Official Report: Minutes of Evidence Report
Members present for all or part of the proceedings:
Dr Caoimhe Archibald (Chairperson)
Ms Sinéad McLaughlin (Deputy Chairperson)
Mr Stewart Dickson
Mr Gordon Dunne
Mr Paul Givan
Mr John O'Dowd
Mr Christopher Stalford
Mr John Stewart
Ms Claire Sugden
Witnesses:
Mr Roger Pollen, Federation of Small Businesses
Mr Seamus Leheny, Logistics UK
Mr Aodhán Connolly, Northern Ireland Retail Consortium
Mr Glyn Roberts, Retail NI
EU Exit and Protocol on Ireland/Northern Ireland: Federation of Small Businesses, Logistics UK, Northern Ireland Retail Consortium, Retail NI
The Chairperson (Dr Archibald): I welcome to our meeting Roger Pollen, who is head of external affairs at the Federation of Small Businesses (FSB); Seamus Leheny, who is the policy manager for Northern Ireland for Logistics UK; Aodhán Connolly, who is the director of the NI Retail Consortium; and Glyn Roberts, who is the chief executive of Retail NI. I will hand over to you — we cannot see Aodhán, so I am not sure if he has got his camera off — to make an opening statement, and then I will bring members in for questions and discussion.
Mr Roger Pollen (Federation of Small Businesses): Thank you very much, Chair. We will see if Aodhán's camera comes on.
Mr Aodhán Connolly (Northern Ireland Retail Consortium): I am here, but my camera, unfortunately, does not seem to be working — luckily for you guys [Laughter.]
Mr Pollen: Aodhán, would you like to set the initial context?
Mr Connolly: Yes, sorry about that. There are technical difficulties with a new laptop and all that.
First, Chair and members, thank you for your interest and for asking us to come forward. I want to say very quickly where we were, where we are now and what we need, and then I will give you a couple of bullet points on the Šefcovic meeting last week.
At the start of the year, there were a lot of challenges, not just because of the Northern Ireland protocol. EU-to-GB trade had stopped because of COVID. We were in the middle of a lockdown that meant that more people were buying from supermarkets rather than eating out. You have to remember that, at this time of year, it is not unheard of for there to be shortages of certain things anyway, simply because of the season. At this time of the year, 90% of lettuce, 85% of tomatoes and about 65% of soft fruit and veg comes from the EU anyway. You have to remember that we have already 12 hours' less shelf life than places like Alton in Birmingham, simply because of geography. Any time lapse affects freshness and availability.
Some people — for example, the Westminster Government — were saying that it was all absolutely fine and there was no sea border: that was not true. Nor was it true that we were starving and there were lots of empty shelves. Never mind the technical detail, this is one of the key points that business has been making: we have to be realistic and pragmatic. The realistic part is that the average supermarket has between 40,000 and 50,000 product lines. There have only ever been a couple of hundred missing, so there have been choice issues but not food shortages.
I turn to where we are now. That situation is embedded. The people who say that there are shortages do a great disservice to the retailers, small and large, and to the logistics companies that have been working round the clock to make this work. You have to remember that the Northern Ireland business community did not want the protocol; in fact, I am on record as saying that the Prime Minister did not listen to Northern Ireland business or Northern Ireland communities. However, it is in law, and we are making best endeavours to make sure that goods flow freely and we continue to give choice to Northern Ireland consumers as needed.
We know that there are challenges coming, especially on 1 April, with the end of the grace period. From then, we will need export health certificates (EHCs), and the derogation on parcels ends. What we need has been summed up by the Northern Ireland business Brexit working group, which I have the pleasure to convene, as four things. First, we need stability, and that is an immediate extension to the grace periods to continue to allow Northern Ireland business to adapt. That is not a can-kicking exercise, and it brings me to our second point, which is certainty. We need the certainty of a long-term workable solution that is designed with business, not done to business. Thirdly, we need simplicity. That is the real heavy point in this. There is a sliding scale of simplicity. At the very bottom, you have digitisation — all those EHCs. Instead of 70 pieces of paper, you will have one or none at all — right through to the digital evidence of where things are going. In the middle, you have a trusted trader or authorised economic operator (AEO) scheme; what we are calling an "audited and certified supply chain". That is where we provide evidence to the UK Government, who can provide it to the EU, on the basis of the dead-end host idea. Things would come across from GB to NI — you have to remember that 70% of what crosses GB to NI is for retailers' shelves — on the principle of dead-end host, which means that you can tell where it is going, what shop it is going to and where it is being sold. Therefore, it is of very little risk to the single market or to the customs union.
Another part to simplicity is a veterinary agreement. Some people talk about Swiss style, but you have to remember that the Swiss-style agreement is underpinned by 229 other pieces of agreement between the EU and Switzerland and was built up over 40 years. People talk about a New Zealand agreement, which would be quite good. It is 1% checks, which means that only seven lorries a day crossing the Irish Sea would be checked. That came from a piece of work that Manufacturing NI, Logistics UK and we ourselves did a couple of years ago. However, when things move from New Zealand, there are usually very few products, whereas the main supermarket loads are up to 1,500 products.
All in all, we need simplification: a veterinary agreement, but it needs to be a Northern Ireland-style veterinary agreement, one that works for business and people here.
Lastly, all this has to be done in an affordable way. There are two types of affordability. One is removing friction to allow Northern Ireland business, large and small, to continue to be competitive; and the affordability for Northern Ireland households, which have half the discretionary income of households in Great Britain.
I will quickly talk about what vice-president Šefcovic said. First, he said that the EU remains committed to the protocol, the North/South bodies and the Good Friday/Belfast Agreement. He said that the 8 December derogations and grace periods were proof of that. He said that we are dealing with the consequences of Brexit, that there is no alternative to the protocol and that we have to make it work. He said that there can be no permanent grace periods and no permanent derogations. However, he said that there can be facilitations. One of the things that we put to him is that the grace periods were there until a new trading system was put in place. For us, that principle stands because a new trading system is not in place, and he agreed with us on that. Thirdly, he said that the protocol offers opportunities for the creation of new business and for the sustaining of current business. One of the things that the Northern Ireland business Brexit working group has been asking for since last September and the Internal Market Bill, when information from the EU tended to dry up, was a consultative body for business. That is being actively considered, and we look forward to seeing how that progresses. However, he agreed that we have to work on that together and that there must be political leadership on both sides.
I am not gushing about that. We are pragmatic and realistic and anything that the Commission wants to do will be tempered by the needs and concerns of the 27 member states. For us, it is a step forward because there is a recognition of the concerns of Northern Ireland business and a willingness to work on facilitations. That, added to the admission that there is a need for better communication, means that, for us, last week's meeting was significant and had some progress that we needed.
Mr Pollen: May I just add to that, Chairperson? Thanks for that scene-setter, Aodhán. Colleagues here will bring great knowledge across a range of issues, principally on bringing products in for retail and on transport and logistics. The membership of the FSB is much broader and encompasses a real diversity of businesses, some of which see great opportunity in this and some of which see an existential threat, with many others somewhere in between. In this session, we will share information with you in a way that best helps with your enquiries into the matter.
