The National Audit Office (NAO) in the UK has issued a report into the preparedness of the UK for the end of the Brexit transition period describing the government's progress in implementing changes required to manage the border after 31 December, 2020.
Background to the report
The transition period is due to end on 31 December, 2020 at which point the UK will cease to be part of the EU single market and customs union. From 1 January, 2021 there will be changes in how the UK trades with the EU and in the customs, safety and regulatory checks required at the UK-EU border. The EU will also begin treating the UK as a third country and implement full controls on goods passing between the UK and the EU. The UK is in the process of negotiating its future relationship with the EU, including seeking to reach a free trade agreement (FTA). Regardless of the outcome there will be significant changes at the border from 31 December.
Content and scope of the report
The purpose of the report is to: set out how the government and departments have been preparing to manage the border after the end of the transition period; to set out their degree of preparedness to implement their plans; and to highlight the significant risks to the effective functioning of the border from 1 January, 2021. It is based on information available up to 30 October, 2020.
While the UK has now left the EU, preparations to manage the border at the end of the transition period remain very challenging and have continued to be significantly affected by the ongoing negotiations and wider political context, and by the impact of COVID-19 on both the government’s and businesses’ ability to prepare.
The government is planning for significant change at the border from 1 January, 2021. Departments have built on their no-deal planning and, although hampered by the challenges of the COVID-19 pandemic, have made progress in recent months implementing the changes required to systems, infrastructure and resources. However, significant risk remains, in particular in relation to the arrangements required to implement the Northern Ireland Protocol. The NAO says that the government must continue to focus its efforts on resolving the many outstanding practicalities relating to both the Great Britain and Northern Ireland operating models and developing robust contingency arrangements if these cannot be resolved in time.
It is very unlikely that all traders, industry and third parties will be ready for the end of the transition period, particularly if the EU implements its stated intention of introducing full controls at its border from 1 January, 2021. The government recognises that there will be disruption and is putting in place arrangements to monitor issues as they emerge. It will need to respond quickly to try to minimise their impact. It also needs to be alert to any increased risks of smuggling or other criminal behaviour which exploits gaps or inconsistencies in border operations. There is a risk that widespread disruption could ensue at a time when government and businesses continue to deal with the effects of COVID-19.
The increasing time pressure and risks mean that the government is committing a lot of money to progress preparations in areas such as port infrastructure and customs intermediaries, which would traditionally be provided by the private sector. The unique situation in which departments are operating makes some element of additional spending inevitable, and the NAO says it is right that the government does what is appropriate to mitigate the risks. However, despite the funding being committed by government, there remains significant uncertainty about whether preparations will be complete in time, and the impact if they are not.
The NAO says that some of this uncertainty could have been avoided, and better preparations made, had the government addressed sooner issues such as expanding the customs intermediary market, developing a solution for roll-on, roll-off (Ro-Ro) traffic, upscaling customs systems and determining the requirements for infrastructure to enforce a new compliance regime.
Elizabeth de Jong, Policy Director at Logistics UK, the business group which represents the sector said: “Logistics UK has been working closely with government for some time to highlight the issues which could affect the smooth passage of goods through the supply chain after the end of the Transition Period. Much has been achieved but there is still much to be done if disruption is to be avoided from 1 January, 2021, with detail still required in order for logistics operators to brief and train staff and adopt new processes for declarations, tariff calculation and payments. As always, we stand ready to provide all support necessary to make Brexit a success but need government to provide us with the information we require, in detail and at pace.”
The full report is available here.