Theresa May's Chequers Brexit plan 'won't be ready for years', Lords say

Theresa May’s Chequers blueprint for Brexit could take years to deliver, a parliamentary committee has warned.

Although the Prime Minister insists it is the only credible plan on the table, the Lords EU Committee said there were still “significant questions” over the plan which relies on mechanisms that are complex and untested.

Baroness Verma, the chair of the EU external affairs sub-committee, said: “The Government must, as a matter of urgency, provide answers to questions on the FAC.

“With only six months to go until Brexit the clock really is ticking on a mutually acceptable customs agreement.”

The committee also again highlighted what it said were the dangers of a no-deal Brexit, which it said would be “costly and disruptive”.

The committee highlighted fears concerns over the proposal for a “facilitated customs arrangement” (FCA) for when the UK leaves the EU.

“With only six months before the UK’s scheduled exit from the EU, agreement on the principles underpinning any future customs arrangements has become a matter of urgency,” the committee said.

The FCA is intended to allow trade between the UK and EU to continue, while allowing Britain to pursue free trade deals around the world.

It would establish a free trade area with a “common rulebook” for trade in goods, with no tariffs and no routine customs checks.

For goods coming from outside the EU, there would be a dual tariff system, with either the UK or the EU tariff being charged depending on their destination.

UK authorities would charge the higher tariff and businesses would then claim back the difference on proof of final destination, if this could not be firmly established.

HM Revenue and Customs has estimated it will add £700 million a year to the costs of UK importers – still a fraction of the estimated £18 billion a year cost of a no-deal Brexit.

The committee warned however that the repayment mechanism was “untested” and would take “several years to be developed and implemented”.

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A Government spokesman said: “We firmly believe it is in the interests of both the EU and the UK to strike a deal. That remains the goal on both sides and we are confident that this will be achieved.

“The Facilitated Customs Arrangement (FCA) is a business-friendly model that will ensure both UK and EU businesses can continue to enjoy frictionless trade, while enabling the UK to set its own tariffs.

“As set out in our White Paper, the FCA would remove the need for any new customs processes between the UK and the EU, and only a small proportion of overall trade will be affected by the repayment element.

“We are discussing these proposals with the Commission.”

However, the committee said the Government had yet to make clear how goods could be reliably tracked, potentially raising fears of an increased risk of fraud, while the EU has rejected the suggestion that the UK authorities could collect revenues on its behalf.

It also said that the “administrative burdens” for firms engaging with the repayment mechanism could “reduce the attractiveness” for other countries of striking free trade agreements with the UK.