THE customs option favoured by Boris Johnson and his fellow Brexiteers could cost businesses as much as £20 billion a year, top Treasury officials have claimed.
They also suggested that either of the two options being considered by UK ministers could take between three and five years to operate, raising the prospect Britain could effectively stay in the customs union well beyond the end of the transition period in December 2020.
The major intervention into the Brexit debate raises a major question-mark over the maximum facilitation or “max-fac” option, which would rely on using modern technology to solve the Irish border question.
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Conservative backbencher Nicky Morgan, who chairs the Commons Treasury Committee, declared: “I find it extraordinary that a pro-enterprise party can be discussing an option that will add up to £20bn of costs to business.”
John Redwood, a leading Tory Brexiteer, said he did not accept what he described as the HMRC's "general figures" but told the BBC that "if it is going to cost this much it is the wrong system".
By contrast, Jon Thompson, the Chief Executive and Permanent Secretary at HM Revenue and Customs, told her committee the new customs partnership[NCP], favoured by Theresa May, would cost a maximum of £3.4bn a year and might even end up having "a net cost of zero or less".
He explained that, under max-fac, customs declarations would cost an average of £13bn a year with billions more added for EU rules of origin checks; like making sure cheddar cheese comes from Cheddar.
“You need to think about the highly streamlined customs arrangement[max-fac] costing businesses somewhere in the late teens of billions of pounds to operate; somewhere between £17bn and £20bn, it is that sort of order," said the senior official.
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Max-fac would use trusted trader arrangements and technology like number plate recognition cameras to avoid the need for border checks.
The NCP, meanwhile, would see the UK collects tariffs on behalf of the EU for goods intended for the bloc, with traders potentially able to claim a rebate if British duties vary. The Foreign Secretary famously branded this plan as “crazy” while Brussels dismissed it as “magical thinking”.
But Mr Thompson told the committee that because the customs partnership tried to deliver a "free-flow of goods" it avoided the costs linked to max-fac.
While the maximum cost could be £3.4bn, he noted: "The businesses would be getting that back on the tariff, so it might spend £100 and get £150 back; you could argue the NCP has a net cost of zero or less."
When asked about Mr Thompson’s claims Downing Street refused to be drawn on "speculation". Mrs May’s spokesman stressed the £20bn annual cost was "not a figure that I'm aware of".
Asked if the PM was confident a new customs model could be in place by the end of 2020, he replied: "We have been clear on a number of occasions that our intention is to be ready for the end of the implementation period."
Meanwhile, MPs were told Britain’s £39bn Brexit divorce bill could be signed off by Westminster without any formal legal commitments on a future trade deal with the EU.
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Suella Braverman, the Brexit Minister, acknowledged there was currently no explicit condition in the withdrawal agreement between the UK and EU but both sides had promised to act in "good faith".
She told the Commons Brexit Committee MPs would be asked to vote on the Brexit deal - including the divorce bill - before the terms of the future relationship were set out in a legal text.
Commenting on his colleague’s remarks, Mr Johnson, speaking in Chile, said: "Article 50 makes it absolutely clear the terms of the withdrawal have to be seen in the context of the future relationship. I just remind you of the basic fact of negotiations, which is nothing is agreed until everything is agreed."
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