Imminent change

Since leaving the EU, the UK government has operated transitional biosecurity arrangements, including one called Place of Destination. After a number of postponements, the scheme is finally being withdrawn on April 30 to make way for the long-awaited Border Target Operating Model (BTOM).

This will redraw the map for traders, legislators and consumers alike, including a number of far-reaching modifications to the way the border will be managed. It marks the start of a shift away from EU standards to a home-grown hodge podge. In its day, Place of Destination allowed businesses to do their own product checks at a time when UK border facilities were either not available or still under construction.

DEFRA’s own description is an opaque blend of jargon and legalese: “The PoD scheme not only afforded flexibility to businesses as they adjusted to the new requirements following the end of the transition period, but also allowed the UK government time to thoroughly design BCP infrastructure and processes, maintaining frictionless trade, while protecting GB biosecurity.” The present outlook is not encouraging.

On Monday, March 12, the EFRA Select Committee met under the chairmanship of Dr Neil Hudson to discuss the ongoing shortage of vets to carry out routine health checks on inbound food products. The UK’s chief veterinary officer Christine Middlemiss told the committee that when the UK left Europe there was a shortage of vets in the order of 11%, and, that to her present knowledge, this was still the case. This sounds odd, since the demand for routine veterinary validations for food imports is rising steadily. Westminster has known for years that the food industry was facing a skills gap. A House of Lords committee warned of this in 2017 [click link to see context] and the idea that demand could be static is frankly a non-starter.

Consolidated Dover background

This extended post replaces a number of earlier posts, to include more detail.

 Two million lorries passed through Dover in 2022, down 17,000 on 2021. This year the government will roll out its Border  Target Operating Model (BTOM) management structure. Part of the new system is a flat rate payment of (£20 to £43) per consignment per lorry. The Common User Charge covers the use of the terminal, but not inspection fees.

International borders and biosecurity are 24/7 commitments, so when Dover Port Health Authority (DPHA) started planning its Point Bastion Border Control point (BCP) for England’s busiest port, it envisaged a 1,200-space lorry park close to the port with customs inspection facility working a 24-hour working day. Dover port received a royal warrant from King James I in 1606 and operates independently to this day, owned by Dover Harbour Board.

The port handles goods worth £144 billion a year, around a third of the goods traded in the UK. There are two distinct strands to its food enforcement workload. There are the ongoing investigations to catch impromptu smugglers with small batches of unhygienic meat in variable states of decay, destined for closed ethnic groups with money to spend on familiar foods and flavours. 

This contraband has no paperwork and is carefully concealed in all manner of vehicles. In the weeks running up to Christmas 2023, five or six tonnes of illegal meat products were confiscated at Dover. Legal lorry loads of meat and animal products pass through the port, destined for UK food industry customers: processors, manufacturers, wholesalers and retailers. 

The scale of this work goes a long way to explaining the original decision to have extensive parking facilities.  

As well as the Common User Charge, the range of foodstuffs that will be routinely tested on arrival in the UK will rise, with the addition of medium-risk plants and plant-based products. Environment ministry DEFRA is quick to point out that any inspection fees are payable on searched consignments in addition to the CUC. 

Dover handles millions of lorries in a year and Common User Charge would be expected to generate tens of millions of pounds before factoring in groupage.

The port is unusual but by no means unique to be a major port with an independent management structure. Dover East docks are built on an artificial headland created when the railway was separated from the dockside. Space is at a premium here, a deciding factor in the development of Point Bastion. The House of Commons Environment, Food and Rural Affairs Committee heard on March 1, 2022 that work was progressing well and 500 specialist staff had been recruited. (https://committees.parliament.uk/oralevidence/9794/pdf/)

The same committee hearing had similar news from Sevington BCP, a 174 million pound development close to the Eurostar terminal at Ashford. This site had originally been commissioned by the Department for Transport (DfT) with an expected lifespan of five to 10 years. 

