UK Government announces a further £705m investment for Brexit preparations

The first Brexit cracks started to show as both DB Schenker and DPD decided to suspend deliveries from EU to UK.

The UK government has announced a £705m investment plan for new infrastructure, jobs and technology at the EU-GB border. The funding will be used to ensure international freight movements are as smooth as possible when the transition period ceases on December 31, 2020.

Of this sum, £470m will be used to build port and inland infrastructure needed to allow goods to keep flowing. Extra facilities were always likely to be needed given the likely shape of the future trading relationship. Many UK ports that are heavily exposed to EU trade do not have the necessary space or infrastructure needed to carry out full border checks on site.

It is unclear whether a 27-acre site in Ashford, Kent, that was recently purchased by the Ministry of Transport forms part of this investment, but this is certainly the type of facility the government would require. The purchase of the land near to the Port of Dover was made public last week and has space for up to 10,000 lorries; the implication being that this site could be used for clearing lorries before travelling to the EU. This is the type of facility that could be vital in ensuring transport facilities are not overwhelmed. However, it could take time to make these sites operational.

In addition to the investment in facilities, £235m will be made available for staffing and IT systems. This includes:

– Over £100m to develop HMRC systems to reduce burden on traders as well as investment in technology to ensure controls can be implemented in Ro-Ro environments

– £10m to recruit 500 more border force personnel and £20m for new equipment

– £15m to build new data infrastructure to enhance border management and flow

These systems will be in place to allow for the 215m additional customs declarations needed per year (government estimates, 2018) to take place. HMRC has previously estimated the cost of additional declarations at between £15 and £55 per declaration, which could mean additional supply chain costs of between £3.2bn and £11.8bn a year. Cabinet Minister Michael Gove yet again failed to rebut reports that an additional 50,000 customs entry personnel would be needed for declarations, but it is unclear if he really knows what will actually be needed. Ti’s Advisory Board Member Ken Lyon previously wrote that the UK has strong electronic customs submission capabilities that would prove useful in clearing the additional declarations.

Critics of the government have said the investments are too little too late, whilst Mr Gove insists the government has been “laying the groundwork for months”. The UK’s Freight Transport Association welcomed the announcement but insisted that a deal with the EU was crucial. Head of International Policy, Alex Veitch, commented, “Logistics as an industry is highly flexible and can adapt quickly to changing circumstances, as we have seen throughout the COVID-19 crisis, but nevertheless it is good to have confirmation of a large proportion of the detail of how goods are expected to move between the UK and EU from the start of next year … However, logistics businesses are also urging the government to continue pursuing a deal with their EU counterparts as an urgent priority”.

Concerns also appear to have been raised recently from inside government regarding border proposals previously announced which push back numerous checks on EU goods until July 2021. In a Business Insider article, International Trade Secretary Liz Truss is alleged to have written to colleagues expressing concerns that the WTO could put forward a legal challenge regarding the UK’s decision to postpone checks on goods to July. This is because if a free trade agreement is not reached between the two, it could break the WTO’s rules on preferential treatment for trade. She is also alleged to have expressed anxiety over the preparedness of ports to deal with smuggling if they are unable to carry out checks. These apparent concerns from inside government will do little to dispel fears of disruption to trade in 2021.

The overall investments made by the government are helpful and some concerns may be allayed by the buying up of new facilities. However, there is still much to be done in the coming months in readying UK supply chains for the short term disruption that Brexit is likely to cause.

Source: Transport Intelligence, July 14, 2020

Author: Andy Ralls