Risk of ‘widespread disruption’ at UK border after Brexit transition period, NAO warns

A National Audit Office (NAO) report has warned that “widespread disruption” is likely on 1 January 2021 when the Brexit transition period ends.

The report, assessing the government’s preparations at the border, said that although the government has undertaken a significant amount of work on systems and infrastructure, the Covid-19 pandemic has “exacerbated delays in government preparations and significant risks remain”.

It said the government is aware that there will be disruption and is putting in place plans to monitor issues, but there is still a “risk that widespread disruption could ensue”.

One of the key systems required is HM Revenue and Customs’ (HMRC) Customs Declaration Service (CDS), which is due to replace the old Customs Handling of Import and Export Freight (Chief) system.

In May 2020, HMRC completed a programme developing CDS to handle 60 million declarations a year, but as of September 2020, only 11 traders had been migrated onto the system.

“In April 2020, an independent review commissioned by HMRC concluded that substantial re-engineering would be required to expand CDS’s capacity to handle the system interactions relating to the 270 million customs declarations HMRC estimated may be required annually from 2021,” the report said.

Although HMRC has known since 2017 that CDS might need to handle a huge increase in customs declarations, it has not addressed this, mainly because it has been focusing on preparing the Chief system, said the NAO.

Originally, HMRC was due to turn off Chief by March 2020, but the report said the department “is now expecting to have to continue to run Chief as part of a dual approach in which traders would use Chief for customs declarations relating to imports to Great Britain and CDS for those relating to Northern Ireland until CDS has been scaled to be able to handle increased volumes of customs declarations”.

The report added: “HMRC is undertaking a programme of work to ensure that Chief can be sustained and dual-run alongside CDS and provide additional functionality to allow Chief to support HMRC’s plans in regard to roll-on, roll-off (RORO) ports. HMRC also needs to put in place the infrastructure and resources to undertake compliance checks on declarations.”

Another IT system that needs to be ready in time for the end of the transition period, the Goods Vehicle Movement Service (GVMS), is also at risk, according to the report.

In June 2020, the government had yet to begin building the system, and in July it published the technical specification for the application programming interface (API) that ports and carriers needed to build to connect with the system. In October, the Border and Protocol Delivery Group (BPDG) reported the “readiness of the operator and port controls necessary to implement GVMS as red”, said the report.

“In late October, HMRC told us that it was confident that carriers and ports that chose to use GVMS had sufficient time to build the digital connection before the end of the transition period.”

However, the report also noted that the overall readiness of the system was high-risk “due to a lack of time for adequate integration and testing with hauliers and carriers”.

On the Ireland/Northern Ireland border, IT functionality is also an issue. In May 2020, HMRC said that delivering full functionality for the four core IT services required “was not feasible for December 2020 and that it was instead either looking to deliver interim products with reduced functionality, or to introduce contingency measures”, said the report.

However, the NAO noted that since then, the department has made progress and that it is “confident that it could deliver the systems required in advance of the end of the transition period”.

NAO head Gareth Davies said: “Disruption is likely and the government will need to respond quickly to minimise the impact, a situation made all the more challenging by the Covid-19 pandemic.”

One of the biggest issues in getting the technology ready is the readiness of those who have to use the system and their software suppliers.

“Despite rating the delivery risk for most of the systems required for January as green, as at 21 October, BPDG rated the overall systems risk as amber, due primarily to risks relating to GVMS, and the readiness of external software providers,” the report said.

“Software developers who make software that is used by importers, exporters and agents to submit customs declarations need to make changes to their systems to allow third parties to connect to HMRC’s customs systems.”

In October 2020, the Association of Freight Software Suppliers (AFSS) warned that there wasn’t enough time to get software ready by the end of the transition period. This is a particular issue on the Northern Ireland/Ireland border, where CDS will be used instead of Chief.

Stephen Bartlett, chairman of the AFSS, said in October that the CDS Northern Ireland programme’s current delivery plan gave software suppliers “little or no time to build, test and roll out software to their customers”.

The NAO report said that HMRC “acknowledges that bringing all the elements together is still very high-risk, and there is little time for software providers to make the necessary changes or to resolve any issues which may emerge during testing”.

It added: “HMRC is seeking to keep the changes required by software developers to a minimum and is developing contingency plans in case the changes cannot be made in time.”

Commenting on the report, Public Accounts Committee chair Meg Hillier said it was clear that whatever happens, “there will be disruption at the border in January – the government simply hasn’t given businesses enough time to prepare. And a huge amount still needs to be done to implement the Northern Ireland protocol”.

Hillier added: “It is incredibly worrying that with two months to go, critical computer systems haven’t been properly tested. The government can only hope that everything comes together on the day, but this is not certain. If it does, it may be able to limit the extent of the disruption.

“It is completely unacceptable that CDS will have to be rebuilt before it can process all the declarations it will need to. My committee warned that CDS was vital three years ago – and HMRC knew then how much would be riding on its new customs system.”