What happened subsequently is not clear, but HMRC revised its parking requirement for Point Bastion from 1,200 spaces to 96. Dover Harbour Board (DHB) faces cuts to it enforcement activities. Someone in the corridors of power unhelpfully suggested recovering the shortfall from successful prosecutions of illegal meat and animal products. DHB is fending off calls for its food safety checks to be carried out at Sevington, 22 miles away on the A20(M).

More worryingly, the Commons EFRA select committee heard Karen Betts, chief executive of the Food and Drink Federation, expressing her concerns that official vets working for foreign food manufacturers might not fill in the customs  declarations correctly for ready meal products like lasagne. It  is a big ask. 

When the UK left Europe and re-instated third country export rules, the number of qualified vets  plummeted. Where once there had been 1132 vets in the UK to fill in export health declarations in 2019, now there are just 364. There has been a 1255% rise in requests for valid export certificates.

Brexit is far from being “a done deal.”

DEFRA description of common user charge:

Defra has developed a charging model to recover operating costs for government-run border control posts (BCPs) in England ahead of planned implementation of SPS checks on EU imports in January 2024. The legal basis for charging is Article 81(b) of the retained Official Control Regulations (OCR).

Defra proposes administering a single Common User Charge: a flat rate levied on every SPS consignment (Plants and Plant Products (P&PP) and Animal Products) which is eligible for BCP checks and enters through the Port of Dover or Eurotunnel Le Shuttle, whether selected for a check or not. This does not include goods arriving as rail freight via the Channel Tunnel, or personal imports arriving on the Eurostar and Dover Ferry passenger services as these goods will not be subject to SPS checks at a BCP. Imports of live animals will not have charges applied until they are subject to checks at a BCP, scheduled for late 2024.  The Common User Charge approach flattens the rates, spreads the burden, and provides a high level of certainty to importers. These charges are intended to recover the costs of operating the BCP facilities as set out in Article 81(b) of the retained OCR which are necessary to undertake physical inspections. This charge would be separate to any charges applied by the Port Health Authority and Animal and Plant Health Agency (APHA) for inspections. The Common User Charge also does not include charges applied by other government agencies for activities outside of the BCP, such as any customs checks.

https://consult.defra.gov.uk/government-bcp-charging-strategy-implementation/charging-at-government-border-control-posts/Click for source.

In DEFRA’s own words: “The Common User Charge… ( approach flattens the rates, spreads the burden, and provides a high level of certainty to importers. These charges are…) …(is)…intended to recover the costs of operating the BCP facilities(… as set out in Article 81(b) of the retained OCR which are necessary to undertake physical inspections…). This charge would be separate to any charges applied by the Port Health Authority and Animal and Plant Health Agency (APHA) for inspections. The Common User Charge also does not include charges applied by other government agencies for activities outside of the BCP, such as any customs checks.”

Food imports set for price hike

After a couple of years of waving through EU imports of meat and animal products with no dockside checks, the UK government is about to apply a sharp twist to food pricing this year. It will start charging businesses a fixed charge on all shipments passing through government-run Border Control Posts. Referred to as the Common User Charge (CUC), it was put out for consultation over three weeks in July last year. While the CUC will be a single fixed payment, there are uncertainties over inspection charges for food shipments that would be billed by BCP operators*. These can total hundreds of pounds for a large container.

On January 31 2024, DEFRA brought into force a number of measures for each of the three risk categories (https://www.gov.uk/government/publications/border-target-operating-model-information-leaflets-for-businesses/technical-questions-and-answers-about-sanitary-and-phytosanitary-controls-sps#risking-approach).

