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UK National Audit Office reports on preparedness for UK border operations risks under a no-deal Brexit

Even with a withdrawal agreement, significant challenges lie ahead to ensure the UK border is fully functioning, but under a no-deal situation risks will be much higher says the UK National Audit Office (NAO) in a new report.

Border management is fundamentally important to effective trade, with many businesses exposed to impacts should border management difficulties arise. Delivering an effective border after the UK leaves the EU is an enormous challenge, says the NAO, requiring significant coordination across government and with private sector organizations.

Key points from the ‘The UK border: preparedness for EU exit’ report include:

  • The creation of the Border Delivery Group has improved central government’s understanding of the changes that need to be put in place at the border and focused efforts across departments. Although the government has achieved much and its planning efforts have increased in momentum, given the scale of the task, there are inevitably gaps and risks to its progress.
  • Ongoing political uncertainty and delays in negotiations have hampered the effectiveness of departments’ border planning and delivery. This has reduced the time available to plan and implement new border regimes that might be required.
  • Government is heavily dependent on third parties, such as traders, making changes to their systems, behaviours and complying with new processes. Government papers from July 2018 stated that it was already too late to ensure that all traders were properly prepared for ‘no deal’.
  • Many of the changes needed to be made by government under a ‘no deal’ scenario may not be ready on time. In particular:

    - 11 of 12 critical systems needing to be replaced or changed to manage the border are at risk of not being delivered on time and to acceptable quality.

    - 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.

    - 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.

    - 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.

In the event of day one of ‘no deal’ the government has accepted that the border will be ‘less than optimal’. This might include delays for goods crossing the border, increased opportunities for tax and regulatory non-compliance, and less information to inform checks of people crossing the border. Government is putting in place coping responses where it can. It has decided to prioritise safety and security; the flow of people and goods; and then compliance activity, including the collection of revenue, in the short term. Contingency plans are also being prepared with the aim of managing potential issues such as queues of traffic in Kent, and the continued supplies of essential goods and medicines.

The NAO’s report also warns that organized criminals and others are likely to be quick to exploit any perceived weaknesses or gaps in the enforcement regime. This, combined with the UK’s potential loss of access to EU law enforcement and national security tools, could create security weaknesses which the government would need to address urgently.

Planning for border operations in the event of a deal is less developed than that for no deal because of the ongoing uncertainty regarding the nature of the future relationship between the UK and the EU. If an agreement between the UK and the EU is reached, departments expect there to be little immediate change at the border. Yet, introducing new border arrangements will involve a large amount of work both leading up to and beyond the end of the implementation period.

Read the UK border: preparedness for EU exit report (PDF).

KPMG's Head of Brexit commented on the NAO border readiness report, saying:

“The NAO report makes for grim reading and is a call to arms for any businesses reliant on products coming through UK borders.

“With an estimated £423bn of trade crossing UK borders every year, a no-deal Brexit could prove incredibly costly for UK businesses in terms of time and money. There are currently around 15,000 classifications of goods subject to 135 different duty rates. Classification is only one of around 30 pieces of data from various sources needed, usually in real time at the border. That’s a huge amount of paperwork to be done by the estimated quarter of a million traders who have never needed to make a customs declaration before.

“It is anticipated that mitigations will be  found for essential, time sensitive and regulated goods like medicines and food crossing the UK border, but all businesses dealing in non-essential goods need to accelerate planning for a disorderly no deal scenario in March. In particular they should start preparing for the needs of customs declarations, and making sure their own suppliers are Brexit ready.

“For our armies of importers and exporters the NAO report today just highlights that the cost of a no-deal Brexit for businesses will be painful and could be significant.”

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