The Treasury Committee is looking at the UK’s proposed customs policies and procedures once the transition period expires on 31 December 2020.
In its latest session, the committee interviewed:
- Lord Agnew of Oulton, Minister, Cabinet Office and HM Treasury;
- Sue Catchpole, Director, Customs Unit, Business and International Tax, HM Treasury;
- Emily Antcliffe, Director, Indirect Tax, HMRC;
- Sophie Dean, Director-General, Borders and Trade, HMRC; and
- Katherine Green, Director-General, Borders and Trade, HMRC.
Lord Agnew answered most of the questions.
Committee Chair Mel Stride, Conservative, said the government’s reasonable worst-case scenario suggests the possibility of 7,000 trucks in queues and two-day delays. And there have been a number of surveys and reports suggesting that the exporters and importers themselves are not going to be sufficiently prepared.
Lord Agnew of Oulton is worried about ‘trader readiness’ because there has been a ‘head-in-the-sand’ approach by traders, compounded by a ‘quadruple whammy’ of two false alarms, so two extensions at the very last minute, followed by COVID and, now, the recession. The peer said around 210,000 have now registered for EORI numbers and there is a 100-person call centre in HMRC, which is ringing the 10,000 or so highest-value traders. About 250,000 businesses trade with the EU but not with the rest of the world. HMRC’s Katherine Green suggested the shortfall of 40,000 contains largely the sub-VAT threshold group.
Lord Agnew said the smart freight app is now released for beta testing among some trusted stakeholders. If traders are ready and understand the paper trail they must follow, the smart app is merely ‘icing on the cake’, he said. If there is no app and traders are unready, will that lead to major problems with traffic descending on Dover, asked Stride. Lord Agnew said: “To be brutal about it, how many times is a lorry driver going to drive into Kent, take a £300 fine and then park up and wait at Manston for 36 hours while he gets his paperwork sorted? That is what will happen, but I hope to goodness they will not do that more than once.”
Lord Agnew said Manston is ‘85 per cent ready to go’ to hold 4,000 lorries if need be.
HMRC’s Sophie Dean said the transit sites for Kent were up and running for no deal. Ebbsfleet, Ashford, Waterbrook and North Weald are all ‘up and running and ready’. The two HMRC are pursuing in addition are Sevington, with DfT, and Warrington. Those sites are all on track to be ready, she claims.
Steve Baker, Conservative, asked about France’s readiness for Brexit. Lord Agnew complained of a lack of visibility of French readiness. The minister said France has increased the capacity of its green lanes in Calais, so the volumes of vehicles can be increased. Pragmatism would suggest to me that they are not going to want to restrict imports coming from them to us, Lord Agnew said. This is part of the reason why we hope to get some sort of deal, because that will mean there is goodwill. We do not want to go into a hostile environment in January, because that will make life even more difficult, he added.
Reasonable worst-case scenario
Labour’s Rushanara Ali asked if there is gridlock from the word go, how quickly can emergency measures be triggered to close motorways, set up roadblocks and forcibly stop traffic from entering Kent? Lord Agnew said the cliff edge date is happening at a weekend literally after Christmas, when activity is at one of its lowest points in the year. In Kent, they have just completed a hydraulic mechanisation of the motorway so they can shut lanes in a much more efficient way than could have happened last year. He added that CHIEF is a very well-established system. CDS, which is the long-term replacement to CHIEF, is a system that has been built and operating for over a year. And the GVMS system has been out in beta with traders since about August this year.
Ali asked if it is now government policy to pre-emptively strike and blame businesses when, 80 days out from the new customs regime coming into place, there is not a deal to be seen? Lord Agnew replied that ‘ultimately, the government can only do so much’. He is confident that sufficient customs intermediary capacity is ready to support these traders.
Conservative Anthony Browne asked Lord Agnew if he is going to need to change what he is doing once we know the outcome of the UK-EU negotiations. Lord Agnew said we are leaving the customs union whatever happens, whether or not we have a deal. He said: “If we get a deal, all that happens, in a very simplistic sense, is that all the different tariffs - there are some 15,000 - will be set to zero or whatever the deal might be. The paperwork, the processing, still needs to happen on the basis that we are leaving the customs union.”
