Official Report: Minutes of Evidence

The Chairperson (Dr Aiken): This evidence session will focus on article 5 of the protocol: "Customs, movement of goods". Apologies to our witnesses for being slightly delayed — sorry, quite a lot delayed — in bringing you on for the evidence session. Our earlier session was quite long, and we have already discussed quite a few of the issues with our previous expert witnesses on the protocol. For that, I apologise. However, you are very welcome indeed. Christian and Shanker, it is good to see you again. We look forward to hearing what you are going to say. The session is being reported by Hansard.

Hopefully, you all had a chance to listen to the earlier session. You are welcome to add any opinion on issues that you picked up on today. I ask each witness to make an opening statement of about five minutes, beginning with Mr Benson and Mr Singham.

Mr Christian Benson (Trader Support Service): Thank you, Mr Chairman. It is a pleasure to be here, and thanks to you and the Committee for inviting me to say a few words in order to provide members with an overview of the Trader Support Service (TSS).

As the Committee considers the Northern Ireland protocol and article 5, "Customs, movement of goods", TSS provides a practical insight to the movement of those goods from GB to NI throughout the period that the protocol has been in operation. It is from this practical perspective that we provide our inputs today.

With six months of live operation, we are able to draw on data on the movement of goods, and, through interactions with thousands of traders during that period, we can provide insight into how businesses are interacting with our system and with the new requirements arising from the protocol. We are incredibly proud of the progress that we have made to date. TSS has been rolled out and delivered at pace from a contract award in September 2020 to live operation at the start of this year. All that happened amid COVID-19 restrictions, and most team members have never met one another.

TSS is working. Its role is to make sure that trade between GB and NI is as free-flowing as possible and is consistent with the legal requirements of the Northern Ireland protocol. It is also to make sure that NI businesses have unfettered access to GB. That is what we are doing.

We now have around 39,000 registered businesses, 59% of which are GB-based businesses, with around 35% of the registrations having occurred since 1 January. That demonstrates that the market recognises that TSS is working and responding. We have seen around 1·9 million declarations raised, enabling the movement of nearly 800,000 consignments of goods. That number increases steadily week on week. So, TSS is enabling the flow of goods into Northern Ireland on a daily and weekly basis.

We recognise that the rules are new and that TSS is a new service to implement those rules. We have worked hard to educate and support traders in GB and NI. To date, we have made over 100,000 outbound calls to provide direct support to businesses, which is around double the number of calls that we received. That shows the efforts that we are making to ensure that businesses can get on with trading.

Senior members of our team conducted over 85 seminars and held over 250 engagements with businesses and trade bodies. Those trade bodies combined represent over 5,000 businesses and organisations. We have created over 30 user guides, which have been downloaded 366,000 times from our Northern Ireland Customs and Trade Academy (NICTA) website.

Our role is to support businesses in how they use the service and to make it as simple as possible. As traders become more used to utilising the service and as we implement further improvements, we expect to see further ease of use and improvements in how traders interact with the service. Already, most trader interactions with the service are digital, so 85% of those interactions come via the website and are processed online in under 15 minutes.

We are not complacent. We listen to traders and adapt to the experience of their live service, providing simplifications and guidance to support the flow of goods, as demonstrated by our "consignment first" model for groupage and our transit service.

TSS is an evolving service. It was stood up in an incredibly short time, and we regularly release greater functionality to expand and improve the service that we provide to traders.

We have shared a background note with the Committee in advance of the session, which includes some trader experiences, together with feedback that has been provided by service users. I look forward to answering the Committee's questions and providing further details.

The Chairperson (Dr Aiken): Thanks very much indeed. I have two short questions. Time is moving on. First, how much does it cost?

Mr Benson: HMRC has procured the overall service from the Fujitsu-led consortium. The figure is publicly available: £240 million for a two-year contract. HMRC has the option to extend that contract by a further two years.

The Chairperson (Dr Aiken): How many people do you employ to do all that?

Mr Benson: Currently, we employ around 900 people. Over 600 of them are contact centre agents at various tiers of experience in the contact centre. The rest are people who are engaged with continuing developments to the programme and service management, and we have various other personnel from across the consortium.

The Chairperson (Dr Aiken): Am I correct to say that, with the start-up costs and everything that has been involved since the protocol came into place, it has already cost UK plc around £120 million and is likely to cost £240 million over the first two years?

Mr Benson: It is £240 million for the stand up of the service and running it for two years.

The Chairperson (Dr Aiken): Shanker or Robert, do you want to come in?

