Source · Select Committees · Public Accounts Committee
Recommendation 2
2
The new controls in place over the movement of goods from the UK to the...
Recommendation
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.
Government Response
Not Addressed
HM Government
Not Addressed
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 The government adopts an evidence-based approach to policy making and will continue to do so. With 2021 being a non-typical year of trading because of the pandemic and customs controls introduced in stages to support business recovery, the government does not have the data at this stage to update the October 2019 Impact Assessment, which set out the anticipated administrative burden for additional customs declarations which resulted from EU Exit. The government intends, in due course, to produce an updated estimate when it is able to collect more stable trade data that has less interference with the COVID-19 pandemic and global supply chain issues, which will set out our revised assessment of business impact. 2.3 The government set out in its 2025 UK Border Strategy six key transformations - all designed to contribute to a reduction in costs and administrative burdens for all border users. The greatest impact on administrative burden will come from enhancing the government's collection, assurance and use of border data, enabling upstream compliance to move processes away from the frontier, and making border documentation digital by default. 2.4 Work to develop the UK Single Trade Window, which will create a single digital gateway for traders into UK border systems, is underway. The first functionality has been 3 released and discussions on further features are underway with stakeholders. The government is also reviewing the presence at the border with the aim to understand how it can best deliver goods checks to improve the speed and ensure traders experience a coherent and joined-up government presence. The government has also established a long-term policy call for evidence on the UK’s customs regime – this is currently live (due to close on 2 May 2022) and welcomes views on how the UK’s customs system can be improved by simplifying processes for traders and embracing innovation.