Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol
External Affairs and Additional Legislation Committee01/10/2020
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Alun Davies MS|
|Dai Lloyd MS|
|David Rees MS||Cadeirydd y Pwyllgor|
|Huw Irranca-Davies MS|
|Laura Anne Jones MS|
|Mandy Jones MS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Duncan Buchanan||Cymdeithas Cludiant Ffyrdd|
|Road Haulage Association|
|Mags Simpson||Logistics UK|
|Richard Ballantyne||Cymdeithas Porthladdoedd Prydain|
|British Ports Association|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Aled Evans||Cynghorydd Cyfreithiol|
|Claire Fiddes||Dirprwy Glerc|
|Rhys Morgan||Ail Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Cyfarfu'r pwyllgor drwy gynhadledd fideo.
Dechreuodd y cyfarfod am 13:58.
The committee met by video-conference.
The meeting began at 13:58.
Good afternoon, and can I welcome Members and the public to this afternoon's meeting of the External Affairs and Additional Legislation Committee? Can I remind Members that we are operating a virtual system and therefore we are using our Zoom mechanism today? But that doesn't stop us using a bilingual approach. Members of the public can use and access www.senedd.tv to watch proceedings, and there are two versions available to you: there is a verbatim version, which would include Welsh contributions; and there is an English language version, which will have translation available on it. Can I therefore also thank everybody for attending? If I lose my connection today—and it's a real possibility, because it happened yesterday—then Alun Davies has been nominated as a temporary Chair in my absence, until either I rejoin the meeting or until the meeting ceases. Does any Member wish to declare an interest in issues we are discussing today?
Chair, only my standard declaration in terms of the three groups that I chair that have a European context.
Thank you. Just to remind everybody that, actually, we are, under Standing Order 34.19, meeting in this mode as I determined to exclude the public from the meeting in order to protect public health.
Now, if we go into item 2 on our agenda, and that's an evidence session with stakeholders from the Welsh ports and the freight sector. Can I welcome Richard Ballantyne, British Ports Association; Duncan Buchanan, Road Haulage Association; and Mags Simpson, representing Logistics UK, which used to be the Freight Trade Association? Welcome, all three, and thank you for your contributions this afternoon. I also very much appreciate Richard's time, because I know he was also giving evidence this morning to another committee in another place.
But we'll move straight into questions, if that's okay with yourselves, because the role and preparations of the sector are going to be critical for Wales, and we are fully aware of both the issues relating to the roll-on, roll-off ports, but also the other ports. We will want to cover all the ports if possible, because freight links with all the ports as well. So, if we start off with the questions and I'll go to Dai Lloyd first, please.
Diolch yn fawr, Cadeirydd, a diolch am y croeso a chroeso i'n tystion ni. Mae'n neis eich gweld chi ar ein sgrin. Wrth gwrs, cyd-destun y drafodaeth prynhawn yma ydy paratoadau yng Nghymru ar gyfer diwedd y cyfnod pontio, felly fe wnaf i ddechrau'r adran sy'n sôn am y trafodaethau rhwng y Deyrnas Unedig a'r Undeb Ewropeaidd sy'n mynd ymlaen ar hyn o bryd. Allwch chi amlinellu lefel parodrwydd cyfredol eich aelodau ar gyfer diwedd y cyfnod pontio fel ydych chi'n ei gweld hi ar hyn o bryd? Fe fedrwch chi ei chymryd hi yn eich tro os ydych chi eisiau i amlinellu lefel parodrwydd cyfredol yr aelodau rydych chi'n eu cynrychioli o'n blaenau ni y prynhawn yma. Dwi ddim yn gwybod pwy sydd eisiau dechrau.
Thank you very much, Chair, and thank you for the welcome and welcome to our witnesses. It's nice to see you on the screens. Of course, the context of the discussion this afternoon is preparations in Wales for the end of the transition period, so I'll start with the section that talks about the negotiations between the UK and the European Union, and those negotiations are ongoing, of course. Could you outline the current level of preparedness of your members for the end of the transition period as you currently see it? If you could answer in turn, please, to outline the level of preparedness at present of the members that you represent this afternoon. I don't know who wants to start.
Shall we start with Richard, then we'll go to Duncan and then we will go to Mags? Is that okay?
Yes, thank you, and good afternoon to the committee. It's always a pleasure to come before you again, and, as the Chairman indicated, I was giving evidence to another committee this morning, but I think I'll give you guys prominence, you're more impressive in terms of your technology, certainly—we had a few technical issues. But thank you very much for the opportunity to speak again.
I think, just to remind you, I run the British Ports Association, which is the trade association for ports and harbours, and we represent about 86 per cent of UK port traffic by cargo. Within that, we represent all the major roll-on, roll-off ports, such as Dover, Portsmouth, Immingham, but significantly in Wales, we have, of course, Holyhead, Fishguard and Pembroke ports, as well as some of the other major ports operated by ABP, Milford Haven, the port of Mostyn and some of the smaller ports.
I think, coming to your question, Mr Lloyd, about preparedness, I would like to say that our sector is as prepared as can be expected. There have been quite a lot of deliberations and discussions with Government, particularly in the last few months, about what the actual impact of leaving the customs union and the single market will mean at the frontiers. I would say that we are now getting clarity about what the expectations are, but we're into the detail now, and some of the detail is quite complex and some of that is not easy to solve quickly. So, we're probably as ready as can be expected, but there's still infrastructure that needs building, there's still finance that needs to be looked at, there are still customs processes that need to be looked at, and we need to talk to our colleagues and stakeholders in the freight and logistics industry and the haulage industry—we're, of course, joined by their representative bodies today—about what this means and how prepared they are, because this is not an issue just for ports. This is for the whole of the logistics and freight industry, and how we do this is going to be a joint effort, I think.
A'r nesaf, Duncan Buchanan.
And next, Duncan Buchanan.
I'm Duncan Buchanan from the Road Haulage Association. I'm the policy director for England and Wales. I've been leading on Brexit for the RHA since 2016, so it's been a long road to get here. You've asked about the end of transition and how well prepared we are, but the gaps are enormous in terms of having a border that is actually functionally and practically applied. I can understand the ports sector—they've probably done as much as they possibly can to prepare. They're in as good a position as they possibly can be. But for the traders and for the logistics companies that are involved in making this work and pulling together the paperwork, there is still a lot of detail that needs to be worked through.
It is a shame that we're 60-odd working days away from the end of this process, and after three or four years, we still have many, many questions that need to be answered, and uncertainties about a whole range of things. We have inland border posts that are border facilities. We don't know exactly where all of them are going to be. We do not know what processes can be done at each of these places. We have uncertainty over a whole range of processes. So, again, we as a sector have probably done as much as we possibly can, but the key thing is that it is all dependent upon how well prepared the traders are.
The importers and exporters themselves are the people who are responsible for customs declarations, for the data that is needed to be transferred in and out of customs, and that is where there is a huge gap at the moment. The traders are not necessarily getting the best advice and information from the Government, and the greatest level of clarity that there could be. We have a new border operating model coming out—it should be tomorrow. It's a development of the one that came out a couple of months ago. It's an extra 50 or 60 pages over the earlier one, and it goes into huge amounts of details about what has to be done, but very often it misses out how you do it. So there are still huge amounts of uncertainty over that.
What I would say is that, from our point of view, with our members, we're instructing them not to take any goods to a port for export or import if they do not have all the correct paperwork to complete the movement across the border, and it's only by doing that that we will get the necessary information in the right place at the right time. This does mean that in preparation for 1 January a lot of shipments are going to be sitting in warehouses going nowhere because the paperwork will not be done.
Diolch yn fawr am hwnna. Mags.
Thanks very much for that. Mags.
Thank you very much. I'd like to reiterate my colleague's points and thank you for allowing me to come along today. You won't be surprised to hear that I would agree with everything that has just been said. Basically, we're in a position where businesses want to prepare, they want to get ready as well as they can, but unless Government systems are ready to be used—. As Duncan said, the detail is not there yet, so we're waiting for this border operating model, and we fully expect there to be a lot more detail in that, but there are so many systems that anybody who now will be exporting is going to need to be aware of, and we need all these systems to join up. So it's very much about businesses wanting to prepare, but unless we have all the information that we need—. And let's be frank about it, it is going down to the wire now; we're getting so close to when these things are going to have to happen. I think it's important, perhaps, to point out that importing is perhaps less of an issue, because the UK Government have recognised and allowed, essentially, up to six months to put the systems in place, but for exporting the new rules come in on 1 January, a second past midnight, and we don't have the detail that we need right now. So, I hope that's helpful.
Okay, thank you. Dai.
Diolch yn fawr am hynna, i'r tri ohonoch chi. Wrth gwrs, gwnawn ni fanylu ar rai o'r agweddau rydych chi wedi'u crybwyll nawr yn y cwestiynau sydd yn dod. Felly, allwch chi yn y lle cyntaf amlinellu'ch ymateb i gyhoeddi'r ddogfen reasonable worst case scenario gan Lywodraeth y Deyrnas Unedig? Allech chi amlinellu yn fyr eich ymateb chi i ddogfen Llywodraeth y Deyrnas Unedig, reasonable worst case scenario? Yr un drefn eto? Fe awn ni Richard, Duncan, Mags, ife?
