Boston Consulting Group lands £2 million contract with Brexit department

04 June 2018 Consultancy.uk

The British arm of global strategy firm the Boston Consulting Group (BCG) has landed a £2 million contract from the UK government’s Department for Exiting the EU (DExEU). The American consulting giant now holds at least five Brexit contracts as scrutiny grows on the Government’s perceived overreliance on consultancies to help engineer a ‘smooth’ Brexit.

BCG’s contract with David Davis’ DExEU department commenced in December 2017 but only became public knowledge five months later when it was published on the government contracts website. The delay has done little to help DExEU’s media image after it was revealed that the department charged with executing Brexit has the worst transparency record of any governmental office.

The £2 million contract handed to BCG in the UK is for “the provision of consultancy support for the cross government delivery coordination of the EU Exit Programme”, according to the award notice. It was awarded on December 8, began a week later, and is due to be completed on September 14 2018.

Boston Consulting Group lands £2 million contract with Brexit department

Boston Consulting Group has now been awarded at least five Brexit-related contracts by the government. They have a combined value of £4.7 million and more may yet be made public. Though sizeable it is a drop in the ocean compared to the £2 billion just six core Whitehall departments are expected to spend on Brexit-related policy work by the time Brexit becomes a reality in 2019.

In response to the news, a spokesman for the DExEU said it was “quite standard for a government department to draw on the advice of external specialists”, adding "the Government is utilising the skills of the brightest and best across the Civil Service as we prepare to exit the EU.”

Consulting firms are among the most immediate beneficiaries of the 2016 referendum. McKinsey & Company recently beat off competition from EYKPMG and PwC to land a £1.9 million DExEU contract. The long-term impact of Brexit on Britain’s booming management consulting industry is, however, unclear with concerns mounting that a hard Brexit could impede the flow of talent into the UK.

More news on

×

Brexit will have major impact on UK-EU electricity flows

22 April 2019 Consultancy.uk

Brexit could have a major impact on the consumer price of electricity in the UK, according to an analysis by Sia Partners. The total costs for UK society could swell to €600 million annually due to less efficient flows of electricity.

As the Brexit process has perpetually stalled, with no realistic end in sight now until Halloween, underprepared businesses have been handed a lifeline. The scramble to prepare for a No Deal scenario can now continue for another half-a-year, and one of the key factors which companies will need to consider when drawing up these plans is the cost of accessing utilities post-Brexit. In the digital age, virtually no business can survive without a ready supply of electricity – while the pay-cheques of staff will also need to inflate to accommodate future rises in bills.

With significant cross-border flows of electricity between continental Europe and the UK, Brexit is destined to have a major impact on individuals and companies in this manner, according to new analysis by consulting firm Sia Partners. These flows of electricity are governed by common European rules, but when the UK leaves EU, Britain’s electricity markets will no longer be integrated into Europe’s ‘Internal Energy Market’.

European model

Historically, electricity grids and markets were developed on a national level. However, years ago the EU set out to achieve integration in electricity grids, on the premise that coupling grids and markets can lead to significant benefits. By making electricity flows possible, price arbitrage can be faded out by allowing buyers to access cheaper prices offered beyond the country’s own borders, driving up competition and lowering average prices.

Brexit will have major impact on UK-EU electricity flows

An analysis of electricity flows between the UK and Ireland demonstrates this. Before Ireland was coupled to the UK, commercial electricity exchanges on the UK - Ireland border flowed 40% of the time against the natural direction, i.e. from the higher to the lower price market. After more effective cooperation and regulation was put into place ('After the I-SEM' went live), the picture changed drastically, with commercial flows now following the price differential 96% of the time. Quantifying this welfare benefit is not easy: according to one estimate by ACER, the economic added value of having market coupling with implicit capacity allocation on the GB-Ireland border (1GW) amounts to around €110 million annually.

Europe’s aim is to achieve interconnection of at least 10% of their installed electricity production capacity by 2020. As it stands, seventeen countries are on track to reach that target by 2020, or have already reached it.

On the UK side, the region currently has a total capacity of around 5GW connected with mainland Europe (France, the Netherlands, Ireland, Belgium), corresponding to roughly 5% of UK’s installed capacity. In comparison with other EU countries, this ratio is on the low end; however, the UK is playing catch-up and has 10 interconnections scheduled for commissioning in the next four years.

Brexit

It's clear that the UK’s withdrawal from the EU will have an impact on electricity markets co-operation. The question which remains is how large will the impact will be? To provide a forecast for this, analysts at Sia Partners ran a modelling exercise with two scenarios in mind. After leaving the European bloc, the UK will have to make agreements with European countries, similar to how Switzerland and Norway currently operate. Norway has a deal with a relatively high level of integration with the EU’s internal energy market, while Switzerland stands at the other end of the spectrum, with the country excluded from several market coupling initiatives (e.g. MRC, XBID) and from implicit capacity allocation with any other EU member state.

“If Brexit leads to a construction which is similar to the Swiss deal, where UK’s electricity borders are uncoupled from its neighbouring countries, then there will be a major loss of welfare.”
– Sia Partners

If the UK follows in the footsteps of Norway, then the consequences of Brexit could be muted. According to Sia Partners’ calculations, the economic loss would be minimised in the mid-term, with only operational challenges expected. For example, the implementation of pan-European projects, such as XBID, could run into delays in the UK. The EU currently has 7 of such interconnection projects scheduled for completion before 2022.

“In case a Norwegian style deal is struck, the UK will lose its decision power related to EU energy policy but it would allow keeping the benefits linked to the internal energy market not only for itself but also for Ireland and continental Europe,” the researchers state.

If, however, a Swiss deal is struck, then the projected costs could range between €500 million to €1 billion. An expected 60% of this loss will be borne by the UK, 16% by France, and 8% by Belgium, the isle of Ireland and the Netherlands. The researchers concluded that if Brexit leads to a construction which is similar to the Swiss deal, where UK’s electricity borders are uncoupled from its neighbouring countries, “then there will be a major loss of welfare.”