Purpose of this notice
This notice outlines the Government’s overall approach to no deal. Delivering the deal negotiated with the EU remains the Government’s top priority. This has not changed.
However, as a responsible government we have spent more than two years carrying out extensive preparations for all scenarios, including no deal. Over the course of August, September and October 2018, the Government published a series of technical notices. Since then, we have published further guidance on preparing for a no deal scenario.
On 18 December 2018, Cabinet agreed to proceed with the Government’s next phase of no deal planning. With just over three months until our exit from the EU, we have now reached the point where we need to accelerate and intensify these preparations. It has always been the case that as we get nearer to March 2019, preparations for a no deal scenario would have to be accelerated. Preparing for no deal is now an operational priority for the Government. This means we will set in motion our remaining no deal plans. We recommend businesses now also ensure they are prepared and enact their own no deal plans.
Context – progress in negotiations
The Government has been clear from the outset of this process that the UK would prepare for all scenarios. The Prime Minister set out in her Lancaster House speech on 17 January 2017 that:
It is right that the Government should prepare for every eventuality – but to do so in the knowledge that a constructive and optimistic approach to the negotiations to come is in the best interests of Europe and the best interests of Britain.
We have now agreed the terms of our exit from the European Union, as set out in the Withdrawal Agreement. This was agreed by the EU Member States at the special European Council on Sunday 25 November. We also agreed the terms of our future relationship, as outlined in the political declaration.
The deal we have agreed will allow the UK to leave the EU in a smooth and orderly way on 31 October 2019 and sets the framework for a future relationship that delivers in our national interest. It takes back control of our borders, laws and money, it protects jobs, security and the integrity of the United Kingdom, and it delivers in ways that many said could simply not be done.
The deal must now be voted upon in Parliament. In keeping with the clear intention of section 13 of the EU (Withdrawal) Act, the Government will ensure the matter is brought back to the Commons before 21 January. If Parliament approves the Withdrawal Agreement and framework for the UK’s future relationship with the EU, the Government will bring forward the EU (Withdrawal Agreement) Bill to give the Withdrawal Agreement domestic legal effect.
The procedures for approval and implementation of the Withdrawal Agreement and framework for our future relationship are set out in the white paper on legislating for the Withdrawal Agreement. In parallel a ratification process will need to take place in the EU.
What we mean by a ‘no deal’ scenario
The UK triggered Article 50 of the Treaty of the European Union on 29 March 2017. As set out under that treaty, the UK has two years to negotiate a Withdrawal Agreement and framework for a future relationship with the EU before the point of the UK’s exit from the EU at 11pm GMT on 31 October 2019.
A no deal scenario is one where the UK leaves the EU and becomes a third country at 11pm GMT on 31 October 2019 without a Withdrawal Agreement and framework for a future relationship in place between the UK and the EU.
In a no deal scenario there would therefore be no agreement to apply any of the elements of the Withdrawal Agreement described above.
The UK is therefore preparing for a scenario where there is no UK-EU agreement in place on exit day.
Plans already in place
For two years government has been implementing a significant programme of work to prepare for all scenarios, including a potential no deal scenario in March 2019.
The government has taken its responsibilities to prepare the UK for all scenarios very seriously. The Budget 2018 confirmed an additional £500 million of funding for 2019/20, meaning the Government will have invested over £4 billion in preparing for Brexit since 2016.
Over the course of August, September and October 2018, the Government published 106 technical notices to ensure that citizens and businesses have the information to prepare for Brexit. Since the publication of technical notices, we have taken further steps to ensure people and firms are ready, including:
- Publishing more than 100 pages of guidance for businesses on processes and procedures at the border in a no deal scenario.
- Contacting 145,000 businesses who trade with the EU, telling them to start getting ready for no deal customs procedures.
- Advising hundreds of ports, traders, pharmaceutical firms and other organisations that use the border about potential disruption so they can get their supply chains ready.
- Publishing a paper on citizens’ rights, giving people clarity on their future.
We have already brought forward legislation that takes account of different scenarios. The European Union (Withdrawal) Act 2018 is a historic piece of legislation, ensuring we will have a functioning statute book whatever the outcome of negotiations.
The Nuclear Safeguards Act 2018 establishes a UK nuclear safeguards regime as we leave Euratom, while the Sanctions and Anti-Money Laundering Act 2018 ensures we can continue to impose, update, and lift sanctions and Anti-Money Laundering (AML) regimes.
