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Business unready for end of Brexit, says National Audit Office – updated

[ November 6, 2020   //   ]

It is very unlikely that all traders will be ready for the end of Brexit transition at the end of the year, says the National Audit Office in a report published on 6 November. Preparations to manage the border at the end of the transition period remain “very challenging” and have been significantly affected by the ongoing negotiations with the EU and the impact of Covid-19 on the government’s and businesses’ ability to prepare.

Disruption will be particularly severe if the EU implements its stated intention of introducing full controls at its border from 1 January 2021, adds NAO.

It says that while the government is putting in place arrangements to monitor issues as they emerge, it will need to respond quickly to try to minimise their impact. It also needs to be alert to any increased risks of smuggling or other criminal behaviour which exploits gaps or inconsistencies in border operations. There is a risk that widespread disruption could ensue at a time when government and businesses continue to deal with the effects of Covid.

NAO believes that with increasing time pressure and risks, government is committing a lot of money to progress preparations in areas, such as port infrastructure and customs intermediaries, which would traditionally be provided by the private sector. However, the additional spending is inevitable, and it is right that the government does what is appropriate to mitigate the risks. However, despite the funding being committed by government, there remains significant uncertainty about whether preparations will be completed in time, and the impact if they are not. 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 ro ro traffic, upscaling customs systems and determining the requirements for infrastructure to enforce a new compliance regime.

Government departments have built on their no-deal planning and, although hampered by the challenges of Covid, have made recent progress in implementing the changes required to systems, infrastructure and resources. However, significant risk remains, in particular in the arrangements required to implement the Northern Ireland Protocol. The government must continue to focus its efforts on resolving the many outstanding practicalities relating to both the Great Britain and Northern Ireland operating models and developing robust contingency arrangements if these cannot be resolved in time.

BIFA director general Robert Keen said that the NAO assessment corresponded with what it was hearing from its members, which believe that it will be take some time for a fully functioning border to be put in place.

“BIFA anticipates that the businesses which use its members’ freight forwarding and logistics services to conduct cross-border trade between the EU and the UK, will feel the impact of a sub-optimal border to varying degrees,” says Keen.

“BIFA acknowledges that, of late, the government has increasingly been putting in place coping responses where it can. How effective they will be remains to be seen.

“With less than two months to go to the end of the transition period, BIFA members are still waiting for the government to provide complete information and clarity on the processes by which cross-border trade will be conducted at the end of the year; the systems that will underpin those processes; and assurance that those systems, which have yet to be tested, will actually work, and be able to do what is necessary.

“Even before the pandemic, our members were concerned that the 11-month transition wouldn’t leave enough time to prepare for all the reasons mentioned in the latest NAO assessment. Having had their businesses affected badly by the effects of the pandemic, we really do continue to wonder whether they, and the clients they serve, will have the capacity to increase readiness for a sharp change in trading practices and conditions from the start of next year.”

Policy director at Logistics UK, Elizabeth de Jong, said: “Logistics UK has been working closely with government for some time to highlight the issues which could affect the smooth passage of goods through the supply chain after the end of the Transition Period.  Much has been achieved but there is still much to be done if disruption is to be avoided from 1 January 2021, with detail still required in order for logistics operators to brief and train staff, and adopt new processes for declarations, tariff calculation and payments.  As always, we stand ready to provide all support necessary to make Brexit a success but need government to provide us with the information we require, in detail and at pace.”