‘Only detectable impacts’ of Brexit are costs, delays and paperwork, says MPs’ committee

Brexit is battering UK businesses with higher costs, more paperwork and border delays, according to a damning report by an influential group of MPs.

The Public Accounts Committee said it had “repeatedly” raised concerns about the impact of new trading arrangements and that it remained concerned, with disruption expected to worsen as the pandemic subsides.

The PAC said Brexit’s impact had been partially obscured because Covid-19 had led to a big decline in passenger numbers.

If cross-border passenger volumes recover as expected this year “there is potential for disruption at the border”, exacerbated by “further checks at ports as part of the EU’s new entry and exit system”, the committee said.

It warned problems would be particularly acute at ports like Dover where EU officials carry out border checks on the UK side. Dover has been beset by long queues of lorries backed up along roads leading up to the port.

While it was difficult to untangle the relative effects on trade of Brexit and the pandemic, it was “clear that EU exit has had an impact”, the PAC said. The “only detectable impact” of Brexit so far has been to increase the burdens on businesses, the report added.

Dame Meg Hillier, chair of the PAC, said: “One of the great promises of Brexit was freeing British businesses to give them the headroom to maximise their productivity and contribution to the economy – even more desperately needed now on the long road to recovery from the pandemic.

“Yet the only detectable impact so far is increased costs, paperwork and border delays.

“The PAC has repeatedly reported on Brexit preparedness and at every step there have been delays to promised deadlines.

“It’s time the government was honest about the problems rather than overpromising.”

The PAC said the government had “much more work” to do to ease the administration and costs woes suffered by firms. The committee slammed the government over repeated delays to introduce full import controls, which are due to to be phased in from last month, and called for an end to “overpromising”.

It dismissed the government’s aim to create the “most effective border in the world” by 2025 as being “optimistic, given where things stand today”.

The cross-party group of MPs noted that HMRC estimated that complying just with new customs rules could cost UK and EU businesses £5bn per year. It wants the government to calculate all extra costs to businesses from new border rules and look at ways to reduce them.

While government departments have made progress towards introducing the systems, infrastructure and staff needed for new checks being phased in between January and November, the PAC warned that there is still much to be completed.

For example, currently, the Import of Products, Animals, Food and Feed System (IPAFFS) cannot communicate with the Goods Vehicle Movement Service (GVMS) system to tell hauliers where they should go if the goods they are carrying are selected for physical checks.

The government should also do more to help small firms prepare for the extra burdens and consider further support, the PAC recommended.

It said that only £6.7m was paid out of the £20m offered under the SME Brexit Support Fund as many businesses missed out on the funding due to narrowly defined criteria.

“There is much more work that government should be doing in the short term to understand and minimise the current burden on those trading with the EU, to address the immediate delivery and readiness risks in introducing import controls, and to have a border in place which is operating effectively without further delays or temporary measures,” said Dame Meg.