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Customs Safety and Security Procedures (EU Exit) Regulations 2020

Volume 808: debated on Thursday 10 December 2020

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Customs Safety and Security Procedures (EU Exit) Regulations 2020.

Relevant document: 36th Report from the Secondary Legislation Scrutiny Committee

My Lords, we are here to discuss a further statutory instrument that is part of the Government’s package of SIs to prepare for the end of the transition period. This instrument concerns safety and security declarations, as did the SI debated here and in the other place last month. This statutory instrument was debated and agreed in the other place earlier today. If there is disruption at the border after the end of the transition period to which the Government have to respond, these powers will allow the Government to manage those issues. Noble Lords will be aware that the Secondary Legislation Scrutiny Committee reported the regulations as an instrument of interest in its 36th report, published on 3 December.

Allow me to set out the context of the current regime for managing the safety and security risk of goods entering and leaving the UK. The UK subscribes to the World Customs Organization’s SAFE framework of standards, which sets out minimum requirements for participating customs administrations to regulate, monitor and secure the international supply chain. Customs authorities are required to collect and risk-assess data on consignments of imported and exported goods for security purposes. The UK does this through safety and security declarations, which goods carriers are required to submit.

These declarations are currently required under the Union customs code and are retained in law in the UK after the end of the transition period by the European Union (Withdrawal) Act 2018. While part of the EU, the UK required safety and security declarations only for goods leaving or entering the EU. From the end of the transition period, the default position is that carriers will be required to complete safety and security declarations for goods moved into and out of Great Britain where those goods are moving to or from the EU, as well as the rest of the world.

As we announced in June, the Government are staging in controls at the border after the end of the transition period. As part of that we have introduced a six-month waiver on the requirement to submit entry summary declarations for goods imported from the EU into Great Britain. The requirements for entry summary declarations for goods imported from the rest of the world will not change. That waiver will allow businesses affected by Covid-19 additional time to prepare to meet their requirements for safety and security, and the full range of customs controls, at the end of the staging-in period. While the Government have waived the safety and security requirement for imports from the EU and other countries where they are not currently completed until 1 July 2021, the requirement for safety and security declarations for exported goods is in place from 1 January 2021.

Before goods leave the country, carriers are required to submit safety and security data to HMRC for risk assessing. As well as managing safety and security issues, this data is also used to meet other international obligations, such as controls on the movements of live animals. This data is normally contained in a customs export declaration. Where there is no requirement for a customs export declaration—for example, in the case of the movement of an empty truck—the safety and security requirements are met through the submission of an exit summary declaration.

This SI gives the commissioners of Her Majesty’s Revenue & Customs the time-limited power to waive, by public notice, the requirement for the submission of safety and security information for goods exported from Great Britain. The deadline for the pre-departure submission of this information could also be altered by public notice. Any waiver would be introduced only where necessary to preserve the flow of goods at the border. Prior to any use of this power, the Government would consider risks such as border security and manage them against risks posed by the border disruption. Without this power, in some scenarios traders may be left with no option to compliantly export goods from Great Britain if they are unable to collect and submit the appropriate data to current time limits.

These powers are limited so that they can be used only if necessary to mitigate border disruption, and only within the first six months after the end of the transition period. Within this, any mitigation can be further limited; for example, by time, location, sector of trade or type of goods. Measures could therefore be applied depending on need. The Government will update Parliament as appropriate when introducing the waiver.

The Northern Ireland protocol means that there are no safety and security requirements for goods moved between Northern Ireland and the EU. The protocol applies EU UCC rules in Northern Ireland, and therefore the public notice powers introduced by this instrument would not affect goods movements into or out of Northern Ireland. Goods moved between Northern Ireland and the rest of the world will continue to be subject to safety and security requirements.

The Government continue to work with stakeholders to support their readiness for the end of the transition period. Introducing these powers is an important step in preparing for every eventuality after the end of the transition period. They will give the Government some capacity to intervene in safety and security requirements for exports, if necessary. These powers would be used only in exceptional circumstances, where it was absolutely necessary to ensure that goods could continue to move across the border. The powers would be used only after due consideration of the risks arising from the waiving of these requirements. I beg to move.

My Lords, obviously I do not approve of what is happening. I think that the loss of security that the country will suffer as a result of leaving the European Union is vast and will be of great comfort mainly to people of the criminal fraternity and others seeking to evade various rules.

Can the Minister please tell us what goods he has in mind being covered by this SI? Can he give some practical examples? If they are the sorts of things which are a threat to security or are dangerous goods, it is very serious that these are going to be dealt with in this way, where Parliament has virtually no say over what is happening.

