Wednesday, October 24, 2018

New NAO Report on Post Brexit Borders Troubles Freight and Road Haulage Communities

When Will Logistics Sector Get Clarity and Competence?
Shipping News Feature
UK – The National Audit Office (NAO) has today published a report 'The UK border: preparedness for EU exit' and the conclusions in the event of the much deprecated no-deal scenario are less than flattering for the government. In short, the NAO says the increase in Border Force staff levels needed to cope with all the envisaged problems of a considerable rise in the need for the examinations of people, trailers and freight, equates to around to just 1% in real terms as against 2014 levels, and the logistics community, particularly the road haulage sector, has not reacted favourably.

Additionally of the 12 critical systems which the Border Delivery Group said are required to be in place and fit for purpose by March 2019, 11 were at risk of not being ready, and this when the HMRC has estimated a 400% rise in customs declarations will emanate from the revised arrangements, taking the annual total to 260 million submitted returns.

A summary of the NAO report is downloadable here whilst this link will take you to the report in full. The report pulls no punches and each part highlights how far the UK is from resolving a myriad of problems, admittedly most hypothetical and dependant on the results of the final deal (or not as the case may be).

With regard to future border arrangements the situation is complicated by ever rising and more complex security threats just as more mobility leads to an increase in transits with restrained resources in place to cope. The government admits it does not have enough time to put in place all of the infrastructure, systems and people required for fully effective border operations therefore initially there will be no regulatory or safety checks on the majority of agricultural and food-related products and other goods arriving from the EU (our italics).

The government is preparing ‘civil contingency plans’, seemingly a euphemism for queues of trucks on the Kentish motorways and beyond. The tone of the report on border controls echoes that of many road haulage operators and freight forwarders, saying ‘the government is putting in place coping responses where it can. How effective they will be remains to be seen’.

New infrastructure to track and physically examine goods cannot be built before March 2019. Without this, the UK will not be able to fully enforce compliance regimes at the border on day one. As to staffing levels, Border Force intends to recruit 581 staff by March 2019 and expects to increase its staff in the months following. However, given uncertainty regarding the future regime, and the length of time it takes to recruit, security clear and train staff, Border Force acknowledges that there is a significant risk that it will not deploy all the staff it plans to recruit by 29 March 2019.

There is an increased delivery risk due to the high interdependence between ‘at risk’ government programmes reliant on another ‘at risk’ programme. For example, seven of the most critical border systems are interdependent with the Customs Declaration Service and/or its legacy system CHIEF (Customs Handling of Import and Export Freight); and all must be ready on day one for the border to operate as planned.

As is commonly known and accepted the most complex issues relating to the movement of goods at the border, such as arrangements to apply at the Northern Ireland and Ireland border and a system that will allow roll-on roll-off ferry ports and Eurotunnel to operate smoothly still need to be resolved. There is even talk of ferry operators having to ‘switch routes’ to avoid congested ports. Upon release of the report Amyas Morse, the head of the NAO, commented:

“Government has openly accepted the border will be sub-optimal if there is no deal with the EU on 29 March 2019. It is not clear what sub-optimal means in practice, or how long this will last. But what is clear is that businesses and individuals who are reliant on the border running smoothly will pay the price.”

Needless to say the report has elicited responses from across the British freight community, which in general appears to be getting ever more nervous and disgruntled by the lack of both preparedness and progress in negotiations. Pauline Bastidon, Head of European Policy for the Freight Transport Association (FTA), commented:

“The report from the NAO confirms that the fears of the logistics industry over border readiness for Brexit in the event of no deal are justified. There are still so many elements to prepare if trade is to continue to move freely into and out of the UK, from the Government IT systems required, to contingency measures to mitigate border delays and the availability of government resources to handle new controls and procedures. Despite repeated warnings from FTA since article 50 was triggered, it is concerning to note the NAO has confirmed that it is now too late to implement new border infrastructure and that border processes on day 1 after Brexit will be “less than optimal”.

“The logistics sector is adept at adapting to change, but needs clarification on a range of elements, from the UK schedule of tariffs in the event of no deal to the arrangements that will be used for the safe passage of trucks. Logistics also needs more visibility on what would happen in terms of border controls beyond day 1 and beyond the ‘reduced compliance’ regime that will initially be in place. Logistics businesses are being left as the ‘fall guys’ for the government’s lack of planning, and with most of FTA’s questions over future trading arrangements still unanswered, it will be difficult for our members to keep doing what they do best, which is adapt to new circumstances and keep Britain trading.”

For its part, representing the sector most likely to incur delays and expense if border matters are not satisfactorily resolved, the Road Haulage Association (RHA) shares the National Audit Office fears that measures to prepare the UK border for Brexit won’t be ready for a no-deal scenario, with RHA chief executive Richard Burnett saying:

”With only 156 days until the Brexit deadline becomes reality, we are still in the dark regarding the essential details. To maintain the supply chain between the UK, across the Irish border and mainland Europe, it is imperative that businesses can plan. This has not happened. The border is not ready and plans to make Kent motorways into, what are in effect glorified lorry parks are simply not enough. And Government’s claim that any increase in the number of checks will be kept to a minimum fills us with no confidence at all.

“We need clarity and we need it now. Time has run out. Such is the nature of today’s haulage industry that plans need to be made well in advance to ensure the smooth running of logistics operations, particularly those making the just-in-time deliveries on which the manufacturing industries on the other side of the Channel rely. Yes, we welcome the NAO’s latest report but how many more reports will be issued before their contents are noted and acted upon?”