Report

by the Comptroller
and Auditor General

Implementing the UK’s exit from the European Union

People and skills: The role of the centre of government

HC 626 Session 2017–2019 1 December 2017

Our vision is to help the nation spend wisely.

Our public audit perspective helps Parliament hold government to account and improve public services.

The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of £734 million in 2016.

Report by the Comptroller and Auditor General

Ordered by the House of Commons
to be printed on 1 December 2017

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

Sir Amyas Morse KCB
Comptroller and Auditor General
National Audit Office

29 November 2017

This briefing describes how the centre of government works with departments to put in place the people and skills needed to implement the UK’s exit from the European Union.

© National Audit Office 2017

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11652 12/17 NAO

The National Audit Office’s programme of work on Exiting the EU

Leaving the European Union will be a key moment for the UK, and one that will have a very significant impact across the public sector.

The NAO has an ongoing programme of work across government to examine how government is organising itself to deliver a successful exit from the EU. This document is one of a series of reports that provides insight on aspects of government’s preparedness for Exiting the EU.

Our back catalogue of work is set out in Appendix One.

The National Audit Office study team consisted of:
George French, Jonny Mood, Sarah Pearcey, Cat Sheil, Leanne Stickland, Anna Sydorak-Tomczyk and James Janson Young, under the direction of Peter Gray.

This report can be found on the
National Audit Office website at
www.nao.org.uk

For further information about the National Audit Office please contact:

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Tel: 020 7798 7400

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Summary

The task of implementing the UK’s exit from the EU will require government to develop new policies to operate post-exit, put in place the necessary primary and secondary legislation, and establish new processes and systems. These tasks require the right people and skills to be in the right place when needed.

Identifying the people and skills needed for Exit is a complex task

There are over 310 Exit work streams across government.

Departments’ workforce planning and modelling will have to anticipate what people and skills they need under a range of scenarios and reach a judgement on how to prepare for that. They also need to consider factors such as the time it takes to put someone in post.

Departments will need to put the right mix of people and skills in place to match the task

The scale and nature of the Exit work required in some departments changes their task substantially. While some people have moved departments in response to Exit, the people and skills that are currently in departments are largely influenced by what those departments have needed in the past.

The immediate demand from departments has been for staff with policy skills. As departments implement their plans, high-level task analysis shows there will be greater demand for specialist skills. The level of demand for operational delivery staff will be dependent upon the outcome of negotiations.

The centre of government identified five departments that had an immediate need for support in meeting their needs for people and skills following the EU referendum

Two were newly formed departments. The other three are taking forward a large volume of Exit-related work relative to the size of the department.

At October 2017, 2,409 extra roles had been funded and created in those five departments, and 87% of the roles had been filled.

There is no centrally held figure for the number of people working on EU Exit across the civil service, or of new roles created.

The centre of government has a role in overseeing and supporting the recruitment and deployment of staff needed for Exit across government

Civil Service HR in the Cabinet Office has coordinated activity to fill roles in the five departments which most needed support. It is monitoring the requirements of those departments and the progress made in filling gaps. It works with DExEU to understand how resourcing demand across departments might change depending on the outcome of negotiations.

Specialist areas of expertise – called ‘functions’ – provide support and capability across government and are working with departments to understand the skills they need to implement Exit. Functions are developing plans to provide support to high priority areas of work in departments.

The challenge of resourcing Exit

Exiting the EU has created a new demand for people and skills

Assessing the scale of the task (2016-17)

Following the EU referendum, two new departments were created: the Department for Exiting the European Union; and the Department for International Trade.

Departments across government had to identify what work they needed to do to deliver Exit.

This work involved drawing on a range of skills such as:

policy;

legal, to assess the EU laws that are part of the UK legal system; and

analytical, such as economists.

It also required the reallocation of staff within and across departments and the use of consultants by some departments.

In summer 2016, 12 of the 17 then main departments had identified a ‘considerable’ or ‘significant’ impact to their capability in policy, operational and specialist skill areas.