I will go back to what this and our meeting the other day with Maros Šefcovic are all about, which is the Northern Ireland protocol. We drew their attention to the element in the protocol that says that the EU and the UK are determined that the application of the protocol should impact as little as possible on the everyday life of the community in Ireland and Northern Ireland. There are key issues that affect this community and the wider population that require urgent and permanent solutions in the spirit of that original commitment by the EU and the UK if we are to avoid the wider
or turning against the protocol. Those issues have been characterised as the five P's — parcels, pets, potatoes and potted plants — but those are by no means the only issues that require resolution. They are just totemic points, but a failure to address them in a way that will impact as little as possible on the everyday life of the community in Northern Ireland will risk damaging businesses here.
The operation of the protocol has been summarised as the best of times and the worst of times. In its favour, the protocol offers the perfect conditions for manufacturers from anywhere on the planet to locate in Northern Ireland, with virtually unfettered, tariff-free, quota-free and customs-free access to the UK internal market and the even larger EU single market. That opportunity is solely here in Northern Ireland, so it presents a unique
highly educated workforce, some of the lowest property costs, five sea ports, three airports plus Dublin port and airport close to hand. Indeed, Belfast is now the second-largest English-speaking city in the EU single market. That is the "Best of times" lens focused on it.
The worst of times, though, was brought home to me last night by one of our members who has a franchise business. Their product comes from GB. It is a pet food business, and they are being advised that they need to have the postcode for the farm and the date of
for the lamb that goes into the pet food. Because they are a franchise, they cannot source elsewhere and they cannot
in Northern Ireland. Their entire business is predicated on being able to access that product from GB. As I said, two different lenses are being focused on this. For some, it is the best of times, but, for others it could be the worst.
Mr Glyn Roberts (Retail NI): Madam Chair, may I add to what my two colleagues have said? First, a belated happy birthday. I do not want to embarrass you too much.
I think that Aodhán and Roger have summed up the situation fairly well. For us, it is about how we get long-term solutions and secure unfettered trade. It is not a case of kicking the can down the road if we get an extension of the grace period announced today; it is about making sure that we have long-term solutions in place that will not inhibit trade. It is worth pointing out that businesses in the past year have fallen off so many cliffs. We have had a perfect storm of challenges from the pandemic and the protocol, and we need to make sure that we resolve the difficulties and get back to the real focus, which is recovering our shattered economy and dealing with a post-pandemic world that will be very different.
In Retail NI, our 2,000-strong membership takes in local wholesalers, independent retailers of all kinds and local suppliers. In one sense, that gives us a unique perspective on the issue because, in many respects, our membership spans the entire supply chain. For many of our retailers, the situation has been improving. Aodhán is absolutely right to say that the talk of food shortages is irresponsible and creates fear. Let us be frank: there are delays, and there are challenges, but we all need to focus on knuckling down to having a laser-like focus on solving the problems, and that includes many of the concerns that unionists and unionism have.
It is not about looking back to what we did in 2016 or how we voted in 2016; it is about where we go from here in 2021. How do we resolve the problems and create an outward-looking, global, tolerant Northern Ireland that could be the gateway to Europe? It could be the best place anywhere in these islands to locate and start a business. We are ambitious for Northern Ireland. We are optimistic and believe that we can get through the problems, but only if we have a solution-based approach, whether it is based on Switzerland or on New Zealand. The debate has moved on, and it is important that we focus on what lies ahead rather than on how people voted and what decisions they made in the years since Brexit. From our perspective, we are keen to work in a broader partnership with civic society.
Mr Seamus Leheny (Logistics UK): Madam Chair, may I come in briefly as well? I endorse what the three other witnesses have said. As Roger said, we in the logistics industry have a varied membership. We have 18,000 members across the UK and just under 400 in Northern Ireland. We surveyed our members at the end of January/start of February, and 62% of the membership who responded said that there were lower volumes on GB to Northern Ireland. Fifty-eight per cent said that they expect volumes to go back to the levels that they were at previously. However, 42% do not anticipate that their volumes from GB to Northern Ireland will return to pre-2021 figures. The main reasons given for that were that they are using alternative routes, that their customers or traders are using new suppliers and that there is reduced trading confidence in GB. That is primarily down to businesses not being fully aware of their undertakings and responsibilities in moving goods to Northern Ireland.
Things like extensions to grace periods cannot be a short-term solution. It is the means to give us time to implement new IT systems and, as Aodhán mentioned, a fully audited supply chain that can be easily traced back to origin destination and so on. We proposed that this time last year as a solution, especially for the movement of food. We are keen to discuss those issues this morning, especially with regard to parcels and food supplies.
The Chairperson (Dr Archibald): Thank you for your briefings. They have been useful. Thank you for the birthday wishes, Glyn. Aodhán, it was useful to get feedback on last week's meeting with the Commission and the British Government. Had you more confidence coming out of that meeting that there is a willingness to look at flexibilities in the protocol to resolve some of the issues and difficulties that businesses face?
Mr Connolly: Last week's meeting was a bit of a tour de force from the business community in Northern Ireland. The people on the call were on top of their game, and they outlined the challenges in a pragmatic way. That was reflected in how Minister Gove — Chancellor of the Duchy of Lancaster Gove — reiterated what we said and asked us if he had a correct understanding, which he did, and by the fact that vice-president Šefcovic took on board the principle of the need for further facilitations and better communication and political leadership on this.
I am not gushing about the meeting; we are realistic about the challenges. You will have member states pushing for no competitive advantage for other member states and the protection of the single market. That is one of the reasons why it sometimes takes so long to get to these things. I know that the EU has been talking to member states over the past few days, since the Šefcovic meeting, to gauge reaction and to look at facilitations. It is a lot more positive than it had been. Does it mean that we are going to get a magic customs fairy or a magic SPS fairy? It does not. However, as a business community, we have done as much as we can to articulate our concerns and the solutions to them.
The Chairperson (Dr Archibald): Will you elaborate on some of the flexibilities that are not yet being properly used but which were agreed in December? What is required for the facilitations? Where are the gaps? Where do you see the veterinary agreement being a challenge? How realistic is it to believe that an agreement on that can be reached?
Mr Connolly: The grace periods are there. We have to remember that the biggest part of this was the fact that the "transition period" was a complete misnomer, but it sounds better than the "protracted negotiation period", which, in fact, was what it was. We did not have the customs declaration service (CDS) and the Trader Support Service (TSS) in place until the middle of December, so we had only a week and a half to get ready for it. The facilitation on parcels was known only 18 hours before the end of the transition period. This is not about flicking a switch for retail, logistics or any other industry; this is about making sure that computer systems can deal with the process and about training staff. The person who takes the order, the person who fills in the paperwork, and the person who delivers the parcel need to know exactly what they have to do under their legal requirements. A big thing to remember is that retailers and businesses in GB and NI want to fulfil those legal requirements.
The grace periods are working well, because they are needed. It has not been easy in any way, shape or form, as you can tell from the tired look of everyone who is giving evidence. We have all been doing long days and answering queries from members, large and small. That is what we have had to do. That is a big thing to take away from this: business has been making its best endeavours.
You asked what was needed for the facilitations. Digitisation is something that can be worked on. We also need a trusted trader scheme, an AEO scheme and an auditable and certified supply chain, because an AEO and a trusted trader means different things to different people. We need something that is suitable for Northern Ireland and as wide as possible. That can be done, but it needs political will on both sides. We are clear about that. There will be an evidentiary burden, but that evidentiary burden should not be prohibitive to small and medium enterprises.
