The current border operating model for the UK-EU is “not sustainable”, according to the National Audit Office (NAO).
In a report the NAO said businesses faced additional burdens as a result of leaving the EU single market and trade with the EU had fallen.
The NAO said it was not possible to “disentangle” the causes of the trade drop, as it occurred during the pandemic, but total UK-EU trade fell 15% (£17bn) in quarter two of 2021 compared to the same quarter of 2018, while UK trade with the rest of the world rose 1% (£1bn) over the same period.
“While the pandemic will have led to lower volumes of trade between the UK and the EU, evidence also suggests that some staff shortages, such as in relation to heavy goods vehicle drivers, and disrupted trade flows have been exacerbated by the ending of the transition period,” said the report.
The report said full import controls on goods entering the UK from the EU had been delayed three times – the EU introduced such controls on goods from the UK on 1 January 2021 – and risks remained around new deadlines of January and July 2022.
“Trader and haulier readiness remains a significant risk,” the NAO said.
“The current overall operating model for the EU-GB border is not sustainable, and much more work is needed to put in place a stable operating model that eliminates any risk of WTO challenge from trading partners, does not require any temporary supports, and has clarity and ease of use for border users.”
The report said the Horticultural Trades Association had estimated additional costs within the supply chain resulting from new border controls would amount to £25m-£30m a year.
The NAO said the percentage of HGVs turned away from short Channel crossings due to incorrect paperwork or lack of Covid tests reached 8% in January 2021 but this fell to around 1% in March.
The report said Operation Brock, in which lorries are queued on the M20 to avoid border congestion, had been used just twice since January 2021, while there was “little demand” for the additional freight capacity procured by the government for essential goods such as medicines.
The UK-EU Brexit deal allows for tariff-free trade between the two but firms must be able to prove goods are produced in the UK or EU via rules of origin requirements. The NAO said UK firms would be required to collect declarations from suppliers to prove the origin of goods from 31 December 2021 under the rules, designed to prevent goods entering the single market from the rest of the world without paying tariffs.
“In the short term, companies will have to collect extra paperwork to ensure they can qualify for preferential access,” said the report. “Longer term, some businesses may have to change their supply chains entirely.”
Gareth Davies, head of the NAO, said: “We recognise the significant achievement of government, departments and third parties in delivering the initial operating capability needed at the border for the end of the transition period.
“However, this was done in part by using interim measures and by delaying the introduction of full import controls. Much more work is needed to put in place a model for the border that reduces the risk of non-compliance with international trading rules, does not require any temporary fixes, and is less complicated and burdensome for border users.”
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