Brexit: The Customs Challenge (European Union Committee Report)

Baroness Randerson Excerpts

Monday 1st April 2019 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I did not have the privilege of being a member of the committee responsible for this excellent report, but it is a very interesting read. It is, unfortunately, a historical document, and it would have been a lot more appropriate to debate it some months ago. It is striking that, in the six months since it was published, although we have learned a lot more about the problems associated with customs arrangements, there have not been any solutions. Therefore, what the committee advises is as relevant now as it was then.

The report draws attention to the fact that, as my noble friend said, there are 145,000 VAT-registered businesses in the UK, and a further 100,000 under the VAT threshold, that currently trade abroad but exclusively with the EU. That means that they have not had to deal with the paperwork and bureaucracy associated with international trade. In addition, the report draws attention to the huge cost to business of no deal, estimated by HMRC at £18 billion per year. It is a pity that figure was not on the side of a bus.

The report also emphasises that all the talk of using technology to overcome border issues, particularly in Northern Ireland, is basically so much hot air—those are my words, not the report’s. There is no technological solution. Essentially, there are bound to be hold ups at the border, and, however brief they are, they will have a huge impact. Since the publication of this report, we know quite a lot more about the details of that impact.

I will start with Dover, which has already been mentioned, the largest roll-on roll-off port in the UK. Noble Lords will be familiar with the expectation that there will be long queues. The report acknowledges that there is no space for additional checks, examination sheds, checkpoints or additional barriers, and no space for lorries to park as they wait. Of the UK’s total trade in goods, 17% goes through Dover, and it depends on going through without stopping. Indeed, both Dover and Eurotunnel market themselves as a continuous, non-stop motorway to Europe. Some weeks ago, I met the Road Haulage Association. Its representative told me that an Amazon lorry can have 8,000 individual shipments on it, and would normally have an individual customs declaration for each of those 8,000 shipments. Each customs declaration has 36 different fields that must be completed. The RHA estimates that it would take 170 staff one day’s work to process that lorry. The implications on a grand scale are serious.

The Government have sought to combat these problems in two ways. One is by saying, essentially, that we will ignore the need for border checks and everything will continue as it always has. There are a couple of problems with that. First, why are we leaving if we are going to continue exactly as we have done? Secondly, as a representative of the freight industry said to me, the moment we do not apply the rules we lose control of the border. That will lead to various kinds of smuggling—of people, drugs, armaments and so on, as well as ordinary, everyday goods. It will also lead to the introduction of substandard goods—a serious issue for those trying to produce good-quality goods in the UK.

The Government have also attempted emergency preparations—the M20 being turned into a giant lorry park and the use of Manston Airport for emergency long-term parking—and we are all familiar with the fact that they have not gone well. Then there is the Seaborne ferry company with no ferries, which seemed to think it was providing the Department for Transport with pizzas rather than ferries.

The serious point is that the subsidy for ferries led to Eurotunnel seeking compensation for its products and services being overtaken by the subsidy for ferry services. Last week we discovered that the contract the Government signed with the ferry operators started on 29 March, even though we have not left the EU. I am told that tickets for these additional ferries are now being sold on the open market. It might be a good time to catch a ferry in the next week or so but, if you meet a tall, bald man called Chris trying to flog a few tickets in the ferry terminal, it would not be good value for money.

It has already cost £89 million for the ferries; £6.5 million for the extra weeks of the ferry subsidy that the Government have to cover until we leave the EU; £800,000 for the financial advice; £33 million in compensation to Eurostar; and £30 million for the design, build and operation of Operation Brock on the M20. By my calculations, that is almost £160 million, and counting, as the cost of Brexit to the DfT alone.

I have dealt with the costs to us—the taxpayer—but most importantly we should remember the costs to the businesses of Britain. The SMMT referred to the production of a single fuel injector. To make it takes 35 components from 15 countries and it requires 39 border crossings between the UK and the EU. Now we can see why the automotive industry is thinking of leaving this country fast and why the producers in the supply chain are extremely concerned about their future.