It needs to cover customs, of course, and TSS is there to be part of that. However, the biggest thing is the sanitary and phytosanitary (SPS) checks and regulations. That is where the Department for Environment, Food and Rural Affairs (DEFRA) is working on different models and that is at an embryonic stage at the moment. However, we are making progress. As Glyn said, it cannot be can-kicking, but there has been tangible progress.
The veterinary agreement strays into the world of politics. Again, it depends on political will. It falls to Number 10 and the 80-seat majority in the House of Commons. As you know, the House of Commons voted against giving us more say in trade agreements. This was an additional agreement; there was a good chance that it would not actually go through. However, some people would argue that it is not Brexit if there is a veterinary agreement. We need to sidestep politics, and that is what we do in business. There is a very simple equation in this. If we have a veterinary agreement, it is equivalence; it does not have to be dynamic alignment, it has to be recognition equivalence, and then there is a sliding scale as to how strong it could be. The more we have that alignment recognition and equivalence, the less friction that there is in trade from GB to NI on goods of animal origin and plant origin. We have been asking for that since 2016. If there was anything that we were going to get, we would need something along the lines of a veterinary agreement to allow the free flow of trade. It is a big ask for us, but it is within the realm of our political masters.
The Chairperson (Dr Archibald): Aodhán, thank you for that. It was a really useful overview. To pick up on your final point on the alignment, from the beginning of this week, the export health certificates were required on chilled meats. Can you give an update on how that has been going?
Mr Connolly: It has been going fine. As you know, we had a derogation on chilled meats. You have to remember that people are seeing it as a bad thing, and friction is bad, but the export health certificate was brought in on Monday. Before that, we had what some people called a
which is basically a self-certification on those products of animal origin which were uncooked meats — the prohibitive and restrictive (P&R) list. You have to remember that those things do not go on to anywhere else that is administering single market rules. That does not happen. For us, this was a derogation which was good in that it allowed that to happen.
We should have had export health certificates from 1 January. We did not because they did not exist, because nowhere else under the single market rules has that. They are in now and only apply to a small minority of products. They are costly and they are a source of friction, but they are continuing to allow it to flow. It is also quite a good test on how things will work out on 1 April if we still need those export health certificates for all products of animal origin. Even after two days, there are major struggles. We have to be pragmatic and realistic about the challenges. We will do it, but there will be costs and possible delays. There are a lot of moving parts that all need to fall into place by 1 April if this is going to work.
At the moment, it is working, if only for the minority of products that need it. From 1 April, there is a big train coming down the tracks, and that can only be fixed if we have flexibility from the EU and the UK.
The Chairperson (Dr Archibald): Thank you for that, it is useful to know. I have one final question before we pick up on points made by a number of you in your opening remarks. Yesterday evening, the Assembly approved a motion calling for an overarching economic strategy to deal with the new trading realities. It is important that we respond to the new trading realities to support businesses to adapt and to take advantage of any opportunities that are there from the new arrangements. How should that be done? In what specific way do businesses need to be supported in line with the new strategy?
Mr Roberts: I read the Hansard report of yesterday's debate, and it was quite wide-ranging. Whilst we are all focused on the here and now and how we can work through the challenges that we are facing with the protocol, we also need to ask ourselves, "What is the overall long-term vision about how we build relationships with the EU?". Over the years that we were members there, we built up a lot of good contacts and networks right across governance regions of the European Union, and one of the things that we now need to ask the Executive Office is about the Executive's office in Brussels. That needs to be maintained and enhanced as well, and Invest NI is in that office as well. There needs to be a new work plan to reflect the new realities so that we can continue to build on the contacts and relationships and, obviously, the relationship that the protocol gives us with the single market.
The other issue is that it is important that the European Commission reopens an office in Belfast, not so much to do what it did before but to reflect the new realities that we have left the European Union and that we are part of and have a relationship with the single market. If you reflect on the fact that we have Chinese, American and Polish consulates, they are all huge players in the global scheme of things, but we do not have an office for the European Commission. Let us not forget that that is a market of 450 million people.
This is a takeaway for the UK Government to think about this issue and allow a new European Commission office to open to act as a focal point for engagement, not just with business but with civic society. We are all having to grasp with the big-ticket issues, but, daily, we get a lot of pertinent queries from very small retailers that are not attached to wholesalers but are bringing in a pallet or two, here and there, and there are very technical issues around particular products that are facing delays, and it is difficult for us to get answers to that. If we had a European Commission office, it could help with such queries. It would also act as a key part of that new relationship that we, as a region, have developed not just with the EU but with the rest of the world.
As I said in my opening remarks, we have a vision where we want to see Northern Ireland as an open, global-facing region that is the gateway to the EU, that plays to all the good relationships that we have with the UK, the island of Ireland and to our connectivity with North America. So, whilst we are very focused on where we are with the problems, we need to start asking questions such as, "What does that long-term vision mean? What does success look like for us as a region?".
Retail NI is part of Trade NI, which is Manufacture NI and Hospitality Ulster. As you are probably aware, this Committee helped launch our 2030 report last year, when we asked the question, "What type of Northern Ireland do we want to achieve or arrive at by 2030?". We need to see that long-term thinking about where we see ourselves in the world. That was very much the subject of yesterday's Assembly debate.
Mr Leheny: I will just come in very briefly. There is a responsibility on the EU to hold up its end of the bargain, and it is something that we said to Maroš Šefcovic last week. A lot of member states and businesses in the EU are not aware of the unfettered access that Northern Ireland has with the continent, so there has to be promotion of Northern Ireland as a place to invest in. For businesses here, Invest NI also has a big part to play. I dealt with an enquiry this morning from a large engineering firm, based in Northern Ireland, that asked, "How do we get our goods to the EU, avoiding customs, ie capitalising on our unfettered access?". I was able to answer, "It is quite simple. You use a T2 transit document to bypass all those customs controls and potential tariffs etc". There is work for Invest NI. We also have to put pressure on the EU to stick to its end of the bargain.
Mr Pollen: Chair, can I pick up on Seamus's point? This goes to the question that you asked before Glyn's answer, and it is around the sense of urgency that needs to accompany this. We are looking at a lot of businesses that will disappear unless they get to the settled end state quickly. Something beneficial that the Committee can do is keep the pressure on, everywhere that that can be exerted, to get through where we are going and get to the settled state at the end as quickly as possible. An opportunity, if it is not seized, will be lost.
The Chairperson (Dr Archibald): Thanks for that. We can pick up on that after today's meeting and reflect some of those points to the Minister, the Executive and Invest. I will bring in some other members for questions. I ask anyone who is not speaking to mute themselves, because there is a bit of feedback.
Mr O'Dowd: Thank you all for your presentation, which was very informative. It is crucial that we have real-time, informed evidence presented on the protocol, including the opportunities and difficulties presented by it. Instead of the reality that has been outlined by you today, you would almost believe, from listening to some media reports, that we require UN food drops or a Berlin-style blockade-buster operation to go ahead.