There are over 310 Exit work streams across departments

‘Work streams’ are the areas of work that departments need to carry out in order to deliver a smooth Exit. They vary in size and complexity but all represent new areas of work for departments. As such the number of work streams does not necessarily indicate the scale of the task for each department.

Five departments in particular had an immediate need for support in meeting their needs for people and skills following the EU referendum.1 Their demand was largely for policy staff.

These five departments account for around half of the work streams across government.

Two more departments are expected to have a large need for operational staff from 2018-19. The number of roles they need will vary depending on the outcome of negotiations.

Development of plans and implementation (2017-18 onwards)

Implementing Exit work streams will require some departments to put in place new processes and systems. Departments will need to ensure they have the skills required to implement their plans.

Departments may need to make greater use of specialist skills such as:

project delivery;

commercial; and

digital.

Central areas of expertise in government called functions are responsible for these specialist skills. The functions are assessing departments’ plans and the demands for specialist skills to implement Exit.

Identifying the people and skills needed to implement Exit is a complex task

Each department needs to assess and plan for how the people and skills needed will vary under negotiated and ‘no deal’ scenarios, as well as reacting to any changes that arise during negotiations

The civil service has longstanding capability challenges

1 The five departments are: the Department for Exiting the European Union; the Department for International Trade; the Department for Business, Energy & Industrial Strategy; the Department for Digital, Culture, Media & Sport; and the Department for Environment, Food & Rural Affairs.

The people and skills needed by departments

Five departments had an immediate need for support in meeting their people and skills needs following the EU referendum

The five priority departments

Following the EU referendum departments had to identify what work they needed to do to deliver Exit. This work involved, for example, identifying and analysing options for the UK’s future relationship with the EU.

The centre of government identified five departments that most needed support in meeting their people and skills needs. This was because they were newly formed, or have a large volume of Exit-related work relative to the size of the department, or both.

Department for Exiting the EU (DExEU) is a new department and was set up to manage the process of Exit.

Department for International Trade was created to promote British trade and investment across the world. It has 10 Exit work streams.

Department for Business, Energy & Industrial Strategy was formed following a machinery of government change. It has the largest number of Exit work streams (69).2

Department for Digital, Culture, Media & Sport is one of the smaller government departments and has 19 Exit work streams.

Department for Environment, Food & Rural Affairs has 43 Exit work streams. A large amount of the department’s work is impacted by EU Exit.

There was, and remains, demand across other government departments for people for Exit work.

To date departments have largely needed policy skills

There was an immediate demand for policy skills reflecting the need for departments to assess the implications of Exit. Policy skills were needed to develop and assess policy options and to inform negotiating positions.

New Exit roles have been created in those five departments

At 1 October 2017, 2,409 new roles had been identified and funded in the five departments.3 There is no centrally held figure for the number of people working on Exit across government as a whole, or for the new roles created in departments.4 At 1 October 2017, Cabinet Office recorded that in the five departments:

87% (2,086) of the roles had been filled.

13% (323) of the roles had not been filled.

The Department for Business, Energy & Industrial Strategy had the largest number of unfilled roles at 1 October 2017 (122).5 This department has the largest number of work streams across government. The department is recruiting to fill these roles.

Some of these departments are likely to need more people in addition to the roles already created and funded.

Departments need to manage staff risks related to unfilled posts. These include managing the resilience of staff who take on additional work and any impact on retention.

2 Work stream data is taken from DExEU’s database as at 10 November 2017. The approach taken by DExEU to classify and therefore count work streams may differ from that adopted by individual departments. For example, the Department for Business, Energy & Industrial Strategy records that it has 68 work streams compared with 69 in DExEU’s database.

