Brexit chaos as HMRC warns that Boris Johnson’s ‘Max Fac’ customs plan could take THREE YEARS to implement and cost firms £20bn after he demands PM ‘gets on with’ leaving EU
- Boris Johnson warned PM by urging her to ‘get on with’ leaving customs union
- Brexiteers increasingly alarmed at ‘backstop’ plan to keep EU ties beyond 2020
- Michael Gove has also attacked Chancellor in angry letter to Cabinet colleagues
MPs were warned today that Brexit customs plans will not be operational by 2020 – after Boris Johnson demanded Theresa May ‘gets on with’ taking Britain out of the EU.
The Foreign Secretary risked escalating tensions with the PM again by demanding the UK regains control of its own customs ‘as fast as is reasonably possible’.
The call came amid mounting Brexiteer anger about the ‘backstop’ plan to keep Britain tied to EU customs rules beyond 2020 in order to avoid a hard Irish border.
But the difficulties facing the government were underlined as the chief executive of HM Revenue & Customs warned that the Eurosceptics’ favoured ‘Maximum Facilitation’ blueprint for future links could take three years to implement.
Jon Thompson also told MPs the model could cost business up to £20billion.
The Remainers’ option of a customs partnership would take even longer to fully implement at five years, he said – but the costs would be significantly lower at around £3.4billion.
The Foreign Secretary Boris Johnson, pictured on a visit to Argentina yesterday, has risked further escalating tensions with the PM by demanding the UK regains control of customs ‘as fast as is reasonably possible’
The chief executive of HM Revenue & Customs, Jon Thompson, told MPs today that the Eurosceptics’ favoured ‘Max Fac’ blueprint for future links could take three years to implement
Mrs May, pictured at PMQs today, has insisted the ‘backstop’ customs proposal will be strictly time limited
Mrs May has been scrambling to find a way through a bitter Tory standoff on the post-Brexit customs models.
Brexiteers including Mr Johnson support the ‘Max Fac’ scheme – which would use trusted trader arrangements and technology such as number plate recognition cameras to avoid the need for border checks.
But the PM has been fighting for a ‘customs partnership’ where the UK collects tariffs on behalf of the EU for goods and businesses claims rebates if British duties vary.
Ministers have so far agreed to a ‘backstop’ that would extend customs ties until a solution can be found – but only on the basis it is strictly time limited.
Tory backbencher Jacob Rees-Mogg yesterday condemned Mrs May’s ‘weak’ stance and voiced doubts about whether she ‘really wants to leave’ the EU.
Speaking during a visit to South America, Mr Johnson appeared to echo his impatience with the premier.
‘The Prime Minister is the custodian of the plan, which is to come out of the customs union, out of the single market and to get on with it, to get on with that project with all convenient speed, and that is what we are going to do,’ he told Bloomberg TV.
‘I think it’s important for people to have a sense of when it’s going to happen and to be able to do it as fast as is reasonably possible.’
WHEN WILL BRITAIN BE OUT OF THE EU?
Britain triggered Article 50 on March 29, 2017, starting a two year process for leaving the EU:
March 2018: Outline transition deal agreed, running for about two years
June 2018: EU summit that Brussels says should consider broad principles of a future trade deal.
October 2018: Political agreement on the future partnership due to be reached
Early 2019: Major votes in Westminster and Brussels to ratify the deal
March 29, 2019: Article 50 expires, Britain leaves the EU. Transition is expected to keep everything the same for about two years
December 31, 2020: Transition expected to come to an end and the new relationship – if it has been agreed – should kick in
Spelling out a detailed list of requirements from any deal, Mr Johnson added: ‘The Prime Minister has made it absolutely clear that we are coming out of the customs union and we’re coming out of the single market and what is entailed by those promises is very precise.
‘It means we take back control of our tariff schedules, we set our own tariffs, we run our own commercial policy.
‘It means we are able to do things differently if we choose, when it comes to our regulatory framework. That’s very, very important. Otherwise, you’re not taking control of your laws, you’re not taking back control of your borders.’
However, in a letter to the Commons Brexit Committee, HMRC chief executive Jon Thompson made clear that the Max Fac plan would not be ready by December 2020 – when a mooted transition period is due to end.
He said the ‘highly streamlined’ approach would require a ‘range of measures to facilitate as frictionless UK-EU trade as possible as well as further specific facilitations for the Northern Ireland-Ireland land border to avoid physical infrastructure or related checks and controls’.
‘As (Max Fac) is a basket of measures they would take different amounts of time to deliver. Some could be ready immediately some would take a year; some would take a couple of years; and some could take around three years,’ Mr Thompson wrote.
‘As I mentioned in my evidence to your Committee, HMRC is also exploring longer term facilitations that would improve the UK’s trading position to a longer timetable.’
Meanwhile, Chancellor Philip Hammond used a speech to the CBI last night to insist a solution to the customs dilemma can be found, although he acknowledged it would involve further work to develop.
