House of Lords Committee report recognises SMEs suffering most one year on from Brexit

One year on from the implementation of the UK-EU Trade and Cooperation Agreement (TCA), ADS is hosting a webinar next where will we be joined by an expert from the Department for Business, Energy and Industrial Strategy to talk through the Agreement’s impacts on members and key things to know going forward. You can find out more and sign up for free here.

The House of Lords European Affairs Committee last month published a report on trade in goods between Great Britain (GB) and the European Union (EU) one year after the UK’s exit from the EU.

The inquiry was launched following the decision by the UK Government to further delay the introduction of new import controls on goods entering GB from the EU in September 2021. The Government has adopted a phased approach to their introduction, whereas the EU introduced full controls on 1 January 2021. The inquiry also examined the overall impact to date of Brexit and the TCA on GB-EU trade in goods.

The main findings from the report were that:

  • Since the agreement of the TCA and the end of the transition period nearly one year ago, businesses trading goods between GB and the EU have faced additional administrative burdens, making it more complicated and expensive to trade with the EU.
  • These burdens have fallen particularly heavily on smaller and medium sized businesses (SMEs), who have fewer resources to draw upon to help them adapt.

ADS submitted a response to the inquiry’s call for evidence and covered the following key areas, which were cited by the Committee in their report:

Implementation Delay

ADS pointed to relieving the pressure on firms as a clear benefit of the Government’s decision to delay the implementation of full import controls. However, we also highlighted that we were concerned that the level of acceptance for the current asymmetric model is likely to decline over time. Any additional delay to the introduction of import controls would create adjustment costs, increase uncertainty, and undermine the level of trust required for businesses to invest in readiness.

Rules Application

ADS highlighted that exporters are concerned about the inconsistent application of the new rules by different EU Member States and that navigating these requires significant extra time and resources, the burden of which falls disproportionately on SMEs.

Customs Intermediaries

ADS flagged concerns about capacity in the intermediary sector and warned that some intermediaries were turning away the business of new clients (particularly SMEs) owing to them reaching their capacity.

Impact of COVID

ADS noted that we had seen no significant disruption to production or flow of goods in our sectors over the past year due to COVID suppressing demand. The Committee concluded that “it is difficult to disentangle the impact of the end of the transition period from that of the COVID-19 pandemic at a macroeconomic level, but that the new challenges individual traders have faced on the ground cannot be attributed solely to the pandemic.”

Recommendations

The Committee called on the Government to do more to provide access to professional support for small businesses and recommended that the Government restore a version of its SME Brexit Support Fund, but with wider eligibility criteria.

ADS continues to represent members on issues such as trade in goods and would encourage companies to get in touch with any problems related to UK-EU trade. You can also find out the latest up-to-date information in our Brexit Hub.