Government departments need to do “much more” to tackle border delays and costs caused by Brexit, MPs have warned.
Brexit has clearly suppressed trade volumes and added costs to businesses, and this could worsen when new import controls are introduced, the Public Accounts Committee said in a report today.
The spending watchdog said an expected increase in passenger volumes, as the impact of Covid diminishes, could cause further problems when combined with stricter EU border checks coming in later this year.
It has called for government departments to do much more in the short term to minimise increased costs and administrative delays for traders, provide more support for small and medium-sized businesses, and to ensure there is an effective border.
PAC also questioned the lack of a detailed plan to deliver the government’s “ambitious” goal to create “the most effective border in the world” by 2025.
Meg Hillier, chair of PAC, said: “One of the great promises of Brexit was freeing British businesses to give them the headroom to maximise their productivity and contribution to the economy – even more desperately needed now on the long road to recovery from the pandemic.
“Yet the only detectable impact so far is increased costs, paperwork and border delays.
“The PAC has repeatedly reported on Brexit preparedness and at every step there have been delays to promised deadlines. It’s time the government was honest about the problems rather than overpromising.”
Trade hit by Brexit
New controls on movement of goods from the UK to the EU, implemented after Brexit, have created additional costs for businesses and affected international trade.
Imports from the UK into Germany fell by 8.5% during 2021, new data from Germany's Federal Statistical Office shows.
While trade has also been hit by Covid-19 and wider global supply chain pressures, the committee said “it is clear that EU exit has had an impact, and that new border arrangements have added costs to business”.
PAC said it has repeatedly raised concerns about the impact changes to trading arrangements would have on businesses of all sizes.
It urged the government to undertake a comprehensive exercise to understand the additional costs that businesses are facing due to the new border requirements and find ways to reduce costs and administrative delays.
The report raised particular concern that the government is not doing enough to help small and medium sized businesses, calling for targeted support for SMEs.
Increase in passengers could exacerbate problems
In September, the EU will introduce biometric passport checks at ports under its new Entry/Exit IT system for registering passengers.
PAC has said the new checks, along with an increase in passenger numbers as the impact of Covid diminishes, could lead to increased queues at busy ports like Dover.
Departments “should be doing all they can” to prevent this, including planning for an increase in passengers and traders, MPs said.
The watchdog has asked the government to set out its scenario planning and modelling for anticipated passenger volumes in 2022 and clarify how it will manage increased numbers.
While the EU introduced full import controls in January 2021, at the end of the Brexit transition period, the UK has delayed implementing its own controls three times.
PAC said departments were “very confident” in their ability to introduce import controls in 2022 but officials could not give “complete assurance” that there would not be further delays.
“We hope that this confidence proves justified,” the committee said.
“Much remains to be done to introduce import controls, and in particular to ensure that traders and hauliers across the 27 EU member states are ready as the controls are phased in.”
It added that “improving readiness in 27 countries is significantly more challenging than improving it in one”.
The report also raised concerns that the government’s import controls could be exploited due to a lack of permanent infrastructure.
The Dover White Cliffs border control post will not be ready until 2023, which means trucks arriving at Dover have to travel 60 miles to Ebbsfleet for physical checks, increasing the risks of illicit goods being offloaded before checks are made.
PAC has asked the government to explain how it will minimise the potential exploitation of the temporary arrangements until permanent infrastructure is in place.
Lack of plan for ‘world’s most effective border’ ambition
The government set out plans to create “the most effective border in the world” by 2025 in December 2020.
The MPs have asked the government to explain in detail how it will achieve this ambition, which it said was “optimistic, given where things stand today and we are not convinced that it is underpinned by a detailed plan to deliver it”.
This ambition will rely on cross-government digital programmes, but the government has a poor record in delivering large-scale IT projects, they added.
One of the main hurdles to the goal is the Northern Ireland Protocol, which necessitates checks on goods coming into Northern Ireland from the rest of the UK to allow goods to be delivered without checks when crossing the border from Northern Ireland into the Republic of Ireland.
Both the UK and EU have raised concerns about the implementation of the protocol. PAC said the government should continue negotiating with the EU to resolve the issues and ensure that departments are ready to implement any changes to the protocol or adapt if an agreement cannot be reached.
A government spokesperson said: “Traders have adapted well to the introduction of full customs controls on 1 January, with minimal disruption at the border and inbound freight flowing effectively through ports.
“We are continuing to ensure that businesses get the support they need to trade effectively with Europe and seize new opportunities as we strike trade deals with the world’s fastest growing markets, including one-to-one advice through the free-to-use Export Support Service.
“As an independent trading nation, the UK has secured over £760bn worth of trade deals with more than 70 countries plus the EU, including landmark deals with Australia and New Zealand.”