The fact that the Government have not prepared for us leaving the European Union in a proper way is their fault. Whatever they are doing to cut and paste a solution to the failures of their policy certainly does not have my support, unless the Minister can be very explicit about what is involved in this and whether it really is absolutely essential that this sort of power is given.

My Lords, the central requirement for government in the context of customs safety and security procedures is, as the Minister said, to establish the continuity of procedures so that the economy can continue to operate effectively in the context of the end of the transition period.

This is more important than ever today. As reported earlier by the BBC, a global shipping crisis is impacting the UK severely. Understandably, many businesses are stockpiling in advance of a possible no deal. Port backlogs are driving up shipping rates. UK ports are reported to be close to broken. The surge in demand and backlog of empty shipping containers are causing bottlenecks. The impact of the three Cs—Christmas, coronavirus and customs—while businesses are still lacking in confidence about what will happen in the case of a no-deal Brexit, is growing.

Accordingly, I hope my noble friend the Minister will take this opportunity to provide the Government’s view on how this crisis can be resolved, any action the Department for Transport intends to take to remedy the situation, and what proportion, if any, of the substantial port costs will be passed on to consumers. The case of Honda is important; is it the Government’s intention to intervene, given the suspension of production at its Swindon plant? What further capacity for moving containers through ports can the Government provide? Should we look towards more expensive prices for consumers, or unsustainability for businesses where the onward price cannot be increased?

On customs procedures in the event of a no-deal Brexit, I will raise an important issue that I fully appreciate might require my noble friend, despite his lexicon of knowledge, to consult further with Defra and DCMS, although he did refer specifically to the control of the movement of live animals. In that context, can he confirm that EU law on the movement of horses and equines will continue to provide a shared framework to allow Ireland, France and the UK to ensure that, from 1 January 2021, there will be a specific arrangement for the movement of racehorses through customs posts and immigration control, as at present; in other words, will he ensure that that law will be placed on the statute book in the UK?

Will the tripartite agreement—TPA—be in place? As I understand the situation, this agreement will lapse in three weeks’ time, thereby removing the free movement of racehorses between Ireland, the UK and France, and massively impairing horseracing in this country. This would draw a curtain over Cheltenham and racing in general. Trainers would understandably not submit their highly tuned racehorses to potentially lengthy delays at the borders, which would impair the movement of horses and potentially do such significant harm that trainers would not enter them in races. Any increased certification and controls would have to be electronically managed in advance. A successor agreement to the TPA may be agreed in respect of north/south movement of horses only if Northern Ireland continues to provide the necessary guarantees on maintaining high-health status, and if the UK can continue to guarantee that all other controls are carried out, including on horses coming from Great Britain into Northern Ireland, as well as from Ireland and France into the UK.

For the movement of equine animals between the UK and the EU countries I mentioned to continue after the transition period, the UK would need to be listed by the Commission as a third country eligible to export horses to the EU, and vice versa. From 1 January, when the transition period ends, racehorses entering Great Britain from Ireland or France will, I assume, only be permitted departure and entry clearance under this and related regulations. Specific controls for movement from Great Britain to Ireland, including blood testing and residency requirements, will also apply depending on the sanitary group—the health status category—the Commission assigns to the UK and the purpose and duration of the equine movement. Will this impede the current seamless free movement of racehorses across borders, as permitted by the tripartite agreement?

This categorisation has to be clear in three weeks’ time. Equine animals moving to and through the UK will be subject to UK government customs requirements. Customs controls will also apply to equine movements between Ireland and the United Kingdom. In the circumstances, is my noble friend confident that all involved should now prepare for the seamless and unimpeded movement of racehorses between Ireland, France and the United Kingdom? Is the industry ready and prepared for racehorses moving from the UK to Ireland and France? What new documentary, identity and physical health checks will be required?

Will the border be frictionless when it comes to the movement of horses from Northern Ireland to the rest of Great Britain? Are transporters of horses on both sides of the Irish, French and UK borders compliant with the relevant authorisations and certificates, irrespective of the outcome of the current round of negotiations; in other words, can my noble friend assure me that a new TPA will be in place on 1 January 2021 come what may, without any impact on Cheltenham, Ascot, the Derby or the British horseracing calendar next year?

My Lords, I thank the Minister for explaining these regulations. I note that they will introduce powers to allow a temporary waiver of the requirement for pre-departure declarations, or temporary modification of the time limit for their submission, by public notice. Obviously, some of this work would involve HMRC. I have some questions for the Minister. There have been some interesting expositions already by previous speakers.