3 At 1 October 2017 departments were in the process of agreeing funding for further resources.

4 Some staff recently recruited to departments have been placed in Exit-related work. For example, the Government Legal Department told us that in the past 18 months it has recruited over 300 lawyers to meet staff turnover and increased demand for services. It estimates that around 240 full-time equivalent staff are working on Exit-related activities. Other departments have indicated their likely future needs. For example, in evidence to the Public Accounts Committee Jon Thompson indicated that HM Revenue & Customs has identified a need for a further 3,000-5,000 roles from 2018-19 under a ‘no deal’ scenario.

5 As noted in Implementing the UK’s exit from the European Union: The Department for Business, Energy & Industrial Strategy, as at November 2017, the Department has recruited 269 new staff.

The role of the centre of government in meeting people and skills needs

The centre of government supports departments in meeting their needs for people and skills

Although departments are responsible for their own workforce planning, the centre of government has a role in overseeing and supporting the recruitment and deployment of staff needed for Exit across government

There are 11 cross-government functions. The functions aim to provide the specialist expertise needed by government and to provide a coherent approach to recruiting and deploying specialists. The functions support departments who have demand for these skills.

Each of these functions has a head, most of whom sit within the Cabinet Office. They are responsible for building specialist capability and skills across government.

The functions work on different models. Some have a small central team and most of their staff work in departments (such as the HR function). Others hold most of their staff centrally, and provide services to departments as required (such as the legal function). In this briefing when discussing these functions we are referring to the central teams.

Five functions are most closely involved in Exit work

Functions aim to provide the specialist expertise needed by government. Five functions are most closely involved in providing support to departments on issues relating to Exit.

Four of these are hosted by the Cabinet Office:

Infrastructure and Projects Authority (the Authority) is the government’s centre of expertise for infrastructure and major projects. It supports delivery of the biggest, most strategically significant and riskiest projects across government. The Authority has increased the scale of its support and assurance work in response to Exit. It leads on the coordination and recruitment of project and programme managers across government, which is focused on Exit at present.

Civil Service Human Resources (CSHR) comprises HR staff working across the civil service. The central team in Cabinet Office leads on workforce strategy, with departments and executive agencies remaining responsible and accountable for their own workforce planning. It works with departments to ensure that they have the people and skills needed for Exit, including working with the other functions to identify skill gaps and support cross-government recruitment.

Government Commercial Function works across government on commercial activity. It is working with DExEU and departments to examine the need for commercial skills across government, including the people needed to assess commercial aspects of departments’ Exit plans.

Government Digital Service coordinates government digital activity. It works with departments to identify the digital skills departments need to prepare for Exit. It works with DExEU to review, support and challenge departmental plans where they rely on digital expertise.

The fifth function closely involved in Exit work is a non-ministerial department:

The Government Legal Department provides legal advice on the development, design and implementation of government policies and decisions about the UK’s future relationship with the EU. It works with DExEU and departments to plan, coordinate and draft secondary legislation needed for Exit. It works with the Parliamentary Counsel on primary legislation.

Civil Service HR is coordinating workforce planning across government

Civil Service HR’s central workforce team is based in the Cabinet Office and leads on workforce strategy for the civil service

Civil Service HR set up an EU Exit Capacity and Capability programme

In May 2017, Civil Service HR (CSHR) set up the EU Exit Capacity and Capability programme. This aims to work with departments to identify current and future capability requirements across government and to help meet urgent demand.

In July 2017, CSHR established a programme board that brings together staff from CSHR, key functions and the policy profession, and HR staff from key departments impacted by Exit. The programme board provides updates to the cross-government EU Exit and Trade board of officials, which oversees preparations for Exit.

The programme board discusses issues such as which departments require central support and provision of specialist skills. It discusses and identifies how to improve aspects of the recruitment process, such as reducing the time taken to security clear staff.

The programme board provides a forum for departments to discuss the people and skills they need to recruit, to ensure coordination between departments in recruitment and avoid competition.

The objective of the board is to “ensure that the civil service has the capacity and capability required to ensure the UK achieves a successful exit from the EU”.