I have a couple of questions that are largely around the same issue that the Chair raised in her last question. How do the Executive help businesses to — for want of a better term — exploit the opportunities presented by the protocol? How do we create jobs, businesses and prosperity for the people who live here? Added to that, if we continue to ask or lobby for extensions to the grace periods, is there not a danger that the mindset of businesses will become, "We can put this off until another day" and that we will therefore be looking at a problem rather than an opportunity? While I understand the rationale for the call to extend the grace periods, there may be unintended consequences from that. What are your views on that?
Mr Connolly: First, it is clear — I think that we have all said this — that this cannot be can-kicking. It goes back to those four points, the first of which is about the need for immediate stability, and that is through those extensions to the grace periods, but it has to lead to certainty. That certainty is not just for Northern Ireland business but for those people who want to invest in Northern Ireland.
There are some great opportunities to come, especially if you are in the manufacturing sector and especially if you are adding value and then selling to GB, Ireland or the EU. That is very clear. One of the principles on which the Northern Ireland business Brexit working group was founded was this: no sector left behind. What we need, as far as those grace periods and facilitations are concerned, is to ensure that we take all sectors of business with us. There will be some changes. It is a new trading regime. It is the biggest economic shift, as far as supply chains and how we trade are concerned, since the foundation of the state, 100 years ago. What we need now is to make sure that we get enough immediate facilities to allow a strong trading system to occur.
On the opportunities, what we need and what was severely lacking is information. The Westminster Government spent millions of pounds on a, "Get ready to trade with Europe" campaign, but they did not have a, "Get ready to trade with Northern Ireland" one. Similarly, the EU admitted that it did not do something similar. As well as asking for the intimate technical communication that we need with the UK Government and the EU, we have asked them to actively promote Northern Ireland and our position — our access to both markets — to EU member states and GB companies and investors. We have that undertaking from them that they will do that.
Businesses like certainty. Any sort of trade change always takes a while before people are willing to invest. Last week, two large contracts went to Northern Ireland agri-food processors from two retailers: Aldi and Lidl. I think that both contracts were for somewhere around £500,000. Those were for the EU and Ireland, and they were facilitated by the Northern Ireland protocol. It has been shown that there are opportunities. We have to work now to ensure that we have immediate stability, which will mean that people can adapt. That is what business are trying to do.
Mr Pollen: I think that Aodhán has covered most of the points. Your first question was about what the Executive should be doing about jobs. One of the key things is to avoid losing jobs unnecessarily because of the application of the protocol. We have a member that is a wholesaler. It is a Northern Ireland-based company, but it operates island-wide and has employees on both sides of the border. It brings in about 7,000 product lines, and 10% of its staff are now focused on doing the paperwork to continue to do that. It brings stuff in to its Northern Ireland-based warehouse, so it is not clear whether it is at risk until it gets the end customer, which could be on either side of the border. That business is looking at the prospect of having to become a Northern Ireland-only company and give up its business in the South simply to minimise some of the disruption that it is facing. Rather than looking at growing jobs in another business, let us protect the ones we have by making sure that the protocol operates effectively.
Mr O'Dowd: I accept and fully understand why you represent your businesses. I am certainly not seeking the loss of any jobs or any sector, but the strategy of leaving no sector behind could be interpreted as all sectors being left behind because we do not move forward. There is no economic strategy or trading arrangement that will encompass every business. Businesses open and close in all sorts of environments. I fully accept and agree that the best environment for businesses to operate and flourish in is a stable trading environment. It may impossible to say that all businesses will be sustained. I am not aware of any economic strategy that could deliver that. The danger with that is that you do not create new businesses, jobs or opportunities.
Mr Connolly: I completely take that on the chin, but that is not what I am saying; I am talking about no sector being left behind in the support that it needs and the opportunities that are provided to it. There will have to be changes and adaptations; that is fairly clear, even in the first seven weeks that we have been under the protocol. It is not that there will not be winners and losers in that regard; it is very obvious already that there will be. For me, no sector left behind means that everyone has the opportunity to make their voice heard; to adapt, if possible; and to articulate their asks. That demonstrates the importance of the Northern Ireland business Brexit working group; we will not get a magic wand, but every sector under our umbrella has the chance to fully articulate those arguments and make those asks.
Ms Sugden: Good morning, everyone. I declare an interest: I am a member of FSB. I do not have a business, but I use it for other purposes.
I want to talk about the difficulties that I am hearing at constituency level, from small businesses in particular. There is a political debate around this, but I will put my cards on the table that there are opportunities with Brexit and the protocol. However, if there are challenges, we need to address them in a meaningful way. We cannot overlook people's issues. A lot of small businesses use Amazon as their supplier because it is a gateway to cheaper products. We cannot diminish that. It is not just about me, as a consumer, or anyone else being able to receive a product; it is an important cog in the wheels of many small businesses. Those issues need to be addressed.
There was an interesting article in the 'News Letter' this morning from Sam McBride. He talked about the big issues that are yet to come and that, over the next four months, we will see a lot of businesses pull out of Northern Ireland. I am keen to hear your comments on that. We need to put our best foot forward and try to ensure as much access east-west and North/South because the east-west issue will have an impact on North/South. Sometimes, that issue is not being looked at. I have constituents asking if they can drive a van to Cork to pick up a supply because they cannot get it from their normal supplier in England. I am not sure that they can because of COVID regulations. We are in a very complicated and difficult situation. There are issues, particularly for small and medium-sized enterprises in Northern Ireland, which make up a significant part of our economy.
Mr Pollen: I very much agree with all your points. A lot of them are also coming through to us from the wider membership. We need to keep everyone's attention focussed on the commitment in the protocol that says that it:
"should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland".
Keep that as our guiding light throughout the negotiations and see what we are trying to achieve.
Your point was very well made about Amazon. A business phoned me a couple of weeks ago. They needed stickers saying, "Fragile". They got an order on Saturday morning of a product that had to go out on Monday morning and needed to get "Fragile" stickers to put on the product. They went online, thinking that by using their Amazon Prime account, they could have it delivered on Sunday to use on Monday. The first six stockists that had the right product said that they were no longer serving the Northern Ireland market place. Despite a grace period being in place for parcels, those six businesses had decided that dealing with Northern Ireland was in some way complicated and something that they were no longer going to do. The risk is that we will see that start to multiply if we do not get a permanent solution in place as quickly as possible so that people know what they are operating with.
You are also right that a lot of small businesses use Amazon as the market place, to buy and sell their product. Going back to the commitment in the protocol about impacting as little as possible, we need to make sure that, when it is of no risk and no potential leakage to the single market, we allow that to be facilitated. We need to keep the pressure on Maroš Šefcovic and Michael Gove to get to that point as quickly as possible so that we do not see the destruction of businesses on the way, whatever that new situation will look like.
Mr Connolly: May I come in on the 'News Letter' piece? Claire, we need to be really careful with the language in this.
Mr Connolly: No retailer has said that they are pulling out. It was about delivery to Northern Ireland, and I have severe queries about that. First and most importantly, it is not what any of our members are telling us. They are committed to Northern Ireland. You must remember that we found out what the trading regulations on parcels would be just 18 hours before the end of the transition period. A lot of companies have had to set up whole new systems, even the biggest guys, because they do not usually deliver outside the UK customs union and single market. To be fair to them, they have worked hard to come back online.