Thank you very much for that, to the three of you. Of course, we will go into detail on some of the issues that you've mentioned in the questions that will come later. So, in the first instance, could you outline your response to the UK Government's publication of the reasonable worst case scenario document? Could you outline, briefly, your response to that UK Government publication, namely the reasonable worst case scenario? The same order again? We'll go to Richard, Duncan, then Mags, please.
Yes, thank you, Mr Lloyd, again. How would I summarise my response to the letter that was sent out to trade last month? I would say it was alarming, the figures in there. Whether or not it's accurate remains to be seen, but the numbers in there are certainly something not to ignore. And I think it brings home the reality of the changes that are going to take place at the frontier and what it actually means to leave the European Union's institutions, such as the customs union and the single market. And a subtle point I'd like to make is that, although there could be some implications for tariffs and road permitting, which Duncan will be in a better place to comment on, a 'no deal' for the ports sector doesn't look dramatically different from a deal that we're pursuing now. This is not where we were a couple of years ago, where we had a model for the deal that involved no customs control. So, that is essentially why we have this rush.
Equally, on the plus side, I suppose, trying to be positive, it does give us some clarity knowing that we have to prepare for full customs controls. But, as Mags said, there's a lot coming in, there are new IT systems, there's the Northern Irish traffic situation, there's the goods vehicle movement service, of course, and the smart freight application, which could be rolled out in Wales, although I expect it’s mainly focused on the Kent corridor at first. So, I think it’s probably fair to say that all these measures are there to try and mitigate and to avoid a lot of the warnings that we saw in that Government letter. But whether or not they’ll be ready in time is the $64,000 question, I guess. It really is going to go to the wire, as one of my fellow witnesses said, and there's a lot more to do. And I would underline the fact that, while ports may be in a certain position—some of them haven’t got the infrastructure and they’re looking at inland facilities et cetera—that may not be complete either. So, you’re in a situation where the haulage industry may not be ready but there are parts of my sector that may also not be ready. And what Government does is very important. Does it introduce a pragmatic approach, in the way that Mags described, on what we’re going to do on imports next year? Is there any chance to extend those out? It’s probably unlikely, but we may have to look at some of these things that are difficult for politicians to swallow.
Thanks. I’ll follow on from what Richard has said. Reasonable worst case: some of the numbers that were in there I thought were dramatic and probably not quite right. There was this idea of 7,000 lorries queuing in Kent; the only way that that really is going to happen is if there are strikes in the port facilities or the channel tunnel, seriously bad weather or other forms of disruption—then you may get to that sort of number. But you have slow-moving, slow processes going through the key roll-on, roll-off ports. What will happen is that the road haulage industry itself will manage itself. It will find other ways of getting through so that you’re not sitting there for two, three or four days, because that’s not viable for road haulage operators, to leave their lorries and their drivers sitting in roads doing nothing for days and days at a time.
We may actually find that we’ll have goods coming into the UK—as Richard said, or maybe Mags said, the export side is going to be more critical, more disrupted, potentially, than the import side because of the measures that have been put in place. That is purely and simply because complying with the range of rules is going to be very, very onerous if you’re not prepared as a trader. So, I suspect that what we will have is goods sitting in warehouses and in factories and in other places waiting to go to the ports, rather than trucks queuing. I think 7,000 is very dramatic. It may be more to do with political messaging and also a desire to scare traders, to some extent, to actually get off their bums and get ready, because there’s a lot of people who are sitting on their hands waiting for clarity on absolutely everything. We can’t do that any more, we have to do what we can with the information we’ve got, because otherwise it’s going to be too late.
So the scale, not 7,000 lorries—I don't think that's the case, but it will be significant and it will be in the warehouses. The bottleneck is also in the number of people who can do customs clearance with the agents; you've heard of that as a bottleneck. That's going to be a clear bottleneck. So, from the reasonable worst-case position, 'deal' or 'no deal' makes very little difference to us because it's about how the border will operate. We're going to worry about some of the 'deal' or 'no deal' things in November when it happens or doesn't happen, and then we'll deal with that when we can. We have to deal with the things that we know and get as prepared as we possibly can.
Diolch yn fawr. Now, Mags.
Apologies, I forgot to hit the button. I agree with what, again, colleagues have said there. Perhaps I could give you some more information by picking out some of the key areas that we've identified if we were to face the 'no deal' scenario. So, if there was no free trade agreement, reduced truck access is one of our main concerns because we could go back to an outdated permit system where we believe only one in four—. The figures are difficult to be really precise on, but roughly only a quarter of the UK hauliers that are currently moving goods across the channel would be able to continue business. It's literally that stark.
There's also a risk regarding reduced air cargo flows because the UK-registered cargo airlines would have strict limitations on their ability to move goods inside the UK, which could result in airlines flagging out and moving out of the UK. Clearly, it would put a lot of pressure to bring in checks for the Northern Ireland to GB movements, and the more the UK diverges from the EU—if I can use the analogy—the further the island of Ireland drifts, without wishing to make light of it.
It would also mean that there would be no opportunity for the UK to secure any sort of simplifications to the default regulatory checks, so that would be particularly on agri-food products. So, up to 32 per cent of consignments of certain products are going to face physical checks at the point of entry into the EU territory and, of course, there are documentary checks as well.
And the final point to perhaps raise is that if there is a 'no deal' scenario, it's much harder to think about the unexpected, so things like pallets, which are clearly a vital part of the logistics of the supply chain. There could be regulation on what pallets are used and how they're treated and things.
Diolch yn fawr am hynna. Mae gen i ddau gwestiwn bach arall fydd ddim angen atebion cweit mor hir, dwi'n gobeithio, achos yn rhannol mae'r cwestiwn nesaf wedi cael ei ateb gan Duncan Buchanan, ond, wrth gwrs, teimlwch yn rhydd, Duncan, i gyfrannu eto.
Allwch chi fel tystion gadarnhau a ydy gweithredwyr porthladdoedd yng Nghymru wedi nodi eu bwriad i wrthod derbyn cerbydau cludo nwyddau nad oes ganddynt ddogfennaeth briodol i fynd i mewn i'r Undeb Ewropeaidd ar ddiwedd y cyfnod pontio? Dywedodd Duncan gynnau mai dyna oedd bwriad ei aelodau ef, ond all y gweddill ohonoch chi sôn am hynna? Ydyn nhw wedi nodi bwriad i wrthod derbyn cerbydau cludo nwyddau nad oes ganddynt ddogfennaeth briodol i fynd i mewn i'r Undeb Ewropeaidd ar ddiwedd y cyfnod pontio? A wnawn ni ddechrau efo Mags tro hyn, i fod yn deg?
Thank you very much for those responses. I have two brief questions that won't require such in-depth responses, because the questions have partly been answered by Duncan Buchanan, but do of course feel free to contribute further, Duncan.
Could you as witnesses confirm whether port operators in Wales have indicated their intention to deny boarding in the UK to freight vehicles that do not have appropriate documentation to enter the EU at the end of the transition period? Duncan said earlier that that was the intention of his members, but could the rest of you talk about that issue? Have they indicated their intention to deny boarding in the UK to freight vehicles that do not have appropriate documentation to enter the EU at the end of the transition period? Shall we start with Mags now?
I would agree with that comment. There is no benefit to allowing a vehicle to get onto the back of a ferry that is simply going to join a queue at the other side, so there's no benefit to doing anything other than that.
Ocê, diolch yn fawr. Richard.
Okay, thank you. Richard.
Mr Lloyd, with all due respect, I think that's more of a question for the carriers, which is the shipping companies, but I understand that the intention and the aspiration from Government and industry is exactly as Mags said. To facilitate those vehicles in potentially congested areas when they're not prepared I think would be unhelpful, but I appreciate there's going to be a lot of challenges here in how you actually enforce that.
Diolch. A, Duncan, ydych chi eisiau ychwanegu rhywbeth? Dwi'n gwybod eich bod chi wedi ateb eisoes.
Thank you. And, Duncan, do you want to add to your previous answer? I know that you've mentioned this earlier.
If I could. I think one of the problems is that, particularly early on, what worries us is that some people may—how can I put this—cheat, try and slip through without compliance. The reason we and the Freight Transport Association—oh, sorry, Logistics UK—. Sorry, Mags.
They just changed their name. [Laughter.] So, Logistics UK, their members, everyone is in the situation where we are doing everything we possibly can to encourage compliance, because when you're crossing the border, being 90 per cent right is wrong. Ninety-five per cent right is wrong. You have to be 100 per cent right to actually complete the border movement for both sides. There will be some people who will be tempted to misunderstand the rules and claim things. We're doing our best with our members, and others are, but 85 per cent of the trucks coming in and out are not UK lorries. So, part of what we're doing is also educating, doing what we can to educate, across Europe, through the International Road Transport Union and other people. So, we're worried about when lorries aren't ready, it's not just the paperwork for the ones that are ready, it is, actually, the disruption caused when the French start turning trucks around, sending them back to UK with incorrect paperwork. That's what worries us.
