LONDON — They shelled out millions of pounds building Britain’s repeatedly delayed new Brexit border.
But the U.K.’s commercial ports could soon find all their hard work rendered redundant if a Labour government strikes its long-promised EU agreement to ease trade friction.
Port operators have splashed around £100 million on high-spec inspection facilities across the U.K. in preparation for checks on EU food and plant imports.
They want a guarantee they will get their money back if Labour wins the general election on July 4 — and manages to clinch an EU deal.
One of Keir Starmer’s key election promises is to strike a veterinary — or sanitary and phytosanitary (SPS) — agreement with the EU, which could potentially remove the need for checks on “agri-food” imports.
While the deal would be welcome for businesses facing mountains of fresh paperwork and millions in additional costs each year as a result of the regime, the policy reversal could create fresh headaches for ports, who say they would seek tens of millions in compensation if Starmer pushes ahead with the plans.
“If we were to go back a few years, this is something we would have encouraged the current U.K. government to have negotiated previously under the Brexit agreement,” Richard Ballantyne, chief executive of the British Ports Association (BPA), the national membership body for ports in the U.K., told POLITICO.
“Obviously, that’s not something the government wanted, so it didn’t push that and it’s now led to a lot of pain and aggravation for the ports’ industry [which has been] developing, building and preparing at pace for the controls that came in [in April].”
Ballantyne said ports would “be looking for some kind of financial resettlement to make sure they have not been left out of pocket.”
The Labour Party did not respond to requests for comment.
A decommissioning fund
Ballantyne estimated that ports have spent up to £100 million on the inspection facilities, known as Border Control Posts (BCPs).
That’s in addition to the £200 million provided by the taxpayer through the Port Infrastructure Fund — and it doesn’t count the estimated annual running costs for a typical BCP facility of between £100,000 and £200,000 while the checks were delayed.
The total cost of the regime to the government is even higher. A recent report by parliament’s independent audit body put the total cost of implementing the border regime since Brexit at an eye-watering £4.7 billion. A Labour reversal of the policy would mean that “a lot of that investment and preparation has been completely wasted,” said Ballantyne.
If the existing scheme is scrapped, the total amount of compensation that ports might claim to be entitled to would depend on the nature of the scheme that replaces it, when it would come into effect and how much money they could recoup through fees in the meantime.
But if Ballantyne’s estimates are right, it could still leave the port industry wanting tens of millions of pounds of compensation from the government.
The simplest solution, Ballantyne said, would be for the government to “pay some kind of decommissioning fund to the ports who wanted it and then they could either use that fund to demolish or modify [the BCPs].” He added that the BPA had “mentioned this in passing in a couple of roundtables with Labour officials but not formally.”
Geraint Evans, CEO of the UK Major Ports Group, the trade association representing larger commercial ports in the U.K., told POLITICO “any change in policy would be welcome to allow ports to recover costs through a HM government fund.”
He added: “Major ports have been consistent in the need for a level playing field and for the U.K. government to cover the full cost of the facilities the change in border policy required.”
Alignment with EU rules
Under a veterinary agreement, the U.K. would stay aligned to EU single market rules on food and agricultural products, plant and animal health.
This would mean goods crossing between the EU and the U.K. could be assumed to meet shared standards, and wouldn’t have to prove this at the border with health checks and reams of onerous bureaucracy, as is required now. The hope is that the move would result in fewer queues of lorries and less supply chain disruption.
However, the extent to which trade barriers can be removed would depend on the type of alignment a Labour government would agree to.
“There are two forms of veterinary agreement, one of which removes barriers and one of which reduces them — and there is no consensus in Labour or the EU as to which we are talking about,” explained David Henig, director of the UK Trade Policy Project at the ECIPE think tank.
Tom Southall, deputy chief executive of the Cold Chain Federation, which represents businesses that run the temperature-controlled supply chain in the U.K., said he supported plans for a veterinary agreement “in principle.”
“Anything that removes that bureaucracy and red tape we would support,” he said. But he cautioned that it “wouldn’t be universally popular because a lot of businesses have spent a lot of time and money preparing for the current rules.”
Any new system “would need to be developed closely with industry,” he added.
Jon Stone contributed reporting