British companies trading with Europe face a post-Brexit bureaucracy burden of an extra 215m customs declarations at a cost of about £7bn a year, after Michael Gove revealed plans for managing the UK’s borders.
The scale of the additional red tape involved in future UK trade with the EU was set out by the Cabinet Office minister in a 206-page document on operating the new border. It included the admission: “Customs declarations are complicated.”
Mr Gove has not disputed industry estimates that some 50,000 new private sector customs agents will have to be hired by business to deal with formalities at the UK-EU border — regardless of whether the two sides reach a trade deal.
The cabinet minister was speaking on the day the government launched an upbeat advertising campaign to prepare the country for the end of the Brexit transition deal on January 1, under the strapline: “UK’s new start — let’s get going”.
In spite of fears from business that new IT, customs experts and lorry parks will not be ready by the end of the year, Mr Gove and prime minister Boris Johnson insisted that the “Project Fear” warnings of anti-Brexit campaigners would turn out to be ill-founded.
Mr Johnson claimed that the Covid-19 crisis had put the costs associated with Brexit “very much into perspective”.
Michael Gove: his report admits that ‘customs declarations are complicated’ © AFP via Getty Images
But while Mr Gove told MPs that Brexit would allow Britain to set its own immigration policy and strike trade deals around the world, for businesses trading with Europe and for individuals travelling abroad for work or leisure Brexit will throw up new hurdles.
Government officials confirmed that when Britain leaves the EU customs union and single market it would mean an estimated 215m extra customs declaration forms for businesses importing or exporting goods.
That would apply regardless of whether Britain and the EU conclude a trade deal this year with the aim of removing all tariffs and quotas. Only a fraction of the estimated 50,000 extra agents needed to handle the new customs forms have so far been recruited.
Jon Thompson, former head of HM Revenue & Customs, in 2018 estimated that the cost of each declaration could be £32.50, but cited a range from £20 up to a possible £55.
The estimated 215m import and export declarations made by British traders would be mirrored by the same process by counterparties in the EU, meaning some 430m forms would have to be completed in total; that will add considerably to the cost of trade across a currently open border.
Mr Gove announced £705m of extra spending for new infrastructure, jobs and technology, and the border with the EU and confirmed plans to build lorry inspection sites away from congested ports such as Dover. Officials estimate that up to a dozen may be needed.
Rachel Reeves, shadow cabinet office minister, said the extra bureaucracy was “staggering”. Last week Liz Truss, international trade secretary, raised concerns with ministerial colleagues about the delay in preparing the new border.
Julian Smith, former chief whip, said it was “deeply problematic and worrying” that the government was imposing additional costs on businesses which were already struggling with coronavirus.
Richard Burnett, head of the Road Haulage Association, warned of a serious shortage of customs agents and expressed concern about a proposed new “Smart Freight” app, that lorry drivers will have to complete in advance before travelling to ports in Kent.
Hauliers have been promised it will be ready by the end of the year, but Mr Burnett said: “That’s not that much use to say it’s ready by the end of the year. We need to be able to ‘touch, feel and train people on the functionality for it to be working from Jan 1.”
Meanwhile Dominic Goudie, head of international trade for the Food and Drink Federation, said the requirement that all fish imports and exports must have full documentation by January 1 could “hit consumers quite quickly” given that 75 per cent of UK-caught fish is exported to the EU, and about a third of fish consumed in the UK is imported from the EU.