Mr Shanker Singham (Trader Support Service): Thank you very much, Chair. I am a senior adviser on the Trader Support Service. I lead the customs and trade policy area. My background is very much as an international trade and customs regulatory competition lawyer, with an economics background as well. In the past, I have headed up the international trade practices of two large global law firms, and I bring that expertise to the TSS.

I have been involved in issues that relate to the Irish border and the resolution of issues around Brexit and Northern Ireland for a number of years now, starting off with work on various attempts to find a solution to the Irish border: a paper that I wrote in 2017; going through an agreement that I proposed at the end of 2017; the Malthouse compromise, which included a number of Members of Parliament, including Nicky Morgan and led by Kit Malthouse, to try to find a solution to the Irish border; and, most recently, with the Alternative Arrangements Commission, where I chaired the technical panel. The team and I put together our proposal for alternative arrangements to the then Northern Ireland backstop. That was led on a parliamentary basis by Greg Hands and Nicky Morgan.

When TSS was established, we brought together leading experts on TSS in order to give it the best chance of success. Therefore, I speak here in both my TSS capacity and independent trade expert capacity. I look forward to your questions.

The Chairperson (Dr Aiken): Thanks very much indeed. Robert and Sam?

Mr Sam Lowe (Centre for European Reform): I think that Robert is speaking but muted, so I am happy for him to go first.

Mr Robert Hardy (Customs Clearance Consortium): I am still going first, Sam. [Laughter.]

The Chairperson (Dr Aiken): Go for it.

Mr Hardy: I am a former freight director of P&O Ferries. Until 2017, I ran the customs freight terminal at the Port of Dover, working on behalf of a company that is based in Newry — would you believe? — so I am no stranger to Northern Ireland shores. In 2019, we formed the Customs Clearance Consortium (CCC), which is a specialist consortium that was built to cater for the additional volume of customs declarations created by Brexit. The consortium is not, as it might sound, a consortium of customs clearance agents. Rather, it is a consortium of logistics companies and traders who recognised that they would require customs formalities to be completed. Those include some very significant food logistics and general logistics operators based in Northern Ireland — I could list them, but it would probably be inappropriate to do so — and some Northern Ireland-based traders.

We like to think that we are at the forefront of customs planning and processes. To that end, we were part of the design team of, and we are the customs intermediary engine underneath, the Trader Support Service. We helped to design those flows to facilitate the smooth movement of goods under the protocol. So, we are kind of ganging up on Sam at the moment; sorry, Sam.

I speak as a founder of the Customs Clearance Consortium and as a user of the Trader Support Service. I was also a user of the trade control and expert system (TRACES) for sanitary and phytosanitary (SPS) controls, and hats off to the staff in DAERA for the work that they are doing; they are walking the tightrope between compliance and practicality very well. Also, I speak as a representative of the CCC members who are based in Northern Ireland.

I will keep it short and sweet, but there was a comment earlier about what is good about the protocol. A major success was recently secured by the Road Haulage Association (RHA), which was only possible because of the protocol. In a nutshell, one of the benefits of the protocol to the logistics industry is cheaper fuel, which is rather a large win. There is an essential user rebate in Europe that is significant — it is 25 cents per litre in Belgium, for example — but you must be a member of the EU to qualify. Northern Ireland is not a member of the EU, but, because of its special status, the EU is allowing Northern Ireland-based transport companies to continue to benefit from that rebate whereas GB-registered trucks cannot. That is me finished.

The Chairperson (Dr Aiken): Hurrah.

Mr Hardy: One more thing. In an attempt to win friends and influence people, I wish you all a happy International Day of Parliamentarism.

Mr Lowe: Thank you for inviting me. I speak as the one member of the panel who is not involved with the TSS, but I will try in my introduction to draw on some of the themes that we have heard from the panel and maybe expand the remit of the discussion slightly if people wish to go there.

It is important to remember the fundamental starting point, which is that the UK has left the European Union and that includes Northern Ireland: Northern Ireland has left the European Union. What we are discussing is the ongoing relationship between the UK as a whole and the European Union, but in this respect we are discussing Northern Ireland's specific circumstances. The context is that the British Government decided to extricate Great Britain from the EU's customs and regulatory sphere while leaving Northern Ireland partially within it, particularly in respect of the movement of goods. The political context is that the British Government prioritised regulatory and trade flexibility for Great Britain over the economic coherence of the United Kingdom and decided in favour of controls and checks on goods entering Northern Ireland from Great Britain as a compromise to avoid those controls and checks having to take place between Northern Ireland and Ireland.

