Plastic is the future for cash – one way or another

22 September: Physical cash use is declining fast, leaving the fixed cost base for processing cash transactions at risk of stranding. As cards and digital forms of payment become more prevalent, what will happen to those who still need access to cash?

The National Audit Office (NAO) issued a report on 18 September 2020 on the production and distribution of cash. It looks at what the Bank of England, the Royal Mint, HM Treasury and financial regulators are doing in response to a 59% decline in the volume of cash transactions between 2008 and 2019, as well as efforts to improve the efficiency of cash production and reduce counterfeiting.

According to data from UK Finance, cash payment values fell from £267bn in 2008 to £141bn in 2019 and were (prior to the pandemic) forecast to fall to £59bn by 2028.

Coin production has fallen significantly, with 383m coins manufactured for circulation in 2019-20 compared with 1.1bn in 2010-11. Notes in circulation have continued to increase (to 4.4bn notes with a monetary value of £76.5bn in July 2020), but only around 20%-24% of these are used for cash transactions and 5% used for savings, leaving over £50bn whose location is uncertain – a point which the NAO believes deserves further investigation.

A key finding from the report is that there is no single body in government responsible for overseeing how well the cash system is performing, despite the establishment of a Joint Authorities Cash Strategy Group (JCAS) focused on access to cash for those that need it, in particular for the million or so UK adults who do not have a bank or building society account.

The UK’s entire cash infrastructure across the public and private sectors is estimated to cost around £5bn a year, with many of these being fixed costs that with declining usage are putting pressure on the cash system. 

The number of ATMs fell by 12% over the two years to December 2019 to around 60,000, with a fall of 17% in the number that were free-to-use to around 45,000. The Payment Systems Regulator (PSR) has been working with the industry to maintain free-to-use ATMs in geographic areas where provision is most limited, although the NAO recommends greater attention is given to more deprived areas.

Demand for notes and coins declined by 71% between early-March and mid-April 2020 during the COVID-19 lockdown but has since recovered. The NAO believes it is still too early to assess the longer-term impact on cash access and usage but moves amongst some retailers to suspend acceptance of cash during the pandemic could further accelerate the switch to non-cash forms of payment.

The NAO is positive about the steps the Royal Mint and the Bank of England have taken against counterfeiting. In 2016, about one in 30 £1 coins was a counterfeit, but surveys since 2018 have found very low counterfeiting rates for the new £1 coin. The introduction of the polymer £20 note, traditionally the denomination favoured by counterfeiters, should also help reduce the cost of fraud to consumers and businesses.

The Royal Mint reported a reduced loss of £3.9m on its coin-making activities in 2019-20, with actions to improve efficiency including a 22% headcount reduction within its currency division and the mothballing of two of its six plating lines. The Bank of England has also worked with De La Rue to improve efficiency, albeit each polymer banknote costs 60% to 80% more than a paper one, even if they are expected to last at least 2.5 times longer. 

The NAO recommends that HM Treasury takes another look at the roles and responsibilities of the bodies involved in the cash system, setting out more clearly the specific outcomes it wants to deliver for consumers and small businesses and how this should be balanced against the cost of doing so. It also believes that a plan is needed to take action if some groups become left behind as the cash system changes.

Martin Wheatcroft FCA, adviser to ICAEW on public finances, commented: “The NAO has provided some extremely useful insights into how the UK’s cash system is coping with declining usage and it makes a number of sensible recommendations for improvements. 

“However,” continued Wheatcroft, “the report does not answer the more fundamental issue of whether cash has a long-term future at all, and in particular whether the multi-billion costs of running cash and other legacy payment systems could be better deployed.

“Ultimately, is it now time to look beyond a managed decline of the cash system and explore more radical options?”

Front cover: NAO report 'The production and distribution of cash'. Click on the image to go to the NAO website.

This article was originally published on the ICAEW website.

Pandemic costs add up to a very big number

21 September: The National Audit Office COVID-19 cost tracker provides critically important data about the current £210bn cost of the pandemic but disappoints in the way it presents this financial information.

Page 10 of the NAO covid-19 cost tracker

The National Audit Office (NAO) has published a COVID-19 cost tracker comprising details of over 190 different measures announced by government departments in response to the coronavirus pandemic. This is an extremely valuable exercise in seeking to track the huge amounts being spent in the absence of any centrally collated financial tracking by the Government itself.