Richard, roeddech chi eisiau dod nôl.
Richard, you wanted to come back on that.
Yes, just a very minor point of clarification, actually. We're talking, obviously, very much about the roll-on, roll-off port sector here and routes. I just wanted to make sure that the—. About two thirds of Wales's port traffic is non-EU related, and places like Milford Haven and the south Wales ports, operated by Associated British Ports—although a lot of that traffic goes to and from Europe, it's bulk loads particularly. And I just want to make sure that we understand that we're talking about ro-ro here. I don't think there's a case of any freight operators being turned away from the bulk-handling facilities and other general cargo ports where, I think it's fair to say, the industry is a bit more experienced at dealing with controls in a more natural environment for customs, where things tend to sit around a bit longer and you don't have that degree of potential congestion and other things that you do in road haulage.
Diolch yn fawr am yr eglurdeb yna. A'r cwestiwn olaf gennyf fi ydy—wel, am y coronafeirws: dwi ddim yn gwybod, ydych chi wedi clywed am y feirws yma sydd yn mynd o gwmpas, efallai? Allwch chi amlinellu sut mae'r coronafeirws wedi effeithio ar baratoadau porthladdoedd Cymru a'r sector drafnidiaeth cludo nwyddau, fel ei gilydd, ar gyfer y paratoadau ar gyfer diwedd y cyfnod pontio? So, ar ben yr heriau roeddech chi'n eu hwynebu ta beth, nawr rydyn ni wedi cael coronafeirws, sut mae hwnna yn effeithio, ar ben yr heriau sylweddol oedd o'ch blaen chi yn y lle cyntaf? Dwi ddim yn gwybod—Mags eto, ac wedyn Richard ac wedyn Duncan. Mags.
Thank you very much for that clarification. And the final question from me is with regard to the coronavirus—I'm not sure whether you've heard about this virus that's going around at the moment—but could you outline how the coronavirus has affected the preparations of Welsh ports and the freight transport sector for the end of the transition period? So, on top of the challenges that you were already facing, now that we are facing the coronavirus, how has that affected, on top of the significant challenges that were already in front of you? I don't know who wants to start—Mags again, and then Richard and then Duncan.
Clearly, COVID is unlike anything that anybody has ever faced, so it's really difficult to quantify this. And without wishing to sound fickle, it's insane that we're having to deal with this all at once, if I'm being blunt. We did ask for an extension to the implementation period, because COVID has had such a catastrophic effect on the industry—everybody is running around trying to keep up with the UK scenario.
The other thing I think it's really important to point out is that an awful lot of businesses clearly had to furlough people. There's been no opportunity to train. Whereas businesses before may well have trained up individuals to deal with things like customs and paperwork, et cetera, et cetera, none of that's happened. Business members are quite distressed about the fact that they're having to deal with this as well, if I can be that blunt. Duncan might be able to give you more information on that.
Grêt. Richard ac wedyn Duncan.
Great. Richard and then Duncan.
Duncan, do you want to go?
Yes, I'll go. I agreed with what Mags said there. I briefly wrote down a couple of things, as you asked the question. Attention has been diverted, as a result of COVID, both within the logistics industry, but more importantly within traders. And just to reiterate what Mags said: the resources that are available for training, for people who are on furlough—it's taken bandwidth out of the trading sector just at the wrong time. And the second part of it is that resources and resilience within the sector have been undermined by the fairly random split of where things have fallen badly in the sector. Some parts of the haulage sector have done really well and are fine; other parts are decimated. So, it's not even, and you can't say, 'Oh, it's all going to be okay', because 30 per cent isn't okay, or whatever. So, there's that. So, that's all I would like to say.
Yes, just quickly, I'd repeat and reiterate what Mags and Duncan have said there. It's been pretty unhelpful really. But Government went fairly quiet in terms of Brexit at the height of the lockdown, but then, suddenly, we saw a flurry of activity and ever since the summer, there has been a huge amount of stakeholder interaction—a lot of it good; some of it less useful, it has to be said. And I would say that industry's ability to deal with that has been somewhat difficult and challenging with various things: furloughs, one, and operational challenges, and what to do with staff members who are going off sick and things like that. Those are all the kinds of things that port operators and other employers are having to worry about.
So, yes, it's been unhelpful, but I think one thing I would say, in a different kind of way, I think, is that our sector has shown that it's fairly resilient. Hopefully, that can be transferred through to Brexit. It's a different kind of challenge, of course: we're talking about a big slowdown of the economy there, whereas in Brexit terms, which may have some economic impact such as that in the long run, the short term will probably mean dealing with too many things trying to get through bottlenecks, which is not the particular challenge we've had during the lockdown.
Grêt. Diolch yn fawr. Cadeirydd.
Great. Thank you very much. Chair.
Thank you, Dai. We'll go on to Huw Irranca-Davies.
Thanks, Chair, and perhaps I could develop some of the themes that Dai has been exploring with you. One of the things that we always hear from business—different sectors—and industry is that they can frankly do anything, they can move mountains as long as they have certainty and clarity to do the planning and enough time to do it. So, I'm just wondering whether you want to add to what you've said already in terms of your observations of the EU-UK negotiations. You don't have to, but if anybody would like to, we'd be really interested.
That's an excellent question. Shall I go first? I think that, under normal circumstances, when you would have a dramatic change in a trading relationship, you would expect those negotiations and the deal and whatever arrangements to be set, and then you would have a period afterwards to start implementing. The fact that the negotiations are still live is quite an amazing development. Yes, we've had some clarity in the last few months, and particularly since the general election last year, and we can start to plan and look forward, and there has been a huge amount of official activity on the Government level and ministerial focus, but it is quite interesting that we're still not at the end of this process and there could be last-minute additions to a trade deal, which may actually negate some of the concerns we have, or it may make things even worse—we don't know. So, it is, I would say, amazing.
Duncan and Mags, you don't need to add to that, but if you want to, feel free.
I—. Sorry, you go.
No, it's okay, Mags, you go first.
I was just going to say really briefly that we are still saying to Government, 'Please get the deal done.' Whether that will help, I don't think we know. Sorry, Duncan.
Yes, we're saying the same thing. It's really important to get it done. I'd reiterate what Richard said: we shouldn't be in a situation where, with 60-odd days to go, there is so much uncertainty. If we'd had two months, three months, four months of clear, 'We know what we have to do and how we have to implement it', then I would be confident. I'm not confident where we are now. I think this is going to be more disruptive than COVID was from a supply chain point of view. We were able to put in mitigations for COVID in terms of driver hours and keeping the supply chain running and keeping people safe and operating. This is bureaucracy; it's sort of much more treacly and difficult and random. We don't know what goods are not going to make it across the border when it comes to 1 January. I suspect that we will recover in a short period of months, as people get disciplined, but it is going to be highly disruptive in the first three months of next year.
Thank you, all. Can I just say, I applaud your stoic approach to this, and your pragmatic approach as well? Because you've made very clear to the committee today that come what may, you will make this work, whatever the rules are. But some of those rules might be more unpalatable than others, as you've already indicated. Can I ask on that basis a couple of things? One is: what do you want to add to what you've already said in terms of what would the implications be for your sector of no trade deal—on the ports, on freight, on logistics—and some sort of negotiated agreement, perhaps with a free trade agreement as well? Regardless of you getting on with it, what would make it easier for you to get on with it?
I think I'll take that one first, if that's okay. I think, as I've said before, the differences between a deal and 'no deal' are not what they were previously, so the controls will still come in. But as I think Mags and Duncan have indicated, the traditional permitting of vehicles and access into EU markets, although that's not directly a concern for the ports, if one of their main, if the arteries that flow through them—through the ro-ro ports, certainly—is prevented from sending vehicles abroad, that would be very challenging for us, because it would mean completely different new operating models, et cetera.
I think tariffs is an interesting one. I've said this previously: it's not conditional on entry into the UK, a tariff; it's a fiscal process, it's collected away from the border, so things are not held up, typically, for tariff arrangements. But we are mindful of certain industries potentially that could have a higher tariff than others. Some are relatively low, it has to be said; it would just be a few pence billed onto logistics flows, and a lot of them are like that, and although politicians don't like me saying this, quite often, most tariffs are just passed on to you and me as consumers and manufacturers. It makes things slightly more expensive, but it's manageable. But I think any sort of industries—. Agriculture industries, obviously—the Welsh agricultural farming industry would have an interest here—and automotive—we've still got a lot of steel coming through Wales—what that means for those sectors where you have a 10 per cent tariff on any cars we export to the EU, et cetera, and high tariffs on agricultural products, I think that's definitely one to watch, because it could have a lasting impact, and it could make, in this case, certain Welsh activities less competitive.
Yes. I'll open it up to Mags and Duncan now as well, but it's not only the tariffs, it's also some of those hidden costs that Duncan alluded to, because warehousing in itself, as part of the logistics chain, carries a significant cost if it falls on one side of the channel and not the other. But Duncan, I don't know if you wanted to add to what you said before.
