Home Office delivery of Brexit: customs operations Contents

Conclusions and recommendations

A transition or implementation period

1.The outcome of the Brexit negotiations which would cause the least upheaval for ports, points of entry, and traders doing business with EU Member States would be the preservation of the operational status quo for customs arrangements and remaining in the customs union. The Government should aim to agree transitional arrangements with the EU which involve no practical change to customs operations either in the UK or the EU, and especially at the Irish border, including the maritime border with Wales. (Paragraph 33)

2.If it is not possible for the Government to reach a deal with the EU that results in no changes to customs and border operations in the transition period, then businesses and haulage operators urgently need details of what those changes will be. At a minimum, the options under consideration should be published so that these organisations and the public sector can make the necessary plans and investments for those operational changes. (Paragraph 34)

3.Given the lead times for changes in staffing, technology and infrastructure, Border Force, HMRC and other public sector agencies also need clarity rapidly if any such changes will be required for the transition. The Government must make sure that all affected agencies have contingency plans in place to introduce new systems and capacity over the next 16 months. The Home Office should also set out its own urgent assessment of the additional costs of the options for each scenario. (Paragraph 35)

4.The Brexit Secretary has stated that he wants to reach agreement on transitional arrangements in the first quarter of 2018. This timescale already poses immense difficulties if significant changes are required. If there is any further slippage to this timetable it will be extremely damaging to the smooth operation of the border regime, including to trade and security operations, and to businesses which will struggle to make major changes in such a short period of time. (Paragraph 36)

Implications of no deal on Brexit

5.If no deal is reached on customs arrangements, it will result in all those involved in customs in the UK experiencing a huge amount of change in a very short time, with a vast increase required in capacity and processes at the border, with the risk of either significant delays at ports of entry, or of inadequate checks taking place. A major contingency plan is therefore needed for the border which sets out the volume and nature of checks that the Government would expect to operate in the event of no deal. It should include plans for extra staff, additional infrastructure and new processes for businesses, and set out the costs of these plans. The long lead times that these changes require mean that, even if negotiations on a transitional arrangement continue throughout next year, the country cannot afford “no deal” arrangements to be left until the last minute. Therefore, Ministers need to set out early in the New Year the timetable they will follow for decisions, including when extra staff will start to be recruited and trained on a contingency basis, and what the costs and funding arrangements will be. The Government will also need to provide detail to businesses on the checks they can expect on goods at the border in the event of no deal, so that they can put in place their own contingency arrangements. (Paragraph 41)

Infrastructure Challenges

6.Decisions are needed as a matter of urgency on improvements to port and transport infrastructure that may be needed as a result of Brexit. The Government should significantly increase its coordination with the privately-owned ports sector to ensure that the necessary preparations for any changes required during the transition period begin immediately. Such preparations must also include anticipating any changes affecting border regimes in EU Member States, particularly France and Belgium. (Paragraph 59)

7.Any new arrangements put in place at UK ports will need to be replicated at the Channel ports in France and Belgium. The French ferry operator strikes in 2015 clearly demonstrated how quickly delays and backlogs can build up when the flow of traffic is interrupted at ports, and the dire knock-on effects this can have in the UK, particularly in Kent on the approach roads to Dover. (Paragraph 60)

The Northern Ireland border

8.This inquiry has not taken separate evidence on options and arrangements for Northern Ireland. However, it is clear that the impact on border and customs operations at the Northern Ireland border with the Republic of Ireland will be severe in the absence of specific solutions to the very complex Brexit issues affecting the island of Ireland. Decisions on the way forward are needed as a matter of urgency including on infrastructure improvements, systems and capacity. (Paragraph 65)

Possible mitigations and solutions

9.The Government’s plans for expanding the use of the “trusted trader” Approved Economic Operator and approved warehouses schemes seem sensible and are welcome. They could also help address some of the specific challenges at the Northern Ireland border. However, the Government needs do much more immediately to inform traders about what this might mean for them in practice and to develop the registration and accreditation processes so that businesses can start the process now. The Government should also ensure that it has the capacity in place to register a high volume of traders in a short period of time. (Paragraph 69)

IT systems

10.Updated IT systems will be fundamental to the effectiveness of any new customs arrangements. By far the most important of these is the HMRC Customs Declaration Service (CDS) which is due to be in place by January 2019, to replace the existing CHIEF system. It is deeply worrying that any slight slippage in the CDS programme risks it not being available by the time the UK leaves the EU at the end of March 2019. The Chief Executive of HMRC has acknowledged that it would be “catastrophic” if the new system is not operational on Brexit day. We endorse the NAO’s recommendations on the actions the Government needs to take to ensure this scenario is avoided. We expect the Government to prioritise contingency planning for the eventuality that the CDS system is delayed or lacks full functionality. We also look forward to the further recommendations which our colleagues on the Public Accounts Committee plan to make on this issue, following their recent hearing with HMRC officials. (Paragraph 76)

Home Office capacity

11.The Home Office is not the lead department for customs but Border Force staff provide an essential function in carrying out checks of vehicles and goods at border entry points. The NAO has raised concerns that Border Force may struggle to cope with the combined demands of a greatly increased number of checks being required for both people and goods entering the UK after Brexit. These risks include fewer seizures of illicit and illegal goods at the border. The Government needs to provide reassurance that there will be a sufficient number of Border Force officials in place and that they will be properly trained in any new customs processes required for the transition period or the UK’s future partnership with the EU. Border Force may well require more locations to hold goods or conduct searches and assessments, yet the Home Office could not provide specific details about any post-Brexit planning that is under way. We request that these details are set out in response to this Report. (Paragraph 85)

12.Urgent coordinated staff planning is required between HMRC and Border Force. HMRC has stated that it will need up to 5,000 additional staff in place by March 2019 as a consequence of Brexit. The Home Office has stated that an extra 300 border staff will be in place by March 2019, a 4% increase. We find these plans for such a small increase in border staff completely unconvincing, particularly given the current uncertainty and the need for contingency planning. If new customs arrangements require a substantial increase in customs capacity which cannot be delivered in time, then there is a significant risk that Border Force staff will be diverted from crucial security functions, including preventing smuggling, the seizing of dangerous goods and immigration processes. The Home Office needs to plan for a significant further increase in border staffing and to ensure that arrangements are in place to prevent large numbers of staff being diverted away from other critical areas. The Government must not allow failures in operational planning, HMRC recruitment, or the implementation of new customs arrangements to jeopardise UK border security. We will return to consider further the relationship between the immigration and customs functions which Border Force and HMRC staff carry out, and whether any changes need to be made. (Paragraph 86)

Co-ordination and leadership within Government

13.We were not satisfied with the answers we received to a vitally important question about planning for post-Brexit customs arrangements: who is in charge? The Government’s approach seems to us to lack focus, urgency and above all leadership. Any progress seems to rely on working groups of government officials, with no meaningful ministerial leadership. This is particularly worrying given that the costs involved would appear to be significantly higher than the existing Brexit contingency funding requested by the Home Office and even higher than the total envisaged by the Prime Minister for the whole Government. Moreover, the fact that multiple government departments and agencies are involved in delivering customs means that a fully joined-up approach from the Government is urgently needed, as well as proper coordination with the private sector. The impetus to achieve this is only likely to come from a named senior Government Minister taking responsibility, who can then provide regular reports to Parliament on the Government’s plans. In addition to the ongoing cooperation between the Treasury, the Home Office and other departments with a direct interest, we recommend that a Minister of State should be named as the lead Government Minister responsible for delivery of post-Brexit customs arrangements. (Paragraph 89)





13 November 2017