How do we make this work? I have my preferences and then I have what is realistic, given the political circumstances. If we take, for example, the movement of products of animal origin from Great Britain to Northern Ireland, my preference would be to prioritise the regulatory uniformity of the United Kingdom over Great Britain's flexibility to diverge in this space and bring Great Britain back into alignment with Northern Ireland via a Swiss-style veterinary SPS agreement. That would benefit not only companies that are moving goods from Great Britain to Northern Ireland but companies that are exporting from the UK to the EU in general. However, I appreciate that the British Government do not share my view on that and want to prioritise flexibility for Great Britain over the economic uniformity of the United Kingdom.

Given that, do I think that options are available? Yes. What the UK has proposed on equivalence could help to reduce the levels of inspection on products of animal origin that enter Northern Ireland from Great Britain quite substantially. Also, proposed trusted trader schemes could help in allowing restricted goods such as processed meat to be sold in Northern Ireland. If we consider how the grace period functions, if you are sending chilled sausages from Great Britain to Northern Ireland, you have to raise an export health certificate (EHC), and that can happen only if they are to be sold in a supermarket, and they are subject to checks. We already have an audited system that could be made permanent in that respect. I am very willing to look at compromises; I just want to help where I can.

One thing that I want to raise — I raised it in my written submission and it is under-discussed — is the impact of the Northern Ireland protocol on Northern Ireland's trade with the rest of the world. I am not talking about trade with the EU or Great Britain; I am talking about trade with Australia, New Zealand, the US and wherever else. Here, the impact of article 5 and the declaration by the Joint Committee are quite interesting, because, from an export perspective, Northern Ireland is very much covered by UK trade agreements. I would argue that, in some instances, Northern Ireland exporters potentially have an advantage over Irish-based exporters because the UK rollover agreements are, in some cases, more accommodating than the original EU agreements, particularly when it comes to rules of origin and extended cumulation. For example, they allow for components of a product that originated in the EU to be counted as British for the purpose of qualifying for, for instance, the trade agreement between the UK and South Korea. In some instances, it might make more sense to export from Northern Ireland than the EU, because, if you export from the EU, you cannot account for UK inputs in the same way.

When it comes to imports, it gets slightly tricky, and Northern Ireland's ability to benefit from UK free trade agreements becomes more conditional in that the UK-applied tariff can be used only by Northern Ireland-based importers if they fulfil the not-at-risk criteria and can demonstrate that the difference between that tariff applied under the UK regime and the tariff applied under the EU's applied regime is no greater than three percentage points. In practice, that means that, for new agreements where there is no equivalent EU agreement as a reference point, such as the one between the UK and Australia, you will get circumstances in which certain imports to Northern Ireland will not qualify for the UK free trade agreements whereas they would if they were imported to Great Britain. I am thinking particularly of food. You can argue that from both directions. Potentially, Northern Ireland-based consumers will lose out if they are not able to access Australian products more cheaply, unlike their Great British neighbours. However, there is a producer side to that argument if you look at it very cynically, which I do not advocate, that Northern Ireland farmers will be able to benefit from UK free trade agreements but will not be exposed to competition from those countries, at least in the Northern Ireland market, although they might face increased competition when selling into Great Britain.

There is also an issue with tariff rate quotas (TRQs) that needs to be resolved. TRQs are allowances for certain quantities of goods to enter the UK at a certain tariff rate. For example, x tons of lamb from New Zealand can enter at zero tariff, and, if a greater amount than that specific tonnage is imported over a year, a much higher tariff applies. There is some confusion as to how that works in Northern Ireland, because, going back to my point about the difference between the UK-applied tariff and the EU-applied tariff having to be no more than three percentage points for the importer in Northern Ireland to use the UK regime, we have an issue in that EU tariff rate quotas do not apply in Northern Ireland. The reference point for a Northern Ireland-based importer importing under a UK TRQ would be the EU's most-favoured nation (MFN) tariff, not the EU's in-quota tariff, if there is an equivalent quota, because those quotas do not apply in Northern Ireland. De facto, that means that importers to Northern Ireland cannot use the UK's TRQs, which are included not only in trade agreements but on an MFN basis under the UK's WTO commitments.

I feel that this can be resolved, and the UK is trying to resolve it. The solution is in my written statement, but I am happy to go into it further. I will leave it there, having warmed up the discussion but appreciating that we might go right back into the nitty-gritty of the TSS.

The Chairperson (Dr Aiken): Thank you very much indeed.

Mr O'Toole: Thank you all for your evidence and for appearing before the Committee.

