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Brexit preparation bill ‘could reach £2 billion by official date of leaving EU’

A think tank has found that austerity cuts in the civil service workforce have been reversed as departments recruit thousands to deal with Brexit.

Preparations for Brexit have cost taxpayers at least £400 million in this financial year, with the bill expected to jump to £900 million or more in 2018/19, according to a new report.

And the total spent across government could reach £2 billion over the two years running up to Brexit day on March 29 2019, said the Institute for Government (IfG) think tank.

The IfG said it was too soon to estimate the final bill for Brexit preparations.

A further £1.5 billion set aside for the year after March 2019 “could prove to be a fairly comprehensive slush fund, or just the beginning”, the think tank warned.

The report found that half of the money spent on Brexit so far has gone on staff, with the six Whitehall departments most affected by the UK’s EU withdrawal expecting to recruit almost 10,000 extra personnel.

Demand for new staff means Brexit has reversed the reduction in civil servant numbers imposed on the Home Office, Department for Environment and HM Revenue & Customs since 2010 under the Government’s austerity drive.

David Davis’s newly created Department for Exiting the EU (Dexeu) now has around 700 staff and Liam Fox’s Department for International Trade (DIT) 800 performing Brexit-related work, found the IfG.

Meanwhile, Michael Gove’s Department for the Environment (Defra) expects to have filled 1,200 new roles linked to Brexit by the end of this month, the Home Office is due to recruit 1,500 by September and HM Revenue and Customs is looking to take on 3,000 to 5,000 by March 2019.

Chancellor Philip Hammond announced in last autumn’s Budget that £250 million had been allocated to Whitehall for spending on Brexit preparations in 2017/18, with a further £3 billion set aside for the coming two years.

The £400 million spent by just six departments in 2017/18 was more than the £250 million announced by the Chancellor partly because ministers reallocated cash from other programmes and partly because Mr Hammond’s figure did not include money committed to Dexeu and DIT before last year’s election.

If all of the £1.5 billion allocated for 2018/19 is used, the total spent on Brexit preparations could reach £2 billion by March 2019.

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David Davis's newly created Department for Exiting the EU now has around 700 staff (Victoria Jones/PA)

The IfG’s Brexit programme director Jill Rutter said: “We look only at costs incurred ahead of the UK’s formal exit from the European Union.

“But the true scale of those costs will not be clear until the future relationship starts to take shape.

“Details still to be determined, like the UK’s relationship with EU regulators or its access to EU-wide customs systems, will affect the scale of the task in Whitehall – and the size of bill for delivering it.”

And the think tank’s senior researcher Joe Owen added: “If the UK fails to negotiate the access to EU regulators that the Prime Minister wants, costs are likely to grow again – new arm’s length bodies and new border functions will need to be put in place.”

The report, which looked at spending by Dexeu, DIT, the Department for Business, Defra, the Home Office and HMRC, also found:

– Defra has seen the largest increase in spending, with almost £100 million allocated to Brexit in 2017/18 and staff numbers up by 65% since June 2016;

– HMRC expects to need up to £450 million for 2018/19 alone;

– The Home Office is using around 50% more agency staff per month than before the referendum, at an expected additional cost of almost £40 million;

– The six departments have already signed contracts worth £5.5 million with consultancy firms.

Most of the money spent so far has gone on staff, supporting negotiations and preparing policy and legislation, with “little progress” made on implementing programmes like a future migration regime.

A Government spokesman said: “The Government is committed to ensuring that the right skills and resources are available to deliver a successful Brexit that works for all parts of the country.

“The Chancellor has committed £3 billion of funding over the next two years as government steps up preparations.

“We have built two new departments, the Department for Exiting the EU and the Department for International Trade, to help deliver a smooth and orderly exit from the European Union and to forge new bold and ambitious trade agreements across the world.

“And we continue to review the capability of all departments and recruit the brightest and the best talent from the public and private sectors to unlock the benefits and opportunities of leaving the EU.”

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