House of Commons Committee of Public Accounts Defra’s progress towards Brexit Sixty-Eighth Report of Session 2017– 19 Report, together with formal minutes relating to the report Ordered by the House of Commons to be printed 5 November 2018 HC 1514 Published on 14 November 2018 by authority of the House of Commons The Committee of Public Accounts The Committee of Public Accounts is appointed by the House of Commons to examine “the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the committee may think fit” (Standing Order No. 148). Current membership Meg Hillier MP (Labour (Co-op), Hackney South and Shoreditch) (Chair) Bim Afolami MP (Conservative, Hitchin and Harpenden) Douglas Chapman MP (Scottish National Party, Dunfermline and West Fife) Sir Geoffrey Clifton-Brown MP (Conservative, The Cotswolds) Chris Evans MP (Labour (Co-op), Islwyn) Caroline Flint MP (Labour, Don Valley) Luke Graham MP (Conservative, Ochil and South Perthshire) Robert Jenrick MP (Conservative, Newark) Gillian Keegan MP (Conservative, Chichester) Shabana Mahmood MP (Labour, Birmingham, Ladywood) Layla Moran MP (Liberal Democrat, Oxford West and Abingdon) Stephen Morgan MP (Labour, Portsmouth South) Anne Marie Morris MP (Conservative, Newton Abbot) Bridget Phillipson MP (Labour, Houghton and Sunderland South) Lee Rowley MP (Conservative, North East Derbyshire) Gareth Snell MP (Labour (Co-op), Stoke-on-Trent Central) Powers Powers of the Committee of Public Accounts are set out in House of Commons Standing Orders, principally in SO No. 148. These are available on the Internet via www.parliament.uk. Publication Committee reports are published on the Committee’s website and in print by Order of the House. Evidence relating to this report is published on the inquiry publications page of the Committee’s website. Committee staff The current staff of the Committee are Richard Cooke (Clerk), Laura-Jane Tiley (Second Clerk), Samir Setti (Second Clerk), Hannah Wentworth (Chair Liaison), Ameet Chudasama and Carolyn Bowes (Senior Committee Assistants), Zainab Balogun and Kutumya Kibedi (Committee Assistants), and Tim Bowden (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Committee of Public Accounts, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 6593; the Committee’s email address is [email protected]. Defra’s progress towards Brexit 1 Contents Summary 3 Introduction 4 Conclusions and recommendations 5 1 Risks to continuing international trade 9 The potential shortage of vets 9 Risk of disruption to chemical exports 10 Food imports 11 Engagement with industry stakeholders 12 2 The Department’s wider challenges 14 New legislation 14 Getting the right staff in place 14 Critical IT systems 16 Formal Minutes 17 Witnesses 18 Published written evidence 18 List of Reports from the Committee during the current Parliament 19 Defra’s progress towards Brexit 3 Summary The Department for Environment, Food & Rural Affairs (the Department) faces enormous challenges in the lead-up to EU Exit and, with the deadline of 29 March 2019 looming, still does not know which scenario it is preparing for. There is a high level of risk in the Department’s portfolio, with many of its plans dependent on co-operation from other departments, the devolved administrations and agencies and the goodwill of EU member states. The Department is too complacent about the levels of disruption or interruption to trade that may be faced. Fundamental issues for food, chemical and animal importers and exporters are yet to be resolved. Many businesses have not been given detailed advice on what is required by EU Exit, as the Department has had very limited engagement with stakeholders until recently. Six months since we last reported in May 2018, the situation for the Department’s stakeholders has changed very little, as the Department’s preparation for EU Exit continues to be complicated by its need to work on a range of solutions for different scenarios. It has now established a new directorate for business readiness and engagement, but its focus has been on industry and representative groups which means that individual businesses and organisations, in particular SMEs remain unaware and ill-prepared. This is all too little, too late and it is particularly concerning that the Department’s ability to impart specific information has been hampered by excessive secrecy at the centre of government and continuing uncertainty over the outcome of the negotiations. The Department has made good progress in drafting the 86 statutory instruments it must prepare, with three-quarters of them either fully drafted or near completion. But in its efforts to rush through the drafting, we remain concerned about risks to quality. The amount of parliamentary time that these, and those of other departments, will require is daunting. Cabinet Office needs to ensure that those of the highest significance across government receive greatest priority but that all receive adequate parliamentary scrutiny ahead of EU Exit. With the pace at which new legislation will have to be agreed we are seriously concerned about the level of scrutiny. We need the Department to be clear about the impact of not being able to make the necessary legal changes in time. Muddling through in the hope of goodwill is highly risky and means many businesses are left not knowing what the future will bring. 