I want to turn to the TSS representatives. You gave us a flavour of it, but would it be correct to say that Brexit creates a range of disruptions and that the protocol is a novel set of arrangements that involved familiarisation with new kinds of bureaucracy, particularly for people moving goods from Great Britain to Northern Ireland? Would you say that, in general, there has been a clear process of familiarisation since January with participants in the TSS?

Mr Benson: Yes, the protocol has introduced administration that was not there previously. Yes, TSS has been up and running since 1 January. From the data that we are seeing and the qualitative feedback that we are receiving from traders, we can say with some confidence that traders are becoming more familiar with how to operate the service.

We can see that, for instance, in the reduction in calls that we are receiving to the contact centre and in the gradual uptick of customer satisfaction rates that we record for digital and telephone interactions. We can also see it in some of the qualitative and very positive feedback that we receive every week from traders thanking us for the assistance that we are providing. We provided some of that feedback in our written submission.

Mr O'Toole: By how much have the calls fallen since January?

Mr Benson: Not by a huge amount. I would have to dig out the precise numbers, and I can supply those afterwards. I was looking at the trend lines earlier, and the number of inbound calls has reduced.

As we have seen that reduction, we have increased the number of outbound calls. When we see that a trader has maybe got part way through a declarations process or perhaps has not yet raised any supplementary declarations, we proactively call out to those traders to offer assistance and to see how we can help them to go through that administration.

So, yes, there has been a gradual decline in the number of calls, and, as I say, a gradual uptick in customer satisfaction rates. As we introduce greater functionality, that can sometimes result in a small drop-off in customer satisfaction as people get used to the new processes, but we again see that gradual rise. I am more than happy to supply more detailed numbers on the call statistics.

Mr O'Toole: That would be helpful. On the point about familiarisation at the GB side, have you seen any change there? One of the issues that businesses have faced is their suppliers not being fully aware of the provisions of the protocol. Have you seen any change in that regard?

Mr Benson: The outreach that we do is to GB traders just as much as to NI traders. Some 58% of registered users of TSS are traders based in GB. We have focused on those traders based in GB equally as much as traders in NI, especially the small to medium-sized traders in Northern Ireland.

Mr O'Toole: Have you seen a positive improvement in awareness and familiarisation?

Mr Benson: Yes. There has been positive improvement right across the board. Further evidence is that we have had over 330,000 downloads of the user guides from the NICTA website. We are seeing the downloads drop off as people become more used to the processes and more comfortable with what they are required to undertake in respect of administration.

Mr O'Toole: OK. That is really helpful. If I can turn now to Sam primarily, although others may feel free to answer if they wish. You may not have seen this, Sam, but, for the benefit of the Committee, in the last half hour, the Commission has published a press release and clarity on movement on several solutions, including on chilled meats, as had been identified, but also on guide dogs, green cards, which is a North/South services issue and, specifically, on medicines. It says that there will be a legislative proposal in early autumn in order to make this work in time. Sam, I will not ask you to comment in detail on something that has developed while you have been with us, but will you comment on how the process has gone so far in establishing solutions to practical issues on the protocol?

Mr Lowe: That is a slightly political question.

Mr O'Toole: If you can answer it in an apolitical way.

Mr Lowe: That is fine. I can, insofar as I think that the UK and the EU would have got much further more quickly if there were a greater degree of trust and goodwill between the two parties. Both the EU and the UK have contributed to that lack of trust.

My personal view is that many of the solutions to some of the issues being faced by traders trading from GB to NI might require tweaks or changes to the full trading relationship and the full UK-EU relationship. At times, those changes require the person who negotiated it to acknowledge that some of his priorities were skewed. It is always difficult for someone who has negotiated an agreement to implement it effectively because, when you are implementing it, you notice problems, and you have to decide whether to acknowledge those problems and whether you made a mistake in the first instance.

When it comes to the specifics of the extension, as you said, I have not read the detail, although I have seen the announcements. That is positive. We have managed to avoid unilateral measures. It is being done jointly, and it points to a warming in the relationship. I think that solutions exist in this space. In medicines, in particular, the EU has indicated that it is willing to change its own regulations to allow for GB-authorised medicines to be distributed in Northern Ireland. That is not easy to do, but the EU acknowledges that the protocol very much leaves the delivery of health services and the like in Northern Ireland in the hands of the UK, and it can see a legal hook by which to do it.

