We look at the latest happenings in the post-Brexit economy. This month they have included breakdowns in the supply chain, a fuel and energy crisis and shortages of workers ranging from butchers to lorry drivers by way of restaurant and care home staff.
Lord Frost, the UK’s chief negotiator, has maintained that the Northern Ireland Protocol must be redrafted while his opposite number from the European Commission has repeated that such a move would be impossible as the Protocol is an integral part of the Withdrawal Agreement and has the status of an international treaty. With talks seemingly stalled on this point, Lord Frost announced that, “to provide space for potential further discussions”, and to give certainty and stability to businesses while any such discussions proceed, the Government will continue to operate the Protocol on the current basis. In other words, it was extending the current grace periods indefinitely and without the EU’s agreement.
If he was expecting a response from the EU, Lord Frost must have been disappointed. Apart from confirmation from the European Commission that it would not be taking infringement proceedings against the UK further at this point, the move was met with almost total silence from the other side of the Channel. When Commission President Ursula von der Leyen gave her annual State of the Union speech the next day, she mentioned Afghanistan six times: she never referred to the UK once. With the need to reset relations with the United States foremost on European minds, not to mention the German elections, it would seem that the other Member States have finally decided to waste no further effort on the demands of their former partner.
Wish you were here
It is unlikely, however, that the final links will be broken any time soon. Having for many months resisted calls to ease immigration so that workers, and particularly lorry drivers, could be brought in from the EU, the sudden spate of panic buying by motorists desperate for petrol finally spurred the Government into action. Prime Minister Boris Johnson announced that 5000 HGV drivers (and 5500 poultry workers) would be added to the existing visa scheme. Running from October until Christmas Eve, this would, he said, ease supply chain pressures in the food and haulage industries during what he called these exceptional circumstances.
Unfortunately, this plan has had a cool reception at home and abroad. Logistics UK said that, by the time it was in place, the scheme would barely last two months while British Chambers of Commerce (BCC) President, Baroness Ruby McGregor-Smith, described the moves as a thimble of water to put out a bonfire. BCC Co-Executive Director Hannah Essex warned that the Government’s plans were addressing only the tip of the iceberg when it comes to the huge impact of the current labour shortages.
Meanwhile, the media did not have to look far to find EU drivers who said that they would not be attracted back to the UK for such a short period. New EU rules have improved working conditions for drivers and the Commission is investing €millions in establishing a network of safe and well-equipped parking sites across the continent major road networks. Several drivers reminded the UK Government that they had been here last December, then spent Christmas in a temporary lorry park in Kent when it proved impossible to get home. As Edwin Atema from the Netherlands-based union of lorry drivers FNV told BBC’s Radio 4: “The EU workers we speak to will not go to the UK for a short-term visa to help the UK out of the **** they created themselves. In the short term, I think that will be a dead end.”
More border controls, but not yet
Lord Frost addressed Parliament in September to confirm that, with regard to full import controls for goods being imported from the EU to the UK, the Government’s own preparations, in terms of systems, infrastructure and resourcing, remain on track to meet the original timetable for the introduction of the final stages of those controls. However, he went on, the pandemic has had longer-lasting impacts on businesses, both in the UK and in the European Union, than many observers expected in March. There are also pressures on global supply chains, caused by a wide range of factors including the pandemic and the increased costs of global freight transport.
Accordingly, the Government has decided to delay further some elements of the new controls, especially those relating to Sanitary and Phytosanitary (SPS) goods. For example, the requirement for pre-notification of agri-food imports will be introduced on 1 January 2022 as opposed to 1 October 2021 and the requirement for Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be delayed until 1 July 2022. In his statement, the full text of which can be found at https://questions-statements.parliament.uk/written-statements/detail/2021-09-14/hcws285, Lord Frost said that the timetable for the removal of the current easements in relation to full customs controls and the introduction of customs checks remains unchanged from the planned 1 January 2022.
Sarah Laouadi, Head of International Policy at Logistics UK, has pointed out that its members have already worked towards two deadlines for the introduction of these formalities, and, she went on, more delays heap additional work on an industry already working at full stretch. While Lord Frost has presented it as a benefit to companies, Ms Laouadi argued that this second change of plan for import controls will only add to the uncertainty and create extra re-adjustment costs for the logistics industry. It also penalises those companies that invested time and money to be prepared for the planned changes, she pointed out. “The UK’s supply chain with the EU is highly interconnected but it will be impossible to convince our European supply chain partners to do their part if the target they are aiming for is constantly changing”, Ms Laouadi concluded.
Show us the money
Before it focused on sovereignty and taking back control, the Brexit campaign was all about money. We could have £350 million a week to spend on the NHS if we stopped giving cash to the EU, according to the slogan painted on the famous Brexit bus taking Boris Johnson and Michael Gove round the country. While the UK certainly paid more to the EU than it received back, the real picture was slightly more nuanced. Of the money which came back as regional funding, for example, most went to projects in the UK’s poorest areas and it now seems that money is being missed.
Cornwall County Council has complained, for example, that it seems likely to get a maximum of £3 million from the Government whereas it would have been in line for £100 million under the EU regional aid rules. While Mr Johnson has previously stated that the county would not miss out on any funding that it would have received if the UK had remained in the EU, angry councillors have pointed out that the money this Government is planning to make available will go nowhere near to replacing the funds Cornwall used to get from the European Regional Development Fund (ERDF).
To add to the general air of discontent that has marked this month, France was outraged when a deal between the United States, the UK and Australia was unveiled (AUKUS) which meant that Australia was pulling out of a billion-dollar deal to buy French submarines. Still at sea, the UK Government then rubbed salt into the wounds by confirming that it was granting just 12 licences from 47 bids for smaller French vessels to fish in its territorial waters under new post-Brexit rules.
French Sea Minister Annick Girardin said: “It is a new refusal of the British to apply the conditions of the Brexit accord despite all the work undertaken together.” A Defra spokesman responded that the UK's approach “has been reasonable and fully in line with our commitments in the Trade and Cooperation Agreement (TCA)”. With Jersey also refusing fishing licences to 75 French fishing vessels to access its waters from 30 October, this looks to be another argument that will run and run.
Did we say till Christmas?
Even before the emergency visa system has been introduced, the Government has changed the rules. It has now said that 300 overseas fuel drivers can work in the UK until 31 March 2022 (see www.gov.uk/guidance/concession-for-temporary-leave-to-allow-employment-as-hgv-fuel-drivers#eligibility-and-consideration-under-the-concession) while the remaining 4700 visas intended for food haulage drivers have been extended to the end of February.