I would actually—. Not much. I think Richard's really covered most of it. Ten per cent on trucks, 10 per cent on lorries that are manufactured in the EU is already being fed in to vehicle purchases in terms of people being told, 'You're going to have to pay more come next year. It's being put in there.' I think the tariffs, unlike the things we were talking about—the immediate three month, four month, people adjusting to the customs things—that will have in itself a long-term impact in terms of creating stickiness and cost, but the tariffs will also, and those other non-tariff barriers, they're the ones that have the long-term slowly debilitating impact on trade, as you're aware. People will find ways around it in terms of adjusting to the new landscape, but, yes, the immediate thing is the 10 per cent on trucks that we're worried about.
Thanks, Duncan. Mags.
I would pick up—. I know we don't want to focus on tariffs entirely, but there is a bigger picture here in the sense that operators in the UK are facing quite strict, potentially, environmental changes, and the businesses want to do the right thing, they want to buy the Euro 6 trucks, but you add 10 per cent onto the price, and not only that, you're lessening the second-hand market—[Inaudible.]—so there is a bigger picture there.
The other thing I think it might be worth mentioning at this point is let's not forget there are two sides to the border, and there are also a lot of EU operators that come into Britain and move a lot of freight around, and if they're not able to get access—. Some may say there's an opportunity there, but we need to be able to continue to move the goods that we have been doing, and as Duncan says, it's about being adaptable and moving to what the market is as these things change.
Okay, thanks. Listen, the second thing I wanted to ask in relation to this goes beyond this, it looks to the future regardless of what sort of deal or no trade deal or whatever we end up with in a few weeks' time. What are your sectors' views on the future UK-EU relationship for your sector, regardless of what the deal is? What are the things that you are stressing to UK Ministers, and also to counterparts in Brussels as well, about the way you see the relationship going forward? I don't know who wants to start.
I can go again. That's an interesting question actually, and I think it's quite an important point to make. I think the point we would make is because of our geography, because of our economy—we're an import-driven country—I think our relationship with the EU on a non-political level, on a trade level, will continue to be very healthy and vibrant. And I would expect, although there may be some bumps in the road from Brexit, et cetera—and you can read into 'bumps in the road' what you want—but long term, I think the UK is still going to be a close trading partner of the European Union. There may be certain logistics flows and patterns that change, there may be things that deviate, we may attract more trade from outside the EU of course, but I think, at the moment, the EU is our main trading partner and I would expect that to continue with some subtle changes along the way.
Okay, thank you. Duncan.
Longer term, I think that we're all facing some very key problems, and it's shared internationally, and Mags referred to it earlier on in terms of clean air, but carbon is also a major issue. We will be buying lorries that are effectively designed and developed for the whole European market. Whether or not we want to create our own standards or not, we will not have UK-specific lorries being created, other than maybe some tinkering around the edges. It's the reality of the world market that we will be buying vehicles that are designed in Japan or designed in Germany or designed in the UK or America or wherever, and we will buying and trading and using those vehicles. And if we're going to move to net zero, we need to make sure that our frameworks and our systems and our desires for what sort of vehicles we want match with our partners in Europe and internationally. So, I think that's more of a challenge than it otherwise would have been, but I'd just like to say that that's the thing to bear in mind: we will still need to design vehicles internationally and have international standards.
Thanks, Duncan. Mags.
You've just pinched exactly what I was going to say. [Laughter.] That was basically what I was going to say. I suppose another element to be aware of is, as Richard said, the EU is our biggest customer; it's so important to the UK economy. And I know that Welsh and Scottish Governments see exporting as the opportunity for growth for businesses in the regions, so we have to work with the EU—it would be nonsensical to do otherwise.
Thanks very much. I mean, I appreciate those answers, and what strikes me from those is that still, regardless, the hard reality of this is that we will have to have a strong continuing relationship with the EU and with whatever is happening in Brussels, whatever is coming out of the Parliament and the committees and so on, because it will affect your sectors. But it also strikes me that there could well be costs loaded onto us, on top of being a slightly, slightly—we don't know the extent of it yet—more isolated trading nation. So, this is going to be interesting going forward.
Listen, one final question: Welsh Government has already made representations to the UK Government on the issue of hauliers falling back on the use of European Conference of Ministers of Transport permits in the event of a no trade deal; could you outline the potential impact of this on the sectors?
Could I go on that first, because I then don't have to say, 'I just would agree with what Mags said'? ECMT permits: essentially, there are four outcomes that may happen. At one end, we have ECMT only, which will not provide sufficient permits for the international trade that exists and will exist from 1 January. So, ECMT permits will not be any form of solution that is sustainable. You then have a mix of ECMT permits—this is in the event of no deal and bad relationships—you then have a mix of permits where you will have bilateral agreements with individual countries, potentially; it'll be a patchwork, a hotchpotch of things, but we will find ways of working it. So, that's the second option. The third option is some sort of contingency agreement EU wide, similar to what is proposed, like a separate land transport agreement that just keeps things pragmatic, outside of free trade agreement, but it would be an EU-wide agreement that we would come and go, they could come and go, Ireland could come and go—all of that sort of business. So, that's the third option. And the fourth option, of course, is we get a free trade agreement and you have the land transport agreement in that and we can continue not quite as we are now, but with certain limited cabotage, possibly, and unlimited bilateral trade. So, until November, until we have a deal or we know that we're not going to get a deal, we can't do much about that. But, certainly, ECMT is not sustainable in and of itself.
That's really clear. Mags, do you want to follow Duncan for a change?
What he said. [Laughter.]
Okay. What he said—that's great. Thank you. Thanks very much. Chair, back to you.
Thank you, Huw. We move on to questions from Mandy on this last section, on border readiness as well. Mandy.
Thank you, Chair. Can I just pick up on something that Duncan's just said about the ECMT, on the back of what Huw just said? The old carnet TIR customs declarations, which can be prepared in the country of origin for a journey that crosses several countries—don't you think with the new border operating model hopefully coming in tomorrow, with all the telemetry and the tracking technology available these days, that there should be little or no delays in reality? Vehicles are rarely searched with this when they're customs sealed en route, but the EU position seems to be stating that they will impose full checks on goods arriving from the UK into the EU. That's totally unrealistic in practice if they intend to stop and search every lorry. What are your views on that?
I'll be quite clear: they're not going to stop and search every lorry. That is not going to happen. What they will do is they will comply with the union customs code and the World Trade Organization limitations and requirements that will require them to do a certain amount of checking, but it will be—. The customs processes for the EU and our customs processes are not going to be substantially different in terms of the obligations and how we're going to—. We've got some easements very early on, but, in essence, after six months, we're going to be following pretty much the same pattern of operation. TIR, by the way, has absolutely nothing to do with ECMT permits and the permits thing has nothing to do with access to the market. That is a completely—. TIR is a form of customs transit process, just like union transit and common transit convention transit are. So, it's important to keep the ECMT and the lorry stuff separate from the customs requirements.
Mags or Richard?
I think I would kind of—. It's an interesting point to make. I think I would highlight that it's not just about checks. Customs controls—all goods will be subject to controls, which means that they require all these documentary processes. And under usual rules, you are required, as a trusted territory, or a port operator in my members' case, to enforce those controls and seek approval from your customs authority, which is the HMRC. So, even if you're not having a particular intervention where loads are unpacked and inspected, the actual process of a customs declaration, et cetera, as well as the bureaucratic points that Duncan mentions, and getting those documents in, it's actually—there is a nervousness from our sector about how you implement that at the border. And if—. Under a usual customs operation model that the uniform commercial code that the EU has at the moment requires, you would make sure that those goods are customs-approved and cleared before allowing them to enter into free circulation in the country. So, to do that in a ro-ro environment is the reason that the Government is coming up with all these schemes—the goods vehicle movement service, the free lodgement, et cetera, to try and head off that actual process where you would hold freight at the gate. Even if it was just for a few seconds, that's where you potentially would have that impact.
And we still are waiting for clarity from the HMRC. They've designed this GVMS system that I've just mentioned, and others, but there are still questions from the industry about liabilities of port operators if goods are allowed to enter into free circulation without that traditional approval from the HMRC. There's a lot of nervousness, from all types of ports, it has to be said, about that liability. That's a big thing for us, because if a trader runs off without paying the HMRC, and does something naughty, as Duncan diplomatically mentioned some people occasionally do, those ports might be potentially liable for a lot. And also, there could be other financial, fiscal things that ports, in my case, have to think about.
The only thing I would add to what has just been said is: also bear in mind that, sometimes, in the back of the lorry, there are several consignments, and the level of people involved could get enormous, because you've got several different types of product within one lorry. So, that's, obviously, an added complication and, again, forgive me, but what the gentlemen have just said is clearly relevant, so I won't repeat it.
Okay. Thank you. Can I ask for your response on the publication of the border operating model now, and to what extent has this document supported your members' preparations for the end of the transition period?
Will I go first this time? I think we've alluded to this earlier on, that, basically, what we've got so far, there's a lot of, 'Well, this is how it's going to happen', but there's absolutely no detail within that regarding the process. So, I believe—I think it was meant to be out today, but maybe it's tomorrow it's coming now—we are expecting a lot more detail on the practicalities, but, until we see that document, 'we don't know', is the frank answer.