As of 7 August 2020, the NAO has identified around £210bn of measures, of which around £70bn has been confirmed as having been incurred. A number of the measures are unquantified and many of the numbers are broad-brush estimates that may individually turn out to be significantly different.

The largest items in the list are the £47bn estimated cost of the coronavirus job retention scheme (CJRS), £16bn in bounce back loans, £15bn for the self-employed income support scheme, £15bn on personal protection equipment, £13bn for the devolved administrations under the Barnett formula, £12bn on business grants, £12bn in waived business rates and £10bn on testing and tracing. Together these eight items amount to around two-thirds of the total.

Unfortunately, the NAO has provided this data as a 22-page table with very limited summarisation or categorisation, making it extremely challenging to analyse the information which it provides. For example, costs are not analysed between tax cuts, public spending or lending activities, making it difficult to work out their impact on the public finances.

Admittedly, the NAO has had to put this information together itself, which it shouldn’t have had to do. A well-run central government finance function would have already collated and analysed this information, allowing the auditors to concentrate on providing assurance on the data through their audit work.

Despite those criticisms, the NAO COVID-19 cost tracker will help improve the quality of our understanding of the financial impact of the pandemic and will no doubt inform the next iteration of the Office for Budget Responsibility (OBR) coronavirus analysis.

This article was originally published on the ICAEW website.

PAC slams Ministry for local commercial investment failures

13 July 2020: The Public Accounts Committee has severely criticised central government for complacency as local authorities put £7.6bn into risky commercial property investments.

In a hard-hitting report, the Public Accounts Committee (PAC) has severely criticised the Ministry of Housing, Communities and Local Government (MHCLG) for failing to properly oversee the local government prudential framework in England.

The National Audit Office (NAO) reported earlier this year on the huge rise in local authority investment going into commercial property, with £1.8bn invested in 2016-17, £2.6bn in 2017-18, £2.2bn in 2018-19 and £1bn in the first half of 2019-20. This compares with the £200m spent on commercial properties in 2015-16.

ICAEW submitted evidence to the inquiry.

Key findings and recommendations from the PAC report include:

  • More active oversight of the prudential framework is needed, including publicly challenging local authorities where there are concerns.
  • MHCLG’s failure to ensure local authorities adhere to the spirit of the framework has led to some local authorities taking on extreme levels of debt.
  • Requirements to set aside money each year to service debt (the Minimum Revenue Provision) should be strengthened.
  • Actions taken to address risky and non-compliant behaviour have been too little and too late.
  • A ‘soft’ approach of guidance changes has not worked, and ‘hard’ more timely and effective interventions are needed, with rigorous post-implementation reviews.
  • The local government prudential framework has been impaired and now requires a fundamental review.
  • MHCLG does not have access to the data it needs to carry out its oversight responsibilities.
  • External audit has a role to play, but more important is real-time scrutiny of commercial investment strategies and investment decisions.
  • Local governance arrangements are not robust enough, with investments not being properly transparent or subject to adequate scrutiny and challenge.

The PAC is particularly critical of the Ministry for taking four years between identifying that local authorities were starting to ‘borrow for yield’ to making more substantive changes to Public Loan Work Board lending rules. This was despite NAO and PAC reports highlighting the issue in 2016.

The PAC also highlights significant shortcomings in data, with MHCLG ‘flying blind’ as local authorities borrowed billions of pounds. It also doesn’t feel that lessons have been learned about capturing data on emerging and future commercial investment activities and not just about investments that have already been made.

Commenting on the report Alison Ring, Director for Public Sector at ICAEW, said: “This is a hard-hitting report from the Public Accounts Committee that severely criticises the Ministry for Housing, Communities and Local Government for complacency about the huge expansion in debt-financed commercial property investment by English local authorities over the last four years.

The PAC rightly focuses on the importance of data in carrying out central government’s oversight role, enabling better understanding and analysis of risks in local authority balance sheets. Stronger governance at a local level is also needed, with improved transparency and scrutiny needed both before, and after, investments are made.

However, it is important that any changes to the prudential framework do not prevent local authorities in making essential investments in local infrastructure and in encouraging local economic activity as the country emerges from lockdown.

Supporting the economic recovery may involve councils taking on more – rather than less – balance sheet risk, making the PAC’s recommendations about strengthening both local governance and central oversight even more critical.”

This article was originally published by ICAEW.

Universal Credit improves but attracts NAO criticism

ICAEW 14 July 2020: The National Audit Office has stated that vulnerable claimants struggle with Universal Credit and face financial difficulties, while administration costs are still too high.