Let us look at the poll that you are talking about. It was done at the start of the year, when everyone was under severe pressure, and a lot of things have now been levelled out. It was not done by a polling company; it was done by a marketing firm. We do not know how much they traded with Northern Ireland beforehand. Were they sending two or three parcels a year or doing lots of business?
We do not know how the questions were weighted. The biggest thing is that it is not reflective of the experience of our guys. I am sure that Roger and Glyn will want to come in on the experience of their guys, but we do not recognise that headline or poll as being anything to do with reality. Again, I will underline that point: it is not about people pulling out of Northern Ireland; it is about some saying that they will not be able to deliver to Northern Ireland. We repudiate what that article says.
Mr Pollen: Claire, I will come in as well. You mentioned parcels, and that is a good example of why we need the grace period. Some people have asked, "Why do you need a grace period? You are kicking the can down the road". We need it for a practical reason. HMRC is working on a new IT system especially for the fast-based carriers such as Amazon, DHL and Hermes. It is called the super-reduced data set for business to consumer parcels. Express carriers will be able to avail themselves of that IT system. HMRC will not have that system ready until quarter four this year, so that is why we need the grace period. It is not about putting our heads in the sand; it is so that HMRC and other stakeholders can play catch-up. As Aodhán said, the courier companies and parcel operators got guidance only on New Year's Eve about what they faced on 1 January.
Mr Roberts: Claire, I will add to that. Aodhán is absolutely right: there should be a very strong health warning about that 'News Letter' article. We were engaging with the Consumer Council early in January. Aodhán is absolutely right: those regulations came in on 31 December, hours away from this becoming law. Over 100 retailers were saying that there will be delays while we get this new system fixed. That number has come down dramatically and is changing all the time, and that misleading headline in the 'News Letter' does not particularly help. We can get very jargon-focused in the debate about EU exit. What does it mean at the end of the day? Quite simply, it means that ordinary working families can get their parcels when they are needed. In the context of lockdown, many more families have been relying on mail order for a variety of products, and I hope that the restoration of click and collect on 8 March will help local businesses. Ultimately, for many of our food retailers, it is about ensuring that ordinary working families do not pay more for their groceries and other important products. We need to keep the focus on an EU exit that works not only for business but for ordinary working families and the consumer.
Ms Sugden: OK. Thank you. I appreciate your providing balance to that article: it is important to put that on the record. I agree that the preparedness was very last minute. I have been speaking to businesses in GB, and they tell me, "We did everything in our power to be as prepared as possible, and we recognise Northern Ireland as a very important marketplace". They thought that certain information was not coming from the UK Government, and that is regrettable. I hope to see the UK Government put more support in place for those businesses. Again, it is not just about Northern Ireland; it is about the businesses coming back and forth and going into Ireland as well. That is an important consideration.
Again, you hit home on the concerns that I have about the
small businesses. You are 100% right in saying that Amazon is a marketplace. The future of small business in Northern Ireland, particularly for young people, is about utilising that marketplace to make an awful lot of money. Those opportunities need to be recognised when we are talking about the challenges.
I look forward to the Brexit issues being worked out in the coming months, and the grace period needs to be extended. If there are other difficulties with that, we should look at them and try to fix them. We all suffer if they are not fixed.
Mr Dunne: Thanks very much to everyone for their contributions. We are all disappointed that we cannot see you, Aodhán, but no doubt we will see you on the news tonight. There is only a certain amount of coverage that a person can get; maybe you are limited in the coverage that you are getting today, Aodhán. I welcome your statement that Northern Ireland business did not want the protocol. I hope that you remember that and keep putting that message out there, Aodhán. I know that you will and that we can rely on you.
Getting down to more specific issues, as Claire mentioned, we are getting feedback from local businesses. Seamus, could you elaborate a bit on the haulage sector? I have been in contact with a large company that is having problems with groupage. Has that been sorted so that you can now break down container loads of goods coming in? That was a major issue. A lot of our suppliers and businesses in Northern Ireland bring in small quantities, break them down and move them out to the retailers and various sectors. Has that been addressed, Seamus?
Mr Leheny: It has been addressed, but it has not been fixed yet, Gordon. It is still a work in progress. There are two aspects to groupage. There is your normal ambient groupage, so that is your normal widgets coming in on groupage. You might have upwards of 50 consignments on a trailer, and that is very admin-heavy at the moment. A lot of hauliers are using the Trader Support Service. Initially, the TSS was not geared up for multiple consignments; it was designed initially for straightforward single-consignment loads. The TSS has recently upgraded the system to take into consideration groupage loads, so that is getting a little bit better. Generally, I am not getting too many complaints from members who are moving that type of groupage. However, do not get me wrong: it is still taking a lot of work to do that.
The problem has been with the SPS checks on food produce. You are going from multiple sites and picking up food. Technically, that food had to be sealed and you could not break the seal. Several members, such as the likes of Aodhán and other business organisations, and I all work with DAERA. I have to commend DAERA. It has been first class in trying to help us, acting on our behalf and making representations to DEFRA. We worked out a solution whereby you seal the pallets rather than seal the trailer. There is a 15-step instruction process for that, and we have gathered feedback on how to improve it. A few operators are using it at the moment. It is still at trial stage. It has not been properly stress-tested yet.
There are groupage consignments of food moving into Northern Ireland now, but it is very cumbersome and slower. It is 100% checks. You have to pre-notify DAERA. You have to go for inspection. That is to build up trust with the EU to show it, "Listen, we are capable of doing this. We are trustworthy. Here is how it is happening". We expect those physical inspections to drop significantly after a while.
However, the system needs digitised. One of our large wholesaler members and one of our haulier members are working with the Trader Support Service to digitise the system to make it faster and more streamlined. We are gradually getting there. What we do not need is the end of the grace period on 1 April. That will just add a ton of work to the process. The emphasis has to be on easing the burden of the checks and the formalities, simplification and avoiding the EHCs as much as possible.
Mr Dunne: OK. What about the empty trailers coming back? Have those been addressed? There were difficulties in getting a load to bring back because the supplies were not coming forward.
Mr Leheny: Yes. That is a problem. Some are OK with that. It depends on your commodity and who your customer base is. Others are saying that the rule of thumb is that one in three trailers that go to GB comes back empty. That adds significant costs because you are paying a driver to drive back to Liverpool or Cairnryan and ship an empty unit back. Generally, when we surveyed our members for the month of January, we found that their revenue was down by between 25% and 30%.
That was down to reduced volume. We have a trade imbalance on the Irish Sea now. Goods leave Northern Ireland bound for GB unfettered, and business is good. Our products, primarily agri-food products, are still hitting the supermarket shelves of England, Scotland and Wales. The problem, which is probably not helped by COVID, because certain elements of the economy are still locked down, is that a significant number of the lorries that go over laden struggle to find loads to bring back to Northern Ireland. They have to decide, "Do we park up and wait, or do we take a hit and take the lorry back to Northern Ireland empty?". The problem is that, if we do not get the lorries back to Northern Ireland, laden or unladen, we will fail to service the continued exports leaving Northern Ireland. We have to get those trailers, especially refrigerator trailers, back here to make sure that the products leave Northern Ireland.
We had a meeting with Michael Gove and the Secretary of State a few weeks ago. We requested some financial assistance for hauliers who are in the bracket of shipping empty trailers from GB to Northern Ireland. We have not heard any word back on that yet, but they are aware of that difficulty.