I'd agree with that. I'm not holding out a great deal of hope. I have actually seen a draft, from about a week ago. It has an extra 60 pages more detail. The key thing: it's not just the 'what', it's the 'how'; how you can do it is the most important thing. And we've been saying this for years to HMRC—it's the how you hand over the paperwork. The paperwork can be paper or it can be digital—how do we do it is the most important and critical thing. There are things that we thought, recently, were going to be happening in a certain way; we go to a meeting, and, just two weeks ago, we heard that the Customs Declaration Service may not be being used for Northern Ireland. That was a known fact that it was CDS that was going to be used for Northern Ireland; we go to a meeting, and then customs turn round and say, 'Oh, well we didn't—. No. It might be CHIEF. It may be—.' And these things are not minor details; these are absolutely fundamental to the processes, on how you do things. So, we don't have a great deal of confidence that, when we get told things are facts, they stay facts forever.
I think I'm going to deviate slightly from my wonderful witness colleagues here. I think we welcome the border operating model on one level, because I think it's a necessary development that we had to have. I would say it's far too late, and, as my colleagues have just said, it's not completely as detailed up as it could have been, although we wait to see what the revised document looks like. But I think, as I say, we had to have a position, and so we've welcomed having something. Immediately, a lot of the ro-ro operators, particularly, and others jumped on it and said, 'It doesn't have the process maps that we were expecting', which we had under 'no deal', for example, where the Government had actual flowcharts, demonstrating what the processes would look like at frontiers. I think it's been useful in moving the debate, but, as I say, whether it's been early enough and soon enough I think is probably open to a big question here, because look where we are, and we've got less than 100 days to go. Duncan, we work at weekends, unlike you, so I say we've got less than 100 days to go. [Laughter.]
You know we work at weekends too; you know that I'm using the mid-week number. It just sounds even closer.
Actually, I should correct that, because what I don't want to do is have hundreds of hauliers hound me on social media afterwards. So, I know the haulage industry works really hard. But, with less than 100 days to go, the serious point is that that is not a lot of time to work through a document, which—if my maths is right, Duncan, it must be getting on for 200 pages, this iteration. So, getting—
There you go. Getting through that, and also understanding what the implications are for each individual operator and what their role in relation to the customs authorities and others is, how you facilitate these, I think it's quite—it's an ambitious timescale, I'd say.
Thank you. And can I have your views on the UK Government's three-staged approach for the phasing in of new controls on importing goods from the EU into GB, in comparison with the EU's confirmed position that it will implement full checks on UK exports into the EU when the transition period comes to an end, as outlined in the border operating model?
I think—. I would say we welcome the staged introduction. There's a debate in certain parts of my industry and my membership that perhaps there should be further extensions and things, but that hasn't come to fruition. But the staged introduction I think is helpful. I think, as we mentioned earlier though, exports and the fact that, in the ro-ro environments, ferries go back and forth and back and forth, et cetera—. And if there are delays at one end, then, quite often, that can lead to knock-on effects at the other end, with ferries kind of turning around in a much more slow and delayed way.
So, I think we would say it's been helpful. I think we would expect the EU to enforce full controls, because that's what it does and that's what it has done, although I would imagine there would be a degree of pragmatism from the individual member states, such as France and Ireland and Belgium, et cetera.
Yes, I would just go on to say that we welcome the three-staged approach because, obviously, it gives time, as I alluded to earlier— [Inaudible.]—the imports are. We kind of know where we are a bit more with that, and we've got the time—I suppose with the caveat that what they say they're going to put in place is put in place and works. Not wishing to be doom and gloom, but, you know, practice—. We need to trial the systems and make sure they work the way they think they do. I agree that the bigger issue—. It's the immediate focus at the moment because it's so urgent and so—less than 100 days, 60 days, whatever it is. The exporting is the bigger problem.
I really don't have much to add to what's just been said. I'm going to do a Mags; I'm going to say, 'What she said.'
Okay. Thanks, guys.
Laura, do you want to continue the questions?
Thank you, Chair. I'd just like to take you back, if I may, all of you, to talking about the updated version of the border operating model that's coming out in the next few days. I just wanted to know whether you were engaged in the consultation process at all for that. That interests me to start with. But also what sort of information were you hoping to see in the document—or, as Duncan's already seen it, did you expect to see what you saw? I know you say you'd like to see more of how to get things done, but what were you hoping to see in there altogether? Could you just elaborate on that?
I'll jump in here quick, if that's all right, because it wasn't me as an individual; it's my colleagues that have been dealing with that. I suspect Duncan will be in a better position to give you more information on that. So, I'll just say that right from the outset.
Yes, Duncan, do you want go first?
Yes, I will go first. We have been engaged, and, as Mags has said, people within her organisation have also been engaged with the border operating model and all of its predecessors and what have you. And one of the biggest problems that we have had is dealing with HMRC in particular, but other parts of Government, who are going into levels of detail and going down all sorts of rabbit holes. For instance, there are entire sections on what to do with Kimberley diamonds in the border operating model. I would contend that that is really specialised and you don't need it. The French version of the same thing is 60-something pages long—no, 57 pages long, and is in plain English. I can read that and I have a fighting chance of understanding almost everything in there. That is not the case with the border operating model; it is like an internal guide for customs officers and for Government. It is not the clear, simple and focused communication, 'how to', that we really need, and what's failed so far is that the communications have been about HMRC satisfying its own requirements, not necessarily understanding the needs of people who are two steps away from them in the supply chain, the traders, and it's been a constant battle to try and get clarity and simplicity into the information that we share.
Thank you. That's very interesting.
I'll come back as well. I mean, just to give a bit of defence to the poor officials and civil servants who are no doubt watching this session and scribing down things and hopefully smiling now I'm mentioning them. But I think one of the things about the fact it's got so long, Duncan, if you recall, because we were on nearly the same groups where we received the drafts—. This will be the third version of it that's open to the public, and I think it's fair to say it's grown each stage, and that's probably because the Government's been so wary about consulting and feeding things in, and I'm not sure whether I'd say that it's too long now, but it may be just a result or consequence of the fact that they've wanted to be quite inclusive and consult so comprehensively, albeit in a very short period of time.
And the second point, Ms Jones, on what we'd like to see—. I think, when we had the 'no deal' scenarios, we had actual graphics—for those simple people like me who like to see a picture of a lorry and a snazzy version of a customs declaration and where things go, where they're fed in, what the process is—which we do have, to a certain extent, in text, but I think there's still some uncertainty about some of the detail, and, as Duncan rightly says, how it will be implemented at the frontier is the big question. The point I mentioned about port liabilities—I know it's a very technical one, but, effectively, if those goods are free to move as soon as they arrive into Wales, in this case, it's a critical one for us. We just need clarity on various things and, you know, who's going to be liable for those goods, what the process is. We're almost there, I have to say, but the next stage, of course, is the physical realisation of those plans, which is another challenge that we have to get to, but officials are working on that, and we've had good progress across the whole of the UK. So, hopefully, once this border operating plan is out, it's clear, we can look at the actual physical implementation.
Thanks for that. It does seem, really—more practical guidance and help on the implementation of what they're trying to achieve. But I just wanted to ask you—you've all touched on it earlier, actually—because, obviously, there's a new IT system coming in place—. I mean, you've already answered it, really, but it was a question I put it down—I just wanted to know whether you thought people and your members would be ready and enabled to familiarise themselves with the new IT systems for the end of the transition period. You say there's less and less time to do that, and, obviously, COVID's had a massive impact, as Mags said earlier, on training staff and training people in it, to familiarise themselves with the new IT systems and other new systems in place. So, I think if you'll all elaborate on that, because Mags said something, but I was just wondering what you thought, Richard and Duncan.
Okay, I'll go first, if that's okay. I think the slight difference in my organisation, or my members, to Mags' and Duncan's is that they actually have to make a choice, some of them, between what kind of process they're going to implement at the border. This is between the temporary storage traditional customs model, where you can keep goods in storage for up to 90 days, and, effectively, it's better for the bulk handling or container ports where you're used to some kind of build-up or delay at the ports, quite often intended, whereas the ro-ro model may look to this new goods vehicle movement system that, effectively, is a pre-lodgement system where the customs declaration is pre-lodged prior to arrival in the UK and then a swift approval process should be undertaken. But the ports need to decide which system they're going to use and they need to work out how that interfaces with their own systems. The carriers, of course—I'm talking about the shipping companies—will need to feed into that as well.
I think I heard this morning on a session that we mentioned earlier one of the main Welsh operators saying they felt that their systems would be ready, but the problem is there wouldn't be any time for testing and for piloting of these things. I think for the ports that's one thing, but for Mags' and Duncan's members, that could be quite critical, actually. So, they may be in a better position to comment on the wider view.
One thing I would say that we haven't touched on is there has been a bit of pushback from part of the freight industry, and our colleagues at the British International Freight Association and others have made some quite firm statements and frank statements about the new systems, the goods vehicle management system, the trader support service, the Northern Irish system, and whether or not this is undermining their business, taking what they can traditionally do, whether there's time to test it et cetera. So, I think it's a bit of a moving target for us all at the moment, but, as I say, Mags and Duncan may have a slightly more informed view.
