MPs are to conduct an inquiry into how prepared Whitehall is for a spike in customs checks after Brexit, amid fears a new £71m customs computer system could collapse.
The Treasury select committee, chaired by arch-Remainer and former education secretary Nicky Morgan, is expected to summon ministers and bosses at HM Revenue & Customs this autumn as questions mount over whether the new system will cope with a hard Brexit.
The inquiry – yet to be formally signed off – will put the Government under more pressure over its how prepared it is for Brexit as ministers come under fire from Brussels over the lack of progress in divorce negotiations after three rounds of talks.
The backbench inquiry comes after the National Audit Office warned that the new Customs Declaration Service system – due to be implemented at the start of 2019 – would not have the ability to process the expected 255 million customs declarations every year.
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HMRC estimates the number of annual customs declarations will rise from 55 million from 255 million after Britain leaves the EU in March 2019.
The new system, which was signed off before the referendum vote, is expected to be completed just two months before Brexit. But it has been given an “amber/red” status to highlight concerns within Whitehall over progress.
The customs union is a central part of the EU which allows member states to trade freely with each other while charging the same tariffs on imports from outside of the bloc.
Assuming the UK leaves the customs union, the UK could have to levy duties on all imports from the EU, as well as those from outside the bloc.
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Customs arrangements are proving a particularly thorny Brexit issue, with deep divisions on both sides of the Commons over what a post-Brexit system should look like.
Theresa May has committed to quitting the customs union and the single market when Britain leaves the EU in March 2019 – although the Government will put a temporary arrangement in place as part of a wider transition period to avoid a “cliff-edge” for businesses.
This has dismayed some of her backbenchers, who want the Government to remain in the customs union during that transition period.
However, most eurosceptics want to leave the customs union quickly so Britain can be free to conclude trade deals with non-EU countries from the moment it leaves in March 2019, rather than having to wait until the transition period is over.
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Meanwhile, Labour has shifted its position and is now pressing for Britain to stay in the single market and the customs union during any transition period.
Keir Starmer, the shadow Brexit secretary, has even suggested Britain should stay in the customs union EU indefinitely, unless there is hard evidence that a new trade deal would make Britain better off.
The Government’s commitment to quitting the customs union is also fuelling the Irish border problem as politicians and officials ponder how to avoid a hard border on the island of Ireland once Britain has left the EU.
Irish Prime Minister Leo Varadkar has called on the EU and the UK to find “unique solutions” – such as a bespoke customs union.
Source: Sky