Fund customs contigency plans or face "catastrophic" Brexit, Public Accounts Committee warns

 
Catherine Neilan
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Food could be left rotting if the customs system isn't fully deployed by March 2019 (Source: Getty)

Failure to fully deploy a new customs system by the point the UK leaves the European Union would be "catastrophic", a report by the influential Public Accounts Committee (Pac) has claimed.

If HMRC's new customs system, the Customs Declaration Service, is not ready by March 2019 it could cause huge disruption for businesses, massive queues at Dover and result in food being left to rot in trucks at the border, the report warns.

It estimates that customs declarations will leap from 55 million in 2015 to 255 million, a five-fold increase. The Pac report says HMRC must not avoid taking action now, despite uncertainty over the negotiations, to ensure "a viable contingency option is in place well before January 2019".

"There are financial as well as operational implications of not acting now," the report states. "This is a tight timetable at the best of times. With the hard deadline of Brexit, delay is not an option."

The report calls on the Treasury, which is currently putting together chancellor Philip Hammond's Budget speech for next week, to ensure there is funding in place for these contingency options.

HMRC should be "banging on the doors" of Number 11, Pac chair Meg Hillier said. The department also needs to do "a lot more to work with the many businesses affected", the report says.

Hillier added: "Failure to have a viable customs system in place before the UK’s planned exit from the EU would wreak havoc for UK business, trade and our international reputation. Confidence would collapse amid the potentially catastrophic effects.

“HMRC is under considerable pressure to deliver the new Customs Declaration Service in time, but it does not yet have funding to increase the capacity of CDS to deal with the consequences of Brexit – nor to develop contingency options.

“This is deeply worrying. HMRC requires a relatively small sum to upgrade the current CHIEF system – a move which would provide some peace of mind to traders, many of whom are still operating with limited information and in great uncertainty.

“HMRC tells us it is merely ‘in conversation’ over CHIEF upgrade costs when, on behalf of business and the British public, it should be banging on the doors of the Treasury.

“HMRC must press the case to secure this funding now and ensure that, if other plans fail, customs will be fit for purpose.”

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