Lord Bilimoria’s contribution to the House of Lords on the 12th of March was lively and full of factual content. His arguments centre around trade issues in post Brexit Britain, and the catastrophe for British imports and exports. Lord Bilimoria illustrates the consequences for imports via ports, lorries and aviation, that will result in the destabilisation of the British economy.
The noble Lord provides evidence for all his statements, and a particularly alarming case study of the 2015 French lorry strikes. In this study he states that 7,000 lorries were backed up as far as Maidstone, and that £21 million worth of stocks were lost as a result of the exportation delays. Lord Bilimoria argues this study provides a window of sight into the future, with the loss of the Free Trade Agreement (FTA) resulting in more extensive importation/exportation delays.
Lord Bilimoria provides breadth and depth to his position on the argument, thus clearly portraying the message that trading in post Brexit Britain will be harmful to the economy.
EUROPEAN UNION (WITHDRAWAL) BILL
12th March 2018
My Lords, I put my name to both the amendments and I would like to build on what the noble Lords, Lord Berkeley and Lord Bradshaw, said. Some 70% of the UK’s food imports by value are from the EU, and 60% to 65% of the UK’s agricultural exports are to other member states. Any risk of delays would put a strain on our supply chains and would probably raise food prices.
The Channel Tunnel illustrates how important timing is: 1.4 million trucks and 2,900 rail freight trains went through in 2014, transporting approaching £100 billion-worth of goods between the UK and the continent, including almost £200 million-worth of iron, steel and metal products from Yorkshire and the Humber. The time saved by using the Channel Tunnel was equivalent to 120,000 days in 2014, saving a lot of money on each crossing. So any delays and any more customs checks would up-end such financial projections and have downstream consequences.
One whole aspect of Brexit is the huge complexity caused. The amendments highlight the impact that it will have not just on our freight industry but on as us a public. The list of border operations includes revenue collection, safety and security, environment and health, consumer protection and trade policy. Modern customs systems have to balance providing security with facilitating the free flow of goods. Some 37 million tonnes of trade a year pass through Southampton alone, including more than 1 million containers. How could you possibly inspect every container? It would just create delays and blockages.
Of the freight transport that goes in and out of the UK, 69% of that going to the EU is lorry traffic, whereas 99% of non-EU is containers. Of the EU share, between 75% and 100% of lorry traffic goes through Dover, the Channel Tunnel, Harwich and Holyhead. We cannot possibly have any delays that will make life more difficult for our businesses. I just mentioned the requirement for food products. Ireland and the British land bridge have also been mentioned. We will be talking about air transport later, and rail in more detail.
The UK will not be deemed a third country until the end of any transition period, if one exists. Even if the UK were to remain in the customs union with the EU, it would still be a third country and goods would be subject to checks. Freight using the UK land bridge will effectively be subject to non-tariff barriers—people always miss the non-tariff barriers.
Brexit will cause one disaster after another in this area. Customs’ rule of thumb is that 2% of cargo coming from third countries is subject to physical exam, while 4% to 6% of such cargo is subject to documentary checks. However, the Department of Agriculture is obliged to check up to 50% of food and other products that contain an element of food, such as cosmetics, pharma or medical devices. There is a 100% check on animals, including pets. This is how complicated this whole area is. Revenue will prepare a list of approved customs courses for use by traders. Traders should apply for customs registration numbers. This will be absolutely disastrous; I do not think people have comprehended how difficult it will be.
As the noble Lord, Lord Bradshaw, mentioned, 50% of FTA members operate more than 200,000 lorries: almost half the UK fleet. FTA members represent 90% of freight moved by rail. FTA members consign 70% of UK visible exports by sea and 70% of UK visible exports by air. They speak for this industry. If we do not listen to them, we are not listening to the people who do this. How UK companies get goods to and from the continent in the future will be a matter for EU negotiations, but the changes to border controls and customs will impact our transport efficiency. There is no denying that. At the moment there is frictionless movement of goods to and from the UK. Unless a solution can be agreed as a free-trade agreement when the UK moves outside the single market and the customs union, that will change.