The Haulage Permits and Trailer Registration Act 2018 gives the UK the powers it needs to support British hauliers to continue operating internationally after exiting the EU. While the government’s overall aim in its negotiations with the EU is to retain reciprocal access for road hauliers, this legislation provides us with the flexibility to have systems in place if a permit system is required, and provides reassurance for hauliers to continue planning for a smooth Brexit.
In addition, Parliament has passed the Taxation (Cross-border Trade) Bill and is scrutinising the Trade Bill, which will ensure we have functioning customs and trade regimes regardless of the outcome of the negotiations.
The Government has also made good progress in laying exit related statutory instruments regarding our exit for Parliament to scrutinise, and good progress is being made.
Staffing, infrastructure and policy
There has also been significant progress in putting in place the staffing, infrastructure and policy we would need in a ‘no deal’ scenario.
As examples, we have:
There has also been significant progress in putting in place the staffing, infrastructure and policy we would need in a no deal scenario.
For example, we have:
- Ensured there are more than 10,000 civil servants working on Brexit and a further 5,000 in the pipeline, which will allow us to accelerate our preparation as necessary
- Some departments, such as Defra, which are responsible for a sizeable proportion of the Government’s Brexit work, have rapidly increased their capacity to meet the challenge, recruiting 1300 members of staff in 2017 to 18 to work on exit. Border Force is recruiting 600 frontline officers to provide resilience and readiness ahead of Brexit and is separately recruiting up to a further 1000 staff to ensure flexibility for all scenarios and sufficient resources for existing operations.
- Confirmed that existing organisations will grow and take on new responsibilities. For instance, the Competition and Markets Authority will take on an additional role as the UK’s state aid regulator and the Information Commissioner’s Office will support businesses on new data sharing arrangements.
- Procured or developed a number of new systems to build everything from a new market surveillance system to improving the capabilities of our Export Health Certificates system.
- Signed international safeguards agreements with the International Atomic Energy Agency, as well as bilateral Nuclear Co-operation Agreements, and Air Services Agreements. We will continue to work with third countries and international partners to seek continuity of the effects of international agreements which the Government participates in as a result of, or relevant to, its membership of the EU
- Set out our approach to bringing EU financial services legislation into domestic law in time for exit on exit day.
- Guaranteed certain EU-funded projects in a no deal scenario, including the full 2014-20 Multiannual Financial Framework allocation for structural and investment funds; the payment of awards where UK organisations successfully bid directly to the European Commission on a competitive basis until the end of 2020; any Rural Development Programme projects contracted before the end of 2020 for their full lifetime.
The UK approach – prioritising stability
At the heart of the Government’s approach to preparing for a no deal scenario is a commitment to prioritise stability for citizens, consumers and businesses, to ensure the smooth operation of business, infrastructure and public services and to minimise any disruption to the economy. We have plans in place to do this.
In some technical notices we have published, we demonstrate where the Government would act unilaterally to provide continuity for a temporary period in a no deal scenario to protect and minimise disruption for UK citizens and businesses, irrespective of whether the EU reciprocates. The extent of such continuity will vary by area as detailed in specific technical notices, with change happening in different areas over time. Crucially, however, such changes will be applied where and when it is best for the UK.
This approach underpins many of our no deal plans that are already public. For instance, the EU Withdrawal Act 2018 ensures that in all scenarios the same rules and laws will apply the day before and after exit, with changes agreed over time by the UK Parliament.
We want businesses to be reassured that, even in a no deal scenario in March 2019, the Government will seek to do what it can to make the transition as smooth as possible and allow time to make significant changes.
That is why the technical notice on human medicines we published confirms that the Government will continue to recognise batch testing, Qualified Person (QP) certification and release of human medicines that has been carried out in the EU until the Government considers further change necessary, avoiding the need for these medicines to be re-tested in the UK. We will also continue to apply highly automated, risk-based and intelligence targeted customs controls when the UK leaves the EU. As they do today, HMRC will work closely with industry to ensure its interventions are conducted in a way which minimises delays and additional burdens for legitimate trade, while robustly ensuring compliance.
Our continuity approach does not mean that everything will stay the same, but the priority is maximising stability at the point of departure through the Government’s action.