The National Audit Office (NAO) has issued a new report on the troubled Universal Credit welfare benefit that is in the process of replacing six existing benefits. The report states that the Department for Work Pensions (DWP) should do more to support vulnerable people and others who struggle to make a claim. 

With many more people on Universal Credit, the NAO reports that the number of people paid late increased from 113,000 in 2017 to 312,000 in 2019. As a proportion this was an improvement, going from 55% to 90% paid on time, but for those paid later than the scheduled five weeks the average additional delay was three weeks. Some 6% of households (105,000 new claims) waited around 11 weeks or more for full payment.

The NAO also reports that the cost of implementing Universal Credit had risen from £3.2bn to £4.6bn, not including the effect of the coronavirus pandemic. The average cost of administrating each claim has fallen to £301, but this is still higher than the DWP business case target for 2024-25 of £173 per claim.

Many of the payment delays affect vulnerable claimants and others who struggle to make a claim, especially as many are in financial difficulty before they apply. Nearly half have not been earning in the three months before claiming, while many are already in rent arrears. Claimants with more complex needs and circumstances, such as people with learning difficulties, can struggle to engage with the claims process or to provide the evidence required, leaving them at greater risk of being paid late.

Around 57% of households making a new claim obtain an advance payment, but this can lead to further financial hardship and debt when that advance is deducted from subsequent payments. The proportion is much higher for more vulnerable claimants, including the very poorest, those with disabilities or those with children with disabilities.

The NAO says that the DWP has been doing well in paying proportionately more people on time and has made improvements to its systems to address problems that were blocking large numbers of payments. However, the NAO also found that the DWP needs to better understand and address the needs of people with more complex claims.

Fraud and error are listed as “major issues” in the report, with over one in ten pounds paid through Universal Credit being incorrect. The DWP estimates that £1.7bn (9.4% of claims) was overpaid in 2019-20 and that 1.1% of claims were underpaid, the highest error rate for any benefit outside of tax credits. These errors contributed to the NAO qualifying the DWP’s 2019-20 accounts for the 32nd year running earlier this month.

The NAO’s work relates to the period before the coronavirus pandemic caused a significant jump in the number of claims for Universal Credit (over three million since the beginning of March). Dealing with vulnerable claimants will be even more critical if they are not to slip through the safety net.

Commenting on the report Alison Ring, director for public sector at ICAEW, said:

“The NAO report highlights how challenging implementing Universal Credit has been and how many vulnerable claimants are struggling financially. It complements the DWP on improvements to date but reports that late payments are still a significant issue – as are fraud and error.

Although the DWP appears to be making better progress in rolling out Universal Credit than before, it is still not expected to be fully implemented for several years to come. It remains a complex welfare benefit and more thought should be given to its design and how it could be improved to reduce delays, reduce the need for advance payments and reduce the likelihood of error and fraud.

The NAO also highlights the challenges that DWP is currently experiencing, with over three Universal Credit claims since the beginning of March.”

This article was originally published by ICAEW.

NAO qualifies DWP accounts for 32nd year running

6 July 2020: The National Audit Office reports that overpayments from fraud and error reached their highest ever estimated rate in 2019-20. COVID-19-driven claims since March are likely to increase this even further. 

The Department of Work & Pensions (DWP) published its annual report and financial statements for the year ended 31 March 2020, containing a qualified audit opinion for the 32nd year running due to the material level of fraud and error in benefit expenditure.

The audit report from the independent National Audit Office (NAO) contains a clean opinion on the truth and fairness of DWP’s financial statements for 2019-20. However, the Comptroller & Auditor General Gareth Davies (the head of the NAO) has qualified the second part of his audit opinion with respect to overpayments attributable to fraud, error where payments have not been made for the purposes intended by Parliament, and for overpayments and underpayments that do not conform to the relevant authorities.

Excluding the state pension, where the level of fraud and error is relatively low, the estimated level of benefit overpayments increased to an estimated £4.5bn (4.8%) in 2019-20 from £3.7bn (4.4%) in the previous financial year. Underpayments were estimated to amount to £1.9bn or 2.0% of the relevant benefit expenditure. 

The NAO reports that overpayments of Universal Credit increased from 8.7% to 9.4%, which is the highest recorded rate for any benefit other than tax credits. It says the most common cause of fraud and error is incorrectly reported income (leading to £1.4bn of overpayments and £0.35bn of underpayments), followed by incorrectly reported savings (at a value of £0.9bn).