4 Defra’s progress towards Brexit Introduction A full six months after our previous report and, as the negotiations continue, the Department must still address a range of different scenarios, including Exit without a deal in March 2019, and a negotiated Exit with an implementation period lasting until the end of 2020, or possibly longer. In all its policy areas it must plan to have in place systems that will be appropriate for each scenario. Some of the Department’s plans rely on the EU to grant concessions to allow continuity of trade in the event of a no-deal Exit. For example, the UK is seeking continued participation in the European Chemicals Agency. Without this, exporters of chemical products would need to re-register their products with the Agency and may face a long wait while their registrations are processed. Exports to the EU of animals and animal products would require export health certificates that have to be signed off by vets that are not yet in place. The Department plans that food imports from the EU will be waved through into the UK without checks and hopes that the EU will reciprocate for UK food exports. On its engagement with stakeholders, we reported in May 2018 that the scope of the Department’s EU Exit programme remains uncertain and dependent on decisions yet to be taken. This uncertainty is making it difficult for the Department to engage and communicate effectively with businesses and stakeholders. The Department needs to lay 86 Statutory Instruments by the end of January in order to ensure legislation is in place when the UK leaves the EU. We first reported on the Department’s preparations in May 2018 and took further evidence on its progress on 15 October 2018. Defra’s progress towards Brexit 5 Conclusions and recommendations 1. In a no-deal scenario there is a risk of UK exports of animals and animal products being delayed at borders because of a shortage of vets. In the event of a no-deal Exit, the UK’s continued exports of animals and animal products to EU member states will for the first time need to be accompanied by export health certificates. These certificates currently have to be signed off by vets and the Department estimates that the equivalent of around 50 additional full-time vets will be needed to cope with the extra volume. Individual vets would probably take on such work on an ad hoc basis alongside their existing work, so the actual number of people required will be many more than 50 and the Department is cavalier about enough suitably qualified staff to take on this work being available. It believes that the training investment of around six hours online would not be a barrier to uptake, and that its requirements can be easily sourced from a pool of over 6,000 potential candidates in the private sector. However, the Department has failed to consider the geographic distribution of vets and their willingness to take on this additional work. At present the UK only allows this work to be undertaken by vets and although the Department is discussing this with the Royal College of Veterinary Surgeons no resolution has been reached that would extend the candidate pool. We are concerned that the increased demand for veterinary services will increase costs to UK exporters. 2. Recommendation: The Department needs urgently to develop a credible plan for increasing vet capacity for export health certificates that does not add to exporters’ costs including addressing concerns around coverage across the country and whether it is appropriate or possible for non-vets to sign off health certificates. 3. The Department is too complacent about the risk of disruption that UK chemical exporters could face in a no deal scenario. It is relying on the EU’s goodwill to help minimise any interruptions to trade. Under a no-deal Exit the registration of UK chemical products on the EU’s REACH system will no longer be recognised. Companies would not be able to continue exporting their products to EU member states until they had re-registered their products with the EU. We are concerned that the Department has underplayed what re-registration involves. It is dependent on the European Chemicals Agency delivering on its promise to open up the registration process to allow sufficient time to process the re-registrations without creating a hiatus in trade.