These are as follows

From 31 January 2024, DEFRA has introduced:

  • health certification on imports from the EU and European Free Trade Association (EFTA) of medium risk animal products and the introduction of health certification on imports from the EU, Lichtenstein and Switzerland of medium risk plants and plant products
  • health certification on imports from the EU and EFTA of high-risk food and feed of non-animal origin
  • import pre-notification and health certification when moving EU and EFTA animal products or EU, Switzerland and Lichtenstein plant products from the island of Ireland, to align with the rest of the EU (for example, any goods other than qualifying Northern Irish goods from Irish ports directly to Great Britain)

As of April 24,in DEFRA’s own words:

From 30 April 2024, DEFRA will be adding:

  • the introduction of documentary and risk-based identity and physical checks on medium risk animal products, plants, plant products and high-risk food and feed of non-animal origin from the EU
  • existing inspections of high risk plants and plant products from the EU will move from destination to Border Control Posts
  • beginning to simplify imports from non-EU countries – this will include the removal of health certification and routine checks on low risk animal products, plants, plant products from non-EU countries as well as reduction in physical and identity check levels on medium-risk animal products from non-EU countries

What will DEFRA deliver?

2.1 How are checks within a port or airport’s perimeter organised, and who does what and has accountability to make it happen?

Within the curtilage of a sea or airport, the port operator will direct the movement of consignments. At the Border control post (BCP), APHA will undertake checks on live animals, or plants and their products.  The Port Health Authority/Local Authority will undertake checks on animal products and High-Risk Feed or Food Not of Animal Origin (HRFNAO). The port operator will not release a consignment from the port until they have been informed that it has been cleared by the relevant inspection authority.

2.2 Will BCPs be ready? Do they have sufficient capacity?

Defra is confident that existing and new BCP infrastructure will have sufficient capacity and capability to handle the volume of expected checks outlined in the BTOM, with robust, dynamic, and effective operational measures ready to call upon if needed. Defra will continue to work with existing BCP operators to ensure they are prepared, and the Government has built new infrastructure at critical locations. Operators have not expressed concerns regarding under-capacity, we are therefore not anticipating queues but will continue working closely with operators to address any concerns they may have.

What next?

Britain’s busiest ferry port faces the risk of bankruptcy following Westminster’s decision to retract millions of pounds in funding for swine fever checks on pigs arriving at the port of Dover. The money has already been spent during the financial years for which it was allocated. The local council meets tonight (Monday February 5) to plan for the coming months, when food testing will be rolled out further.

A third of Dover District Council’s budget is diverted from local government to funding food safety checks at the UK’s largest passenger and freight terminal. In June, this figure will rise to nearly half. Dover handles up to 120 ship movements a day at peak periods and moves a third of the UK’s food imports.

The harbour is run by an independent trust, set up by an act of parliament and given the task of managing the busiest ferry port in the UK. Since the legal requirements are set by national laws, Dover has no choice but to comply. The district council is run by a Labour group with a majority of one elected in May last year. The harbour’s independent status means that theoretically it can set whatever prices it needs for its services to pay their way. The reality is not that simple

245% duty shock for UK cheese

British cheese exports to Canada will face duty of 245% next year, once the third country duty-free quota is exhausted. Some 95% of this quota is already taken by products arriving from Norway and Switzerland, leaving very little for shipments to any other third country.

This slap in the face for British cheesemakers comes as Canadian negotiators came amid talks on the implementation of the much-vaunted bilateral trade deal. Refusing to roll over previous extensions to zero percent duty available under former EU terms, the so-called cheese letters, the decision vapourises pre-Brexit claims of extensive growth in UK food exports. These will in fact be treated like any other third country products, in the absence from specific terms agreed during the framework negotiations. Last year, the UK exported cheese worth nearly GBP 19 million to Canada.

Late, random and arbitrary

One of the most frequent arguments trotted out for Brexit was that it was time to take back control of international borders. The ‘take back control’ mantra was somehow an irrefutable justification when all else fails. It remains more of a fig leaf than a reasoned argument.