They are finding it much more difficult to find a permanent solution on sanitary and phytosanitary issues because, again, that would require regulatory change in the EU, and there is less of a hook by which to do it. However, in the absence of permanent solutions, I am very much in favour of can-kicking in the meantime, but I appreciate that that does not help when it comes to business solutions.

Mr O'Toole: OK. I agree about the certainty. I have a question about the totality of the economic relationship with the EU — you are a trade expert — and not just trade in goods. It has been said that the protocol fundamentally represents Northern Ireland moving closer to the rest of Ireland — the Republic of Ireland — in economic terms. Is it fair to say that —

The Chairperson (Dr Aiken): That is a political question.

Mr O'Toole: — the meaning of Brexit means that, in a range of areas —? I am not asking you to make a political comment, Sam.

The Chairperson (Dr Aiken): I would not permit you to.

Mr O'Toole: I think it is relatively factual. In relation to the aspects of the single market that are not about the movement of goods, we are, in a sense, moving further away from both the Republic of Ireland and the rest of the EU. Is it fair to say that, while our goods are regulated or partially regulated by the EU single market, we are moving further away from the EU, not closer, in the movement of people or the provision of cross-border services, for example?

Mr Lowe: Northern Ireland has left the EU, like the rest of the United Kingdom. It is just for goods that it has remained at least de facto and for the most part in the EU single market and its customs territory, in a way, although that gets complicated because it is a very conditional answer. In other areas, like services, Northern Ireland is like the rest of the United Kingdom. If we think about financial services, we find that Northern Irish firms have lost the ability to passport into the rest of the EU. The data adequacy arrangements that were signed off by the EU this week are incredibly important not just for Great Britain but for companies in Northern Ireland. They are perhaps more acutely important in Northern Ireland because of the amount of data that is shared between Northern Ireland and Ireland. Whilst convergence remains in that one space, new barriers have arisen in lots of other areas.

There are some caveats. If you look at the cabotage provisions in the Trade and Cooperation Agreement, you find that there are some Ireland-specific arrangements that allow for an additional stop in Ireland in order to take the proximity of the Northern Ireland land border into account. However, for the most part, Northern Ireland is treated the same as the rest of the United Kingdom in the other areas, which, of course, has economic consequences.

Mr O'Toole: Thank you.

The Chairperson (Dr Aiken): Shanker, do you want to come in here?

Mr Singham: I will come in on some points that Christian made in order to give you a sense of the interaction between the TSS and our customers and to answer Matthew's first question about GB suppliers and their role. Of our 39,000 or so registered traders, 59% are GB entities. We have a lot of GB suppliers on our TSS database. Every week, we distribute a bulletin to all those traders that explains a lot of the processes. We do regular sessions with the Automated Customs and International Trade Association and other GB supplier trade associations. My first point is that we do a lot of outreach work with GB suppliers.

Secondly, we are an evolving service. We are constantly issuing new releases and new functionality to support traders as they move products from GB to Northern Ireland. Generally, as new functionality goes in, we get more questions. Traders then understand the new process, and those questions tail off. We tend to see that dynamic on a pretty regular basis. We designed a process that was based on a simplified frontier declaration to get people across the boundary as easily as possible, so we did not have headlines about trucks stopped outside Liverpool or anything like that. That requires a supplementary declaration, and it has been difficult for traders to understand the requirements of that supplementary declaration. Most of the outbound calls that Christian referred to are, in fact, about getting the supplementary declaration situation sorted out for traders. We have introduced a lot of new functionality — we constantly do that — such as our supplementary declaration assistant and other things that we are introducing to make life as easy as possible for traders and that are consistent with the legal requirements.

The protocol tries to do three things. It tries to make sure that there is no infrastructure between Ireland and Northern Ireland, unfettered access from NI to GB and as free a flow as possible from GB to NI. The TSS contribution to that is to ensure as free a flow as possible from GB to NI and unfettered access from NI to GB. We continue to develop new ways of doing that, and we continue to work — out of the protocol, obviously — to deliver, including using things like the supplementary declaration system and the UK trader scheme, which differentiates the not-at-risk category from the at-risk category so that, for not-at-risk traders, where you are trading entirely within the UK customs territory, you are able to do it in an as expedited and facilitated way as possible.

The Chairperson (Dr Aiken): OK, team, we are becoming a bit time-compressed at the moment because we have some other events coming up. Apologies, Maolíosa, can you keep your question fairly short, please?

Mr McHugh: Tá fáilte romhaibh uilig. You are all very welcome here this afternoon. We receive a lot of criticism from businesses about TSS to the point where they say that it is not fit for purpose. How do you respond to that?

