Many UK businesses which import food products from the European Union will have to pay a special “Brexit tax” that will further drive up prices, particularly in smaller shops such as delicatessens, under proposals set out by the government last week.
The planned charge of £43 per consignment, outlined in a consultation document issued by the Department for Environment, Food and Rural Affairs (Defra), was described on Saturday by a leading industry figure as “the sting in the tail of a post-Brexit food inspection regime” that was already fuelling inflation.
Shane Brennan, director of the Cold Chain Federation, told the Observer: “This government tax for importing food goods from Europe comes on top of the costs of vets’ and customs agents’ fees, as well as increased supply chain costs, all arising from the post-Brexit realities of trying to service the UK. Forty-three pounds doesn’t sound like a lot but, given that we import thousands of consignments of food goods through Dover every day, it amounts to a border tax costing the industry millions. It is unavoidable that these costs will filter through to consumers.”
Industry sources say they fear in particular for smaller retailers in the UK such as delis and other specialist food outlets which import lots of small amounts of special items from the EU such as Parma ham, French cheeses or Belgian chocolates.
In its consultation document for the industry, Defra admits that it is planning the new charging regime in order to “recover operating costs for government-run border control posts in England”, many of which were built shortly after Brexit to conduct a regime of checks on goods of plant and animal origin that has never come into force because of a series of government U-turns.
In January, the Observer revealed how the giant border control post at Sevington in Kent, which cost well over £100m to build and was designed to handle 1,700 heavy-goods vehicles, lies all but empty following the U-turns. It is now awaiting adaptation at further cost to the taxpayer to conduct the new type of checks from January.
The Brexit charge will affect food imports from the EU entering the country via government-run facilities, such as the Dover border control posts which handle 90% of food imports from the EU mainland. The consultation makes clear that commercial ports will be left to determine their own charges.
Last month, prime minister Rishi Sunak brought together farmers, food producers and leaders of some of Britain’s largest supermarket to address the crisis of soaring food prices.
Food and drink prices rose by more than 19% in the year to March, according to official figures. Figures from the London School of Economic show that Brexit has cost each UK household £250 since December 2019 in higher food prices.
Brennan added: “The decision to impose a flat-rate fee means that a small business importing a few boxes of ham will pay the same amount as a multinational business importing a 40-tonne lorryload of chicken. This policy will contribute to the collapse of the multi-customer, multi-load haulage operations that small businesses rely on to service UK customers.”
Since the UK left the single market and customs union, its exporters have faced significant extra costs and bureaucracy when trying to send goods to the EU. Many small firms have given up exporting to the EU market altogether, while others have set up depots within the EU to get round the extra costs, paperwork, and tax charges that have hit their customers.
Industry experts say UK importers are about to feel similar negative effects of Brexit as the import tax charges come into force.
A UK Government spokesperson said: “Growing the economy and supporting small businesses are priorities for this government. The estimated charge of £20 to £43 is an indicative range while we continue to determine the full scale of operating costs and finalise the risk categories under the Target Operating Model. We are currently consulting with the sector and businesses to ensure we take the fairest approach that works for them, while also facilitating the movement of goods into the country and protecting our biosecurity.”
