British ports look set to miss imminent Brexit deadlines, after confused advice from government and amid a global supply chain crunch – risking hundreds of millions in lost taxes for the exchequer.
The government is under fire from ports for a lack of guidance about where different kinds of goods will need to be brought into the country just three months before physical checks are due to be introduced.
Port operators also say they are struggling to physically build the infrastructure needed for these checks because of global supply chain shortages for building materials and labour.
A government spokesperson stressed that businesses should prepare for new checks, but declined to give a timeframe by which they should do so.
The first physical checks, including in-person checks on animal products and security checks on other goods are due to come in on 1 January. Other paperwork, such as export health certificates for milk, are still supposedly scheduled for October, and these two deadlines were previously shifted from July and April respectively. Last week, The Independent revealed legislation to allow a delay for certificates for meat imports had already been laid before parliament.
Now, two major port operators, who asked not to be identified, told The Independent they were in the dark about how to meet shifting government demands, and said they now believe it will be impossible to build the necessary infrastructure by the end of the year.
From 1 January, ports and nearby administration hubs called Border Control Posts are meant to be ready to process a host of physical checks on foods and animal and plant products. This is a huge operation, industry groups warn, as it will entail considerable new bureaucracy for the nearly £28 billion worth of EU foods imported to the UK each year.
Meanwhile, other customs checks will need to be carried out at separate sites known as inland border facilities.
Further delays to these processes means fewer taxes are likely to be collected on goods. The government’s decision not to impose full customs procedures from 1 January, 2021, would cost at least £800m, Jim Harra, the most senior civil servant in HMRC, told MPs. That was before deadlines due in April and July were shifted to October and January.
There are also wider negative implications for the public purse from a reduction in net trade with the EU. This was equivalent to a loss of around 0.5 per cent of GDP in the first three months of this year, the Office for Budget Responsibility estimated.
The EU, meanwhile, introduced full customs requirements on exports from Great Britain from 1 January, 2021.
However, despite the economic imperative, port operators and a UK government official familiar with border preparations, speaking on condition on anonymity, have described a picture of chaotic official guidance and mounting cost pressures in the face of global shortages of materials from steel to cement.
The situation is so severe, some leading retailers and port operators now expect deadlines in January and October to be moved well into next year. So far, a senior member of the business community said, the government has consistently prioritised the flow of goods, including food, over customs procedures.
With shortages of some foods and acute supply chain disruption already widely reported, the same official familiar with border planning cited above said it was unlikely the government would take any steps that might further challenge food supplies.
One major food retailer said they did not believe that shortages could be over by Christmas, as the PM’s spokesperson suggested last week, if, as planned, the additional checks are introduced in January.
A Number 10 spokesperson said: “Businesses should continue to prepare for new import checks and we are working closely with port authorities, devolved administrations, and traders to prepare for these checks.”
They added: “We intend to have facilities operational for the introduction of physical checks and we are working at pace with our partners to deliver this.”
The spokesperson did not, however, specify a date for the introduction of physical checks.
One port operator complained of building check points, only to have to demolish them weeks later, following a change to security advice from government. They and another operator added that the government’s port infrastructure fund was oversubscribed and will not cover the costs of building works.
Other industry groups whose members import food, including the British Meat Processors’ Association (BMPA), said that the government had still not laid out which check points would oversee imports of which foodstuffs. The lack of clarity throws businesses’ ability to map out the logistical support for their supply chains into doubt.
Peter Hardwick, policy advisor for the BMPA, said: “There may be ports in the UK which are not considered to be official points of entry for products of animal origin but at the moment we have not been told which ports are for which products.”
He added that he believed Border Control Points were “some way off” being fully up and running.
Meanwhile the government has on several occasions revised its requirements of each port, including slashing the amount of cut flowers several ports should prepare to process, while increasing the levels of poultry. “It’s like they’re putting their fingers in the air to get numbers,” one operator said.
The confirmation from industry of severe delays to get customs infrastructure ready for major trade deadlines comes after The Independent revealed last week that the government had laid legislation in order to delay red tape on imports of chilled meat from the EU to the UK.
Now, industry bodies and port operators are questioning whether all such requirements – known as Sanitary and Phytosanitary checks – should all be delayed for a third time.
Meanwhile, a government website designed to give updates to the public and industry about inland border facilities shows no confirmation of planning approval, or timelines for completing building work at a host of sites, as it is meant to do.
Tim Morris, chief executive of the UK Major Ports Group, told The Independent: “For the port operators developing border facilities on site to allow the rapid flow of trade it’s been a really frustrating process. We’ve experienced shortfalls in government funding and continual changes in requirements from Departments and agencies.”
Mr Morris said ports were doing all they could do get facilities ready in time, “but if the government doesn’t stop moving the goal posts now and start providing more clarity on a level playing field for cost recovery then readiness for 1 January could be at risk.”
Local politicians and a Welsh government source said that a range of sites required to facilitate customs checks had not yet received planning permission. Welsh ports are crucial hubs for trade between Great Britain, Northern Ireland and the Republic of Ireland.
A planned facility in Dover has also been delayed. It was slated to be finished by mid-2021 but in March, Kent County Council said it “should be finished by early 2022”.
HMRC has yet to submit a new application detailing updated plans to Dover Council. Local Green Party leader Sarah Gleave said there was “very little sign” of building at the site. Defra is still in negotiations to purchase land for its site.