In an angry letter, Michael Gove (pictured right in Downing Street yesterday) lashed out at Philip Hammond (left speaking to the CBI last night) for ‘short-sightedness’ which had led to an ‘avoidable’ Lords defeat for the EU Withdrawal Bill
Jacob Rees-Mogg, picturerd on the BBC’s Daily Politics programme yesterday, voiced doubts about whether Mrs May ‘really wants to leave’ the EU
The CBI has backed the UK remaining in the customs union, but Mr Hammond told business leaders that would not be necessary.
He said: ‘The UK has proposed two possible future customs models.
‘Both are ‘works in progress’ but we are confident that, building on these two models, we can develop a solution that will allow us to move forward while meeting your concerns.’
He added the UK also wanted a ‘comprehensive system of mutual recognition’ to ensure products would only need to be approved in one country to meet standards across Europe.
‘It is in the interests of both the UK and the EU to secure a mutually beneficial deal that will allow us to continue to have a close economic partnership and to do so as soon as possible to give businesses the certainty they need,’ the Chancellor said.
Tensions between Mr Hammond and Mr Gove have also been exposed by a letter leaked to the Daily Telegraph in which the Environment Secretary blamed the Chancellor’s department for a defeat on Brexit legislation in the Lords.
Mr Gove accused the Treasury of ‘short-sightedness’ over a post-Brexit environmental regulator, saying its opposition to the proposal had led to an ‘entirely predictable and avoidable defeat’ for the Government as peers voted to maintain EU green rules.
What are the options on the table for a customs deal with the EU?
With time ticking away on the Brexit negotiations, the Cabinet is still at daggers drawn on the shape for future trade relations with the EU.
The government has set out two potential options for a customs system after the UK leaves the bloc.
But despite a series of tense showdowns at Theresa May’s Brexit ‘War Cabinet’ ministers continue to be deadlocked over what to do.
Meanwhile, Brussels has dismissed both the ideas – and warned that negotiations could stall altogether unless there is progress by a key summit next month.
They are demanding the UK agrees to a ‘backstop’ in the Withdrawal Agreement that Mrs May has rejected as unacceptable because it would draw a customs border down the Irish Sea and split the UK.
Despite a series of tense showdowns at Theresa May’s ‘War Cabinet’ (pictured in February) ministers continue to be deadlocked over what to do
OPTION 1 – CUSTOMS PARTNERSHIP
Under the so-called ‘hybrid model’, the UK would collect EU import tariffs on behalf of Brussels.
Britain would be responsible for tracking the origin and final destination of goods coming into the country from outside the EU. The government would also have to ensure all products meet the bloc’s standards.
Firms selling directly into the UK market would pay the tariff levels set by Brussels – but would then get a rebate if Britain’s tariffs are lower.
Supporters of the hybrid plan in Cabinet – including Theresa May, Philip Hammond and Greg Clark – say keeping duties aligned up front would avoid the need for physical customs borders between the UK and EU.
As a result it could solve the thorny issue over creating a hard border between Northern Ireland and the Republic.
Mrs May has been advised by the chief whip that the hybrid option could be the only way of securing a majority in parliament for a Brexit deal.
But Brexiteers regard the proposal as unworkable and cumbersome – and they were joined by Sajid Javid and Gavin Williamson in criticising it at a tense ‘War Cabinet’ meeting last week.
There are fears the experimental system will either collapse and cause chaos, or prevent the UK from being able to negotiate free trade deals around the world after Brexit.
Mrs May has instructed official to go away and revise the ideas. Eurosceptics are braced for her to bring back the plan with only ‘cosmetic’ changes, and try to ‘peel off’ Mr Javid and Mr Williamson from the core group of Brexiteers.
They are also ready for Mrs May to attempt to bypass the ‘War Cabinet’ altogether and put the issue before the whole Cabinet – where she has more allies.
OPTION 2 – MAXIMUM FACILITATION
The ‘Max Fac’ option accepts that there will be greater friction at Britain’s borders with the EU.
But it would aim to minimise the issues using technology and mutual recognition.
Goods could be electronically tracked and pre-cleared by tax authorities on each side.
Shipping firms could also be given ‘trusted trader’ status so they can move goods freely, and only pay tariffs when they are delivered to the destination country.
Companies would also be trusted to ensure they were meeting the relevant UK and EU standards on products.
Senior ministers such as Boris Johnson, Michael Gove and Liam Fox believe this is the only workable option.
But Remain minded Tories such as Mr Clark insist it will harm trade and cost jobs in the UK.
They also warn that it will require more physical infrastructure on the Irish border – potentially breaching the Good Friday Agreement. It is far from clear whether the government would be able to force anything through parliament that implied a hard border between Northern Ireland and the Republic.
The EU has dismissed the idea that ‘Max Fac’ could prevent checks on the Irish border as ‘magical thinking’.
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