Having regained third country status to make this dream come true, the UK has obtusely dragged its feet over implementing the veterinary aspects of border control. The simple truth is that the commitments which come with international borders were not in fact a top priority for British politicians. There has been little political appetite to ensure full compliance with post-Brexit structures from day one, possibly because the necessary skill sets are in short supply.

The declaration of a 10km Temporary Control Area for blue tongue around a dairy farm in Kent came as a wake-up call the UK government. It was as if Westminster was caught out taking a calculated risk that there might not be any significant animal health issues. There may not be a serious risk of the notifiable disease spreading, the real problem is the political fallout from gaps in the UK’s veterinary provision under international animal health treaties.

This autumn has seen the implem entation of the first phase of the UK government’s Target Operating Model (TOM), marking greater reliance on digitised documentation and a move away from visual inspections. If all goes according to plan, the next twelve months will see the implementation of sanitary inspections by customs staff. The laboratory and testing fees will be charged to the owners of the goods concerned,. The additional costs will be significant but randomised. The testing will have an inflationary effect, but this will neither be directly attruibutable nor constant. It will b e impossible to predict reliably, but will generate resentment.

Worst of both worlds for UK farmers

UK farmers exporting to Europe have faced the full cost of third country status from the start, while EU exporters of animal products to the UK have effectively had a free ride in the absence of routine food safety checks on animal products arriving in the UK.

“For the past three years, our farmers have faced the full reach of EU controls on our exports while the EU has enjoyed continued easy access to the UK marketplace,” NFU president Minette Batters told Urban Food Chains. “This is not just an issue for competitiveness, with British farmers faced with additional costs and paperwork, but also for our nation’s biosecurity.”

Pic: NFU

“Proportionate and effective controls are necessary if we are to prevent outbreaks of pests and diseases that threaten human, animal and plant health, the safety, quality and biosecurity of our food products and the confidence of our trading partners.”

More detail on this paradox can be found here.

“It is vital that the government uses the latest delay wisely to raise awareness among EU exporters and to address the concerns expressed by many in the supply chain. This includes horticulture growers who continue to see the shift of controls away from their business premises to border control posts as a major point of jeopardy, with unknown costs and heightened biosecurity risks. This time should also be used to minimise unnecessary delays at the border once the new system is finally up and running.”

Restoring checks on animal products will push up import costs

The UK is at last preparing to complete the Brexit process. For two years randomised routine physical checks on imported animal products have not been carried out. In 2024, ports with Border Inspection Posts (BIPs) will start to undertake physical inspections. These will be comparable to those which have been carried out routinely at European BIPs from day one.

Checks on the documentation for inbound goods, however, is carried at the border. For inbound consignments of animal products, this is done at a BIP, for which an appointment is made. The resources and staff for these checks are charged to the owner* of the goods and amount to just under a tenner a tonne. The cost of physical checks will reflect the degree of sophistication involved, and will routinely come to hundreds of pounds.

The money charged for all this checking is not customs duty but it will be counted towards the customs valuation, an aggregate figure upon which 20% import VAT is due. Local authorities will collect the product checking revenue, HMRC will bank the VAT. Bringing in a full regime of product checking will add significantly to the cost of putting food on the market.

The UK government estimates that the additional fees for product checking and related services will add GBP 330 million a year across all imports from EU. The UK government claims that the impact on food and drink imported from the EU “… will not be significant.” This is a moot point.

Checking the documents for a consignment of animal products in normal office hours would cost GBP 196 at the BIP in East Midlands airport. A further GBP 64 would be charged for goods listed on additional veterinary certificates appearing on the same header document. Costs rise for out of hours inspections, for which prices are quoted on application. Bear in mind, however, that air freight consignments will be smaller than loads packed in containers.

Third country goods going into the EU face physical checks determined by the sampling rate fixed by the customs service. Traders shipping goods into the EU can earn a reduction in the frequency of physical checks, by complying with EU requirements. Think of it as time off for good behaviour. As a new third country, the UK has faced 100% sampling. UK exporters have been charged accordingly, unlike traders shipping to the UK.

