National Audit Office report on The UK border: preparedness for the end of the transition period

Today the National Audit Office (NAO) reports that although government departments have made progress in recent months implementing the changes required to systems, infrastructure and resources to manage the border at the end of the post-EU Exit transition period, it is still likely that widespread disruption will occur from 1 January 2021.

In its fourth report¹ assessing government's preparations at the border, the NAO highlights that planning for 1 January 2021² has built on work done for previous EU Exit deadlines, but COVID-19 has exacerbated delays in government's preparations and significant risks remain, particularly in relation to implementing the Northern Ireland Protocol³ and trader readiness more generally.

Departments have made progress towards implementing the systems, infrastructure and resources required to operate the border in relation to Great Britain at "minimum operating capability"⁴ by 1 January 2021 and are reasonably confident most will be ready, but timetables are tight. The ability for traders to move goods under transit arrangements⁵ is a key element of the government's plans but some elements will be challenging to deliver in their entirety. HMRC currently estimates that there will be around 6.3 million movements of goods under transit arrangements in the year following the end of the transition period. If all the planned arrangements are not ready, this could have an impact on the ease with which traders can import and export goods.

There is little time for ports and other third parties to integrate their systems and processes with new or changed government systems, and contingency plans may need to be invoked for some elements. In part as a result of the delays caused by COVID-19, there is limited time to test individual elements and resolve any emerging issues; ensure elements operate together; familiarise users with them in advance and little or no contingency time in the event of any delays.

Even if government makes further progress with its preparations, there is still likely to be significant disruption at the border from 1 January 2021 as traders will be unprepared for new EU border controls which will require additional administration and checks. The government's latest reasonable worst-case planning assumptions, from September 2020, are that 40% to 70% per cent of hauliers will not be ready for these new controls and up to 7,000 lorries may need to queue at the approach to the short Channel crossings,⁶ such as Dover to Calais.

The government's plan for reducing the risk of disruption at the approach to the short Channel crossings is still developing, with various issues yet to be resolved. It intends to launch a new GOV.UK web service called 'Check an HGV is ready to cross the border' for hauliers to check and self-declare that they have the correct documentation for EU import controls before travelling and obtain permits to drive on prescribed roads in Kent. However, there is more to do on how 'Check an HGV' will be enforced and how it will work together with traffic management plans for Kent.

Government is preparing civil contingency plans, such as to ensure continuity of the supply of critical goods and medicines in the event of disruption to supply chains. On 13 October 2020 the Department for Transport announced it had awarded contracts to provide additional freight capacity for over 3,000 lorries a week on routes avoiding the short Channel crossings. However, COVID-19 is making civil contingency plans more difficult to enact, with local authorities, industry and supply chains already under additional strain.

Government will also need to implement the Northern Ireland Protocol from 1 January 2021. However, due to the scale and complexity of the changes, the lack of time and the impact of ongoing negotiations, there is a very high risk it may not be implemented in time.

The government has left itself little time to mobilise its new Trader Support Service (TSS), in which it has announced it is investing £200 million, to reduce the burden on traders moving goods to Northern Ireland and to help them prepare.⁷ It will be challenging to establish the TSS by 1 January 2021. Work needs to be done to identify NI traders and sign them up to use the service; recruit and train the staff required; develop software to enable traders to connect to HMRC's systems; and deliver educational activities to traders. There is also ongoing uncertainty about the requirements for the movement of goods under the Protocol. Therefore, there is still a high risk that traders will not be ready.

The government is spending significant sums of money preparing the border for the end of the transition period and, in 2020 alone, announced funding of £1.41 billion to fund new infrastructure and systems, and wider support and investment. Despite this, there remains significant uncertainty about whether preparations will be complete in time, and the impact if they are not. Some of this uncertainty could have been avoided, and better preparations made, had the government addressed sooner issues such as the need for an increase in the number of customs agents to support traders.

The NAO says that government must continue to focus its efforts on resolving the many outstanding issues relating to the border and develop robust contingency plans if these cannot be addressed in time for the end of the transition period.

Gareth Davies, the head of the NAO, said:

"The 1 January deadline is unlike any previous EU Exit deadline - significant changes at the border will take place and government must be ready. Disruption is likely and government will need to respond quickly to minimise the impact, a situation made all the more challenging by the COVID-19 pandemic."

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Notes for Editors

1. The NAO has previously published three reports about border preparations for EU Exit: The UK border: preparedness for EU exit (2018), The UK border: preparedness for EU Exit update (February 2019) and The UK border: preparedness for EU exit October 2019 (October 2019).
2. The government has set out its plans to adopt a three-stage phased approach to introducing import controls between 1 January and 1 July 2021 here.
3. The Northern Ireland Protocol is part of the Withdrawal Agreement and sets out the basis on which trade will be conducted in and out of Northern Ireland, recognising the specific circumstances in Ireland and Northern Ireland in the context of the Belfast (Good Friday) Agreement. In order to avoid the introduction of any hard border between Ireland and Northern Ireland, while still maintaining the integrity of the EU single market, Northern Ireland will be part of the UK's customs territory but apply the EU's customs rules and follow EU single market rules.
4. Establishing a "minimum operating capability" includes replacing EU systems in order to monitor imports of goods from the rest of the world, as well as providing the minimum capability to comply with Word Trade Organization (WTO) rules. Government has prioritised security and safety; flow of people and goods over compliance activity, including the collection of revenue. It means the border would be operating in a way that is 'less than optimal' for a period of time.
5. Moving goods under the Common Transit Convention (CTC) allows traders to reduce the number of declarations they are required to make when moving goods across borders within a customs territory, and to suspend the payment of duties until goods reach their final destination.
6. The short Channel crossings are Dover to Calais, Dover to Dunkirk via ferry routes, and Folkestone to Coquelles via the Channel Tunnel.
7. The scope of the TSS is still being determined but includes: educating traders and carriers about their obligations; completing customs declarations and safety and security requirements on their behalf; and ensuring the readiness of the software providers and Community Systems Providers who provide software which enables traders to connect to customs systems. As at 16 October 2020, HMRC had let a contract to a consortium led by Fujitsu to deliver TSS but it had not finalised all of the contract's details, including cost and duration.