‘£20billion’ customs plan could only cost £2billion
A CAMBRIDGE economist has dismissed HMRC’s claims that post-Brexit customs red tape could cost firms up to £20billion a year.
Dr Graham Gudgin, from the university’s Judge Business School, said the figure was based on ‘shoddy calculations’ – and that the final cost is more likely to be around £2billion.
The so- called ‘Max Fac’ – or maximum facilitation – option is favoured by Brexiteers as it would ensure that Britain does leave the EU’s customs union. It would involve using technology and ‘ trusted trader’ arrangements to keep customs checks to an absolute minimum.
Last week Jon Thompson, the chief executive of HMRC, told MPs that Max Fac would cost between £17billion and £20billion and take up to three years to bring in. He also told the Treasury committee yesterday that under the plan, customs declarations would cost businesses an average of £13billion a year, with billions more to be added for EU rules of origin checks.
But last night Dr Gudgin, a member of the 50- strong group of pro-Leave academics Briefings for Brexit, said the figure was ‘hugely inflated’. Along with John Mills, chairman of retailer JML and chairman of Labour Leave, he warned that no Government policy decisions should be made on the basis of the HMRC’s ‘shoddy calculations’.
They said: ‘The Treasury and HMRC have taken to presenting hugely negative calculations of the economic impact of Brexit without formal analyses that can be checked for accuracy. This must stop. We fully expect that HMRC’s wild forecasts will also be confounded by reality.’
The pair highlighted the real experiences of Mr Mills’s firm as evidence of how apocalyptic claims about postBrexit customs practices are unfounded. They said: ‘The retail company JML judges that customs administration costs amount to around 1 per cent of the value of consignments.
‘JML does close to £100million of trade per annum with 85 countries and ships roughly 2,000 containers a year from one place to another in the world. About 80 per cent of these movements are on World Trade Organisation terms outside customs unions or free trade areas.
‘ The only additional paperwork requirements for business from being outside rather than inside the customs union are the production of certificates of origin and any necessary compliance certification. This can’t possibly cost £7billion a year or anything like it for firms trading with the EU after Brexit.
‘As things stand at the moment inside the customs union all shipments from the UK to the EU27 involve invoices and dealing with VAT. If this sort of paperwork is a manageable burden, why should the addition of certificates of origin and compliance documentation be such a huge additional cost?’
Last night, major European business leaders met with Theresa May and said they needed ‘clarity and certainty’.
The European Round Table of Industrialists, comprised of around 50 firms including energy giant E.On, warned that ‘uncertainty causes less investment’ following a meeting with her at No 10.
The group said in a statement: ‘The uninterrupted flow of goods is essential to both the EU and UK economies. This must be frictionless as with a customs union. We need clarity and certainty, because time is running out.’
Downing Street said the meeting had been ‘open and productive’.
‘Confounded by reality’
POINT by point, a distinguished Cambridge economist demolishes HMRC’s scaremongering claim that red tape could cost businesses up to £20billion a year if Britain leaves the customs union.
Citing the real- life experience of a company trading with 85 countries, Dr Graham Gudgin puts the true administrative costs of high-technology customs clearance at around 1 per cent of the value of consignments – just a tenth of HMRC’s estimate.
There was a time when we could trust the integrity of the British civil service. That was before the referendum campaign, when public servants compromised their impartiality by spreading wildly exaggerated scares over Brexit – most of which have proved utterly baseless.
As Dr Gudgin’s devastating research into HMRC’s ‘shoddy calculations’ shows, they’re still at it. To Whitehall’s eternal shame, Project Fear lives on.