Mr Benson: Thank you for the question. We have heard that criticism, which was made a number of months ago now. In response, evidence that we are seeing from the traders that we are interacting with on a day-to-day basis shows that TSS is helpful, usable and helps them to process their paperwork and undertake the administration that they now need to undertake. As I said, we receive a lot of positive feedback every week. We have given examples of some of that in the written statement.

Yes, I accept that some traders have had challenges, and, when we have seen that happen, we have proactively reached out to those traders to help them. Once we have provided that assistance, we inevitably get really good feedback and thanks for the help that has been offered. As I said, we have 620 agents in the contact centre. The majority of those agents have more than two years of customs experience. Those are our tier-2 agents, and each of our tier-3 agents has more than seven years of customs experience. Some of them have over 20 years of such experience. Where we see traders having specific challenges or problems, we escalate up through those tiers of agents so that we can provide the most appropriate expert resource to help those traders.

In response to your question, I will say that, yes, there has been feedback, as you intimated. I think that that feedback, from what I heard, was a few months ago. If we look at the statistics and the feedback that we are receiving now from the traders, we will see that the system is providing for their needs. As Shanker said, it is very much an evolving service. Every six weeks or so, we provide new releases that further enhance the user experience and make it easier for the traders to undertake that administration.

Mr McHugh: I think that it was Sam who commented on the lack of trust between the UK and the EU. Do you think that that, in some respects, underpinned the difficulty that you have in receiving or sharing import data with each other? That was flagged up by Šefcovic this week as an outstanding problem.

Mr Lowe: My understanding of that — I am sure that others could add to this — is that it is more of an issue of the UK overcommitting and being unable to provide that data in the required time rather than a reluctance to provide it, insofar as it has had to create a new system and pull stuff out from elsewhere and just has not got it all compiled. My belief is that we will see that data shared in the coming months. I hope that that was not just a negotiating gambit, and I have been led to believe that it was not. Has the failure to provide that data helped to contribute to the lack of trust? Of course it has, because the UK committed to do that and then did not do it. You have all lived the arguments of the last few months, so you know.

Mr Allister: I have two questions, if I might.

The Chairperson (Dr Aiken): Short ones, please.

Mr Allister: Yes. We have a Trader Support Service with 900 staff, and we have had almost 2 million declarations related to internal UK trade from GB to this supposed part of the United Kingdom. Will someone explain to me how those are reconcilable with the supposed assurance in section 46 of the United Kingdom Internal Market Act 2020, which talks about:

Mr Singham: I will take that initially from a TSS perspective. I come back to the statement that Christian and I made at the outset, which was that the job of the TSS — basically, this is the job of the protocol — is to deliver as free a flow as possible between GB and NI, not free flow. Those are two different things. To have as free a flow as possible requires us to have customs procedures, because the European Union's customs code (UCC) rules apply. The issue with the protocol is that Northern Ireland is de jure in the UK customs territory and de facto applies the rules of the UCC. That creates a very unusual situation. It is a special status that is akin to a special economic zone in a way. TSS administers those processes. Therefore, you have a different situation for goods that are moving from GB to NI that are not at risk than you have for goods that are moving from GB to NI on an at-risk basis. There is much more flexibility and scope for facilitations in the not-at-risk area. That is what we seek to capitalise on in order to lower the volume of trade. That is how TSS looks at the issue.

Mr Allister: Last week, we heard evidence that much of the protocol's inhibition of trade could be dealt with if you had a system of mutual enforcement. In other words, Northern Ireland authorities would enforce EU rules on anything exporting into the Republic, and, vice versa, the Republic would enforce UK rules on goods coming the other way. Shanker, is that not a simpler, more viable proposition than the complexities and constitutional upset of the protocol?

Mr Singham: It depends what you mean by "mutual enforcement". I am aware of the idea; in fact, I am very aware of it, because it is one of the many things that was suggested in the work that I was involved in with the Alternative Arrangements Commission. The problem with that proposal is that it does not solve a number of the key problems that cause all the difficulties that traders have. For example, you would still require a customs database, customs processes and an equivalent of the TSS, albeit if you were operating across the NI/Ireland border, you would still require a customs database to deal with those kinds of traders, who would be a different group of traders. Even in the Alternative Arrangements Commission, we could not see how you would avoid an SPS regime over the island of Ireland at least. Since many of the issues relate to SPS controls and checks, mutual enforcement would not make a meaningful difference.