The noble Lord, Lord Moynihan, who has just spoken, raised the issue of the equine industry. Coming from Northern Ireland, where the equine industry is quite important to our local economy, both in Northern Ireland and on the island of Ireland, I would not like to see any impediments put in the way of that industry. There are clear links between the equine industry in Ireland, north and south, and Britain, and vice versa, and it is important that the proper procedures are in place from 1 January to ensure that free movement. I also agree with the noble Lord, Lord Bradshaw, that there are certain issues here in relation to security: your Lordships’ House has to be assured that these regulations will ensure a complete diminution of criminal and paramilitary activity in terms of the transport of goods. I would like to ascertain from the Minister what advice he has received from HMRC and the various police constabularies throughout the UK on this issue.

The regulations state that they will still apply to the whole of the UK. How can this be when the Northern Ireland protocol applies to Northern Ireland customs and goods, where the union customs code applies, particularly now that we have a clear definition and an explanation of what has been approved in principle before it is finally approved by the joint committee? Will the instrument apply only to businesses and intermediaries exporting goods from GB to Northern Ireland? What administrative arrangements will need to be put in place to deal with this issue? I note that the Secretary of State for Northern Ireland announced earlier today quite substantial funding for businesses in Northern Ireland to deal with all the extraneous issues that will emerge from the implementation of the Northern Ireland protocol. I also note that the Minister referred in his speech to Northern Ireland-GB issues.

The Minister referred to the Secondary Legislation Scrutiny Committee. Its 36th report stated that

“it is not clear whether suspending pre-departure safety and security requirements on exports could lead to any adverse impacts.”

Will the Minister advise us of the exact position? The committee also noted that

“while this instrument enables HMRC to waive temporarily the requirement for pre-departure declarations for goods leaving GB, any use of this power would not help with potential disruption caused by the need for declarations for the same goods entering the EU.”

What is the Minister’s view of this statement? Will a solution be in place at the end of the transition period?

Finally, will the Minister say what arrangements are in place to publicise the use of these new powers? What will be the frequency of reports to both Houses of Parliament on the use and application of these new powers? What explanatory documents will be published online?

My Lords, as the noble Lord, Lord Moynihan, has already reminded us, the news yesterday and today has highlighted fullness at our ports due to Covid, Christmas and Brexit stockpiling and a build-up of empty containers here while Asian exporters have a shortage. It is a useful reminder that logistics must be thought out well ahead—they are only going to get more complicated from January.

This SI is about outgoing not incoming goods, but I have a few questions about how it works and what can be taken into consideration. On the face of it, it looks simple enough: if there is disruption, flow rate can be made simpler by waiving pre-departure notices or modifying the time limits for submissions; it can be done on specific sectors and types of goods or at specific places to allow targeted mitigation; and the power lasts only six months.

Paragraph 2.2 of the Explanatory Memorandum says that the powers can be used only for border disruption, and paragraph 2.6 narrows that to:

“in the event that requirements for pre-departure declarations cause border disruption”.

However, I cannot find an exactly corresponding provision in the regulations. Regulation 2(2) states that it is

“to relieve disruption at or near places from which goods are directly removed from Great Britain”,

but it makes no mention as to cause. I presume that the legislation is correct and, therefore, that wider causes of disruption could trigger the use of the power even if that is not the current intention. Perhaps the Minister can confirm that. If the Explanatory Memorandum reflects the intent in practice, why does it not make that clear? Is it intended to have a wider contingency, or is it that it is difficult to assert causality in legislation? I understand that but, if so, why not draft the Explanatory Memorandum accordingly and give the causes more as practical examples of intention?

Looking at the legislation rather than the Explanatory Memorandum, and given the present circumstance that I just mentioned about congestion caused by imports, would a similar event, maybe through knock-on effects, qualify as a disruption near a place where goods are removed from Great Britain, because the ports have both incoming and outgoing goods? Do queues in Kent, incomplete or full Farage lorry parks count as a disruption near a place where goods are removed from Great Britain? Could, and would, this provision be used because of events that have no relation to the export of goods, such as civil protest or industrial action? If a major cause is congestion, what steps are being taken to distribute both exports and imports to other ports with capacity, to minimise the need for these powers and congestion in general? Can that be done at short notice?

A previous statutory instrument on no-deal planning made it clear that the waiver would be exercised only in relation to exports to countries where previously there was no need for documentation—basically the EU—but there is no similar mention or emphasis here. Presumably this means that waivers can be in respect of any and all countries. If that is the case, are there some countries for which there would never be a waiver because of greater security concerns? What international provisions are there about disruption? Is there anything in SAFE to enable this kind of suspension for disruption and are there examples of when and why it been done elsewhere?