Mr Dunne: OK. That is good. The trusted trader scheme is working reasonably well. We hear some things about it. How satisfied are your members with it ?
Mr Leheny: Is that for the movement of food produce?
Mr Leheny: It covers most sectors that deal with food. I have not had any complaints from members who have not been included in it. I think that people who have had to avail themselves of it have been able to do so. However, we need a more long-term solution to the situation. As other witnesses said, we need a certified and auditable supply chain whereby you are a trusted trader moving produce into Northern Ireland. You would almost treat it like the VAT return principle where you are an accredited trader moving goods to Northern Ireland and you volunteer the evidence of compliance to the authorities, either biannually or annually. You might be open to spot checks, but, when I speak to businesses, they say that they would be happy with that. It would mean that the vast majority of produce coming to Northern Ireland would be unfettered to a degree. Businesses would still have to complete some formalities, but it would limit the friction and admin.
Mr Dunne: OK; grand. Thanks for that. We have a fella who sells cheese locally. He was buying it in England, obviously under retail, and, since the beginning of the year, he has not been able to get the supplier in England to supply him in Northern Ireland. There are ongoing issues.
I had a message last night from a businessman in north Down who manufactures garden sheds. His supplier for hinges says that a batch of hinges is stuck in quarantine in Larne. That just does not run well with people. Businesses and the public are getting so frustrated with the whole thing. There are unnecessary delays that need to be addressed.
Mr Roberts: Gordon, all my colleagues on the call are getting similar queries. We get calls from members who run small health food businesses and cannot get vitamins and other supplements through. We have ongoing issues with horticultural retailers as well. It is very challenging to give answers given the sheer number and diversity of the technical queries that we get daily. We need better lines of communication so that we can answer those queries and get those problems resolved, whether it is a European Commission issue, an Executive issue, a Cabinet Office issue or a bigger challenge to do with the protocol.
We absolutely get that. Let us not forget the huge burden that the protocol places on the very small independent retailers who are weighed down by the bureaucracy and the form filling. I want those businesses to be focused on their future. I want those businesses to be focused on how they can recover from the pandemic and the economic fallout of the pandemic. I do not want those businesses to be stuck filling in forms. I want those businesses looking to the future and helping to rebuild our economy. It is important that we address the many challenges with bureaucracy that those businesses face, and we need a level playing field for all businesses, large and small, to make sure that they can make the best of this difficult situation.
Mr Leheny: There has been a slight improvement. I spoke to some operators this week who historically used Dublin-Holyhead for their Northern Irish trade. Dublin-Holyhead is the fastest route to market if you are sending goods to or receiving goods from the south of England. Because of the problems at Dublin, especially in January, they started rerouting via Cairnryan and Liverpool, but they were incurring additional costs with the additional mileage etc and drivers' hours. Some operators are now taking the decision to move back to Holyhead-Dublin, but the Dublin routes are still about 50% down year-on-year, and a lot of traffic is still avoiding Dublin-Holyhead. We have a sister association in the Republic of Ireland, the Freight Transport Association of Ireland (FTAI), and it says that the level of checks is at around 15% now.
The problem with Dublin is not because Northern Ireland is a lighter touch than Dublin; it is to do with the IT system. The IT system in Dublin is called the automated import system (AIS), and, basically, it has been unable to cope with the sheer volume of declarations going through it at peak times. At the moment, in Northern Ireland we have grace periods. We have the grace periods on parcels and on a lot of the SPS issues. Dublin does not have those, so a higher level of declarations has to be made, and that AIS has crashed a number of times, leading to trucks being delayed. One member of ours from County Tyrone had lorries parked up for two nights in Dublin port with their drivers. That was not even a load coming to Northern Ireland; it was a load coming from Wales to Donegal. They were just caught in the middle because of the IT glitch.
There has been a slight improvement, but there is still a lot of work to do. I have said to Departments in Northern Ireland that we really have to learn from the mistakes that are being made in Dublin and from the issues there because, ultimately, we might have to face some of the obstacles that Dublin has faced.
Ms McLaughlin: Thank you very much. Apologies, folks, I had to jump off. We had a good news announcement today about heads of terms for our city deal in Derry and Strabane, so it was a pleasure to jump off for something really positive.
Thank you very much for your presentation. It is about being pragmatic and realistic and looking at where we are currently. I do not think that any political representative likes the protocol. We are burdened with it as a result of Brexit, but I am looking in the community for solutions so that businesses can overcome this, and I am particularly keen to work to get our SMEs as much support as possible so that they can overcome the difficulties. It is really welcome to hear in the briefings this morning that there appears to be a willingness from the UK and the EU to facilitate smoother access to both markets, and that is really important for our business community in Northern Ireland.
Apologies if this was asked earlier, but how do we support our small businesses to get through some of the bureaucracy that they are faced with? What training can we give them? I had a call from a local firm yesterday. It wants to do the right thing and wants to complete the forms properly, but it is kind of swimming in the dark and does not know who to turn to for answers to its questions. That firm asked questions of Invest NI and was pointed in a direction that was not really helpful to them.
I put them in contact with
city, who are running a bespoke one-to-one training session on the trusted trader service. We need to be more focused on overcoming some of those obstacles and on really supporting those businesses as they try to fill in the forms and overcome the barriers that they face.
Mr Pollen: Thanks for the question, Sinead. The trouble is identifying which problems we are trying to address. There are so many, and they are changing rapidly. As some problems are identified and solutions brought forward, they can disappear. For others, the problem may be on the other side of the water and may lie with businesses there applying them. Some of the problems involve just a sheer lack of capacity. I am not sure whether you were on the call, but I spoke about the wholesale member that we have that is using 10% of its staff just to input numbers to track the 7,000 product lines that it brings to Northern Ireland. It is difficult to see what you could do for them without a complete systemic change. They are throwing resource at the issue on a temporary basis, hoping that we will get through the grace periods and to an end solution.
Chair, we are getting a lot of feedback. Is it possible to get some microphones muted?
Mr Pollen: Thanks very much.
One thing that the Executive, and probably the Department for the Economy, can do is invest a lot of time, capacity and resource into training so that we have more people available. Those resources would not necessarily be sold to small businesses, and the businesses would not necessarily take them on as a permanent overhead, but those sorts of advisory resources could be available for them to use as and when they need them as they work their way through this ever-changing landscape until we get more towards the stability that Aodhán talked about and that we need to get at the end of this period. That will be our new trading environment, so there could be assistance to get us through, and then people can take on their own structures once we know exactly what environment we are operating in on a more permanent basis.
Ms McLaughlin: The company that I am speaking about has about four staff members, so it is a very small operation, but it imports and exports, and it wants to do the right thing. I feel that, if there is an onus on us in Economy, we should make sure that the resources, signposting and walk-through are there. Once businesses get their heads around what is expected of them, it will be much easier for them to go through those processes. At the minute, the signposting and training are not as easily identifiable as they should be for some of those SMEs.
Mr Pollen: That is true. In some ways, it is about how we all employ professionals. Any business will use an accountant or auditor rather than learn to do those things themselves. The risk, therefore, is that you end up needing additional bureaucracy just to be compliant, and that could make you uncompetitive and destroy your business in any case.
