that will arise and the risks that need to be addressed. The First Minister and deputy First Ministers have made it clear that they intend to have a full and active voice in shaping the terms of the UK's negotiations and the arrangements for exit. At a ministerial level, it seems likely that the discussions between the UK Government and the devolved Administrations will be through the Joint Ministerial Committee (JMC) machinery. At the apex of that, you have the Joint Ministerial Committee (Plenary) (JMCP), and it is due to meet on 24 October. Our expectation is that the First Minister and deputy First Minister will represent the Executive at those negotiations. There is to be a lower-level group, the Joint Ministerial Committee (European Negotiations) (JMCEN), which will probably meet to get through some of the more detailed discussions at a later stage. At official level, as I say, we are engaged on a bilateral basis at departmental level. The Department of Agriculture, Environment and Rural Affairs (DAERA), for example, is talking to the Department for Environment, Food and Rural Affairs (DEFRA), Derek's Department is talking to the Department for Business, Energy and Industrial Strategy (DBEIS), and, obviously, we are talking to the Treasury. A Whitehall permanent secretaries group has been set up, at which permanent secretaries from the three devolved Administrations have an opportunity to discuss issues with Olly Robbins, who is the permanent secretary in the Department for Exiting the European Union (DExEU). We have also been feeding the Northern Ireland perspective into a range of detailed sectoral reports that are being prepared by DExEU and are taking part in regular discussions with the Cabinet Office, which is also looking at various thematic issues. They have set up a couple of specific groups to look at market access and justice and security issues, and a border issues working group has been established at official level. It is important to point out that we are not relying on one means of engagement; we are using all channels available to us to find out what is going on and to maximise our influence. It is clear — there is no surprise about this — that the issues facing Northern Ireland are, perhaps, unique and more significant than for any other UK region. That gives a special focus to the work that we are doing. The particular concerns for the Executive were set out in the First Minister and deputy First Minister's letter of 10 August to the Prime Minister, which, I am sure, you are aware of. It identified five categories of issues: the border; economic competitiveness; energy supply and security of supply; future provision of EU funding; and sector-specific issues, particularly the agrifood sector, which comprises a much larger proportion of our economy than in other regions. That is a broad overview of where we are at the moment. We will continue further discussions with Whitehall Departments. At the weekend, the Prime Minister signalled an intention to trigger article 50 before the end of March 2017, so our expectation is that activity will increase over the next few months at ministerial and official level. As officials, our role is to provide Ministers with the best possible advice on the implications and on potential negotiating positions for the Executive. The Chairperson (Mr Nesbitt): Thank you, David. That is comprehensive. May I begin with contingency planning? In the face of such a massive event as an in/out referendum, it would be reasonable to expect that there was some contingency planning, even if you felt that the seismic result was unlikely. It appears that Sir Malcolm McKibbin commissioned some contingency planning in terms of this famous paper, which, we are told, was not finished. Why was the paper not finished? Mr Sterling: The First Minister gave a clear answer to your question about that paper in the Assembly yesterday, I think. I do not think that I have anything that I can usefully add to that. 2 The Chairperson (Mr Nesbitt): She said that Sir Malcolm had commissioned it and that neither she nor her predecessor had seen it. It appears that her partner in government, the deputy First Minister, had seen it. She also said that it had not been finished, and there was no opportunity to ask why not. Mr Sterling: As I say, I am not sure that I can add anything to that. The important thing to recognise is that, following the referendum result on 23 June, the Civil Service mobilised very quickly. I would not say that we were any less prepared than Whitehall has been. We have moved quickly to establish the apparatus that I have described across all Departments. Intense analysis has been completed over the summer, and we are now in a position where we are aware of all the potential implications. We are in a position to give advice to Ministers on all the major issues that have been identified. We will be able to give Ministers advice when it comes to the more detailed negotiations that will begin, I would think, within the next few weeks. We have caught up. It is also worth noting that we have been working with Deloitte, which has assisted us — on a pro bono basis, I should say — in conducting an assessment of capability and capacity requirements in the Civil Service. We now have an assessment of the likely need for resources over the next few years, and we will have to manage within that. The Chairperson (Mr Nesbitt): Are the departmental Brexit teams populated internally? Mr Sterling: Yes, they are populated internally. I would not want to generalise too much about what the Departments are doing because Departments are affected in different ways and their responses have been constructed in line with the context that they face. Although this is characterising things a little crudely, three Departments are, perhaps, affected more than others: the Department of Justice (DOJ), the Department for the Economy and the Department of Agriculture, Environment and Rural Affairs, with our Department being affected from a financial and EU funding perspective. I know that at least two of those Departments have set up special arrangements for consulting stakeholders. As I say, different approaches have been taken to conducting analysis and seeking the views of stakeholders across Departments. That is being done in the context of what each Department faces. The Chairperson (Mr Nesbitt): Would it be fair to say that there is a clear understanding and willingness in the Departments to reach out where capacity needs to be built up by engaging with the right stakeholders and experts? Mr Sterling: Yes — absolutely.
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