I turn to a more general point: alongside requiring pre-departure declarations, there is a provision for risk assessment time, which is in Article 264 of EU Regulation 952/2013. The SI makes provision for that to be stipulated in connection with notices relating to the time limit for lodging pre-departure declarations. What is the usual current risk assessment time? Obviously it does not apply at the moment for EU goods, but it applies elsewhere, so there must be some available information. Is there a uniform target time? What is the time relationship between when the pre-departure declaration must be lodged and the risk assessment time?

Finally, what is the timescale for changing or bringing out a notice? How quickly would it be disseminated and expected to have an effect, and for what duration would it typically be expected to run? What happens to the live animal aspects, which the Minister mentioned, saying that they would use the same documentation? If the documentation is suspended, what happens to checks on live animals: are they abandoned, or will they run separately?

I do not really have any fundamental objection to the SI but, as the Minister will be able to tell from my questions, more surrounding information is really needed to put it in proper operational context. Brexit is an extraordinary event, but it is of some comfort to know whether international norms cater for extraordinary events or whether contingency measures that we have to take cause strain to those norms and, therefore, to other international relationships.

My Lords, I am grateful to the Minister for introducing this latest statutory instrument from Her Majesty’s Revenue and Customs. Having dealt with the issue of imports three weeks ago, we now turn to the export of goods. As he outlined, HMRC is establishing a new power, described as a “contingency option”, to temporarily waive the requirement for pre-departure declarations if it is felt that this will lessen the disruption at the border. This power would also allow temporary change to the time limit for submission of these declarations. As with the import measures discussed previously, the potential grace period is limited to six months, which is designed to provide time for hauliers and ports to adjust to the realities of life outside the EU and beyond the transition period.

Paragraph 7.4 of the Explanatory Memorandum notes that there are potential risks to border security if these powers are used. Can the Minister explain the process that HMRC will use in relation to this contingency measure? Can he confirm whether that process has been decided? The phrasing of the Explanatory Memorandum suggests that it is in progress, but that would be surprising, given that the power will be available to Ministers in just three weeks’ time.

Given the risks involved, it is doubtful that the Government would want to extend the power beyond the envisaged six months. However, if HMRC were to decide to extend the intended sunset, would that be done by a further statutory instrument? While there may be a rationale for making it available, this unilateral power will get us only so far; it may help to limit disruption on the roads of Kent, but the problem will merely be shifted to the other side of the English Channel, where other forms will be needed for goods to move any further. This represents as much of a change to current arrangements as the need for pre-departure safety and security declarations, which have hitherto not been required under the terms of the Union customs code. It is regrettable that the haulage industry and others have not been afforded more time to prepare themselves for these new processes; it is worth remembering that such an option was on the table, only to be rejected by No. 10.

While we do not oppose this instrument, we remain deeply disappointed and troubled by the Government’s handling of the ongoing negotiations with the EU. They are now operating to a deadline of Sunday but, given the nature of the briefings last night, it is hard to be optimistic. We must therefore assume, as this SI does, that there will be no trade agreement. Let us not forget that, over three years ago, the former International Trade Secretary told the nation that the task of negotiating a comprehensive trade deal with the EU would be

“one of the easiest in human history”.

Since then, every deadline set by the Government for either a withdrawal agreement or a trade deal has been missed. Before leaving for his last-ditch dinner in Brussels yesterday, the Prime Minister pre-emptively sought to blame the EU for supposedly negotiating in bad faith. However, while the Government may not like its contents, the EU’s mandate is consistent with the political declaration signed by the Prime Minister in October last year.

The Minister is no doubt familiar with the reasonable worst-case scenario outlined in a Cabinet Office document earlier this year. A leak of that document has allowed all noble Lords to find out just how severe disruption could be in the event of no trade agreement. On exports, it warns that between 40% and 70% of trucks travelling to the EU might not be ready for new border controls; flow across the short Channel could be reduced to between 68% and 80% of normal levels; and queues on the roads of Kent could reach 7,000 trucks, equating to a two-day delay.

This is not what we were promised. At no point have the public been warned of the potential issues with imports if there is no trade deal. The document states that the flow of medicines and medical products could be reduced to between 60% and 80% of normal levels for a period of three months. Food supplies could be threatened, with low-income groups disproportionately impacted by price hikes. There is even a warning that some local areas could experience disruption in fuel supplies.

The Prime Minister promised the nation an oven-ready deal, not an outcome that prevents shops from stocking oven-ready meals. To avoid the chaos envisaged by the leaked document and this SI, it is vital that he gets his act together and secures a trade deal by Sunday.

I thank noble Lords for their contributions. I am grateful for the chance to respond to the points raised.