It also, frankly, requires a level of trust between the parties that operate it. You see a little bit of that on the Norway/Sweden border, where there is a high degree of trust. You see some regulatory recognition, although not mutual enforcement processes, between, for example, Australia and New Zealand, where there is a lot of trust. Trust has to build up over time. While I stand by the work that we did on the Alternative Arrangements Commission, it was done at a particular point in time. We are at a different point now, and we are moving towards lowering traders' concerns. Our goal is to make the process that traders have to experience at the NI/GB boundary more like administration and less like a fully fledged customs regulatory process.

Mr Allister: It certainly would put the border where it should be, which is at the frontier, instead of partitioning the United Kingdom.

Mr Singham: If you look at the boundary between NI and GB as it is being implemented, you see that Northern Ireland has, without question, a special status under the arrangement. There is no doubt about that. There are aspects of the boundary that have processes that you would not normally see in a customs territory, but, on the other hand, there are aspects of it that you would not see between one customs territory and another. For example

the UK trader scheme, which covers a significant volume and value of trade, between two customs territories. There are multiple aspects to it.

The question really is whether you can make it as facilitated as possible. If you cannot make it as facilitated as possible and it cannot be reduced to something that looks a bit more like an administrative process, yes, it is a burden.

From our perspective in TSS, in the six months that we have been operating, we have seen a reduction in that burden on traders. The proof of the pudding is in the trade data statistics. If you look at GB to NI movements — perhaps Mr Hardy can comment on this — you see the trade data for GB to NI direct movements going up compared with last year, so, despite COVID, the trade statistics suggest that GB to NI trade has increased. TSS is administering that trade, and that suggests that it can be achievable. In contrast, GB to Ireland trade, certainly over a central corridor like Holyhead to Dublin, went down significantly after 1 January 2021.

Something is happening on that boundary that is better for traders and that is improving matters for traders. The question that I think will need to be answered is this: is that a trajectory that can get us to a point where trade has as free a flow as possible, or is that not possible? That is a question for others, but Mr Hardy probably has statistics on how those two things have

Mr Hardy: I will jump in, if you do not mind.

Mr Singham: Yes.

Mr Hardy: Thanks, Shanker. Shanker is absolutely right. Apart from the new ferry routes from Zeebrugge to Dublin and what have you, which are completely new, traffic on every ferry route is down. Every other established ferry route has seen a reduction in traffic in the first six months of this year, apart from Northern Ireland. Northern Ireland has seen year-on-year growth of 20%. Dover and the central corridor of the Irish Sea are suffering because of the volume of traffic, yet there is continued growth in Northern Ireland.

Going back to the previous question of why there should be so many customs entries on consignments that are purely for internal trade, I will say that the point is that they are not, and you need to be able to identify which are for internal trade and which are not. That works equally for Northern Ireland flows via Dublin. If you start to put more regulatory controls on the island of Ireland, it will be harder for logistics operators in the North to ship out through the South because there would be more controls than there are today. It is a much easier process today.

The issue with Brexit generally is that we have gone from a situation where goods that previously flowed freely and on the basis of their being innocent unless proven guilty to a situation where they are almost guilty unless proven innocent. The customs declaration is the document that gives more information about that.

Where Shanker and Christian are completely right is that, although there is more of an administrative burden, there has not been any significant delay to the movement of goods. That is proved by the fact that the Cairnryan to Larne and Cairnryan to Belfast routes have seen 20% growth when everywhere else has seen a reduction in traffic.

Mr Allister: You should talk to some of my constituents who have had trailers stuck at Larne port. You would take a very different view then, sir.

Mr Hardy: That may have been because of SPS controls, but it is very unlikely to have been because of the customs element. The UK trader scheme and greater use of it have a role to play.

I agree: I have had trucks stuck at Duncrue Street in Belfast and at Larne for having the wrong paperwork. It is always to do with SPS controls, and they are the most cumbersome.

Mr Singham: There is an opportunity to continue to simplify, facilitate and use the UK trader scheme. To come back to your question on enforcement, the better approach is to use the UK trader scheme and the not-at-risk category. There is no doubt that, under the protocol, the European SPS rules apply. You need to comply with those rules. Given the evidence that you need to provide in order to show compliance and the way that you would use that evidence, there is a difference between the not-at-risk category and the at-risk category. If we explore that a bit more, we will be able to deal with some of the SPS restrictions and difficulties as well. There are a number of things that we can do, such as introduce simplifications and facilitations, that are fully UCC-compliant. There are trusted trader schemes, periodic declarations and aggregation; there are a lot of things that we can do to get over the impediments and the barriers. TSS is working to introduce a lot of that functionality. Depending on what the EU and the UK ultimately agree, we can support all those movements.