NAO head Gareth Davies issued a press release commenting on his concern that the level of error and fraud in benefit payments has risen again – and highlighting the likelihood of even higher levels as a consequence of relaxed controls at the DWP during the coronavirus pandemic.

Commenting on the report Alison Ring, director for public sector at ICAEW, said: “Although the National Audit Office is quite right to stress how important it is that the DWP does more to reduce the incidence of fraud and error, it is likely that the increase seen in 2019-20 is primarily as a consequence of the further rolling out of Universal Credit, a complex welfare benefit which is inherently prone to error and more vulnerable to fraud than many other benefits.

“As well as investing more in tackling individual cases of fraud and error, the DWP may want to give further thought to the design of Universal Credit and how it could be improved to reduce the likelihood of error and fraud in the first place.

“The relaxation of controls over benefit payments during the coronavirus pandemic has helped get financial support to claimants in quite often severe financial difficulty, but that has come with the prospect of much higher levels of fraud and error in the current financial year. Reducing the levels of both over- and under-payments will be a big challenge for the DWP, especially if there is further large surge in claims as the furlough scheme comes to an end in the next few months”.

The Department for Work & Pensions Annual Report & Accounts 2019-20 and the associated NAO press release are publicly available.

This article was originally published by ICAEW.

UK aircraft carrier groups won’t be operating to full extent until 2026

ICAEW 26 June 2020: NAO reports on challenges remaining to the Carrier Strike programme, including cost overruns since their last report in 2017.

The National Audit Office (NAO) has published the latest in a series of challenging reports on defence procurement with a critique of the Ministry of Defence (MoD) programme to establish two fully operational carrier strike groups.

This is a complex multi-year effort that has seen the building of the HMS Queen Elizabeth and HMS Prince of Wales aircraft carriers at a cost of £6.4bn, the initial order of 48 fighter aircraft (out of a long-term plan for 138), and the planned integration of carriers, warships, radar systems and support ships with navy personnel into two fully combat capable carrier groups.

This report focuses on the last three years of development since 2017 – a period that has seen the Royal Navy complete and launch two new aircraft carriers, receive and test the initial batch of aircraft, construct essential on-shore infrastructure, and undertake extensive training of sailors and aircrew.

Key highlights from the report include:

  • There was a further cost overrun of £193m on building the two aircraft carriers, equivalent to 3% of their total cost of £6.4bn.
  • The MoD has spent £6.0bn to date on 48 Lightning II fighter jets, of which 18 have been delivered on schedule. Port and military airfield facilities have now been completed.
  • The Crowsnest airborne radar system is 18 months behind schedule, affecting carrier group capabilities in the first two years of operation.
  • The MoD delayed seven of its 48 jets on order to 2025 to accommodate budgetary pressures, with the approved cost now at £10.5bn, a £1.0bn or 15% increase.
  • Funding has not yet been made available for enough Lightning II jets to support the carriers through to the 2060s as planned, with no commitment as yet to order the remaining 90 jets.
  • The MoD has been slow to develop the support ships needed to operate carrier strike group, with only one ship currently in operation – with delays in ordering three new support ships potentially hampering operations until 2028 or later. The MoD has also not provided the necessary funding for logistics projects and munitions.

The NAO reports that the MoD is making progress in delivering key milestones, albeit with some caveats.

  • Initial operating capability for one carrier group and 12 jets is expected to be achieved by December 2020 on schedule, albeit with more basic radar capability than originally planned.
  • There is a tight schedule to deliver ‘full operating capability’ by 2023 (two carrier groups with up to 24 jets) and the planned extended capability by 2026 to deliver a wide range of air operations and support amphibious operations worldwide. 
  • Significant questions need to be answered about the place of the carrier groups within defence strategy, the investment prioritisation necessary to ensure that they can operate for the planned life-span of 50 years, and a clear understanding of the full costs of operating the carrier groups in the context of a Defence Equipment Plan that is currently unaffordable (as reported in several other NAO reports).

The NAO conclude by making a series of recommendations for strengthening programme management, ensuring there is a clear view of future costs, and on monitoring new governance arrangements that have recently been put in place. The NAO also recommends transferring lessons learned from the Carrier Strike programme over to other major defence projects.

