Suppliers 'deterred' by 20% red tape cost increase

29 July 2021

Red tape required as part of the Northern Ireland (NI) Protocol has raised admin costs by 20% and is “deterring” suppliers in Britain from delivering to NI, according to Lords. 

In a report the House of Lords Sub-Committee on the Protocol on Ireland/Northern Ireland said many businesses were considering ceasing trade with NI due to the “sheer volume of red tape”.

The committee, made up of Nationalist and Unionist members from NI, found pharmaceutical, agriculture, and automotive were all heavily impacted by the Protocol.

The report said the Protocol was “wholly unsuited to the regional supply chains used by businesses in Great Britain and Northern Ireland,” and customs checks required as part of the Protocol are “burdensome, repetitive and disproportionate”.

The report continued: “Despite the best efforts of businesses, they were significantly hindered in their preparation for the implementation of the Protocol by the lack of clarity, and the late provision of guidance, on its practical operation.”

The NI Protocol was agreed as part of Brexit negotiations to avoid a hard border between NI and Ireland by effectively keeping NI in the EU’s single market for goods. 

Stephen Kelly, chief executive officer at Manufacturing NI, told the committee 77% of manufacturers had experienced some negative impact to their business, and 36% believed these difficulties were likely to persist.

The report said the pharmaceutical industry looked set to become especially disrupted, with industry bodies warning trade would be significantly disrupted after the grace period comes to an end in October. 

The report found 56% of members from trade industry association Ethical Medicines Industry Group were planning to cease trade in NI after the grace period. It said 6% of its members had already begun to discontinue trade in the area due to the admin required.

The report was told by PAGB, a consumer healthcare association, that 75%-98% of over-the-counter medicines currently available in NI could be discontinued.

Operational measures caused by the Protocol cost healthcare companies over £2.1m in the first quarter of 2021, said the report. 

The report comes after M&S boss Archie Norman warned there would be “gaps on shelves” in NI if issues with the Protocol weren’t resolved. 

M&S said while it currently completes 40,000 pages of customs documents a week to get products into NI, this will increase to 120,000 when the full rules for NI start at the end of the grace period.

The EU and UK remain in stalemate over the implementation of new checks and processes on goods being shipped into NI from the rest of the UK.

Peers said the “fundamentally flawed” approaches adopted by the UK and EU were hampering efforts to find solutions, and warned NI could become a “permanent casualty” of Brexit should a compromise with the EU over the NI Protocol not be found soon.

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