NAO report finds that new IT platforms and other infrastructure required a 10-figure investment
Credit: Yui Mok/PA
The cost of developing new IT systems and other infrastructure in preparation for Brexit cost government £1.5bn, a report from the National Audit Office has found.
During the 43 months between the EU membership referendum in 2016 and the UK’s eventual exit from the bloc on 31 January, Whitehall departments spent a cumulative total of £4.4bn on preparations, according to the NAO.
Around a third of this was classed as spending on “activities”, which included the likes of “building IT systems [and] advertising and communications”.
Among the technology programmes that have required significant investment are HMRC’s construction of the Customs Declaration Service – work which was already underway before the Brexit vote. But the decision to leave the EU meant that the system’s capacity requirements instantly increased almost fivefold.
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Putting in place the Settlement Scheme for EU citizens has also been a costly exercise. In the 2018/19 year, the Home Office was given £395m in Treasury funding to deliver the programme – including £63m to build the digital application process, £3.75m to undertake a marketing campaign, and £59m to hire the necessary caseworkers.
Additional staffing has been the biggest overall expense of government’s Brexit preparations, auditors found, with departmental spending up to end of January coming in at a running total of £1.9bn.
Digital programmes have certainly seen a large spike in personnel costs, including an increased reliance on multimillion-pound ‘bench’ agreements with large tech and professional services suppliers. Firms including Cognizant, Deloitte, and PA Consulting have been retained by government agencies on flexible long-term contracts that require them to provide teams of people at short notice to support urgent digital delivery needs.
Of the remaining £900m laid out by government in the last three and a half years, a third has been spent on “expertise and external advice”, while the rest represents “spend not assigned to a specific category”.
Although £4.4bn clearly represents a significant amount, it is still some way shy of the £6.3bn that the Treasury has made available since June 2016 to support Brexit prep.
“In preparing for EU Exit, government departments planned for multiple potential outcomes, with shifting timetables and uncertainty,” said NAO head Gareth Davies. “Producing this report has highlighted limitations in how government monitored spending on EU exit specifically, and cross-government programmes more generally. Our previous work has recommended that government continues to improve the way it plans and allocates money, linking spending to objectives.”