As things stand at the moment, eighteen months from now the UK will leave the EU without any agreement on trade regulation or tariffs, either with the EU or any of the other countries with which it currently has trade agreements. The arrangements which assure the smooth running of 60 percent of our goods trade will disappear. Once we are outside the regulatory framework, many products, particularly in highly regulated areas like agriculture and pharmaceuticals, will no longer be accredited for sale in Europe. Aeroplanes will be unable to fly to and from the EU to the UK. Those goods which can still legally be traded with the EU will face lengthy customs checks. Integrated supply chains and just-in-time manufacturing processes will be severely disrupted and, in some cases, damaged beyond repair. Unless politicians do something, that’s where we are heading.
International trade and commerce doesn’t just happen. It is facilitated by a framework of agreements on tariffs, quotas and regulations. Without these, trade is either very expensive or, in some cases, simply illegal. Therefore, if the UK were to leave the EU without concluding a trade deal, things wouldn’t simply stay the same. They would be very different and very damaging.
Of course, it would be disruptive for the rest of the EU too, although it is much easier to find new suppliers and customers in a bloc of 27 countries than it is in a stand alone country with no trade deals. Even so, most of us have assumed that common sense will prevail at some point. No-one in their right mind would let such a thing happen so surely both sides will do what is necessary to between now and March 2019 to avoid it.
Incredibly, though, our government, egged on by ideologues on its own back benches, has been talking up the prospect of a no-deal Brexit, apparently as a negotiating ploy to make the EU realise that we are serious about walking away. Almost as soon as the no-deal idea was suggested, Phillip Hammond said that he was not willing to set aside any money to fund it. In any organisation, that’s a sure-fire sign of a project that’s going nowhere. If the finance director won’t even stump up the cash for the planning phase, you might as well forget the whole thing. Mr Hammond said that he would wait until “the very last moment” before committing any money to prepare for a no-deal scenario. Which means it’s not going to happen because the very last moment passed some time ago, most probably before we even had the referendum.
To prepare this country for the complete removal of trading arrangements that have been in place for decades would be an immense task. The customs implications alone are massive. Ports like Dover, Folkestone and Holyhead have no customs infrastructure. They have been designed and developed on the assumption that they are, to all intents and purposes, domestic ports. The proposed inland customs area would need to be vast to cope with the number of lorries. There was already a plan to build a lorry park in Kent in anticipation of increased traffic but this has stalled after local objections and is now subject to a judicial review. It is unlikely that work will start for some time even on this modest proposal. The idea that a fully functioning inland customs processing facility could be up and running in 18 months is just fanciful.
Much has been made of technological solutions to the increased administration brought about by Brexit but the specification for the new customs IT system written before the Brexit vote. It was future-proof to the extent that it was designed to handle around three times the current number of customs declarations. The trouble is, that number is now likely to multiply by six, with many declarations from companies that have never had to use the system before. Increasing its capacity in time for the Brexit deadline will be challenging. It may well not be ready by March 2019.
As well as infrastructure and IT, HMRC will have to take on more people. A lot more. It has estimated that some 3-5,000 new customs staff will be needed. Other departments face similar challenges. The Home Office has said that it will need at least a year to recruit and train the staff it needs to handle the additional border and immigration work. As the Institute for Government pointed out, customs alone has an impact on many public sector organisations. They will all need extra resources and organisation to deal with these changes. On top of that, new regulatory organisations will need to be built from scratch. Capability is a combination of capacity and ability. It’s not that the civil service lacks good people, it just hasn’t got enough of them for this colossal task. The British state doesn’t have the capacity to do Brexit in 18 months.
There comes a point in any project when, if a certain amount of work hasn’t already been done, there is just no way you are going to meet the deadline, no matter how much money and resource you throw at it. Some things can’t be fast-tracked. This is especially true of recruitment, training and setting up new organisations. If anyone ever finds a way of microwaving the acquisition of skills and the bonding of teams they will become very rich. For now, though, these are not processes that are easy to speed up. As a colleague of mine used to say, nine women can’t make a baby in a month. Some things just take as long as they take and there isn’t much you can do about it.
The UK had a decade to prepare for the Olympics. Brexit is a much bigger job. If we had decided to make a clean break from the EU as a well-thought out and considered policy, it would have taken us years to plan and prepare for it. We should probably have started several years ago. As it stands now, it is far too late to do anything that will have a significant impact on the chaos that would follow in the wake of a no-deal exit from the EU. However much money the government throws at the problem, there won’t be enough. It is simply too late. Philip Hammond knows it, the civil service knows it and, most probably, Michel Barnier knows it too.