In a week that has seen the re-ignition of a political row over the claim that leaving the EU will allow the UK to spend up to £350 million a week on British priorities, such as the NHS, the likely cost and requirements of restoring customs checks on UK exports and imports with the EU has come under the spotlight.
At the moment, as a member of both the EU single market and the customs union, goods travelling to and from the UK from the rest of the EU are able to move freely since it removes tariff barriers between its members. It requires that an external common tariff scheme is adopted against non-members of the union. It has been stated by the British PM that when the UK leaves the EU it will exit both the single market and the customs union, thereby ending the advantages of being within the union. Whilst Mrs May has been quick to claim that the UK wishes to negotiate both a bespoke access to the single market and a very similar customs union with the EU that will facilitate “near frictionless” trade, these gifts are outside her control. This means that the re-imposition of customs checks and duties is highly likely.
The boss of Her Majesty’s Customs and Revenue (HMRC), John Thompson, has recently appeared before the Treasury Committee. He pointed out that HMRC currently has no funding to cover the costs involved with extra customs inspections. His estimate was that the task would require the employment of approximately 5000 new customs officers and could cost an additional £800 million. Tellingly, he estimated that it could take up to seven years to implement the new regime – the UK risks crashing out of the existing customs union in just 18 months if a transitional agreement cannot be reached.
Re-imposition of customs requirements after Brexit could mean that 130000 “new” companies would need to deal with customs. At the moment, these businesses trade exclusively with the EU and so have no current contact with UK customs. It is estimated that this new burden would represent a five-fold increase in customs declarations and workload.