Gareth Davies, the Comptroller & Auditor-General for the United Kingdom and the head of the NAO, commented on the good progress made by the MoD to deliver Carrier Strike. But he also stressed the need for greater attention to be paid to the supporting capabilities essential for full operability, and the need for the MoD to get a firmer grip on future costs.

Martin Wheatcroft FCA, advisor to ICAEW on public finances, said:

“In many ways, the MoD receives quite a positive report card from the NAO on the good progress that it has made over the last three years, improving on much less complementary reports in 2017 and before.

However, as the NAO reports, the MoD continues to struggle to deliver major procurement programmes within a defence budget that is unaffordable and there remain significant issues that need to be addressed. The extent to which further funding will be provided in the long-delayed Spending Review later this year is yet to be seen.”

The NAO report Carrier Strike – Preparing for deployment is available on the NAO website.

This article was originally published on the ICAEW website.

Treasury backs PAC in battle over recommendations

ICAEW 17 June 2020: Treasury writes stern ‘Dear Accounting Officer’ letter instructing departments to stop delaying compliance with PAC recommendations.

In a co-ordinated move, the Public Accounts Committee (PAC) and HM Treasury issued instructions to government departments to stop unilaterally extending the deadlines on addressing PAC recommendations, and to write to the PAC promptly to explain any delays in completing agreed actions.

Meg Hiller MP, Chair of the PAC, recently wrote to HM Treasury complaining about the behaviour of some departments who have been deferring implementation of agreed actions to address PAC recommendations and doing so without providing an explanation for the delay. Sometimes the PAC only finds out about delays many months after deadlines have been missed.

In response, Treasury has issued a ‘Dear Accounting Officer’ letter instructing departments to ensure systems are in place to monitor progress on implementing recommendations and to write to the PAC immediately it becomes clear that a recommendation is no longer on track to be implemented by the agreed target date. Departments need to provide a detailed explanation for a deferral together with a revised date for completion.

Martin Wheatcroft FCA, advisor to ICAEW on public finances, said:

“This is an unusual and very public shot across the bows of departments. It brings out into the open the frustration felt by both the Public Accounts Committee and Treasury when weaknesses in systems and processes identified by the PAC are not dealt with as planned.

Permanent Secretaries are now on notice that any backsliding on implementing agreed actions is not acceptable, and that attempting to slip missed deadlines past the PAC in routine reports many months later is not going to work anymore.”

This article was originally published by ICAEW.

Challenges for public bodies as PFI contracts end

ICAEW 8 June 2020: An NAO report has recommended that public bodies start preparations seven years before PFI contracts expire to negotiate the handover of assets and ensure service delivery is not disrupted.

The National Audit Office (NAO) has issued a report on the challenges public bodies are facing as private finance initiative (PFI) contracts come to an end. 

There are over 700 PFI contracts in the UK involving assets with a capital value of £57bn. Of these, 72 are due to expire over the next seven years in England, with an estimated £3.9bn of assets expected to revert to public sector ownership in that time.

The NAO is the independent audit body responsible for scrutinising public spending on behalf of Parliament. In addition to auditing the financial accounts of departments and other public bodies, the NAO examines and reports on the value for money of how public money has been spent.

PFI is a contracting approach where public bodies acquire the right to use an asset embedded within a long-term service contract. PFI contracts are typically for periods of up to 25 years and were used extensively from the late 1990s until the early 2010s to build a range of assets including (but not limited to) schools, hospitals, offices, transport infrastructure and military equipment. 

Most PFI contracts expire from 2025 onwards, meaning there has so far only been a limited number of practical examples to learn from. Of those, the NAO reports that four out nine of the public bodies they surveyed were dissatisfied with the condition of PFI assets at expiry.

Key findings in the report include:

  • The public sector does not have a strategic or consistent approach to PFI contract expiry and risks failing to secure value for money in negotiations with the private sector
  • There is a risk of increased costs and service disruptions if public bodies do not prepare for contract expiry adequately in advance
  • Insufficient knowledge about asset condition risks them being returned in worse quality than expected
  • Contract expiry is resource-intensive and requires different skills, with external consultants needed in most cases
  • Many public bodies start preparing four years or more before expiry, but experience suggests that preparation time is often underestimated. Infrastructure & Projects Authority (IPA) guidance is seven years
  • There is a potential for disputes, especially as PFI providers often have a financial incentive to cut spending on asset maintenance and rectification towards the end of a contract
  • Early PFI contracts are likely to be ambiguous about roles and responsibilities at contract expiry, with poorly drafted clauses open to interpretation.