We need to keep a focus on simplifying customs. Seamus made a point about how, if you think about how the entire tax system is based on trust, you find that people have to retain their own records, make their own commitments, declare what they owe and then pay it. They are also required to keep records for six or seven years to demonstrate that the claims they submitted were valid. If we can get to those fairly light touch processing systems for a whole range of the requirements that are being introduced here, that would make it more viable and feasible.
Parliament is sticking a plaster on staff and training and so on to get us through the current period, but the real focus has to be on getting a much better system to operate in the longer term.
Ms McLaughlin: I have a great deal of trust in the business community. We see them every day operating various systems: the VAT system etc. They will overcome some of the present difficulties and find ways of doing business effectively.
I do not know whether we talked about the opportunities that there are to sell this place as a place to do business with two major world markets: the UK and the EU. It is really important to keep that goal ahead of us as well. There definitely are problems and barriers. We need to overcome them, get in solution mode and knock them off one by one.
I do not think that the protocol [Inaudible.]
We need to make sure that our businesses are not negatively affected, and every opportunity must be sought for us to be competitive in world markets.
Mr Leheny: Sinead, I will add to that. One thing that we have made clear to the Government is that a lot of the SMEs have fallen through the cracks when it comes to information. They will pick up the phone and call the Trader Support Service for some kind of bespoke advice, but the TSS does not provide that, so they get scripted answers to questions. They are then told to call a customs agent, but customs agents are busy right now and do not have time to sit down and given someone almost consultant-led advice. SMEs are therefore stuck in no man's land, and, a lot of the time, they pick up the phone to Aodhán, Roger, Glyn or me, and we are not always equipped to provide advice or have the time to give it. As we said, either through the Trader Support Service, Invest NI or some other outlet, there should be some sort of additional funded advice for those SMEs that need it to help them, whether for trading with GB or the EU. That is not there at the moment.
Ms McLaughlin: There should be an emergency helpline through which they can get one-to-one advice. The Economy Committee needs to feed that back to the Department. Prepping is urgent, and businesses need help.
Mr Roberts: Sinead, I endorse what my colleagues have said. In the past 24 hours, we have had queries on subjects ranging from violets to vitamins from very small businesses and very small independent retailers. The questions were very technical in nature. To put it into context, we are dealing with a huge amount of information about the pandemic as well. It is about how you get that information out in a way that can be utilised by small businesses. Between the Department for the Economy and DAERA, something needs to be done centrally, such as having a helpline staffed by experts. Many of the businesses that operate under very small margins were the hardest hit by the pandemic. As I said at the start, many of our members are facing the perfect storm of the pandemic and the protocol. We need to ensure that we hold their hand, get them through this, answer their questions and try to get their businesses back on track. It is our independent retailers and small businesses that will have the toughest time with the protocol and the pandemic.
Ms McLaughlin: Finally, I have to say again to the representatives of the business bodies who are here, and to others who are not, that you are doing a very good job. Once again, you are ahead of the politics and the politicians here. You need to keep at it and keep doing it in order to find solutions for those businesses. That is really important, because, at the end of the day, it is about jobs. People can platform and cry and moan about things, but there are real lives behind this. People are going through tough times because of COVID and everything else. We need to make sure that we crack some of the difficulties that businesses are experiencing as a result of the Brexit protocol.
The Chairperson (Dr Archibald): Thanks, Sinead. I will pick up on the point about advice and stuff to businesses. When we had officials in a couple of weeks ago, they pointed to the Invest NI webinars and said that people can now book advice slots on those. They also pointed to the Trader Support Service. On the basis of what you said, Seamus, it is perhaps not the most appropriate place to seek help. How do you think that the supports that are in place are working? Do you think that more help, and more specific help, is needed?
Mr Leheny: More specific help is needed for people whom the Trader Support Service or a customs agent cannot help. They need targeted advice and assistance to help get them through this. As Sinead said, we should get staff in a room, on a helpline, where they can talk to people one to one and give them that advice. That just does not exist at the moment.
There are a lot of companies involved. The specific commodities that they are moving could mean that they are coming up against a brick wall and thus need that help. That could be traders, hauliers or whatever. It would be good to have that for a limited time, until people find their feet and we get some certainty about trading conditions.
The Chairperson (Dr Archibald): That is useful to know. When we had officials in, they told us that the TSS likes specific questions, but, if people are not getting specific answers when they are asking those questions, something else needs to be put in place to help.
Mr Pollen: Chair, the other issue is that none of us realised the complexity of the economy and the business environment here. We all do what we do, and there will be members who run their business in a particular way, and they are experts in their field in running that business. Suddenly, there has been a colossal change to the operating environment for them, and there are very few experts around to advise them on how they do what they do in this new context. We can get a lot of generic information up on websites, we can run webinars and we can have a degree of telephone advice, supports and so on in place, but there will still be an awful lot of instances in which the challenge is so complicated that you cannot advise on that basis. Those businesses are really toiling as they try to navigate their way through the system whilst still running their business.
The Chairperson (Dr Archibald): That is useful. We will be having Invest NI in with us quite soon, so we can explore that a bit more with it. We are also having InterTradeIreland in to talk about cross-border businesses. What you have said is really helpful.
I have one final question, and it may be a bit political. You said that getting some solutions will require political will. How do you think the appointment of David Frost will impact on the ability to reach some of the agreements on flexibilities that may be required?
Mr Connolly: Dun-dun-dun. That is quite the question, so thank you very much, Madam Chair. One of Minister Gove's saving graces is that, for all the ideological decisions that he makes, there is a baseline of pragmatism there. We have to remember that Lord Frost comes from a different position ideologically. Lord Frost also has a different way of negotiating. There is an inherent difference between how the EU and the UK negotiate things anyway. The UK will go in with a big list and ask for the moon and the stars, and if it gets the sky, it is happy. The EU, however, because of how it is made up, has to take 27 countries along with it. It agrees a principle and then extrapolates from that principle, based on trust. Those are very different ways of negotiating. One of the inherent frictions in the whole process is not just what the UK is asking for but how it is asking for it.
We have to remember that Lord Frost does not come into post until 1 March. Following yesterday's Specialised Committee meeting, a very significant meeting is happening this afternoon that could deliver an extension to the grace periods or look at other facilitations. We do not know what those other facilitations might be. The fact that we now have an agreement in principle to have some sort of formal communications with both the EU and the UK provides me with a little more solace. We will have a direct line to communicate our concerns, our solutions and possible opportunities, and that has made me slightly more sanguine about it than I perhaps otherwise would have been.
The only other thing to add is that the reality of trading and of the needs of the Northern Ireland business community and Northern Ireland households has been really well articulated by the Northern Ireland business community, to the point at which I feel that it cannot be ignored. The challenge for us as a business community is to continue to keep us the centre of attention. You may remember that, in January 2020, the Northern Ireland business Brexit working group came together to break the narrative that Northern Ireland was sorted under the protocol. We had to come together again this year to break the narrative that either Northern Ireland was completely sorted or Northern Ireland was starving, and that we have done. It is on us to continue to push those messages. While there will be a change, no doubt, and a harder, more robust style of negotiation, the base level and the needs of Northern Ireland business have not changed.
The Chairperson (Dr Archibald): Thanks for that, Aodhán. You reminded me of something that I wanted to ask you about the formalised engagement with business.
Is the Joint Consultative Working Group (JCWG) the channel for that, or is it something separate?
