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NAO: DEFRA Will Struggle to Fulfil Duties Due to Budget Cuts and Brexit

23 December 2017   (0 Comments)
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DEFRA is under “significant strain” due to repeated resource cuts and a hefty Brexit workload, according a National Audit Office (NAO) report.

The report, published on 20 December, reviews DEFRA’s progress towards implementing the UK’s exit from the EU and how well it is coping. 

Due to repeated funding cuts over the years the department has had to slash its workforce only to start an intensive hiring programme to help it cope with new workload presented by Brexit.

DEFRA estimated it would need 1,200 new full-time equivalent posts to be filled by March 2018 and has so far filled 650 of them. To exacerbate matters, DEFRA and its delivery bodies will also have to backfill the posts left vacant where existing staff have been transferred into Brexit work. The NAO predicts recruitment will become more challenging as competition for skilled staff increases across government and the private sector.

It also warns that maintaining sufficient resources across the DEFRA group will be a challenge. “There is a risk that staff will be under increasing pressure as they take on additional EU Exit work alongside their business as usual roles, and have to deliver efficiency savings at the same time,” it said.

Around 80% of DEFRA’s workload is framed by EU legislation, a quarter of EU laws apply to its sectors and there are around 1,200 pieces of DEFRA-owned EU legislation that the government expects to convert into UK law.

The NAO says DEFRA has an “extensive legislative programme to prepare for  EU exit – primary legislation on agriculture and fisheries, and an estimated 95 statutory instruments to successfully convert existing EU law into UK law at the point of exit... in addition to any further business as usual statutory instruments that may be needed”.

DEFRA estimates that it will be able to reduce the number of business as usual SIs in the 12 months leading up to Brexit to around 40, half the number required in a normal year.

According to the NAO, the department is in the process of reviewing the DEFRA group’s workload across both Brexit and business as usual to “establish which areas of its work can be stopped, slowed down or reduced in scope”.

Aside from Brexit, the department’s policy priorities are to tackle air pollution, grow food and drink exports, make a step-change in resource efficiency and increase productivity and prosperity in rural areas. Its operational priorities are maintaining the level of CAP support, mitigating animal and plant health risk and flood risk management. 

Budget continues to be an issue for the beleaguered department. The Treasury has approved £94.4m EU Exit spending for 2017/18 but DEFRA still has to accommodate £147m budget reductions for 2017/18 and 2018/19 as required by 2015 Spending Review (see chart).

The NAO says this, on top of other budgetary pressures, means that DEFRA needs to make savings exceeding its budget reduction each year. DEFRA is aiming to deliver savings of £105 million in 2017/18 and £138 million in 2018-19, according to the report.

Changes in how DEFRA spends its money (£m)

Source: NAO Created with Datawrapper

DEFRA will also need to make up for the shortfall in money when EU funding dries up. DEFRA’s income was £4.2 billion in 2016-17 and more than three quarters (78%) came from the EU in 2016-17. This is mostly to reimburse direct payments made to farmers under the Common Agricultural Policy (CAP) (£2.8 billion, of which £1.0 billion is paid to the devolved administrations).

Most of the remaining EU funding (£400m) is for the Rural Development Programme England (RDPE) which provides funding to improve agriculture, the environment and rural life. DEFRA’s non-EU sources of income include grant income, fees, levies and licences payable to some of its delivery bodies.

DEFRA's income (£m)

Source: NAO Created with Datawrapper

It is likely that DEFRA and its delivery bodies will have to take on additional responsibilities after Brexit, such as chemicals and pesticides, animal imports and exports and development of agricultural policy which previously were primarily the responsibility of the EU.

Environment secretary Michael Gove announced in November that he will consult on a new “commission-like body” to take on some of the European Commission’s responsibilities, but there will still remain governance, enforcement and other regulatory gaps.  

He will have to come up with alternative regulatory solutions to replace other EU institutions, including:

  • The European Court of Justice (CJEU)

  • The European Chemicals Agency (ECHA) which is responsible for the operation of key aspects of EU chemicals regulation. All chemicals must be registered under the EU’s REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) regulation in order to access the EU single market.

  • The European Environment Agency (EEA) which, with the European Commission administers quotas and licensing for fluorinated gases and ozone depleting substances

  • The European Medicines Agency (EMA) which authorises veterinary medicines for use in the EU, and is responsible for setting safety standards for the maximum residue levels from veterinary medicines permissible in animal products for human consumption. In November 2017, the EMA announced that it would move from its current London location to Amsterdam.

  • The European Food Safety Agency (EFSA) which provides the EU with scientific advice and opinions on risks to the food chain, including from pesticides

In November, Gove revealed he is considering a new environment bill this side of Brexit which may clarify some of these areas. The repeatedly delayed 25-year environment plan is also expected to be published, possibly for consultation, in early 2018.

A DEFRA spokesman said, “As with other government departments, we have an extensive programme of work focused on preparing for a range of scenarios to make sure we deliver a green Brexit.

“We have utilised resources, continue to build the right skills, experience, and leadership to make the most of the opportunities ahead and are in ongoing discussions with Treasury about future funding requirements.”

Original report »

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