Home Office delivery of Brexit: customs operations Contents

1Introduction

1.The Home Office has significant operational responsibilities in delivering the changes which will occur as a result of the UK’s exit from the EU in March 2019. These changes will affect the Home Office in three main categories: customs operations, immigration, and policing and security cooperation. This will be the case whether the UK reaches an agreement with the EU on Brexit arrangements or in the event of there being no deal, although of course the nature of the task will depend to quite a large extent on the precise terms of any deal and the timetable for change.

2.We decided that we should prioritise examining the Home Office’s capacity to deliver Brexit as one of our first inquiries of this Parliament, because, with only 16 months to go before the UK leaves the EU, there is only a very short period of time for decisions to be made and effective arrangements to be put in place.

3.This report on customs is the first stage in this overarching inquiry. It looks at the possible operational challenges, particularly for the Home Office, the risks that need to be addressed and the additional contingency planning that needs to be done. While the Government has indicated that the UK will leave the EU customs union after Brexit, the Prime Minister has stated that she still wants the UK “to have a customs agreement with the EU”, although it is not yet clear what this will mean in practice.1 The practical challenge involved in changing customs and border arrangements is significant and potentially costly: imports and exports are worth billions of pounds and involve a vast number of businesses and intermediaries. HM Revenue & Customs (HMRC) has estimated that Brexit could lead to an increase of up to 360% in the annual number of customs declarations in the UK, from the current total of 55 million to 255 million, if the arrangements after Brexit require declarations for UK trade with EU countries; and more than double the current number of traders may have to go through customs processes.2

4.Moreover, as the Government has acknowledged, customs arrangements are potentially a “cliff edge” issue, where change could happen suddenly; in the absence of an agreement which ensures continuity, or transitional arrangements, the introduction of border checks between the UK and the EU will need to happen on the first day of Brexit, as well as new documentary and excise and duty requirements3. It is the Government’s intention to avoid this cliff edge, but how this will be achieved is still unclear. Furthermore, the Government’s stated policy is for a bespoke customs arrangement with the EU during any transition, which suggests the need to model a range of operational responses to what could be—even in transition—changed customs arrangements.

5.When we took evidence from the Home Secretary last month, she told us that “irrespective of any of the outcomes” from the Brexit negotiations, dealing with post-Brexit immigration policy and delivery would result in “little change as long as we get our estimates right, as long as our technology is right and working correctly”. However, she acknowledged that this was not the case with customs arrangements: “I do think the challenge is much more on goods”. Ms Rudd was clear that “We will make the necessary minimum structural preparations to ensure that, whatever the outcome, we are ready on day one” and “we will make sure that we have something in place so that we can continue to operate”; and she indicated that the emphasis would be on “technological investment, so we can make sure that we can have advanced customs preparation, as we already do for non-EU matters”. However, she accepted that “it may not be perfect on day one”.4

6.HM Treasury is the Government Department with responsibility for customs; its agency, HM Revenue & Customs, delivers this policy and is responsible for collecting duty and excise. The Home Secretary emphasised to us that the Home Office’s “primary responsibility is on immigration, not on customs”.5 However, the Home Office does have a significant interest in customs operations in that one of its agencies, Border Force, is responsible for securing the border and managing flows of people and goods. Border Force officers work at 140 sea and air ports across the UK and overseas. In relation to customs, its responsibilities include: searching baggage, vehicles and cargo for illicit goods or illegal immigrants; patrolling the UK coastline and searching vessels; gathering intelligence; and contributing to the protection and collection of customs revenues for trade crossing the border.6 The Home Office also took over from HMRC responsibility for storing goods held prior to the payment of customs duties, evidencing the joint role performed by Border Force staff in the operation of both immigration and customs procedures.

7.Our predecessors took oral evidence on post-Brexit customs arrangements in January 2017 from witnesses representing freight and road haulage organisations, a leading logistics company, and a ports operator.7 The witnesses expressed serious concerns about the level of preparation for post-Brexit border and customs arrangements and were clear about the scale of the delivery challenge for the Government, in terms of the volumes and complexity, the potential impact on importers and exporters, the urgent need for infrastructure improvements at and around ports, and development of new IT systems. This evidence remains valid, despite 10 months having elapsed since it was taken, because little has changed in terms of the detail of the Government’s intentions, or any action being taken to begin laying the foundations for a new customs system, beyond the publication of position papers and consultative documents (discussed in Chapter 3).

8.We have not assessed the options for customs or trade policy after Brexit; this report is instead focused only on operational delivery and Government preparedness for changes at the border as a result of the UK’s future customs relationship with the EU. We have been able to draw on a recent report from the Institute for Government on Implementing Brexit: Customs, (“the IfG report”) which provides a detailed and comprehensive examination of the current system and the challenges faced in leaving the EU customs union, and proposes some potential solutions. The National Audit Office’s (NAO) recent reports on The UK border, which looks at the range of challenges for the Government in managing the border in the context of Brexit, and on HMRC plans for a new customs declaration IT system, have also been a very useful resource.8

9.We have not rehearsed the wealth of detailed information which is already in the public domain about current UK and EU customs arrangements. Instead we have sought to inform the ongoing public debate about how best to deliver any required changes, and to help shape the Government’s approach to putting in place post-Brexit customs arrangements which will meet the needs of UK business with the minimum of disruption, and preserve the free flow of international trade, including with EU countries, while at the same time ensuring that UK trade is adequately protected from illicit, dangerous or unfairly priced goods coming through the border. The way in which Border Force operates means that the practical implementation of immigration and customs policies are currently interlinked. We plan to monitor the Home Office’s delivery in meeting these operational challenges over the next 16 months.


1 Speech by the Prime Minister: The government’s negotiating objectives for exiting the EU, 17 January 2017. See also The Telegraph, 13 August 2017, Britain will not stay in EU by the back door, Philip Hammond and Liam Fox jointly declare

2 NAO, Customs Declaration Service, July 2017, HC 241, Key Facts and p 6; and NAO, The UK border: Issues and challenges for government’s management of the border in light of the UK’s planned departure from the European Union, HC 513, October 2017, pp 8 and 27

3 HM Government Future customs arrangements: a future partnership paper, August 2017, p 2; and Institute for Government, Implementing Brexit: customs, p 3

4 Oral evidence taken on 17 October 2017, HC 434, Qs 13, 15

5 Oral evidence taken on 17 October 2017, HC 434, Q13

6 Gov.uk website, Border Force: About Us [accessed 23 October 2017]

7 Oral evidence taken on 25 January 2017, HC 494, Session 2016–17

8 Institute for Government, Implementing Brexit: customs, September 2017; NAO, The UK border: Issues and challenges for government’s management of the border in light of the UK’s planned departure from the European Union, HC 513, October 2017, NAO, Customs Declaration Service, July 2017




13 November 2017