Post-Brexit customs checks could cost £1bn a year

7 August 2017

Brexit could cost £1bn a year in extra customs checks and huge border delays, a consultant has claimed.

Currently £466bn of goods are exempt from border checks between the EU and Britain, said Andrew Meany, partner at economics consultancy firm Oxera. But once out of the EU, Britain may have to conduct at least 300m border checks a year, he predicted.

Based on a scenario of low regulation and high enforcement, this will cost £1bn, he said. Staff and IT systems will struggle to cope with the extra checks on goods coming into and leaving the UK, and those passing through to Ireland, he said. An estimated two-thirds of Irish exports to continental Europe move via the UK.

HMRC’s customs clearance system is due to be replaced in March 2019, but has been planned to handle 60m annually.

Checks on goods from outside the EU generally last 45 minutes on each lorry load at ports such as Dover.

“Post-Brexit, adding four of those checks (at an Irish port, at two English ports, and then a French one) onto each consignment of Irish goods starts to look unpalatable,” he said.

The £1bn cost was “extremely conservative” he said and does not account for the economic costs of the uncertainty involved, the extra staff needed, the vehicle congestion, the land required for the additional customs checks, or the wider economic impact of jobs moving overseas due to uncertainty of just-in-time logistics.

“The full cost is likely to be much higher,” he said.

While there is no understanding yet of what the customs deal with the EU will look like, the report looked at four scenarios. An alternative scenario based on low regulation and low enforcement would have almost negligible economic impact, and would look almost identical to the status quo, he said.

A scenario featuring high regulation and high enforcement has been dubbed “Armageddon” by the Port of Dover and could lead to an almost-permanent instigation of Operation Stack.

This is the plan to turn the M20 into a parking space for lorries because of a lack of alternative parking space. Even with Britain in the EU, Kent Police and the Port of Dover have already been forced to instigate Operation Stack on a number of occasions. The cost of Operation Stack alone was put at £1bn over four days, in a recent study by Conservative MPs, Meaney said.

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