Barriers to Trade Between EU and UK

Cabinet Office – in the House of Commons on 27th May 2021.

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Photo of Philippa Whitford Philippa Whitford Shadow SNP Spokesperson (Health and Social Care), Shadow SNP Spokesperson (Europe)

What recent assessment his Department has made of the extent of barriers to trade between the EU and the UK for (a) importers and (b) exporters since the end of the transition period.

Photo of Anne McLaughlin Anne McLaughlin Shadow SNP Spokesperson (Justice), Shadow SNP Spokesperson (Immigration, Asylum and Border Control)

What recent assessment his Department has made of the extent of barriers to trade between the EU and the UK for (a) importers and (b) exporters since the end of the transition period.

Photo of Jonathan Edwards Jonathan Edwards Independent, Carmarthen East and Dinefwr

What steps he is taking to support businesses that are subject to non-tariff barriers to trade with the EU.

Photo of Penny Mordaunt Penny Mordaunt Paymaster General

We have been working closely with businesses to help them adjust to any new requirements for trading with the EU. Monthly Office for National Statistics trade figures have shown that exports to the EU have rebounded strongly and have been above average monthly 2020 levels.

Photo of Philippa Whitford Philippa Whitford Shadow SNP Spokesperson (Health and Social Care), Shadow SNP Spokesperson (Europe)

On top of the impact on our local fishing fleet, Brexit is driving businesses to move operations to Europe. Foxglide, a sportswear company, is not just facing shipping delays and having to pay VAT on the materials it imports, but, due to rules of origin, facing tariffs on the garments it exports to the EU. So does the Minister accept that, contrary to the Prime Minister’s claims, the deal does not deliver tariff-free trade and is damaging local economies?

Photo of Penny Mordaunt Penny Mordaunt Paymaster General

I thank the hon. Lady for raising that particular case. As she will know, we are always happy to talk directly to businesses, or through their Members of Parliament, to see what we can do to help their particular circumstances, but all the issues that she raises are being worked through by my noble Friend Lord Frost. We are also setting up new structures to work with our counterparts in the EU. We have opportunities with member states to resolve these matters.

Photo of Anne McLaughlin Anne McLaughlin Shadow SNP Spokesperson (Justice), Shadow SNP Spokesperson (Immigration, Asylum and Border Control)

UK trade exports to the EU fell 23% in the first quarter of the year, compared with 0.8% to non-EU countries. It is clear to everyone that that is a consequence of the Tories’ Brexit deal—everyone that is except this Government. Will the Minister finally accept that her Government’s deal has harmed exports—in other words, harmed business in my constituency, in her constituency and right across these islands?

Photo of Penny Mordaunt Penny Mordaunt Paymaster General

I do not accept that. Businesses have had to contend with a huge amount and they have done a tremendous job to get this far. There are remaining issues, but, on the trade figures, as I said in my opening remarks, they have rebounded; they are actually above average compared with what they were at the beginning of last year. What the hon. Lady does not refer to is the 63 trade deals that we have done elsewhere in the world and that will bring huge opportunities for businesses in her constituency and across the UK.

Photo of Jonathan Edwards Jonathan Edwards Independent, Carmarthen East and Dinefwr

Five months ago, I raised with the Cabinet Secretary the case of a local business facing significant problems importing from Belgium. It is now reporting a doubling in time before products arrive, significant extra costs and significant extra red tape. These are not just teething problems. Is it not clear that the task requires wholescale dental treatment, starting with a far closer alignment with the single market, starting with an urgent veterinary agreement on sanitary and phytosanitary rules?

Photo of Penny Mordaunt Penny Mordaunt Paymaster General

I would be very happy to look at any cases that hon. Members raise. We can put them in touch with the subject matter experts to work through what mitigations we can bring and what financial support we can give to make sure that businesses are accessing the schemes. As I say, my noble Friend Lord Frost is very focused on these issues. We have done a huge amount of work with businesses directly but also through their trade bodies, and we will bring forward new support for them as we go further to give them the bespoke advice that they need.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Cabinet Office), Shadow SNP Spokesperson (Constitution)

In February, I raised with the Chancellor of the Duchy of Lancaster the issue of Wilde Mode, a company in my constituency, and the increases in shipping costs it has had. In the past week or so, it has confirmed that it is still being quoted about €1,000 to ship in from Poland, when pre Brexit it was effectively zero. What concrete action are the Government going to take to resolve these problems, to end this uncompetitiveness and to mitigate these massive Brexit-driven cost increases?

Photo of Penny Mordaunt Penny Mordaunt Paymaster General

In addition to the work that my noble Friend Lord Frost is leading on, which the right hon. Gentleman will be aware of, and the financial support we have put in place, we are monitoring what businesses are being charged, whether it is through trader support services or through particular aspects of the supply chain. We are monitoring those costs, and that is factored into our work and the work that Lord Frost is taking forward.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Cabinet Office), Shadow SNP Spokesperson (Constitution)

Monitoring is fine, but we need action. Let me raise the issue of another business: ATL Turbine Services, which brings into Scotland for repair turbine parts from around Europe and the world. It has told me that its post-Brexit admin costs are now 10 to 15 times greater than they were last year. It cannot use the Revenue’s post-VAT accounting processes. It is encountering significantly more shipping errors, not just costs. Most damningly, it has said that, while the high-level structure has been put in place, the details of how it works in practice are basically non-existent and, where they do exist, have fallen short. Cost increases, administrative burdens, shipping errors, no useful guidance—when will this Government finally take these issues seriously? Would it not be better to admit, finally, that the truth is that, for business, Brexit is not working?

Photo of Penny Mordaunt Penny Mordaunt Paymaster General

I have been doing a large amount of work with Lord Frost to look at what advice and support there is for businesses and what their needs are. They now need at this stage more bespoke support, and we are standing that up and putting it in place. We will be informing Members of this House about that in short order. As well as mitigating the difficulties that we are having, as a nation, to work through, we want people to maximise the opportunities. The trade deals that I referred to represent £217 billion-worth of business. We want all businesses across the UK to maximise that and we will provide the space for them to do that.