We need to listen to the FTA. On top of that, there will possibly be immigration checks. Those combined with all the other checks will constitute a disaster. Some members of the FTA say that they cross the border four or five times a day—and of course there is the Irish land bridge, which I shall come to. Red tape is likely to increase. Brexiteers talk about EU red tape, but this will create red tape that we cannot even dream of. British manufacturers from all over the country will have to list the geographical origin of each component or ingredient of their finished products and specify how many imported products were modified in the UK. Can we even try to start to imagine all this?
The FTA warns of 15-mile queues at the port of Calais if border checks are introduced after Brexit. This should be a wake-up call. Checks at Calais could result in traffic queues of up to 50 miles at the French port. British logistics companies are some of the best in the world at the moment. The FTA is so concerned that it has created its own 10-point manifesto; it is so worried about the situation. The gridlock that could be created at Dover could have queues of 30 miles going towards London as 2.6 million trucks pass through that port every year—and, as I said, the Eurotunnel takes 1.6 million. On one side of the Eurotunnel we have an area of outstanding beauty, so how will we create the infrastructure to be able to deal with all these blockages? The problem for business is not just the prospect of tariffs but the disruption of the free flow of goods.
We need only to look back to 2015 when a French ferry workers strike led to more than 7,000 trucks backed up on the motorway as far as Maidstone. With as many as 16,000 trucks using Dover, a potential repeat of that would be absolutely alarming. We are looking at stopping the economy. Business lost £21 million of stock because of the traffic chaos in 2015. Live shellfish meant for Paris had to be dumped. This is the sort of problem that we could be facing. Asked if the EU would be ready for a reintroduction of customs in two years, experts have said, “You make me laugh. You will need at least double the number of customs officials than you have now. They will need to be recruited and trained and that takes time”.
If trucks coming from the EU are treated like non-EU, the ports will be in permanent gridlock, according to local customs experts. With Brexit—this is the irony of it all—we are coming full circle, returning to the pre-1993 system. That is going backwards, not forwards. What about the staff that freight agents and customs will need to recruit? What about the documentation? There is a possibility that there could be 50 transit documents per transaction.
This is absolutely awful. If the Government were able to implement a viable system of checks, it would cost traders another £45, and businesses even more. Currently, non-EU trucks take up to 20 minutes to go through Dover. If we start doing that for all our trucks, can you imagine the disruption that that will cause? On top of this, lorry traffic in Dover has increased by a third in the past five years. If it has increased, and is projected to do so, how will we manage to deal with all those increases? So these amendments are really serious and should be a top priority for the Government. I have two quick examples. Honda UK relies on 350 trucks a day arriving from Europe to keep its Swindon factory operating, with just one hour’s worth of parts held on the production line.
I conclude with Ireland’s British bridge to European markets. Many Irish farmers and food producers use Britain as a time-saving flyover to get to Europe. Dublin is seriously worried, because a journey from Dublin to the continent takes 10 hours but without going through Britain would take 40 hours. Ireland would not be able to manage; the Dublin port would not be able to cope with that. The revenue chairman in Ireland told a committee in Ireland’s Parliament that customs and the impact on truck freight would be,
“one of the biggest challenges post Brexit”.
I conclude with another Irish quote.
If noble Lords do not like facing reality, they can cheer, but I am talking about this reality as a businessman who imports from and exports to Europe. I will be affected, my consumers will be affected and our citizens will be affected. Noble Lords can laugh as much as they want, but this is the reality.
Aidan Flynn wanted the prospect of a deal. This is the quote:
“We’re all looking for transition, in terms of whatever changes are going to be required … but effectively, if there’s no likelihood of a plan by October 2018 in terms of UK-EU negotiations you’re going to be without a doubt going into … a cliff-edge situation”.