The Chairperson (Dr Aiken): Thanks very much for that, Shanker.

Mr Catney: I have a brief question about the Trader Support Service; I will not hold you back for long. People have told me that they are very impressed with the roll-out. I note that 90% of declarations have been successfully processed in fewer than 15 minutes. I have to say, "Well done", because I know that a lot of your staff have been working from home during the pandemic. With the education, engagement and trader preparedness that you are working through, will you tell me whether the 10% of declarations that were not processed within 15 minutes are marginalising now? That goes from 21 January, but if you look at it now, you will see that it must be significantly fewer than 10%, on a week-by-week basis, of declarations that are not successfully processed within 15 minutes. That is the first part of the question, which is for Christian.

Mr Benson: I apologise; I caught only part of that question.

Mr Catney: At 21 January, 90% of the declarations were successfully processed in fewer than 15 minutes, so that left 10%. If you look at where you are now, surely with your education system, your engagement and your trader preparedness, you will see that that number must be coming down. It is nowhere near 10% now. I want to commend your staff for working through the pandemic because what I have read today is a very impressive set of results.

Mr Benson: Thank you very much. Those submission and processing times are coming down all the time. If the information and the documentation are correct, the majority of declarations are submitted almost instantaneously to HMRC's customs declaration service. It is fair to say that when we introduced supplementary declarations, we saw that more traders needed more assistance, which we supplied. Some traders were struggling with the information they needed to provide. Over time, and especially over the last few weeks, we have seen the rate of being right first time increase dramatically as we have improved the education and as traders have got used to using the service. We have introduced more enhancements to the service that make it more difficult for the traders to make mistakes. Thank you. I very much appreciate your comments, and I will pass them on to the members of the service.

Mr Catney: Thank you, and well done. My other question is for Sam. Maybe I missed it, and I do not know whether the rest of the Committee is aware of the 25 cents per litre refund on fuel from Northern Ireland if hauliers are going into the European market. Did I hear that right? Can you explain that?

Mr Hardy: I am going to take the credit for that one, if you do not mind. Sorry, Sam. In Europe, there has always been an essential user rebate for fuel. It used to be known as the internal tax on petroleum products, or professional petroleum, basically. We used to handle a lot of those claims for hauliers based in Northern Ireland and mainland GB. Of course, when Brexit finished, we were no longer part of the EU, and you have to be part of the EU to be eligible for that rebate, which is 25 cents in Belgium. The rebate is significant. It is about £70 or £80 per full tank of fuel, so these are not small figures. In France, it is about 16 cents per litre, but the hauliers had to be registered in the EU, and, of course, that disappeared on 1 January. If I believe what the RHA is telling me — it is not quite over the line yet — it has done some great work in lobbying for NI operators to keep that rebate. By all accounts, it has won and has got approval for the rebate, which is a fabulous advantage. The other day, there was a round poll on LinkedIn, and it was quite positive that a lot of transport companies in GB will now flag out to NI. Expect to see a lot more Northern Ireland hauliers.

Mr Catney: That works out at 20%. That is a really strong advantage, and it shows the potential of where we are. I am trying to look at all the positives coming out of here today.

The Chairperson (Dr Aiken): Have you got a declaration of interest? Do you own a haulage company? [Laughter.]

Mr Catney: No, but I tell you: 20% is good. That 20% on fuel costs across Belgium and 16% in France must give our hauliers here in Northern Ireland a really strong advantage.

Mr Hardy: I should have picked up that when you turned the figure to percentages, you know more than just the cost of fuel for a truck. It is an advantage, and it is available only because of the unique situation created by the protocol.

Mr Catney: Yes.

The Chairperson (Dr Aiken): I thank —.

Mr Catney: Well done. I commend that, and it is great news.

The Chairperson (Dr Aiken): I can categorically say, Pat, that, for once, I recognise that somewhere, even in a teeny, slight way, I have heard of some benefit from the protocol.

Mr Catney: I wanted to bring that out and show it to you, Chair. I am always here to educate and learn. [Laughter.]

The Chairperson (Dr Aiken): On that note, thank you very much indeed, gentlemen. I thank Christian, Shanker, Robert and Sam for their evidence. Thank you very much for coming and providing the written evidence. Enjoy the rest of the day.

You probably saw us beavering away in the background, but the European Union statement has just come out this afternoon, and some of us having been trying to look at that to see whether I still need my dog to be vaccinated against non-existent diseases like rabies. That is not a political comment; it is a veterinary comment.