Tuesday 10 November 2020

The great Brexit disaster takes another step closer

I listened to the Lords EU Goods sub-committee yesterday who were trying to find out about "Post-Transition customs IT systems and sector preparedness. "They took evidence from various people representing the Association of Freight Software Suppliers, The UK Association for International Trade, The Federation of Small Businesses (FSB), Logistics UK and The Cumbria LEP Logistics Sector Panel. It was like the blind leading the blind. If we have to rely on all these new or upgraded IT systems working together seamlessly on 1 January, Lord help us.

They all seemed remarkably sanguine about it and the questions and answers were all pitched at an incredibly high level.  Will everything be alright?  Yes, probably, we think so.  It was that sort of level.  

They were assured most of the six systems being worked on 'should' be ready by the end of the year. The only one where there was obvious doubt (and a lot of it) was CDS - the Customs Declaration Service. This was supposed to replace the old CHIEF system (Customs Handling of Import and Export Freight)  in August 2018 and be phased in by early 2019. This was because (a) CHIEF is 25 years old (b) CDS can handle 10 ten times as many items per consignment and (c) it is compliant with the latest World Customs Organisation Kyoto Convention, currently being implemented in the UK through the Union Customs Code (UCC).

We already knew that CDS was late and that CHIEF was being expanded to cope with an increased load - up to 270 million declarations a year. The old system was set to run alongside the new one until later in 2021. But CDS is supposed to be used for GB-NI trade from 1 January next year. 

The committee were told CDS was unproven, nobody had been trained on it - all the newly recruited agents were being trained on CHIEF - and it was far more complicated, taking 4-5 times as long to enter the details compared to CHIEF. Amazing.  As of last Friday, it was not possible for traders to communicate with CDS at all with just 52 days to go!

Des Hiscock of the UK Association of International Trade poured cold water on the idea we needed 50,000 extra customs agents. He said a good clerk could handle 10 declarations an hour, 400 a week and so 10,000 per year. If 250 million declarations are required post Brexit this would mean 20,000 extra customs agents.  BUT he didn't explain how that would work IF we move to CDS which takes 4-5 times as long as he had said earlier. On that basis we may need another 80,000 agents, I assume.

Alex Veitch of Logistics UK (it used to be the Freight Transport Association) said if CDS wasn't going to be used from 1 January for UK-EU trade, then CHIEF would. Foreign hauliers would need to submit safety and security declarations via CHIEF but to do that thousands of EU companies would need to be registered on the database. He had tried to download the application form that morning and couldn't. He asked other business groups to try, they couldn't either. He says it isn't easy to fill in and is only available in English - assuming you can download it anyway.  52 days to go remember.

He also said EU hauliers either needed to integrate their own computer systems into CHIEF or send emails, one per consignment, and he says nobody is going to "sit there sending six thousand emails" which he says isn't going to work. In practice they will need to employ a customs agent and with six or seven weeks to go he doesn't think those "conversations are taking place."

The committee listened to this in silence and nobody followed up on it.

Susan Roberts head of delivery at HMRC for these systems came up later like a speak-your-weight machine. Everything is on plan she claimed in an amazingly laid back way. I assume she was protecting the government.

Finally, I want to show a clip of Lord (Norman) Lamont, former chancellor and Brexiteer. He came on to ask a question about the difference between a deal and no deal:


He says, ."...Michael Gove has argued that actually the difference in preparing for no deal and a deal is not that great, which seems rather surprising and rather odd."

This has been true since January 2017 when Theresa Mau announced she was taking us out of the single market and the customs union. For a long time she fudged it by negotiating a deal that tried to mimic the SM and the CU - she talked of a "common rule book" and a "customs arrangement." 

After Johnson and Cummings came in it was clear this would be a problem. But Lamont has only just caught on. It is like adding a massive permanent tax on British industry almost by accident.

Steve Bartlett of the Software Providers Association had to tell him the customs and safety and security declarations and the six huge IT systems the committee was meeting to discuss would be needed with or without a deal - although he didn't seem too sure either. It was simply stunning.

On another topic, the House of Lords rejected the controversial clauses in part 5 of the UKIM Bill last night by a huge margin (268 votes) but the government has vowed to bring them back when the bill returns to the Commons. This is likely to become a big constitutional crisis unless the government backs down. No such commitment was in the Tory manifesto and so I don't believe the so-called Salisbury convention applies. The Lords have said they are not going to budge so a clash is coming shortly. It also sets the government on a "collision course" with Joe Biden.

I urge you to read a Twitter thread by Anton Spisak about this. It's very good:

You might also be interested in a clip first filmed by Channel 4 inside the US embassy between November 2017 and January 2018.  It reveals what serious American diplomats think about Brexit:

Finally, former PM John Major gave another masterful speech yesterday at the Middle Temple. Do yourself a favour and read it HERE.

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