HMRC’s Dean explained that one of the important things we are doing for January, for both traders and flow, is to stage in the import controls. The vast majority of goods coming into the UK from the EU will not have to fill in full import declarations, she added. The GVMS is undergoing tests with carriers and hauliers now. The UK looked at the French system last year, and the judgment was made that GVMS was a better fit for the HMRC systems. We are using GVMS for transit from January, giving us six months to July for using it for customs compliance, she said. That gives us reassurance in terms of making sure everything is fit and ready. For GVMS, again, we are testing all the system contingencies as part of the test environment over these coming weeks and months, she said.
Border operating model / intermediaries
Labour’s Angela Eagle was told by Lord Agnew that government is working to improve the smart freight app to send signals to drivers so they know of disruption before they leave the depot or while they are on their journey so they can divert.
Eagle complained that the border operating model was published a month late, in October. Lord Agnew replied that some of the previous iterations had been shown to need improvement. He said: “Let me give you a small example. I was on a call with one of the senior management of Eurotunnel the other day. He said, ‘We want a scanning facility in GVMS. Can we have it?’ I took that back to the head of IT in HMRC and we are working at pace to try to deliver that. I cannot guarantee that will happen by 1 January, but we will do everything we can to try to ensure that that is the case.”
HMRC’s Dean said the decision on whether to use GVMS, the temporary storage or, indeed, a mixed model is a commercial decision for the ports.
Conservative Felicity Buchan is concerned that the Northern Ireland border model has not yet been published. Lord Agnew replied that there is a great deal of sensitivity about announcing something that is not completely ready. He suggested people look at P2D, which produces a very good service for rules of origin and shows how you track goods. We must get the TSS (Trader Support Service) up and running as quickly as we can, he said, accepting that it is not great that the contract for the TSS was only awarded in September. Green intervened to say TSS training will be ‘up and running very shortly’. In terms of systems, we are using CDS, the customs declaration service, which is being amended for the Northern Ireland protocol, and GVMS will also be used for that purpose, said Dean.
Will the customs check forms, or indeed the online systems needed to log in and view them, be available to enable me to look at the guidance and start training my staff? asked Conservative Julie Marson. HMRC’s Katherine Green expects that many traders and companies will, in practice, use an intermediary to do their customs declarations for them.
The Treasury’s Sue Catchpole said for many traders the better course of action is likely to be to use an intermediary. She said both the EU and the UK are looking to achieve an agreement about mutual recognition of authorised economic operators, but the core message in relation to customs is that the requirements will be there whether there is a free trade agreement or not.
Lord Agnew told Harriett Baldwin that HMRC are estimated to need just over 7,000 additional staff for 1 January. At the last count, they were up to just under 6,000, he said. On top of that, contingent labour is being hired for the manning of the physical sites. We are looking for about 850 people to be in place by 1 January, he said, and added that ‘I am confident that is being managed in an orderly process and we will have that resource in place for D‑day’. HMRC’s Dean said Border Force administers customs at the border on behalf of HMRC. It is recruiting over 1,000 FTE this financial year, of which it is on track to have 670 in place for January and the remainder for July. ‘For completeness, it is worth saying that this is on top of 900 it recruited last financial year, 300 for its mobile readiness unit and 600 for its customs compliance work’, she said.
How much of the £80 million training budget for customs agents has been spent? asked Baldwin. Lord Agnew said: “Not enough. We have just written out again to exhort them to get on and draw down the money.”
Labour’s Siobhain McDonagh was told that the permit for lorries to get into Kent is simply the smart freight app. McDonagh asked how can a Kent permit tell if a driver has filled in their paperwork correctly as well as having filled it in at all? Dean answered that that is all part of the system check. The driver checks against the app as to what they need to have completed. They then self‑certify that it is correct and the permit is issued.
The full session can be read here.