On Thursday, Parliament ended its last session before Great Britain leaves the EU ‘Single Market’ and ‘Customs Union’ at 23:00 GMT on 31 December.
The cross-party Parliamentary ‘Committee on the Future Relationship with the European Union’ completed its assessment of UK preparedness. Published this morning, 19 December – and with 12 days until the end of the transition period – it unanimously paints a stark warning of: “a potentially challenging start to 2021 as businesses, traders and citizens adjust to life outside the EU.”
Committee chair, Hilary Benn MP, said: “With just seven working days until the end of the transition period, significant concerns remain. The Government still cannot provide businesses, traders and citizens with certainty about what will happen in all the areas affected by the negotiations, but as we leave the rules of the Single Market and the Customs Union, firms exporting to the EU will face more red tape, unfamiliar forms and extra costs from 1 January whatever happens.
Coinciding with the toughest trading conditions since records began – and with businesses focussed on surviving Covid-19: Benn added: “At this late stage, the Government must be ready to implement contingency plans where necessary to mitigate the effects of any disruption. Failure to do so would mean the worst possible start to the new year for many people and businesses who are already experiencing the toughest of times.”
The report’s key findings include:
- “Given the overall state of preparedness, the Government must have robust contingency plans ready for 1 January.” The report acknowledges the complexities of developing a brand-new Border Operating Model. However, “key decisions have been taken very late – including the announcement of the outcome of bids to the Port Infrastructure Fund and the location of inland facilities to serve the ports of Holyhead and Cairnryan.” This has affected overall readiness as the end of transition approaches.
It is critical that the Government has robust contingency plans in place to deal with any disruption from 1 January.
- “Late delivery of IT leaves little time for users to adapt.” The report notes that whilst the Government “appears to be on track to make the necessary changes to its own IT systems by 1 January – such as the HMRC’s Customs Declaration Service,” they are being rolled out with very little time remaining. Many businesses and traders will be unable to update their own systems that now need to integrate with the HMRC. Late delivery means that staff cannot be fully trained on the new software across the UK and in countries they are exporting to or importing from.
Training is vital if new arrangements are to function smoothly. We have reported on the recent NAO report which found that systems, processes and resources have not been fully completed and tested. The Government should therefore have a plan to swiftly address any problems that arise.
- “The UK and EU should reciprocate on no-deal measures and phasing-in of goods controls.” The Committee welcomed the European Commission’s ‘no-deal contingency measures’ for road freight and road passenger transport, published on 10 December, and recommends that the Government ensures they can be enacted, if required, by reciprocating in full. We note that the European Parliament went further in recommending additional ‘grace’ periods to mitigate disruptions in their final session of the year on 18 December.
The report says that the Government decision to phase in controls on goods arriving from the EU over the first six months of 2021 was the right one. But it warns that July is not far off and urges that all necessary systems and infrastructure are put in place, and businesses made aware of what changes they need to make, as soon as possible. The report also calls on the EU to reciprocate the UK’s decision to phase in controls.
- “Trained customs personnel must be in post, and business engagement ramped up.” As well as IT systems and physical infrastructure, new trading arrangements will require trained customs agents if they are to run smoothly. Businesses and traders will be reliant on these intermediaries for assistance with paperwork; and ensuring they comply with new requirements – for example on plant and animal health, and food and feed safety. If the right people are not in the right place at the right time, businesses and traders will face an uphill task. “The Government must therefore be ready to address any personnel shortages.”
The report welcomed the Government’s efforts to engage with businesses about the changes that are coming – but warned that with so little time remaining, continuing uncertainty about the future arrangements, unclear guidance and the additional complexities created by Covid-19 restrictions, businesses have been constrained in their preparations.
- “The UK needs to ensure its border is safe and secure.” The report says that whilst the precise nature of future co-operation with the EU on law enforcement remains unclear, “the UK’s safety and security must not be compromised.” While UK law enforcement agencies are working hard to develop alternatives to EU databases – such as the Schengen Information System II – the fall-back systems for information sharing are likely to be slower and more cumbersome.
This was highlighted in Thursday’s Home Office Affairs Committee session into “UK-EU security co-operation”. The police and crime fighting agencies will be disadvantaged once excluded from the shared EU intelligence.
The Brexit Committee noted that: “we still do not know if the UK will receive a data adequacy decision to enable data transfers from the EU to the UK, and a replacement for the European Arrest Warrant is unlikely to be in place by 1 January.” They call on the Government to “closely monitor the speed and effectiveness of its fall-back systems.” They added that the Government should explore all available opportunities for countering cross-border crime in Northern Ireland, including bilateral arrangements, that build on current co-operation between the Police Service of Northern Ireland and An Garda Siochána.
- “The Ireland/Northern Ireland Protocol must remain a priority.” The Brexit Committee welcomed the agreement between the UK and EU about how the Protocol will work in practice. However, they noted the “likely negative consequences of the agreement being reached so late for citizens and businesses.” They warn that – even with an agreement – the early months of 2021 are “likely to be difficult” with some problems deferred rather than solved. Northern Irish businesses and civil servants face challenges, and – if these are to be overcome – “all parties must show flexibility, creativity, and generosity of spirit.”
To ensure that the Protocol is applied consistently – and to avoid future disputes – HMRC should work closely with the Irish Revenue Commissioners and other relevant authorities. The Government should also – together with its devolved counterparts – “put contingencies in place to minimise traffic disruption near affected ports.”
We can only agree with Mr Benn when he says that: “the government has left it very, very, late.”