Today, Philip Hammond admitted that after Brexit, the ports of Britain would grind to a halt if lorries had to spend just “minutes” going through customs checks.
The chancellor made the urgent warning of the United Kingdom’ss preparedness for life outside the European Union’s customs union as he revealed that if no Brexit deal were agreed upon with Brussels, there would be “significant disruptions to patterns of movements” at Dover.
This afternoon, Hammond appeared before the Lords Economic Affairs Committee. He announced that the European Union was not even open to enter into discussions about a future customs system with the United Kingdom – even on a technical level.
The National Audit Office estimates that after Brexit, the number of customs declarations at UK borders could start from 55million a year to 255million.
Hammond, when questioned by former Conservative Chancellor Lord Lamont whether he believed the capacity of UK ports were “adequate” to handle the increase, he answered:
“No it’s clearly not. Anyone who’s visited Dover will know that Dover operates as a flow-through port and volumes of trade at Dover could not accommodated if goods had to be held for inspection even, I suspect, if they were held for minutes, it would still impede the operation of the port.
“Roll-on, roll-off traffic at Dover is predicated on trucks rolling off a ferry immediately, [going] out of the port and the ferry reloading and departing pretty rapidly – Ryanair style turnaround times.”
The Government released a position paper in August requesting for a “highly streamlined customs arrangement” or a “customs partnership” with the European Union after Brexit.
Both of those proposals were based on the European Union and United Kindom agreeing on a free trade deal.
This afternoon, Hammond informed peers that the Treasury was putting in place contingency plans for no deal being reached, but declared it would not be an ideal system.
Hammond stated: “We recognise that the timescales are very challenging and in a no deal scenario, not everything we would want to put in place will be in place on day 1, but we will have a working system in place on day 1, I have had assurances by HMRC.”
The Customs Declaration Service (CDS) is a customs processing system due to be online at UK ports in March 2019
Last July, the National Audit Office found out that even if the CDS was delivered by January 2019, its planned date of, it has never been tested to the capacity needed just two months later.
It has only been utilized to process 180million declarations in a year, even in tests – far small of the 255million that the release is predicted to get through.
The report stated: “Until it is shown to work at this level and with the UK’s specific systems, there is a risk that this new component may not meet the UK’s requirements.”
While the current system CHIEF (Customs Handling of Import and Export Freight) could be improved to act as a safety net, there is no money in HMRC’s budget to do this.
Hammond informed peers one of the biggest difficulties for HMRC has been trying to talk to its European counterparts.
He revead: “In terms of level of engagement with our nearest neighbours at the customs service level that has been limited and it has been limited because the view of many of our neighbours is that until such time as the commission, or the council of ministers has declared sufficient progress they are not authorized to engage with us on post-exit planning and post-exit arrangements.
“We have had less engagement than we would like with our customs counterparts with our immediate neighbours both at a technical level and to discuss possible deal scenario technical challenges and no deal scenario technical challenges.”
When asked on how “frictionless” the future customs arrangements with the European Union would be, Hammond answered: “It may that it cannot be as frictionless as it is now in a long-term settlement because of a desire to negotiate third party trade deals.
“The design challenge is to use technology to minimise the friction to a level that is acceptable to business.”