Civil Service HR is working with departments that have the most urgent need for support

CSHR is coordinating work to meet demand for people and skills in the five departments with the most urgent need for support. This is particularly the case for policy skills. Policy is not one of the 11 functions and so has no central mechanism for cross-government recruitment.

CSHR is monitoring the requirements of those five departments, the activities underway to recruit people, and progress in filling gaps.

CSHR works with DExEU to understand how resourcing demand across departments might change depending on the outcome of negotiations. CSHR does not monitor in detail the total resourcing requirements for Exit work across government.

The demand for people and skills will shift as departments develop and implement their plans. CSHR expects a greater demand for specialist skills, such as project management, commercial or digital and for operational staff. The level of demand will depend on the outcome of negotiations. CSHR expects that its activity across departments will change by the end of 2017-18.

Activities coordinated by Civil Service HR to fill Exit roles

The activities coordinated by Civil Service HR to help the five departments it is supporting to fill their funded Exit roles can be categorised under the following headings.

Flexible resourcing models: the policy profession had no central mechanism to coordinate the recruitment and deployment of people. CSHR asked departments to nominate policy staff for moves and the Department for Exiting the EU asked for expressions of interest in a move. The policy profession plans to develop an approach to improve the process for moving people to work on urgent policy priorities across government.

Campaigns for policy and project delivery: CSHR has coordinated departmental recruitment campaigns for policy and project delivery staff. It has also centrally managed a project delivery campaign for the Infrastructure and Projects Authority.

Campaign reserve lists: people who met the requirements of a campaign vacancy but were not appointed at interview have been placed on a reserve list. Departments can recruit from this reserve list.

Civil Service Fast Stream: this scheme places people in departments for a series of short-term postings over a four year period. CSHR has moved fast streamers to priority departments. It has also appointed to departments, via the Direct Appointees Scheme, people who met the requirements for the Fast Stream but did not get a placement to roles. More than half of the people matched to roles from Civil Service HR activity have come via the Fast Stream.

Functions are working with departments on the skills they need for implementing Exit

The departments most affected by Exit will need to increase their access to specialist skills

Departments are developing and implementing their Exit work stream plans. Departments need to plan for different scenarios and these may have different requirements in terms of people and skills.

The Department for Exiting the EU has asked departments to share their Exit planning information with the central government heads of the 11 functions, particularly the Government Commercial Function, Government Digital Service, Civil Service HR and the Infrastructure and Projects Authority.

This process of sharing information is to allow central government to build an aggregate picture of resource requirements and enable functions to plan for the Exit-related demands placed on their services.

The functions provide support and capability

The functions provide expert support and advice to departments on Exit matters. For example, the Government Legal Department is working with departments to plan, coordinate and draft secondary legislation for Exit. The Infrastructure and Projects Authority has worked with departments in their planning for Exit.

The functions are involved in recruiting skills for the centre and for departments. For example, the Government Legal Department told us that in the past 18 months it has recruited over 300 lawyers to meet staff turnover and increased demand for its services. It estimates that around 240 full-time equivalent staff are currently working on Exit-related activities. The Infrastructure and Projects Authority and CSHR worked together on cross-government recruitment campaigns which have helped to fill 106 project delivery roles. This recruitment covers new Exit-related roles, and roles to fill other business needs.

The functions are assessing the demand for their skills to implement Exit. The Government Commercial Function and the Government Digital Service are both working with departments to identify the specific commercial or digital skills they need, to build a detailed picture of what is needed across government. For example, for the Government Commercial Function this includes reviewing the extent to which existing contracts might require renegotiation and redrafting.

Three functions are developing plans to provide support together to high priority work streams. The Infrastructure and Projects Authority, Government Commercial Function and Government Digital Service are considering how best to provide this support to departments.

The skills and people needed across government will change as departments implement their Exit work streams

The distribution of staff and skills will have been shaped by departments’ historic needs. Implementing Exit requires workforce modelling and may require a redistribution of people and skills across government.