For example, the financial services framework will need to be adjusted to reflect the fact that the UK will no longer be inside the EU’s framework for financial services. In order to ensure that we are prepared for a no deal scenario, the UK government’s approach to financial services will, in general, be to treat EEA states largely as we currently treat other third countries, except where a different approach is necessary to manage the transition to a stand-alone UK regime. For example, the Temporary Permissions Regime will allow EU firms and funds passporting into the UK to continue providing services in the UK for a temporary period after exit.
There are areas where it would be necessary or beneficial to make further changes domestically to improve outcomes in a no deal scenario. Two of the technical notices released give examples of this. In addition to the guarantees around funding that have already been made, the Government can today announce that UK aid organisations will be able to continue bidding for funding from the core budget of the European Civil Protection and Humanitarian Aid Mechanism (ECHO) because the UK will provide financial assurance for any agreements signed before March 2019 in the event of no deal in order for UK NGOs to meet eligibility criteria. We are also setting out the arrangements that will be put in place to ensure the UK meets its international nuclear safeguards and non-proliferation obligations once Euratom safeguards no longer apply, with the Office for Nuclear Regulation (ONR) delivering a domestic nuclear safeguards regime.
We are clear that in a no deal scenario we must respect our unique relationship with Ireland, with whom we share a land border and we are co-signatories of the Belfast Agreement. The UK Government has consistently placed upholding the Belfast Agreement and its successors at the heart of our approach. It enshrines the consent principle on which Northern Ireland’s constitutional status rests. We recognise the basis it has provided for the deep economic and social cooperation on the island of Ireland. This includes North-South cooperation between Northern Ireland and Ireland, which we are committed to protecting in line with the letter and spirit of Strand two of the Agreement.
The Irish government has indicated it would need to discuss arrangements in the event of no deal with the European Commission and EU Member States. The UK stands ready in this scenario to engage constructively to meet our commitments and act in the best interests of the people of Northern Ireland, recognising the very significant challenges that the lack of a UK-EU legal agreement would pose in this unique and highly sensitive context.
It remains, though, the responsibility of the UK government, as the sovereign government in Northern Ireland, to continue preparations for the full range of potential outcomes, including no deal. As we do, and as decisions are made, we will take full account of the unique circumstances of Northern Ireland.
The EU approach
The UK government is committed to take unilateral steps to minimise disruption and prioritise stability in a no deal scenario.
We welcome the Commission’s publications on preparing for withdrawal, which state that preparations at all levels and for all scenarios should be stepped up.
In a no deal scenario, they have indicated that they would intend to treat the UK as a third country for all purposes. The EU has suggested they would apply “regulation and tariffs at borders with the United Kingdom as a third country, including checks and controls for customs, sanitary and phytosanitary standards and verification of compliance with EU norms”.
So these technical notices set out for businesses how they would need to prepare for customs checks which would be applied if they currently only trade with the EU.
The EU has adopted legislative proposals and published advice for a no deal scenario. The EU expects this work to continue and additional action could be implemented in due course. Clarity on further steps the EU may undertake will provide reassurance to both EU and UK businesses.
In a no deal scenario there will be a number of inter-dependencies between our respective contingency plans. The UK firmly believes that it is in the EU and UK’s mutual interest to continue to discuss these, including through regulators and institutions.
We are pleased to see that the EU is committing to step up preparations for all scenarios and the recognition in their recent communication that this will require bespoke preparations by member states, national and local authorities, varying in accordance to their vicinity and economic ties with the UK.
We are ready to intensify our engagement and cooperation with the Commission’s Brexit Preparedness Group, other EU institutions, and member states on preparations for our exit to minimise disruption to both UK and EU businesses and citizens.
There are many areas where joint technical and operational discussions between UK and EU experts are necessary such as ensuring we can maintain uninterrupted air services across Europe, to enable the continued exportation of live animals and animal products, and also the continued flow of personal data between the UK and EU. There are already technical discussions happening in some areas, for instance between the European Central Bank and the Bank of England and we are keen to see these replicated in other priority areas.
Our communication with businesses and the wider public about a no deal scenario will increase as we approach our exit from the EU.
As a responsible government we have spent more than two years carrying out extensive preparations for all scenarios, including no deal.
We recommend businesses now also ensure they are prepared and enact their own no deal plans.
In the coming weeks, we will also publish further advice on the steps that people, including UK nationals living in the EU and EU citizens living here in the UK may need to take to prepare for our exit.