The noble Lord, Lord Bradshaw, asked about the impact on the country’s security of this statutory instrument which, to reassure the noble Lord, is for the export of goods, and so, in that direct context, is not of concern. However, the powers contained within SIs can be limited to apply only to certain types of goods. This has been provided for to allow targeted mitigation and to minimise security risks by providing a waiver only where necessary. Movements of prohibited and restricted goods are controlled by information contained in the customs export declaration and other licences, and the powers in this SI relate only to the safety and security declaration requirements. Even if a waiver were put in place that covered all goods, Border Force would continue to have access to additional intelligence to control border risks. It is also worth noting that we do not currently collect any safety and security data on exports to the EU, so any waiver here would not result in an increase in risks.

The noble Lord also spoke about this being a cut-and-paste solution. Safety and security declaration data is not currently gathered on all exports to the EU, so a waiver of these movements would retain the status quo. These powers could also be used to waive requirements for exports for the rest of the world if needed, but associated safety and security risks are minimal, since these goods are leaving Great Britain.

The Government intend to use these powers only where absolutely necessary to mitigate border disruption. Any waiver would be limited—for example, by time, location, sector of trade or type of goods—allowing targeted mitigation. Prior to any use of the power, the Government would consider the safety and security risks and manage them against the risks posed by the border disruption.

The noble Lord, Lord Moynihan, asked specifically about the movement of horses. The use of a public notice is the only method that would allow the Government to react as swiftly as may be needed to any disruption at the border after the end of the transition period. Without these powers, traders may be left in an unacceptable situation, where they are unable to compliantly export goods from Great Britain. The tripartite agreement to which the noble Lord referred is a specific agreement and, as I understand it, discussions are ongoing, but I will write with further information.

The noble Baroness, Lady Ritchie, asked about security and the risks of enabling increased criminality. I reassure the noble Baroness that the Government take border security extremely seriously and would use these powers only where absolutely necessary and within limits to alleviate border disruption. The Home Office would be consulted and would continue to be involved in the event that the powers were used to ensure that risks were kept to a minimum. Border Force would also continue to have access to other intelligence. The noble Baroness asked about the application to the whole of the UK. Just to be specific: while this is UK legislation, these powers could be used only to apply to goods moving out of Great Britain.

On publicising the use of the powers, this would be published as an online notice in the first instance, and Parliament would be updated as appropriate. We would also support the introduction of any measures with other methods of communication to ensure that traders were made aware as quickly as possible. The noble Baroness asked about causes of disruption. A waiver could be for exports to any country or any cause of disruption. This is necessary to be able to manage different scenarios. Equally, the powers allow for a waiver to apply only to certain exports. In the event of any use of these powers, we would need to weigh up the associated risks and take the appropriate action. The powers are restricted to the first six months of next year, since they are intended specifically to tackle border disruption as a result of the new safety and security requirements.

As to the question of how quickly it would take us to issue the notice, powers allow for a public notice to be published implementing a change in less than two days. A notice would last for a maximum of six months, for the first half of next year. However, the powers would also allow for the notice to be put in place for a shorter period of time within that to ensure that we have the maximum flexibility to manage these risks appropriately.

The noble Lord, Lord Tunnicliffe, asked how HMRC will use this contingency measure. We have established a process to ensure that we are able to assess any need for this contingency and balance risks. The process includes evidence-gathering and consultation with other departments, including the Home Office. We have been clear that these powers will be used only where absolutely necessary to avoid border disruption, and the Government will update Parliament in the event that we use the powers.

The noble Lord asked about any extension to the sunset clause. I reassure him that the powers can be used only within the first six months of next year and only to mitigate disruption. The Government have no plans to extend this contingency beyond the first six months of next year, as we do not anticipate that there will be any risk of disruption, as a result of the safety and security requirements on exports after that period. The Government could consider extending these powers further, but this would require a further statutory instrument which would be subject, as this one has been, to the appropriate parliamentary scrutiny.

I hear and understand the noble Lord’s concerns about the cliff-edge nature of the negotiations. I would like to offer a little more optimism in that, behind the scenes, a great deal of agreement has been achieved. There are some outstanding issues, but I remain confident that we will secure a deal with the EU in the next few days.

The Government are introducing this SI as a step towards being as prepared as we can be for all possible scenarios at the end of the transition period. We have been clear that these powers will be used only with due consideration of the risks, and only as is necessary to ease potential disruption at the border within the first six months of next year. I commend these regulations to the Committee.

Motion agreed.

That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room. The Committee is adjourned, and I wish you all a nice weekend.

Committee adjourned at 4.25 pm.