A report by the National Audit Office (NAO) has found that while the government was able to deliver an initial operating capability at the GB-EU border by the end of the transition period, much more work is needed to bring in import controls, reduce the burden on traders, and resolve the position for Northern Ireland.
The government successfully introduced systems, infrastructure and resources by the end of the transition period (1 January 2021) to allow the trading of goods to continue. It did this by prioritising the delivery of only the essential elements needed before 1 January 2021, and introducing some easements to allow government, traders and third parties more time to prepare.
Significant queues at the border did not materialise in January 2021. This was partially due to traffic flows being reduced because of stockpiling, traders’ wariness about the new import controls, and the impact of the pandemic. The government also introduced arrangements such as the Check an HGV service1 to reduce the likelihood of unready trucks reaching the border.
There was some disruption in other parts of the supply chain as the government and traders adjusted to the new EU import controls, administrative costs, and burdens due to leaving the EU single market and customs union. Between January and August 2021, traders completed around 48 million customs declarations on goods moving between GB and the EU and between the UK and the rest of the world. Between January and June 2021 certifying officers2 signed off 140,000 Export Health Certificates for goods moving from the UK to the EU.
The UK’s trade with the EU fell significantly in the first quarter of 2021 but had partially recovered by the second quarter; there was a 23% and 13% reduction in trade respectively compared to the final quarter of 2020. As the ONS has noted, it is not possible to disentangle the extent to which these changes related to EU exit and the effect of the pandemic but the reductions in the UK’s trade with the EU are significantly greater than the reductions in the UK’s trade with the rest of the world over the first half of 2021. UK exports of food and live animals to the EU experienced the largest monthly decline in percentage terms (73% decline) of all commodity groups in January 2021, before recovering significantly in the first half of 2021. The government has spent £113 million to support businesses affected by new controls, notably schemes to support the fishing industry and small and medium-sized enterprises. However, the eligibility criteria for some schemes meant that some affected businesses were unable to access support.
Traders and hauliers will also have to comply with new requirements when the UK government introduces full import controls. The government originally planned to introduce full import controls at the end of transition period on 1 January 2021. This has been delayed three times, with most controls now being introduced between January and July 2022. The government has said that it was on track to meet its previous timetable whereby most controls would have been introduced by January 2022. The NAO has found that most of the systems, infrastructure and resources needed for January 2022 were on track but there were elements where delivery was at risk and where departments might have had to deploy contingency plans.
The decision to delay import controls has relieved some of the immediate pressure on traders and hauliers, but there is still a significant risk that they will not be prepared for the introduction of full import controls. The UK government and EU member states must ensure that businesses across 27 countries understand what they need to do and when. If they do not, this could reduce the flow and availability of food and other products to the UK.
There is considerable uncertainty regarding the future arrangements for the Northern Ireland Protocol. Elements of the Protocol, such as the required customs arrangements, came into operation from 1 January 2021, while grace periods have delayed requirements for some checks and preparations. Under the terms of the Protocol agreed with the EU in December 2020, the volume of checks required on animals, plants and their products arriving in Northern Ireland will increase significantly once grace periods expire.3 In July 2021, the UK government set out a proposed new approach to implementing the Protocol4 and in October 2021 the EU responded with its own proposals4. Talks between the UK and EU are ongoing and the operational implications of the proposals are not yet clear.
In the immediate term, the NAO concludes that the UK government should prioritise addressing risks relating to infrastructure and trader and haulier readiness. It should provide the support and guidance traders and hauliers need to adapt to new rules as they are introduced. The government should also prioritise efforts to streamline border processes and reduce the administrative burden on traders.