UK-EU trade faces major disruption even with deal, say auditors | International trade
Billions of pounds worth of trade with the European Union will face “significant disruption” on 1 January, regardless of whether a trade deal is agreed, Whitehall’s spending watchdog has concluded.
The National Audit Office (NAO) said crucial IT systems have yet to be tested and transit areas for lorries are not ready as the government attempts to prepare new border controls for the end of the Brexit transition period. The planned controls, which had already been rated “high risk”, have been further hampered by the coronavirus pandemic, according to a report released today.
Officials have still not taken the steps required to ensure there were enough customs agents, auditors said, while civil contingency plans to maintain the supply of medicines and acquire extra freight capacity away from the main Channel crossings have been difficult to enact due to Covid-19.
Meg Hillier, the chair of the public accounts committee, said the government has not given businesses enough time to prepare, particularly when it comes to preparations for Northern Ireland after the end of the transition period.
“It’s incredibly worrying that, with two months to go, critical computer systems haven’t been properly tested. The government can only hope that everything comes together on the day but this is not certain,” she said.
Auditors highlighted concerns about the checks that will be required for goods moving to Northern Ireland from the rest of the UK.
Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (Daera), which is responsible for checks on agri-food products, had been “severely hampered” by a failure to reach an agreement with the EU and a “lack of clarity” over the measures required. As a result, Daera had concluded it would not be possible to complete the necessary work on its systems and infrastructure by 1 January. It said it was having to explore “contingency options”.
Auditors said the government had left itself little time to mobilise its new trader support service, which will help businesses moving goods between Great Britain and Northern Ireland. This meant there was a “high risk” traders would still not be ready when the new arrangements take effect.
According to the government’s latest “reasonable worst case planning assumptions”, between 40% and 70% of lorries travelling between the EU and the UK may still not be ready for the new border controls. Ministers have already warned hauliers they could face queues of up to 7,000 lorries at the main Channel crossings.
The NAO said while arrangements were being developed to minimise delays, these depended on new technology and would require the engagement of both trades and hauliers. There is little time left for ports to integrate their systems and processes with new government systems, and they may have to fall back on “manual processes”, it said.
The government has identified seven inland transit sites for lorries and HM Revenue & Customs (HMRC) has said getting them all ready for 1 January was proving “very challenging”.
Ministers have delayed the imposition of full import controls on goods coming from the EU until July 2021. Auditors said there was still uncertainty over where the infrastructure would be located and whether it would be ready in time.
HMRC still needs to make significant changes to its customs systems to handle the increase in customs declarations, the report said, even though it had known this was likely to be necessary since planning for a no-deal Brexit began in 2017.
Gareth Davies, the head of the NAO, said: “The 1 January deadline is unlike any previous EU exit deadline – significant changes at the border will take place and government must be ready.
“Disruption is likely and government will need to respond quickly to minimise the impact, a situation made all the more challenging by the Covid-19 pandemic.”
A UK government spokesperson said: “We are making significant preparations to prepare for the guaranteed changes at the end of the transition period – including investing £705m to ensure the right border infrastructure, staffing and technology is in place, providing £84m in grants to boost the customs intermediaries sector, and implementing border controls in stages so traders have sufficient time to prepare.
“With fewer than two months to go, it’s vital that businesses and citizens prepare too. That’s why we’re intensifying our engagement with businesses and running a major public information campaign.”