Maintaining operational status quo
The report notes that maintaining the operational status quo for customs arrangements and remaining in the customs union would cause the least upheaval at the border and deliver certainty for business. The Government should aim to swiftly agree transitional arrangements with the EU which involve no practical change to customs operations either in the UK or the EU, and especially at the Irish border.
The Committee specifically warns of the risks if no deal is secured, which would result in customs in the UK experiencing a huge amount of change in a very short time, with a vast increase required in capacity and processes at the border.
Delays and traffic jams at ports
The report warns that rapid changes and a failure to plan could see the UK facing delays and traffic jams at ports similar to those experienced in July 2015 when French ferry operators went on strike and Operation Stack was implemented to ease major problems.
It warns that any change to customs arrangements after March 2019 will require similar investment and planning at the EU side of the border - especially in France, Belgium and Ireland or there will be serious delays for UK exports.
The Committee raises concerns that a 4% increase in Border Force staff is too small as they carry out customs checks in many ports. The report warns of the risk of Border Force being diverted from security and immigration checks into customs checks and emphasises that security must not be put at risk by government failure to plan.
The Committee welcomes proposals to use the approved operators scheme but calls for action to accredit more businesses now.
Insufficient contingency planning
The Committee warns that insufficient contingency planning has been done for Britain leaving the EU with no deal. The report today calls on the Government to publish detailed plans on the impact on Britain’s customs arrangements of all potential outcomes of the Brexit negotiations, including a no deal. This should provide detail on additional staffing required, additional infrastructure, the new processes for business, and set out the costs of these plans.
Lack of coordination across government
The Committee criticises the lack of coordination across government, who were unable to specify which single Minister is responsible for border planning. The report calls on the Government to act and put in place a lead Minister to oversee this substantial body of work.
Government's border planning for Brexit unconvincing
Chair of the Committee, Yvette Cooper MP, commented:
"The Government's border planning for Brexit is extremely unconvincing.
The Government should be aiming for transition arrangements which require no change at all in customs and border requirements as everyone is running out of time to make any staffing, infrastructure or procedural changes - and they risk long delays at the border, both in the UK and abroad.
But there must also be an urgent acceleration of contingency planning in case there is no deal at all. We found the 4% increase in Border Force staff at the borders completely unconvincing. The Government must not allow bad policy decisions or poor contingency planning to mean that Border Force staff are pulled away from security, illegal goods and immigration checks to cover for customs chaos. Ministers must not allow Brexit implementation put our security at risk.
Ports, haulage and logistics companies have made very clear the problems they will face without a clear indication very soon of the contingencies which the Government is considering for post-Brexit customs arrangements in the different possible scenarios, including a transitional period or no deal at all.
It is clear from the evidence the Committee has taken that remaining in the customs union, particularly during the transition deal, is the best way of avoiding the chaos and high costs predicted by traders and trade bodies, like the CBI. However, we recognise this is not the option currently favoured by the Government.
Home Office Ministers must now demonstrate that they are aware of the risks of introducing new customs arrangements and understand the work needed to mitigate them. As a matter of urgency, it must provide details for the no deal scenario that they stress they are not afraid of, including the numbers of extra staff that will be needed to implement the new processes, and new infrastructure requirements and processes, and the associated costs. They must detail the timescales and mechanisms that will be put in place and allow businesses to plan ahead.
As things stand, the Government is running the risk of celebrating their first day of Brexit with the sight of queues of lorries stretching for miles in Kent and gridlock on the roads of Northern Ireland, which would be incredibly damaging to the UK economy and completely unacceptable to the country. Contingency planning is essential. If the Government gets this all wrong, we could be facing Operation Stack on steroids.
We expect a speedy response to this report from the Government to demonstrate that it has now taken these vital matters in hand – and we want to know which Minister is in charge. The current pace of contingency planning is insufficient and risky."
Concerns about Government’s readiness to respond to changes in customs arrangements
The Home Affairs Committee raises serious concerns about the Government’s readiness to respond to changes in customs arrangements at Britain’s borders required by a Brexit deal – or transition period – which does not see the UK maintain operational status quo and remain in the customs union.
Timetable leaves little time to implement significant change
The Secretary of State for Exiting the EU’s has set out his aim of securing a transitional arrangement in the first quarter of 2018, but the report warns that even this timetable leaves little time to implement significant change, if it is required. The practical challenge involved in changing customs and border arrangements is significant. Imports and exports are worth billions of pounds and involve a vast number of intermediaries.
HM Revenue & Customs (HMRC) has estimated that Brexit could lead to an increase of up to 360% in the annual number of customs declarations in the UK, from the current total of 55 million to 255 million, and estimates that the number of traders that may have to go through customs processes could double. The Institute for Government estimates that the introduction of customs declarations on EU trade could cost traders between £4 billion and £9 billion a year.
Freight and logistic companies described a “nightmare scenario” and “total chaos” if significant time is not given to traders to transition to any new customs arrangements. There are particular risks if no deal is secured in March 2019, which would require substantial changes in the volume and processes for customs checks to take place overnight.
Failure to plan sufficiently could see Border Force staff being diverted to customs checks, which raises real risks for our national security. The current 4% increase in staff is nowhere near enough.
Home Office cannot wait for agreement with EU before taking action
The Committee are clear that the Home Office cannot wait until an agreement has been reached with the EU before taking action. It will take time to hire and train additional staff, to build physical infrastructure at ports, and to develop IT systems. And any changes to customs arrangements will impact on EU ports too. If they are not prepared there will still be delays. Businesses also need to be given time to plan ahead and adapt to new arrangements.
Calls on the Government to publish a major contingency plan
The Committee calls on the Government to publish a major contingency plan setting out the potential impact on customs arrangements of the various possible outcomes of the Brexit negotiations. This includes the volume and nature of checks it would expect to operate in the event of no deal being agreed. The plan should cover costings for extra staff, additional infrastructure at ports and new processes for business.
The Government must clearly demonstrate that there will be sufficient staff in place at ports and elsewhere to maintain the UK’s security and the integrity of goods entering the UK, without resources needing to be diverted to customs operations from vital security functions carried out at the border by Home Office Border Force staff.
HM Revenue & Customs’ new IT system, the Customs Declaration Service, will play an vital role in post-Brexit customs arrangements but this project is not due to be completed until January 2019, only two months before Brexit day. The Government must set out what contingency planning is in place should the system be delayed or lack full functionality.
Border between Northern Ireland and Ireland
The border between Northern Ireland and Ireland is acknowledged to present particular difficulties for post-Brexit planning and this could have a grave impact on the day to day lives of people living and working there. Plans to expand the use of the “trusted trader” Approved Economic Operator and approved warehouse schemes could address some of the specific issues here and in the UK more widely. But the Government needs to do more to inform traders now about what this would mean in practice. It must also inform businesses about the accreditation requirements now, so that they can start this process as soon as possible, and improve the registration system.