Expected cost of the new draft Target Operating Model for importers is up to £400m a year
The cost of the UK’s final post-Brexit border checks for food importers are estimated by the government to be hundreds of millions of pounds, adding to upward pressure on inflation.
According to British officials, industry executives should expect that the new draft Target Operating Model, including proposals on how food and fresh produce from the EU is evaluated when it enters the country, will cost importers up to £400m a year. This information was given by two unidentified people at the meetings.
Lingering frictions in the trading relationship with the EU are highlighted by the estimate as final and much-delayed border checks on the bloc’s imports are rolled out by the UK from October. There are also efforts to smooth passport checks for British people visiting the EU and the arrangements at Northern Ireland’s land border taken by Prime Minister Rishi Sunak’s government.
More misery on shoppers who are already suffering the worst cost-of-living crisis in generations and the fastest increase in grocery bills in more than 45 years will be piled by higher costs. The Bank of England, which is trying to reduce inflation, also has additional headaches.
According to Shane Brennan, CEO of the Cold Chain Federation, everything about this is massively inflationary on food costs. Brennan said he was unaware of the cost estimate, in spite of having been at one of the cabinet office meetings.
The £400m cost estimate was first reported by Politico.
The proposals for the UK’s final stage of post-Brexit border checks have been were made by Food industry officials to cut off these “significant” parts of the supply chain for restaurants and grocery stores.
A draft of its Target Operating Model on import controls was released by the UK government earlier in April. Checks affecting animal and plant imports, which will face different levels of scrutiny depending on the risk they’re judged to pose, are included in that.
Brennan said that the actual direct cost will be significant and, assuming there is a significant retraction of the businesses that are willing to supply the UK, then there’s a reduction in supply which will create inflationary pressure.
Executives were told by government officials at meetings that the cabinet office had organized by in recent weeks that the measures will cost £400m more than the current arrangements. Nevertheless, the published TOM documents report that new checks would reduce costs for businesses by £400m relative to its original post-Brexit import model.
According to a cabinet office spokesperson, exploration of the costs of implementing the new model engages industry in the proposals.
He said that a new world-class system to provide protection from security and biosecurity threats, while preventing delays at the border through a reduction in the need for physical checks and by ensuring that checks take place away from ports where this is needed to allow traffic to flow freely will be created by the new border rules.
The spokesperson added that any certificates or physical checks won’t be required for many low-risk goods, which will make their import easier than under the previously proposed model or the EU model.
The introduction of the final set of controls on EU imports was delayed by the government for a fourth time in April 2022. A promise to harness technology to smooth the new checks was given by Jacob Rees-Mogg, the Brexit opportunities minister at the time. Full checks on imports of British goods have already been imposed by the EU.
Many smaller EU importers were warned by industry bosses about too onerous measures, ramping up costs and threatening to damage supply to the supermarket shelves. According to one industry leader, the blow from the changes is likely to surpass the government’s expectations.
Significant proportions of the supply chain will be collapsed by veterinary control requirements on all medium risk goods, according to Brennan.
He said that these regulations concern anything that’s meat or dairy and major disruption is coming for anyone who is in the meat industry or for someone who wants to buy and trade product of animal origin.
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