Duncan and then Mags—
I'll pick out a couple and maybe Duncan will pick up the rest. So, the smart freight—there's a lot of chat about that in the press at the moment, and let's be blunt, the Government are saying it's ready, people are saying, 'No, it isn't', because there is no opportunity to test that at the moment. So, that's the specific system that is going to be in place in Kent. You've also got safety and security, but that's not required until later on, so we don't necessarily have all the detail on that. Perhaps I could pick up the GVMS—we're assured that it is progressing and the technical specs have been published, but we haven't got the official user guidance yet. We don't have the document to say, 'This is how you're going to use the system.' That's just to name a couple of them. As Richard alluded to, there's all the different systems at all the different ports. My understanding is there are four main ones, so there's the Netherlands, France—forgive me, they've gone straight out of my head—there are another two. But all these systems add up and add and add, so depending on what system you're looking at, there's a very different level of readiness. I think that would be the fair way to put it.
Smart freight—we've actually seen elements of smart freight being taken through the plan for smart freight. They appear to have dumbed it down to the point of—it's not going to be a bureaucratic burden, the way that it's structured at the moment. But, likewise, it's going to be a very small hoop. I think most UK hauliers will fill out the form accordingly. All it does is it asks you, 'Are you ready to cross the border?' And if so, you can go to Kent. That's the smart freight.
GVMS—I am aware that some operators engaged with testing it and looking at the system, and I was speaking to one yesterday who said that, in fact, the structure is logical and it looks as though it's going to be a reasonable system. If you want to have a look at something that's a bit more developed and a bit more progressed, but is essentially the same sort of thing, then that is the French system that they've put in. It's sort of an emulation of that. It does more than the French system, that's one of the reasons why it's so late, because it's integrating into HMRC more than the French system does, but, in essence, the difficulty for us is not knowing if that system—well, we're told GVMS is not going to be used for pre-declaration, but will be being used for transit, and we can't get our heads around why it's used for one thing and not others. It works or it doesn't. If it works, just use it for everything, because the feedback we've given—that's not secret, we've given that sort of feedback to HMRC.
I promise I'll take some positivity tablets about our civil servants—they are really working very hard. They've been under a huge amount of pressure, and it's right for Richard to remind me to actually be nice to them. It wasn't that long ago that I was a civil servant, and they're all wonderful people. [Laughter.]
Thank you all for those responses. That's very helpful. I was just wondering what your understanding was of the number of customs agents that have been trained and recruited to date. Are you aware? Do you know?
I'm happy to answer that one: there are not enough. There are problems in the system for getting money out of the Government in terms of limits to how much any individual company can get in terms of the funding. I think it's £180,000. We have been certainly made well aware of the fact that, while the global amount of money available sounds reasonable and generous, it doesn't translate into boots on the ground because of the lag of training people and getting them in the right place, and also the limitations on the amount of money any individual company can get. So, we've been asking—. And it's something we've taken up with Michael Gove—it's been in the press recently—along with our friends at Logistics UK and a number of others, and we've highlighted this as a key bottleneck. It's the skills needed to make very complicated systems that require 100 per cent accuracy to work.
Thank you. Thanks, Duncan.
I would reiterate that that's something that we're pushing the Government on at the moment. I've got a figure here—I could go away and check this, but apparently there are 1,000 1applications that have gone in. That doesn't necessarily mean there are 1,000 that have been trained, but I can try and get some clarity on that figure for you.
That's great, thank you.
Thank you. Alun.
I'm grateful to the witnesses for the conversation this afternoon. You've answered many of the questions that I had. Can I just tell you what I'm thinking and ask you how you react to this? I've been in and around Government now for the last 15-odd years, and I worked in public service before then, and the rest of it. Your evidence this afternoon has been pretty gruesome, frankly. I've sat on a Public Accounts Committee and heard some pretty poor tales over the years, but I can't remember witnesses speaking about a public process that appears to be such a shambles and so chaotic in its execution. I'm just interested, as a politician myself, holding Ministers to account and the rest of it: 'Is it really as bad as you've described?' That's basically, I think, where I'm at. I accept it's not a scripted, well-thought-out question, but it's how I'm thinking at the moment.
I'm quite happy to come in on this one first. Actually, I'd like to support something that Richard said earlier, which was really key. We should have been in a situation where we had a stable regulatory environment six months, 12 months in advance, and then we wouldn't be in this situation where we're unpeeling onions and finding stuff—. I think that the lesson for anyone who wants to leave the European Union, or do anything this complicated ever again is to make sure that there is a process where an implementation period is a genuine implementation period from a regulatory standstill perspective. So, you have your deal and then you can do your implementation, but doing them in parallel leads to increasing friction. It's added immensely—. Some of the civil servants have been working so hard, and the politicians as well, and suffering huge levels of stress and uncertainty. They've been wanting to tell us things and they can't, and then they tell us things and then it turns out they get—[Inaudible.]—because somewhere else—. 'This is not the way to do it' is the answer to your question. Whether it's right to do it or not is a completely different question. We live with the landscape. That's our job. But it is actually about implementing whatever's necessary, and, as has already been said, we will all do our best to make all of this work. A little bit of frustration and tetchiness has been coming out very recently because we have been saying the same things, very often, for a long time. But, yes, a standstill point would have been the ideal way of doing it.
Shall I just chip in? I think Duncan put that very politely and well. I won't be drawn on using the term 'shambolic', because we are where we are and there are reasons for that, but what I would observe is that this is just one part of our industry, and I would say a bit of reality is that a lot of our traffic and trade with the EU is through bulk and general cargo processes, where those challenges will be much more easy to overcome. So I wouldn't like you to think that this is the whole sector, but ro-ro is so important to Wales and to the Welsh economy, and you've got some big operators. It's very important also to the Irish economy, and Wales provides that link that I think we've rightly focused on a lot today. But I wouldn't underestimate the wider ports industry and the fact that about half our trade with the EU is not on ro-ro at all, and we should continue to enjoy a healthy trading relationship with the EU after that. But equally I wouldn't deviate from what I told you earlier when you asked me to say whether that's true. Otherwise I'd be calling myself I liar, wouldn't I, Mr Davies?
Well, it's your evidence, not mine. I worked in the nuclear industry around 1999-2000, and we planned for the millennium bug, if you might remember that, and I remember watching the clock tick to midnight and wondered if I was going into orbit, and nothing happened, of course. Nothing happened, except the kettle was put on. Now, to what extent will we be putting the kettle on on New Year's Day, or to what extent will we be facing severe problems? I accept what's just been said, but to what extent is this, at the end of the transition period, a real crunch point in our time, and to what extent is this working towards something that will probably be okay anyway?
I would not say 'okay anyway' is the right way to look at it, but to be a bit optimistic and to build on what Richard has said, a lot of trade is not ro-ro. A lot of trade will continue to function, and practically function in the way that it does now. However, we know that there are 10,000 lorries a day going to and from the EU, through the Dover straits, that are going to be directly impacted by this. Now, it may end up that 20 per cent of that traffic will move to other ports and use containers and other methods, and some trade will disappear. One thing that we do know is that some will come up on 1 January, and people will have issues to deal with and they will work through them and, in terms of getting things to where they need to go, people will keep trying to get things there. It'll be a bit of a mess, I predict, for January and February, but it will find a way. It will find a level. So, don't think of this as a long-term doom and gloom disaster. It's going to be a process that is going to be very disruptive, but will recover.
I think Duncan has a good point; the freight industry is very agile. One thing we can't predict, though, is what the increased costs will be, because those customs declarations are relatively modest in individual costs, but when you group them all together and you collectively have to pay for that, as well as extra time taken to complete those as well as extra time on journeys, et cetera, those costs—we just don't know what that's going to do to logistics. And it may be that we all pay 5p more for a piece of Irish beef or something like that. I don't know. Let's, I guess, wait and see. But—
Nobody's buying Irish beef, I hope; everybody's buying Welsh beef.
Well, it will probably be more competitive to buy Welsh beef after this, so possibly. But I think—
[Inaudible.]—will be pleased to hear that. Carry on.
I think if this was properly assessed in terms of the economics and we had a proper impact assessment from the beginning, we might have been able to plan a slightly different route. I'm not talking about calling off Brexit, but we might have been able to look at perhaps some kind of trade deal that focused on what was essential for our sector. But it has to be said that our sector—although we are being quite noisy at the moment, we're not front and centre of people's minds. So, I'd imagine that if you're living in Aberystwyth, well away from Fishguard, Pembroke and Holyhead, of course, you probably won't think about this particularly unless there are some lasting impacts that have an impact on your daily life.
I used to live in Aberystwyth—but I won't go there now. I'm grateful, Chair; I don't have any further questions.
Okay. Before I bring Mandy back in, Laura, do you want to come back in? You're muted.
