HM Revenue and Customs has already hired 2,300 extra civil servants to prepare for Brexit and expects that number to increase to as many as 5,300 if the UK fails to reach a withdrawal agreement with the EU.
Giving evidence to the Exiting the EU Committee yesterday alongside other departmental chiefs, HMRC perm sec Jon Thompson said the tax agency will spend £260m this financial year on Brexit preparations. However he added that if the UK strikes a Brexit deal with the EU before March, it expects to spend £400m next year, rising to £450m in a no-deal scenario.
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In the event of no deal, Thompson said he expected to have “well north” of 4,500 additional staff by the end of the financial year, with hiring continuing into next year. In any scenario a “significant further tranche” will join HMRC in November.
HMRC’s “hardened up” staffing figure is towards the higher end of its original no-deal estimates, which ranged from 4,500 to 5,500, he said.
Also giving evidence to the committee was the government’s chief non-executive director, Sir Ian Cheshire, who said the civil service was facing “one of the major peacetime challenges to government” as time runs out to prepare for no deal.
Cheshire told the committee 3,000 extra civil servants had been appointed across the whole of the civil service since April to assist with Brexit preparations. The civil service expects to hire some 16,000 civil servants in total over two years to help prepare for Brexit.
As a large agency with a high Brexit-related workload, HMRC has taken on many more staff than some other departments, including those represented at yesterday’s session. Department for Health and Social Care perm sec Sir Chris Wormald said his department – which does not include NHS staff – had hired around 100 people and had “a few more to recruit”.
The Department for Transport has around 150 employees whose jobs are “all or mostly” related to Brexit, many of whom were existing DfT employees, its perm sec, Bernadette Kelly, said. A contingency plan has been approved to increase “by a similar number” in a no-deal scenario, she said.
Civil servants ‘hamstrung’
Uncertainty about the outcome of Brexit negotiations is a major concern across the civil service, the senior officials told the committee.
“We are ready to go at a point when we can get the signal to move,” Cheshire said. “But the civil service is hamstrung because we don’t have the clarity of that decision.”
“I’m very confident we know where multiple landmines might be. The problem is we don’t know which ones are most likely to go off in that period,” he said.
One of the greatest concerns is that it is impossible to predict how other EU member states will respond in a no-deal scenario, Thompson warned.
Speaking about customs checks, Thompson said: “We don’t know whether the French, the Dutch, the Belgians and the Irish in particular will be reasonable or they’ll be legalistic and it makes a significant difference to the level of checking which may or may not take place with imports and exports.”
He said it was impossible to reach a provisional agreement with France about how to proceed in the event of no deal, as the French did not want to work on a side deal while UK-EU negotiations on the withdrawal agreement were ongoing. Member states’ behaviour was one of three of HMRC’s red-rated Brexit risks, he said, along with customs readiness and how Northern Ireland will be affected.
He said in his view, a conversation in which both sides agreed not to increase the number of customs checks at the UK border should not take more than a few hours, but added: “I don’t know if that’s realistic, I’ve literally no idea.
“You are trying to guess what the president of France will instruct customs staff to do and I can’t speculate on that… I can’t mind-read the president of France.”
Meanwhile in the health department, Wormald said “appropriate contingencies” were in place to protect the supply of medicines into the UK in a no-deal scenario but refused to give an outright assurance the supply would not be affected.
“We are confident that we are putting in place the correct mitigations but with such a complex supply chain it’s very challenging,” he said.