As 'no deal' Brexit looms, can Defra withstand the pressure?

Spare a thought for Defra’s policy advisors. Brexit has suddenly and unexpectedly put the department under severe pressure.

Last week, a devastating National Audit Office (NAO) report detailed the monumental task facing its civil servants as Defra tries to unpick and replace 50 years’ of food and environmental law in just two years. Although the NAO praises Defra for “achieving a great deal in difficult circumstances”, for the most part it documents in detail a department getting gradually overwhelmed by the job.

“For the last 40 years, Defra’s agenda has largely been set by Brussels,” explains Andrew Kuyk, director general of the Provision Trade Federation and a former Defra civil servant. “The scale and complexity of changing to deal with the EU as a third country is unprecedented. After years of ‘right-sizing’ to run established systems, Defra is struggling to cope.”

The implications for the food industry are serious, threatening access to export markets and creating expensive, laborious approvals procedures.

The report highlights 55 Brexit-related workstreams Defra is currently responsible for (out of a government total of 319), covering areas including trade in food, animal and plant health, chemicals and pesticides regulation and fisheries management. It concludes the risk of Defra not delivering its body of work in a no-deal scenario is high, and warns the department is already being forced to prioritise certain workstreams and sacrifice others.

It reveals Defra entered the Brexit process understaffed and underfunded. Headcount had been gradually cut since 2010, to the extent that 1,300 new civil servants had to be rapidly recruited to help deliver the 93 additional regulations and orders needed for Brexit.

Although an extra £320m in funding has been secured from the Treasury, this represents a third less than initially requested. Efforts to communicate publicly with stakeholders on issues such as a shortage in veterinarians, meanwhile, have been thwarted by government restrictions on open consultations, which sources say is caused by fear of a public and media backlash.

So what does it mean for the industry?

Meat trade threat

Meat processors and traders are among those at greatest risk of business disruption. Between 75% and 90% of the UK meat trade is with EU countries, according to the British Meat Processors Association (BMPA). Currently, meat products move freely within the single market without the need for an Export Health Certificate (EHC). If no deal is reached by March 2019, Defra’s economists expect an increase of 150% to 300% in the volume of EHCs needed for food to leave the UK. Each EHC must be signed off by a vet - and there are not enough to deal with the hike. Recruitment should have started in April, but was blocked by the Department for Exiting the European Union, meaning Defra will be forced to launch an emergency recruitment campaign this autumn. The likelihood of hiring enough vets is sufficiently small for Defra to already be drawing up plans to use non-vets to carry out certain administrative tasks.

Nick Allen, CEO of the BMPA, says it is supportive of Defra but frustrated that delays are jeopardising export potential. “The disruption that we could be facing will have drastic consequences for meat companies and contingency plans need to be prioritised if this industry is to avoid being seriously damaged by the fallout from a no-deal Brexit,” he says.

The impact doesn’t end there. Future exports to the EU of animal products are likely to need to pass through a border inspection post. Most of the UK’s meat exports currently travel via the Irish border or Calais where there are no inspection posts, meaning traders could face having to find alternative routes. Defra will also need to reach agreement with 154 countries to accept UK versions of 1,400 EHCs to ensure meat producers can continue to export to third countries. Defra has prioritised reaching agreement with 15 countries that it estimates account for about 90% of non-EU exports, accepting that firms exporting to countries where agreement is not reached will have to cease doing so for a period. “The right approach would have been to make sure we don’t have any avenues closed off, but if we do have to prioritise you have to go where the volumes are,” says one industry source, adding that export partners could use renegotiation to push for improved trade terms.

Importers could also be hit. The UK uses the EU’s Traces (trade control and export) system to notify border inspection posts that carry out controls on imports. Defra is working to replace Traces but is already making contingency plans for a manual system in case the IT system isn’t ready in time to process the 730,000 consignments of animals, animal products and high-risk food and feed that enters the UK each year. The NAO says manual data entry could lead to higher error rates, which in turn could lead to delays at the border while manual checks are carried out, and an increased biosecurity risks when errors are not detected.

There are also stark warnings about a lack of funding for additional vessel patrol hours to police English fishing waters; and a risk of major disruption to the UK’s £17bn export trade in chemicals to the EU should the UK cease to remain part of the European Chemicals Agency (a near certainty under a no-deal scenario). To recover market access, chemicals businesses would need to re-register their products on the EU’s REACH (registration, evaluation, authorisation and restriction of chemicals) system via an affiliate or representative based in an EU member state, a lengthy process that can’t be started until the UK has left the EU. In the meantime, Defra has just months to try to replicate a registration system that took the EU 14 years to develop.

In response, Defra says it has continued to reprioritise resources since the report, expanding its workforce and making progress preparing for a range of Brexit scenarios. Progress has been made on the IT system for imports and exports are not expected to be affected by a vet shortage, a spokeswoman adds.

But businesses will remain concerned. “The most worrying feature of government Brexit planning is the notion that we have at least six months to go,” says Kuyk. “In the commercial world, orders are already being placed for next year, without knowing how they will be delivered or at what cost.”