Mr Connolly: It will have to be something separate, simply because the Joint Consultative Working Group has not met us. The working group seems to operate in a cloak-and-dagger way. We know that the Joint Committee will take its decisions in camera, and we are not able to go in and speak to it. However, the Specialised Committee working group and the Joint Committee working group should be available to hear arguments and concerns from businesses. That has not happened, and that is one of the reasons that, since last September, we have been asking for formalised communication. It now remains to be seen how that will be delivered, but, for us, the JCWG is not doing what it needs to do.
Mr Stalford: You cannot see me, because the internet in Parliament Buildings is rubbish. Any time that I try to use the camera and sound at the same time, it collapses on me.
This has been operating for only 60 days or something like that. There will not have been time for the UK to diverge from any EU regulations at this point, but we already see restrictions being imposed on the movement of goods from GB into Northern Ireland. What does that say about the potential for the expansion of the protocol going forward?
Mr Connolly: On the divergence point, it is not about whether you have diverged but whether you have the potential to diverge and whether you are operating under the same legal framework. In the Infrastructure Committee a few weeks ago, someone said that a sandwich in Cairnryan is the same as a sandwich in Belfast. No, it is not, because it is not regulated in the same way. It does not have that equivalence. Even though we are exactly the same at the minute, there is potential for divergence, and we have already seen things such as GMOs and herbicides being discussed as potential areas for divergence in the short term. We can have the same standards, but, unless those are recognised and have equivalence, it is not the same ball game.
We have been trying to show that there is very little risk, using the principle of dead-end host, in asking for that audit role and for certified supply chains. We can show from point of departure that what is leaving falls under the single market rules and that we know exactly where it is going to be sold. There is therefore a burden of evidence on us, but what we do also provides that robust evidence to the EU.
I will give you an example of how that works. I do not think that the newspapers made enough of this last week when it happened, but, last Monday, we had the agreement between the EU and the UK on data equivalence. Work on that had been ongoing since the end of last September or the start of October. It was a real worry, even for us in Northern Ireland, because you have to remember that the protocol covers only trade. It does not cover services [Inaudible.]
For us, that is really significant, because the EU said, "If you want data equivalence, and if you want to be able to move your data into the EU, and EU data to you, you will need to provide a security framework and evidence to show that that security framework is in place".
The UK then did that. I was quite surprised when that happened on Monday, because member states still had a lot of questions, but the Commission rubber-stamped it. That lays down the principle that, if we in the UK provide evidence to answer EU concerns, the EU will move. That is what we need to get to, as far as a certified auditable supply chain: a trusted trader scheme, if you will.
Mr Stalford: Yes, Aodhán, because the EU is known for being a very flexible organisation.
Mr Connolly: We got a derogation on meat products that had not happened anywhere else. We have a three-month grace period. I am not here as a cheerleader for the EU. I am here to tell you what business needs and what businesses have asked for.
Mr Stalford: OK. The burden of evidence is on us, so, ultimately, the rules that we live by will be determined by people from outside this country.
The Northern Ireland Statistics and Research Agency (NISRA) published figures from 2018 imports to Northern Ireland from the Republic of Ireland. They were estimated to be worth £2·8 billion. Imports from the rest of the EU were estimated to be worth £2·6 billion, while imports from the rest of the world were estimated to be worth £2·4 billion. Meanwhile, purchases from Great Britain — purchases, not imports, because Northern Ireland is part of the United Kingdom — were estimated to be worth £13·4 billion. Surely that demonstrates that placing barriers east-west will have a much greater negative impact than placing them North/South will, not that I am advocating either.
Mr Connolly: There is no argument against that, but you have to remember that what the business community asked for, and did so from day one, was absolutely no barriers anywhere. We argued that the economy was built not on 20 years of peace but on 40 years of being in that trading relationship. We have cyclical, integrated supply chains across these islands. Take as an example the £2·7 billion or £2·8 billion of Northern Ireland agri-food that our members and large retailers buy. We have 1·9 million people here, but we feed over 10 million people in GB. However,
% of that goes through the Republic of Ireland's just-in-time supply chain. None of this can be seen in singular terms. It has to be looked at in its entirety. We are trying now, as I said earlier [Inaudible.]
I am on record as saying that the Prime Minister
in our communities. We are trying to provide facilitation and argue for those flexibilities from the EU and the UK Government to enable trade to happen. My concern is not constitutional or political. It is, as it has always been, about continuing to provide the people of Northern Ireland with the choice and affordability that they need.
Mr Stalford: In not wanting the protocol, you have an ally in me, because, unlike several of those who have spoken in this Committee meeting, I did not vote for a motion that urged for the rigorous implementation of said protocol and said trade barrier up the middle of the Irish Sea between the other parts of the United Kingdom and this part. I will leave it there, because I have made the points that I wanted to make. Thank you.
Ms McLaughlin: I want to go back to Aodhán. At the beginning of his presentation, he indicated that, as a result of the joint meeting held with Gove and Šefcovic at the beginning of this week, or last week — whenever it was — he felt that the discussion was enlightening for both Ministers. He said that they had committed to continuing the consultative process with the business community. In what form did they commit to that? Was it formalised? The joint consultative working group and the Joint Committee do not allow that, but we need another way in which to get your voice in there so that we can deal with the problems.
Mr Connolly: It was enlightening for them, in that the guys who were around the table — professionals one and all — were able to articulate very well the concerns of their own sector as well as those of the individual businesses that were used as examples. I do not want to be so flippant as to say that there was a penny-dropping moment, but the conversation was imbued with a greater understanding.
My understanding is that they will come back to us with an idea for formalisation. We are bit players and are merely on the periphery of the politics of this. It is now understood that we have to be listened to, but how the EU and the UK engage formally on that will be up to them. They have said that there will be a formalisation of the process. To me, that means that it needs to be done outside of the joint consultative working group, which is not functioning in the way that it should be.
Ms McLaughlin: You are not bit players; you will be the problem-solvers. It is really important that you get a process or a formalised way of inputting information to those bodies so that they can overcome some of the barriers that you face and bring solutions to everybody's issues, whether pro the protocol or against it. I do not know anybody who is pro the protocol. We are just trying to work through it. That is it. Nobody loves it.
Mr Pollen: Chair, may I pick up on that point, your question about Lord Frost and Mr Stalford's question? Aodhán was left to bat for a long time at a sunny wicket. They all highlight the fact that this group has studiously not taken any political sides. We deal with whatever we find in front of us, whether that be the people, the regulations or the legislation. That is what has given this group its integrity throughout the past number of years. We had the Theresa May Government first and worked with them. We then had the Boris Johnson Government, and, as you say, now we have Lord Frost in there. Regardless of who is in the role, having been put there to do that role by a party, we will engage with that person to advocate the issues that are affecting our members and their customers. We will aim to gather as many allies as we can in the pursuit of making whatever we have work as well as we can.
The Chairperson (Dr Archibald): Thanks for that, Roger. That is probably a good place on which to finish. I thank you all for engaging with us this morning. It has been, as always, useful, informative and, to use Sinead's word, enlightening. We really appreciate that and the constructive role that you all have played throughout the past four and a half years. I am sure that we will continue to engage with you throughout the rest of the process. Thanks again for your briefing this morning.