Yes, if I may. Thank you, Chair. I just had a couple more questions I'd like to ask Richard specifically, if that's okay. I want to drag you back to border readiness and preparation, but particularly in Wales. Therefore, I wanted to ask you what progress on building any new infrastructure at Welsh ports or inland may be needed in order to facilitate the new customs and border requirements for the end of the transition period. And also, on that, to confirm whether you're aware if any Welsh ports will be applying for the UK Government funding scheme to support the construction of any new infrastructure at Welsh ports.
And then, if I may, Chair, just on a regional level, as I'm a Member for South Wales East, I wanted to ask you what you thought the likelihood of free port status for the ABP Newport docks would be post Brexit. It's an important dock to us, especially in terms of regeneration. I'm just wondering whether you think that would contribute towards it, and if that's in your thought processes.
On the free ports, I'm going to ask you to separate the two questions, because I think there is an important question on free ports. I understand the Member's concern about Newport; I have concerns about Port Talbot on the same principle. I'm sure others will have concerns, but can we separate the two? Because I think free ports is a very important question we need to explore for Wales as a whole.
With your permission, Chair, I'll come back to Ms Jones later on free ports. Is that okay? I'll just focus on the border-readiness point. Absolutely. I think it's a very good question, Ms Jones. I would say firstly starting on the infrastructure fund, which I understand is going live tomorrow for formal applications, although I can't divulge individual operators who will be looking at this, I think it's fair to say—and it's not disingenuous to say—that a port operator in your constituency I'm sure will be looking at that for some of those terminals. That is not in respect of ro-ro infrastructure, of course, but I think they will be looking at that as a group, certainly for the south Wales operations. In terms of the ro-ro ports, I think they also will definitely be looking at this.
There are two parts to this infrastructure fund. One is the element for inland infrastructure, which actually is going to be built by Government, so is not actually the responsibility of the ports, and the other would be directly for onsite infrastructure. I think that a lot of the ro-ro ports are very interested in having inland sites, which effectively moves the congestion or the bottleneck away from the ports, and it gives you a bit of breathing space to prepare and develop. Personally, I think that's a very sensible approach, and I think the ro-ro ports in Wales are very keen to explore that, with possibly a joint facility in south Wales with Pembroke and Fishguard. I think there's an aspiration there.
One additional thing—I think you probed at what we need there. There's one thing you may have picked up: the UK Government passed a statutory instrument a couple of weeks ago, which effectively gave planning approval and planning permission processes to the UK Government for normal local authority processes to be handled by the Government, so they could effectively bypass Town and Country Planning Act 1990. I think that in Wales would be very helpful just to facilitate and speed up the infrastructure development, and that is quite a technical point but I think it's something where the Welsh Government, we would hope, is watching and looking at passing their own legislation in that line.
I think the second one, forgive me, was actually how prepared the industry is, Ms Jones. Is that what you were probing at, sorry?
Yes, sorry. Just if any Welsh ports were applying for UK Government funding schemes and how prepared the ports were, and if any new infrastructure was taking place.
Yes, I think—thank you for that—there are some modifications taking place already, but I think people are waiting for the detail of this fund tomorrow. As well as this, it has to be said that there are still some specifications about what a border control post will look like and what it will need to do—the number of checks it will have to handle and the nature of its activity. So, once we have those details as well as the fund application process, I think ports will quickly be lining up and hoping to take advantage of that. It has to be said that this is not a grant scheme, which is what we originally asked for; this is a per-use payback scheme. So, it's not a loan, but effectively the Government will take on the commercial risk of building this infrastructure and then charge the port operator and then the freight users indirectly for the amount of use it has. So, that's a useful model for it to have taken, although we did push for grants, as you can imagine.
Thank you for that; that's really interesting. Thanks, Chair.
Duncan, can you quickly comment on the implications of that? Because, as Richard just highlighted, that cost may well be passed on to a lot of haulage organisations as well.
When it comes to free ports and the infrastructure funding and all of those sorts of issues, we'll worry about that next year when it's all in place.
Okay. Richard, do you want to answer the question on free ports?
Yes, I'll come back. Free ports, in case you don't know—I'm sure you do, but in case you don't—this is a concept where you create an economic zone, potentially around a port, or an airport, it has to be said, not just sea ports, and you could install some business-friendly stimulus such as customs easements and you could suspend tariff-collection processes, and those documentary checks—you could limit the impact of those. You could also build in planning easements to fast-track development projects and have other stimulus such as skills stimulus and business rates reductions such as the enterprise model process.
Now, individually, you could say, 'Those easements—well, you can get some of them already'. But when you package them up, you have the opportunity to start looking at an economic development strategy that targets, it has to be said, often deprived areas around ports and around the coast, not just in Wales, but across the country. And we have been pushing a point—. We're not a 'rip up all environmental regulations and we're not going to pay any tax' type of organisation—I'm looking at you, and you're not smiling at me, so I think you're taking me seriously. But we're not that kind of organisation or industry. What we're looking at is making things work better, faster, easier, to attract inward investment and to build things quicker and to grow and develop.
Effectively, it's not just the port—it could be a surrounding area; it could be those tenants and those associated businesses that we hope would benefit. And looking at onsite manufacturing and processing, it depends, of course, what the nature of those ports is, but there are good opportunities there. It's fair to say it's not a Brexit solution per se for the ro-ro situation, because a lot of the ro-ro ports are just gateways, effectively, where the freight has to pass through and you can't avoid the customs process. You will cross a customs border at some point, leaving a free port zone, but on the planning easements, obviously they could help, and other things could help those ro-ro ports.
I think our big reservation about the free port strategy, unfortunately, is that number 10. This is the number the Government has said—they will only grant 10 ports around the UK this special status. When you factor in airports and our geography and our devolved nations, you can quickly count up potential sites and locations on both hands, and it does get a bit worrying if you're, say, an operator who might think, 'Actually, one of our neighbouring or competing ports, or just somewhere completely different, is going to get it and we're not—we're not going to have that same pull or attractiveness to investors'. And investors like things like free port status. They can understand what it means—they understand planning easements and permitted development rights et cetera. To them, that creates some security for their investment and development.
So, we're pushing for a broadened policy. Again, I would say it's not about ripping up environmental rules and other things, but we're pushing for a broadened policy, which could be inclusive and make sure that all ports have the opportunity to benefit from this, so that you don't play one region off against another and you certainly don't have the Government picking winners. And what Duncan and Mags, I'm sure, will underline, is we are very independent of Government normally. Some of my ports are publicly owned, but even they operate in a very commercial and private-sector-esque way. So, for Government to intervene in a sector that it doesn't really get involved in normally is something we're a little bit nervous about. But we'll wait and see, I guess. I think Wales has got some great locations for this and some great offers, and the Welsh Government is looking at this. I think it's cautiously supportive; there's always a bit of a challenge when you have a UK Government policy and the devolved nations need to weigh up whether or not they see it's worth embracing. But I think the Welsh Government are tentatively supportive, subject to it being consistent with their own policies and environmental aspirations, et cetera. So, I guess it's watch and see. The bidding process will begin, we understand, this autumn alongside the Westminster financial statement and they will come online towards the end of 2021-22, subject to one or two legislative tweaks.
One thing I would just say, Chair, just to align you and bring you closer together as a committee with your different constituencies, there is a rather novel concept now in this era of data connectivity and digitalisation where you might be able to link up various locations under the same free port banner, so that traditional red boundary around a port means you could link up Newport and Port Talbot and other ports operated by ABP and others, indeed, so we could all be benefiting as well as our neighbours.
I was aware of that, yes. Okay. Mandy.
Thank you, Chair. Hi, guys. I just want to go back to just two more questions on the no trade agreement preparations. Can you confirm whether you're aware of the EU's readiness notices detailing the preparations required for the end of the transition period, and, if so, whether they've been useful for your own preparations?
It's probably less for me, but I'll say, yes, we are aware of those, and the Government keeps—particularly the Department for Transport and the Border and Protocol Delivery Group—. It's quite amazing how much stuff we get out of them on a daily basis. I think it's probably more for Duncan and Mags' members, that point, but we do watch with interest from the ports sector.
One of the things I would say is that the information we get from the European Union is stable. So, when they've written something, we can actually work with it because it doesn't change; it actually provides guidance on what is going to be needed. The delivery in almost all instances is done at a member-state level. So, the EU creates a framework within which the member states will work. Mags alluded to the safety and security preparation stuff that's needed. So, there are different arrangements for Belgium, the Netherlands, France and Spain, which are the ro-ro ports—the ro-ro routes that we're talking about—and Ireland, and each one of those has its own implementation. But the stuff that comes from the framework is generally helpful, but it's helpful from our point of view rather than our members' point of view because it's how it's implemented at the membe-state level that is the most important thing, which is why the stuff that the French and the Dutch produce is so critical and important, and they've generally been pretty good in providing information on what they expect and clarity—but not always, not every area. It's different for Spain, it's different for Ireland, it's different for all of these things, but, generally, the EU has provided a framework for the member states that the member states understand and implement.
If I could jump in. Apologies, I lost my connection earlier and I disappeared for a moment. Admittedly, what Duncan said, is about the different states having their different approaches. One thing I should mention is that we do have a team out in Brussels who we are talking to as well, and, to be fair, the message coming back from the people we're talking to is they want a deal done just as much as we do. It's about continuity and making life easier for everybody.