The NAO recommends that public bodies and sponsor departments start preparing for contract expiry on a timely basis, ensure the PFI contract is complete and expiry provisions are well understood, develop a contract expiry plan and escalate problems which cannot be resolved at a local level. It also recommends that adequate funding is provided to cover dispute resolution and hiring additional resources.

The NAO believes that the IPA and sponsor departments have key roles to play in supporting public bodies and departmental teams responsible for PFI contracts with resources, sector-specific expertise, specialist advice and training. They need to identify high-risk contracts, such as those sitting with public bodies that lack appropriate skills and capabilities, and potentially establish an electronic repository to enable a more consistent approach across government.

The NAO says the IPA should assess the value of money of establishing a centralised pool of internal resources, such as lawyers and surveyors, that authorities can use, provide contract expiry guidance and terms of reference for consultants, develop a consistent approach to resolving legal disputes, and develop an investor strategy to manage relationships with PFI equity investors, management service companies, and contractors.

The report’s final recommendation is to HM Treasury, saying it should provide funding to departments assisting financially constrained public bodies where it is value for money and practical to do so.

Commenting on the report Alison Ring, Director, Public Sector, at ICAEW said:

“Public bodies are very experienced in the operation of ongoing PFI contracts. But with most PFI contracts not due to finish until 2025 or later, they have much less experience of managing contract expiry.

The NAO is quite right to highlight the need to start planning well in advance and the need to invest in the very different skills and expertise required to negotiate the handover of assets to ensure service delivery is not disrupted. 

The role of the Infrastructure & Projects Authority and sponsoring departments will also be critical in supporting the 182 public bodies responsible for just one PFI contract, and in ensuring that lessons learned are shared across the public sector.

With tens if not hundreds of millions of pounds at stake if public bodies get this wrong, it is extremely important that the Government is not penny wise and pound foolish by failing to invest in the sufficiently skilled resources that will be required to get the best value for money for the taxpayer as PFI contracts come to an end.”

This article was originally published by ICAEW.

The £4.4bn cost of preparing for Brexit

17 March 2020: the NAO has provided an analysis of the spending by government departments on preparing for Brexit, highlighting just how significant an exercise leaving the EU is for the government machine.

A recent report by the National Audit Office (NAO) on the cost of EU Exit preparations analysed the £4.4bn spent by government departments in getting ready for Brexit between June 2016 and 31 January 2020.

The NAO is the independent audit body responsible for scrutinising public spending on behalf of Parliament. In its Brexit report, the NAO identified over 300 workstreams with £1.9bn spent on staff, £1.5bn on building new systems and procuring goods and services, £0.3bn on external advice, and £0.6bn in other costs.

Over half of the costs were incurred by three departments, with £871m, £803m, £748m spent respectively by DEFRA, the Home Office and HMRC. This included preparation for new international trade, immigration and customs processes, as well as implementing domestic regulation in areas currently regulated by the EU.

This spending is not the complete total. It does not include costs incurred, for example, of staff only partially working on Brexit or seconded for less than six months, nor local authority preparations not covered by central government funding. It also does not include the net contributions payable to the EU of £8bn during the transition period between 1 February 2020 and 31 December 2020 nor the net financial settlement payable to the EU after that of an estimated £23bn.

The NAO reported that some of the £1.8bn spent between 1 April and 31 October 2019 was spent on no-deal preparation, but that it is not possible to analyse how much of this was wasted (other than the £92m in losses incurred on terminating ferry and other contracts already identified by Whitehall as ‘fruitless payments’ or ‘constructive losses’). This is because many of the preparations will still be needed for when the UK leaves the Customs Union and Single Market at the end of the year.

Spending on advertising and communication amounted to £77m, including £49m spent on the Cabinet Office’s ‘Get ready for Brexit’ campaign, the subject of a critical NAO report in January 2020.

Alison Ring, Director, Public Sector for ICAEW commented: “The NAO has provided a very helpful analysis of the spending by government departments on preparing for Brexit. It highlights just how significant an exercise leaving the EU is for the government machine, with the need for more staff, new regulatory arrangements and new systems and processes across the public sector.

This effort is far from complete, with a huge amount of work still needed to prepare for leaving the EU Customs Union and Single Market in less than nine months’ time.”

The NAO report: ‘The cost of EU Exit preparations’ is publicly available.

This article was originally published by ICAEW.