Departments’ initial demand has largely been for policy skills. This will change as departments move into implementation.

Through early high-level task analysis, some departments have identified an increased need for people with skills in areas such as operational research and operational delivery. They will also have an increased need for specialist skills such as project delivery.

The departments likely to have the largest need for operational staff from 2018-19, depending on the outcome of negotiations, are:

HM Revenue & Customs; and

Home Office.

In evidence to the Public Accounts Committee, Jon Thompson indicated that HM Revenue & Customs estimated it may require between 3,000 and 5,000 additional roles for a ‘no deal’ scenario.

The position in March 2017 suggested that, at that point, some departments had relatively few specialist staff.

DExEU: people and skills required to set up the department

Department for Exiting the EU: people and skills

DExEU was created with a time-limited and high priority task. It had to quickly recruit the people and skills it needed to carry out this task.

DExEU has expanded rapidly since it was formed in July 2016

The majority of its staff are in policy roles

DExEU has used a range of recruitment options to obtain the staff and skills it needs

Most staff are on loan from other government departments, reflecting the time-limited nature of the department. The majority of these staff are on two-year loans with DExEU.

Fast Stream staff are on rotations between departments which range between six and eighteen months.

DExEU is also using external expertise to meet some skills needs

DExEU is using external expertise, such as secondments and consultants, to meet some of its skills needs. During 2016-17 DExEU received secondees or pro bono consulting work from a range of organisations including: Boston Consulting Group; Accenture; KPMG; McKinsey; Deloitte; Barclays; both Houses of Parliament; and the Bank of England.

DExEU had 14 secondees in post at 31 October 2017. DExEU contracted McKinsey for work on policy and delivery coordination between April and October 2017. The contract with McKinsey is for £1.9 million excluding VAT.

DExEU has a turnover rate higher than the civil service average

DExEU has calculated that its average turnover rate for 2017-18 so far is 3% per month, or 9% per quarter. The recent average turnover rate across the civil service as a whole has been around 9% per year. DExEU’s rate is comparable to other departments with high levels of fixed-term appointments; for example, Cabinet Office’s turnover rate for 2016 was 35%.

DExEU is working to collect data on why people have left. Of the 61 people who gave a reason, three left the civil service, 23 were making expected moves as their loans from other departments ended, and the remainder moved within the civil service.

Appendix One

NAO programme of work and publications

NAO’s programme of work on implementing the UK’s exit from the EU

In scrutinising public spending the National Audit Office (NAO) routinely monitors the challenges faced by departments and, where the C&AG identifies a pressing or relevant issue, reports on those to Parliament.

Leaving the European Union will be a historical moment for the UK, and one that will have a very significant impact across the public sector. As with other aspects of government activity, it is not for the NAO to comment on the policy choices being made in relation to exiting the EU. But the management systems that support the implementation of these policies fall naturally within the NAO’s remit.

The NAO has an ongoing programme of work across government to examine how government is organising itself to deliver a successful exit from the EU. This covers the key bodies in the centre of government and the major spending departments that have to deliver Exit programmes.

Out of this work, we are publishing a series of reports to provide insight on aspects of government’s preparedness for exiting the EU.

Recent NAO publications relevant to the UK exiting the European Union

Implementing the UK’s exit from the European Union: the Department for Business, Energy & Industrial Strategy (November 2017)

Implementing the UK’s exit from the European Union: the Infrastructure and Projects Authority (November 2017)

Implementing the UK’s exit from the European Union: the Department for Exiting the EU and the centre of government (November 2017)

The UK Border (October 2017)

Customs Declaration Service (July 2017)

HM Treasury’s economic analysis in the lead-up to the referendum on European Union membership (June 2017)

Capability in the Civil Service (March 2017)

Briefing on the EU-UK finances (December 2016)

These reports are available on the NAO website: www.nao.org.uk/search/pi_area/exiting-the-eu/type/report

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