*Ownership of goods in transit is a moveable feast. It is often transferred directly from the seller to the buyer when the goods are loaded on to a ship, but since the buyer may not be the end user at this point, there are a number of alternative outcomes. The shipping line often takes ownership for the duration of the journey, since owners can be required to make snap decisions in the event of accidents or mishaps.

Home truthes about inflation

Never mind those tired voices from government benches, proclaiming lower inflation rates. Prices are still going up, slower than before, maybe, but they are unlikely to stabilise with a government that routinely lies and prevaricates from force of habit. The only promise that Boris kept during Brexit was “F*ck business.” The rest was cake-ism.

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A work in progress?

As the world’s most recent third country, UK food exports are at the receiving end of thorough checks on entry to the EU. All animal products are allocated risk levels and inspected accordingly; plant material undergo a parallel set of phytosanitary (plant health) checks. For UK exporters, the administrative overheads of complying with food safety standards were a known quantity long before the January 2021 transfer to third country status when UK shipments were routinely checked in Border Control Posts (BCPs).

The UK has yet to carry out its longstanding commitment to implement a mirror image system with the same inspection protocols for food shipments coming into the UK. Until that happens, Brexit is no more than a work in progress, not a done deal.

At the time of writing, the UK government is poised to kick border checks on into the long grass for the fifth time, delaying the full complement of checks until autumn 2024. This should come as no surprise, given the gaps in government resources.

Westminster is wrestling with a structural shortage of vets who are authorised to issue valid health declarations. This was a known issue in 2017 when a House of Lords select committee warned of a vet shortage, among other things, in its report Brexit: plant and animal biosecurity Over the past few years there have been a number infrastructure modifications at UK ports to house BCP facilities. The situation is complicated by the fact that around the UK not all ports are in public ownership and many have hybrid management frameworks. For some, the fabric of the port is its capital, meaning that a parliamentary bill may be required to underwrite loan capital for major infrastructure investments. This is only one factor among many that has cooled the government’s will and ability to act, however.

The UK food industry is caught up by its own reluctance to make the transition to full food safety checking at internal borders. This is not a public health issue so much as a tangle of red tape and knowledge gaps. At any given time of the day or night, there will be dozens of lorry movements up and down the country, heading for Northern Ireland. Leaving aside the unionist arguments against having a border check where none should be required, there is potentially a grittier problem to resolve.

There is a lack of old-fashioned stock control clerks with previous experience of customs documentation. The real problem is that the documentation travelling with a load is closer to a customs valuation than a handlist for whoever has to unpack the roll cage when it arrives instore. The stock in trade of an RDC (Regional Distribution Centre) is a loaded roll cage with dozens of SKUs, more or less stacked in the order they were picked. This is adequate for England and Wales, but is not a promising start for goods which may need to be inspected on a line by line basis in a customs shed.

The rules for calculating a customs valuation are clear and there are a number of ways in which a customs valuation may be arrived at, each with its own methodology. Think of the process as HMRC making a window into a retailer’s accounting system and then discovering anomalies with earlier figures. These could arise from the ways in which shelf money is managed or have an innocent explanation, but making a case to HMRC for a wide gap between a low customs valuation and a full retail price is not what people want to spend time on just now, if at all.

The additional cost of physical checks just adds to the awkwardness of the situation. The UK government is preparing to run documentation checks on inbound animal products for just over GBP 30, but is fighting shy of publishing a price list that would put physical checks into the six or seven hundred pound bracket. These inspection costs would feed directly into the import VAT calculations, pushing up the final figure.

The uncompromising attention to detail and the time these checks will add to operating costs — meaning that they should be blamed on a new incoming government in the wake of a general election. This morning’s BBC news carried an item to the effect that MPs standing down at the next election, or defeated at the ballot box should continue to be paid for four weeks instead of the current fortnight. Someone in Westminster is reading the writing on the wall.