Thank you. My final question is: Logistics UK has previously highlighted the potential risk of shipping routes being developed that would provide opportunities for Ireland-EU freight to bypass the UK land bridge. Do any of you really see this as a risk when crossings are so expensive and they take a minimum of 18 hours to Cherbourg, and more likely 36 hours to reach ports such as Rotterdam?
Seeing as it was us that said that, apparently, I'll jump in. [Laughter.] It will depend on what freight you're talking about. Freight logistics is obviously a huge variety of products within that. Just-in-time product? No, it won't. But if you do not have to have that product shifted within 24 or 48 hours, it doesn't actually matter what way it goes. And to be fair, more and more businesses are considering the carbon option, rather than the speed or the cost option. So, it's a sensible comment, but it would very much depend on what product you were talking about.
Yes, I think is a bit of a risk, actually, but perhaps we've got to be proportionate about it, and maybe we'll put it in Duncan's pile of 'let's look at that next year and see what happens', because we're concentrating on the task at hand. But I think, at the moment, as I understand it, the quantities are quite modest, and, exactly as Mags said, that just-in-time logistics and others, they're still going to use the driver-accompanied processes. But we wouldn't want to be complacent, and the added value—and some people may not particularly like the idea of more lorries coming through Wales—of those businesses and those operations, I think, is something that the Welsh economy does benefit from and, indeed, certainly my members, the ports, do. So, I would be wary of it, but not too alarmed at the moment.
I'd agree with that, and I would say the thing that is going to determine whether there is a direct move away from the land bridge is going to be transit time reliability. If you know that you can get across a land bridge in 24 hours, 48 hours, or whatever the number is, if you can do that reliably, that is the key thing that you need. I think, in January and February we're going to have unreliability, but reliability will pick up. How quickly that picks up may be important, but the thing that is going to make the decisions for the people who are going to make them in the middle of next year or early next year will be the perception of how reliably you can get across the UK on the land bridge. You can add 24 hours if you want; that's not a problem. We do just-in-time from China, and it can take a month or six weeks to come from somewhere, and it's still just-in-time. Just-in-time doesn't mean it's fast; it means it's reliable, and what we've got in January is uncertainty on the levels of reliability that we're going to be able to have at our borders. So, I think it's a 'wait and see'.
Thank you, both.
I'm conscious we've come to the end of our time, but we have one more question, I think, if Alun wants to ask a question on the internal market Bill. No, he's not—
No, I'm turning my microphone back on. In terms of where we're going with the internal market Bill at the moment, for those of us who see the importance of the United Kingdom as a single market, it's a pretty appalling piece of legislation, if I'm quite blunt. From your own members' point of view and the people that you represent, have you had any opportunity to study the legislation and to consider the impact on Wales?
None of our members have come back to us about the internal market Bill at all, and I suspect it's because they see it as high politics, and it's not about the grounding in the practical, day in, day out. Clearly, whatever happens next is going to be important but certainly I don't get the sense—. We had an international committee meeting yesterday; it did not come up. And it didn't come up because we're passengers in this process; we will have to live with the landscape that's created, regardless of whether we like it or not. And this is seen as the high politics, the games that politicians play, rather than down in the practicalities where we work. So, it's your area of expertise rather than ours.
Well, you're very kind, but you'll be disappointed. [Laughter.]
On our side, again, we haven't had particularly a deluge of feedback on things other than just to comment that this is, sort of, high politics, as Duncan describes it. But I think, going back to the White Paper, which was published before a lot of the furore, and the media didn't actually pick up on it, when we consulted our members on that, particularly in Northern Irish ports, it was highlighted about the fact that the Northern Ireland protocol does create some internal borders in the UK's internal market. And, I have to say, without being cheeky, with some sense of irony, the document, the White Paper, talks about, 'We don't want any barriers or blockages or new borders', without focusing on the elephant in the room that we are going to have all these borders and blockages on our external borders with the EU, but that's where we are. But I think our feedback was very much that the protocol will create these blockages, but we understand the politics behind them, and, with the drive to leave the customs union, I suggest it's a consequence of that, and policy makers need to decide if it's that critical to either the internal market of the UK or the UK's economy moving forward. So, that's probably the way I'd put it, in a slightly less diplomatic way than Duncan, of saying that it's not really our game to comment on it.
For me, just to finish off, I would steer a bit towards Duncan, I have to say. Our members haven't come to us about that; they will come to us when the consequences have been fought out and worked through, and when we know what it means. Nobody wants there to be any more complication in what we're trying to do; everybody just wants to stay in business and move goods and services around the country. So, that's what everybody's working towards, but, as Duncan says, we have not had kickback from our members in any way, shape or form on that, because it's the political side of things, rather than the practical.
Okay. I won't push you further than this point, but if there are challenges to the protocol, and a third of the traffic that comes through Northern Ireland goes through Holyhead—it comes from Northern Ireland and goes through the Republic of Ireland—at some point it may impact upon your members, because they may be required to go to other ports and therefore travel different routes as a consequence. So, perhaps you might want to—you might say mighty high politics—look at the implications as to what could happen to some of your members and the rerouting of some of those routes. That's just for consideration.
Indeed, Chair, but that would have happened anyway; we're already looking at that. And I think another point that came out of the consultation, which, I would say, we were probably underwhelmed with feedback on, was about the fact that if the UK wants to forge new international trade deals, it would be important that all nations in the UK have a consistent framework, so that when you sign up to potential deals with countries like America or whatever, they know exactly that we've got, broadly speaking, a level playing field internally, and they can sign up and they're not signing up just for a trade deal with England, but not Wales or not Scotland or not Northern Ireland. So, it was an interesting point there. And I think, also, for those who follow the devolution process very closely, it was a very interesting analysis, or basic analysis, of how things have changed in the last 20 years, where, I have to say, broadly speaking for the port sector, devolution has been quite a good thing. I think it's been welcomed by most of our members, and they like being a bit closer to Government and having Government having a bit more say-so on things that directly affect them. Government doesn't always do what our members want, but at least they know who to go to and they can get to them quicker than, say, more distant, faraway places in London, like the Department for Transport, where Duncan used to frequent many years ago.
Okay. Huw had his hand up, and I'll give him the last word on this.
Thank you. I don't expect our witnesses necessarily to respond to this. I absolutely take your point about the high politics of this, and there is a practical, pragmatic need to get on with things, whatever is given to you. But, as we speak today as well, at midday, the EU put the UK on formal notice over the protocols. They've put a particular reference to the Northern Ireland protocols in terms of the EU withdrawal agreement. That simply cannot be good for any of your members to have this played out in such a chaotic fashion at the last minute, because it's the uncertainty principle once again. I think all of you can plan for anything, as long as you know what the rules are.
So, it's just an observation, curiously, because for us as committee members, trying to protect the interests of Wales from the hauliers sector, from the ports sector and everything else, some of us watch with some dismay as we see the fifty-ninth minute of the eleventh hour unravelling with some of this. Sorry, Chair.
I don't expect witnesses to respond to that. I think Huw has made it quite clear he was expressing—
Chair, I'll just come back very quickly to say that you may well be correct, and I reserve the right—very humbly, if I'm invited back to this committee in the future, I reserve the right to come back and scream and shout about how terrible things are. So, thank you very much for the point.
Your right is reserved, don't worry.
We've come to the end of our session. We've actually extended our time. Can I thank you all, the three of you, for your contributions this afternoon? It's been very interesting. As you know or you may not know, you will get a copy of the transcript from this meeting. If you identify any factual inaccuracies, can you please let the clerking team know as soon as possible so we can get them corrected? So, once again, thank you for your time and thank you for your evidence.
Thanks, Mr Chair, very welcoming as ever, good to see you. Thanks, all.
Thank you very much. Bye bye.
Thank you very much.
For Members of the committee, we now move on to item 3, which is papers to note. The first one is correspondence from the Chair of the Finance Committee to myself and the Chair of the Legislation, Justice and Constitution Committee regarding scrutiny of EU withdrawal arrangements, and we'll have an opportunity to discuss this perhaps privately in our next items. Are Members content to note the paper at this point and we may have a discussion afterwards? I see they are. Thank you.
The second one is actually the LCM on the United Kingdom Internal Market Bill. This has now been laid by the Welsh Government and the Business Committee has referred it to us and the Legislation, Justice and Constitution Committee for scrutiny with a reporting deadline of 19 November. It's item 6 on our agenda today, so do Members note the paper at this point in time and we'll discuss it in item 6? I see so.
And the third one is a paper from Professor Dan Wincott and Professor Jo Hunt at the Wales Governance Centre on the implications of the UK internal market proposals. Again, it's something we will look at and consider as we take the work forward, but at this point do you note the paper? You do. Thank you for that.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).
Cynigiwyd y cynnig.
Item 4 is a motion under Standing Order 17.42(vi) to resolve to exclude the public from the remainder of the today's meeting. Are Members content to do so? I see they are. Therefore, we'll now move into private session for the remainder of today's meeting.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 15:43.
The public part of the meeting ended at 15:43.