The National Audit Office (NAO) has released a report stating that although government departments have made progress in recent months implementing the changes required to systems, infrastructure and resources to manage the border at the end of the post-EU Exit transition period, it is still likely that widespread disruption will occur from 1 January 2021.
The Office has highlighted that COVID-19 has exacerbated delays in government’s preparations for the crucial date of 1 January 2012 and that significant risks remain, particularly in relation to implementing the Northern Ireland Protocol and trader readiness more generally.
“The 1 January deadline is unlike any previous EU Exit deadline – significant changes at the border will take place and government must be ready,” Gareth Davies, the head of the NAO has stressed. “Disruption is likely and government will need to respond quickly to minimise the impact, a situation made all the more challenging by the COVID-19 pandemic.”
Departments have made progress towards implementing the systems, infrastructure and resources required to operate the border in relation to Great Britain at “minimum operating capability” by 1 January 2021 and are reasonably confident most will be ready, but timetables are tight. The ability for traders to move goods under transit arrangements is a key element of the government’s plans but some elements will be challenging to deliver in their entirety.
HMRC currently estimates that there will be around 6.3 million movements of goods under transit arrangements in the year following the end of the transition period. If all the planned arrangements are not ready, this could have an impact on the ease with which traders can import and export goods.
There is little time for ports and other third parties to integrate their systems and processes with new or changed government systems, and contingency plans may need to be invoked for some elements. In part as a result of the delays caused by COVID-19, there is limited time to test individual elements and resolve any emerging issues; ensure elements operate together; familiarise users with them in advance and little or no contingency time in the event of any delays.
Even if government makes further progress with its preparations, there is still likely to be significant disruption at the border from the exit date as traders will be unprepared for new EU border controls, which will require additional administration and checks.
It is reported that the government’s latest reasonable worst-case planning assumptions, from September 2020, are that 40% to 70% per cent of hauliers will not be ready for these new controls and up to 7,000 lorries may need to queue at the approach to the short Channel crossings, such as Dover to Calais.
The government’s plan for reducing the risk of disruption at the approach to the short Channel crossings is still developing, with various issues yet to be resolved. It intends to launch a new GOV.UK web service called ‘Check an HGV is ready to cross the border’ for hauliers to check and self-declare that they have the correct documentation for EU import controls before travelling and obtain permits to drive on prescribed roads in Kent. However, there is more to do on how this system will be enforced and how it will work together with traffic management plans for Kent.
The Government is preparing civil contingency plans, such as to ensure continuity of the supply of critical goods and medicines in the event of disruption to supply chains. On 13 October 2020 the Department for Transport announced it had awarded contracts to provide additional freight capacity for over 3,000 lorries a week on routes avoiding the short Channel crossings. However, COVID-19 is making civil contingency plans more difficult to enact, with local authorities, industry and supply chains already under additional strain.
The Government will also need to implement the Northern Ireland Protocol from 1 January 2021. However, due to the scale and complexity of the changes, the lack of time and the impact of on-going negotiations, there is a very high risk it may not be implemented in time.
The government has left itself little time to mobilise its new Trader Support Service (TSS), in which it has announced it is investing £200 million, to reduce the burden on traders moving goods to Northern Ireland and to help them prepare. It will be challenging to establish the TSS by 1 January 2021. Work needs to be done to identify NI traders and sign them up to use the service; recruit and train the staff required; develop software to enable traders to connect to HMRC’s systems; and deliver educational activities to traders. There is also on-going uncertainty about the requirements for the movement of goods under the Protocol. Therefore, there is still a high risk that traders will not be ready.
Significant sums of money have been spent preparing the border for the end of the transition period and, in 2020 alone, the government announced funding of £1.41 billion to fund new infrastructure and systems, and wider support and investment. Despite this, there remains significant uncertainty about whether preparations will be complete 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 the need for an increase in the number of customs agents to support traders.
The NAO has stated that government must continue to focus its efforts on resolving the many outstanding issues relating to the border and develop robust contingency plans if these cannot be addressed in time for the end of the transition period.
Commenting on the report, Robert Keen, director general of the British International Freight Association (BIFA) has commented that the NAO assessment corresponds with what it is 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,” commented 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.”
