British Ports Association may seek compensation after investing in post-Brexit border control facilities

29 Jul 2024 --- British Ports Association (BPA) is concerned that port and border control posts (BCP) operators are currently being left without an opportunity to recover costs for the facilities installed to check and regulate animal and plant imports post-Brexit. BPA is now demanding compensation from the UK government if it negotiates a deal to reduce trade barriers with the EU.

The recently elected Labour government says a veterinary deal with the EU to prevent “unnecessary border checks” and limit food price increases coming from higher costs incurred by importers is warranted. This is part of plans to revise the trade barriers put in place following Brexit under the Conservatives.

The BPA has written to the Cabinet Office and the Department for Environment, Food and Rural Affairs (Defra), warning of significant losses after the UK government introduced the Border Target Operating Model (BTOM) among UK and EU food businesses in January.

“The new BCPs we are referring to were a necessity of the trade deal between the UK and EU. Ports were essentially forced to build if they wanted to continue handling certain goods from Europe,” Mark Simmonds, director of Policy & External Affairs at the BPA, tells Food Ingredients First.

“Ports met about a third of the overall capital expenditure of the approximate £300m (US$384 million) for the new BCPs. Ports also meet the operational costs for running them, which we estimate to be around £100,000 (US$128,144) for a medium to large BCP.”

Underutilization at checks
Port owners reportedly built a series of high-cost and high-spec border control posts which included investing £200 million (US$256 million) in co-funding facilities to scrutinize imports at 41 ports after the UK’s departure from the EU.

Port owners argue the government's Port Infrastructure Fund was insufficient and they have had to cover the difference. BCPs and sanitary and phytosanitary (SPS) charges for importing live animals, animal products, plants and plant products came into force on April 30. Port health authorities in England and local authorities in England, Scotland and Wales conduct the identity and physical checks at the BCP.

“The actual checks inside the BCPs are done by the government,” Simmonds explains.

“Most ports planned to recover their costs by placing a charge on traders, but there is now significant underutilization at a number of these sites. As such, these ports think they will be unable to recover their costs.”

If the new government seeks a closer SPS agreement with the EU, then all of the new sites could become obsolete.

“We haven’t shared the letter with any journalists as a courtesy to new ministers, but that is the gist of it.”

Earlier this year, Gerald Vernon-Jackson, Portsmouth city council’s cabinet member for transport, said the £23 million (US$29 million), 8,000 sq meter facility at the UK’s cross-channel terminal was a “monumental white elephant.” Nearly half of the site is vacant and unused, and the council (which owns the Portsmouth port) is seeking a government reimbursement of £6 million (US$7.6 million) of the construction costs.

Insufficient funds
In 2020, the government allocated a total of £200 million (US$256 million) for the Port Infrastructure Fund to build new or upgrade existing infrastructure. New constructions included three BCPs at Hull, Immingham and Killingholme on the Humber, costing £70 million (US$89.7 million), and a £15 million (US$19.2 million) BCP at the port of Purfleet in Essex.

During an SPS check, live animals, germinal products, products of animal origin, animal by-products, plants and plant products are categorized as high, medium or low risk.But port owners have argued that the fund was insufficient to meet their requirements and they have had to cover the difference. As per the UK Major Ports Group, this included a total payment of £100 million (US$128 million) to fill the funding gap.

"Ports are also looking to draw back some of the money it has invested in the BCPs from Government. Our sector prepared these borders facilities at speed to meet tight government deadlines but they are not being fully utilized. Many now stand empty at significant expense to port operators," Richard Ballantyne, chief executive of the BPA said previously.

Analyzing risks
BCPs check goods that pose a risk to human and animal health, environmental health or animal welfare. In case a consignment is called to a BCP for an SPS check, it goes through an identity check and a physical inspection.

SPS check follows a global risk-based approach: live animals, germinal products, products of animal origin, animal by-products, plants and plant products are categorized as high, medium or low risk, with controls appropriately weighted against the risks posed both by the commodity and the country of origin.

Imports that do not meet official controls may be returned to the exporting country or destroyed.

Earlier this year, the UK border control changes sparked concerns among food businesses in the UK and the EU. Defra recently reclassified certain fruits and vegetables under this new system, raising alarms over businesses’ readiness for these changes and the potential impact on prices.

By Insha Naureen