Recommendations & Conclusions
4 items
2
Recommendation
Thirty-Sixth Report - EU Exit: UK Borde…
Deferred
The new controls in place over the movement of goods from the UK to the EU have created additional costs for businesses and affected international trade flows. It is not yet clear to what extent the declines in UK trade with the EU since the end of the transition period …
Read more
The new controls in place over the movement of goods from the UK to the EU have created additional costs for businesses and affected international trade flows. It is not yet clear to what extent the declines in UK trade with the EU since the end of the transition period have been caused by EU exit, or by the COVID-19 pandemic. What is clear is that UK businesses face additional administration and cost when trading with the EU. For example, traders may have to pay an intermediary to help them complete customs declarations and traders in sanitary and phyto-sanitary (SPS) goods selected for physical inspections will have to pay fees to both government and the port. Traders may also need to pay tariffs if their goods do not meet “rules of origin” requirements and there are internal costs associated with complying with the additional requirements. In 2019, HMRC estimated that complying just with new customs rules could cost UK and EU businesses £15 billion per year. HMRC told us in November that it has not updated its 2019 estimate, but that there are indications that the costs to businesses will be less than that estimate. Recommendation: To minimise the costs to business as far as possible, government should: i) undertake a comprehensive exercise to identify and quantify the additional costs the business community and border stakeholders face as a result of new border requirements; and ii) identify opportunities to reduce costs and administrative burden to traders. Government should set out what progress it has made on these points in its Treasury Minute Response.
Show less
Government response AI summary
The government agrees but states that it will produce an updated estimate of business costs when it is able to collect more stable trade data less affected by the pandemic and supply chain issues.
Read full response →
HM Treasury
9
Conclusion
Thirty-Sixth Report - EU Exit: UK Borde…
Deferred
There is clearer evidence available of the impact of the UK’s new trading arrangements on UK businesses, which now face additional administration and costs when trading with the EU. For example, Dr Jerzewska told us that even though full import controls have not yet been introduced into the UK, the …
Read more
There is clearer evidence available of the impact of the UK’s new trading arrangements on UK businesses, which now face additional administration and costs when trading with the EU. For example, Dr Jerzewska told us that even though full import controls have not yet been introduced into the UK, the new formalities and costs that have been introduced make it more expensive and complicated to trade between the UK and EU.19 HMRC agreed that many businesses were incurring additional costs and that the introduction of customs paperwork for goods moving between the UK and EU is particularly a challenge for small businesses. HMRC told us that usually only large traders try to make declarations themselves and most traders will instead employ an intermediary to manage their paperwork, which will obviously come at a cost.20 In 2019, HMRC estimated that in total complying just with new customs rules could cost UK and EU businesses £15 billion per year.21 HMRC told us that it has not yet updated that impact assessment because full customs controls have not been implemented and investments planned over the next three years should streamline border processes and make them simpler for businesses. Nevertheless, HMRC indicated it believed that overall costs to businesses would be less than it estimated in 2019.22
Show less
Government response AI summary
The government agrees but states that it will produce an updated estimate of business costs when it is able to collect more stable trade data less affected by the pandemic and supply chain issues.
Read full response →
HM Treasury
29
Conclusion
Thirty-Sixth Report - EU Exit: UK Borde…
Deferred
HMRC told us that it had introduced the Trader Support Service as a free to use service to make customs declarations on behalf of affected businesses and is planning to spend £360 million on this over two years. HMRC stated that the majority of businesses moving goods from Great Britain …
Read more
HMRC told us that it had introduced the Trader Support Service as a free to use service to make customs declarations on behalf of affected businesses and is planning to spend £360 million on this over two years. HMRC stated that the majority of businesses moving goods from Great Britain to Northern Ireland are using this service, and that HMRC has 81 C&AG’s Report, paras 1.10, 3.7, Figure 4 82 Committee of Public Accounts, Challenges in implementing digital change, Thirtieth Report of Session 2021–22, HC 637, 10 December 2021 83 Committee of Public Accounts, The National Law Enforcement Data Programme, Twenty-Ninth Report of Session 2021–22, HC 638, 8 December 2021 84 Q 91; C&AG’s Report, paras 3.39, 3.40 85 C&AG’s Report, paras 3.39–3.41 86 Q 201 87 C&AG’s Report, para 19 88 Q 73 89 C&AG’s Report, para 4.17 90 Q 78 EU Exit: UK Border post transition 19 received good feedback from them.91 Defra is also providing up to £200 million by the end of 2023 for the Movement Assistance Scheme to help cover certification costs for the movement of agri-goods between Great Britain and Northern Ireland.92 Defra told us that so far £10 million of that money has been spent.93 Despite this support, Cabinet Office told us that an April 2021 survey by Manufacturing Northern Ireland showed that 55% of businesses were still struggling with Protocol processes and 36% thought these difficulties were likely to persist.94
Show less
HM Treasury
31
Conclusion
Thirty-Sixth Report - EU Exit: UK Borde…
Deferred
The UK government set out its proposals in a July 2021 Command Paper.96 The Cabinet Office told us that it wants to apply a risk-based approach whereby for most goods only those which are at risk of crossing from Northern Ireland into the EU customs area in Ireland are subject …
Read more
The UK government set out its proposals in a July 2021 Command Paper.96 The Cabinet Office told us that it wants to apply a risk-based approach whereby for most goods only those which are at risk of crossing from Northern Ireland into the EU customs area in Ireland are subject to checks.97 This would mean forming a trusted trader scheme within which companies would certify whether their goods moving from Great Britain into Northern Ireland would stay within the UK with a light-touch assurance regime for this scheme.98 The Cabinet Office told us that the EU has responded in the ongoing negotiations with some practical approaches of its own. The Cabinet Office also told us that the EU has begun to open up to ideas that they had previously said could not be done. Negotiations remain ongoing, and the Cabinet Office told us that, with good will and constructive approaches on both sides, it is hopeful of resolution.99 91 Q 78 92 C&AG’s Report, para 4.15 93 Q 193 94 Q 199 95 Q 73 96 HM Government, Northern Ireland Protocol: the way forward, CP 502, July 2021 97 Q 187 98 C&AG’s Report, para 4.3 99 Q 74 20 EU Exit: UK Border post transition
Show less
HM Treasury