The UK is likely to face “widespread disruption” as the result of its failure to prepare adequately for the new border controls that businesses will face next year after Brexit, a report from the public spending watchdog has warned.
The 85-page National Audit Office assessment of UK border preparedness paints a bleak picture across the board, warning of insufficient customs brokers, unprepared border sites and a failure to build enough capacity in new customs software.
From next year the UK will need to process 270m customs declarations a year — compared with 60m at present — according to estimates by HM Revenue & Customs, with £1.4bn committed this year to funding new infrastructure.
While the report found that Covid-19 had affected the ability of business to prepare, it said that the failure of the government to begin preparing from 2017 when it knew that new border processes would be needed had exacerbated the situation.
“Some of this uncertainty could have been avoided, and better preparations made, had the government addressed sooner issues such as expanding the customs intermediary market, developing a solution for roll-on, roll-off (ro-ro) traffic [and] upscaling customs systems,” the watchdog concluded.
The report found that the new regulatory controls for goods crossing from Great Britain to Northern Ireland would not be ready by January 1, and that the government was “exploring contingency options”.
It added that the government’s own border and protocol delivery group had accepted that there was a “high risk” that not all the infrastructure would be ready even by July 1 next year, when the UK expects to phase in full controls for goods coming from the EU.
The readiness of the new Goods Vehicle Movement Service in which business will pre-declare customs movements was rated “red” by the delivery group for both ports and operators.
Tim Reardon, the head of EU exit for the Port of Dover, said the issue was that operators had been unable to prepare themselves adequately because it was still not clear what the GVMS was required to do.
“Who, precisely, needs to do what with what — and where and when do they need to do it — have still not yet been fully defined,” he said. “And until they are defined, nobody can be in a position to get ready. This isn’t a systems issue, it’s a process one.”
Citing a government assessment that between 40 and 70 per cent of laden lorries may not be ready for border controls next year, the report said the government was providing “targeted support” to 10,000 high‑value businesses that currently trade only with the EU.
Despite earmarking £84m for grants to boost the customs brokerage industry, the NAO found the government “has not yet facilitated the required expansion of the customs intermediary market”.
As for computer software, the report said that in April 2020 the government had concluded that “substantial re-engineering” would be needed to enable its new Customs Declaration Service software to process declarations.
It added that this failure had been allowed despite the fact that “HMRC has known since it began its no-deal preparations in 2017 that CDS might need to handle a very significant increase in customs declarations”.
Meg Hillier, who chairs the House of Commons public accounts committee, said it was “completely unacceptable” that CDS would have to be rebuilt before it could process all the declarations it will need to.
“My committee warned that CDS was vital three years ago — and HMRC knew then how much would be riding on its new customs system,” she said.
The report’s findings echoed the growing alarm among industry and trade groups over the state of preparedness and the failure of Whitehall and government to understand how long it took for business to make real-world adjustments.
“We have run out of time and business will just have to accept and face the challenges come January 1,” said Richard Burnett, the head of the Road Haulage Association. “The government has to take responsibility for how late in the day all of this is.”
Ian Wright, chief executive of the Food and Drink Federation, said there had been a “startling” lack of progress in relation to border preparations and called on the government to consider an additional grace period or financial compensation.
“It is a serious and urgent matter which presents a genuine risk to the UK’s food and drink supply and the availability of products for shoppers,” he added.
The Cabinet Office said it was making “significant preparations” for the new borders, urging both businesses and citizens to prepare. “That’s why we’re intensifying our engagement with businesses and running a major public information campaign so they know exactly what they need to do to grasp the new opportunities available as the transition period ends,” it added