There has been a clear increase in costs, paperwork and border delays in the UK since Brexit, according to a key report by a House of Commons committee.
While the report by Britain's Public Accounts Committee (PAC) highlights the impact of Covid-19 on trade volumes, it says "it is clear that EU exit has had an impact, and that new border arrangements have added costs to business".
Committee chair Dame Meg Hillier MP said: "One of the great promises of Brexit was freeing British businesses to give them the headroom to maximise their productivity and contribution to the economy – even more desperately needed now on the long road to recovery from the pandemic. Yet the only detectable impact so far is increased costs, paperwork and border delays.
"The PAC has repeatedly reported on Brexit preparedness and at every step there have been delays to promised deadlines. It's time the government was honest about the problems rather than overpromising.
"In our view, there is much more work that government should be doing in the short term to understand and minimise the current burden on those trading with the EU, to address the immediate delivery and readiness risks in introducing import controls, and to have a border in place which is operating effectively without further delays or temporary measures."
Brexit took effect on 1 January 2021 when the transition period ended.
While the UK has phased in the customs and regulatory controls on its side of the trade relationship, the EU implemented its full range of non-tariff barriers from the beginning.
The UK has delayed checks and controls on goods entering Great Britain from Ireland.
Today, British Prime Minister Boris Johnson repeated a warning to the European Union, saying London would take action to suspend post-Brexit customs checks on some goods moving to Northern Ireland if the bloc did not show "common sense".
"We must fix it (the problems with the so-called Northern Ireland protocol) and with goodwill and common sense I believe we can fix it," he said.
"But if our friends don't show the requisite common sense then of course we will trigger Article 16," he said, referring to the clause in the Brexit deal which allows either side to decide to stop implementing parts of the protocol governing trade with Northern Ireland if there are substantial practical problems or trade diversion.
Meanwhile, the report, by the House of Commons committee, predicted that as the impact of Covid wanes and trade volumes increase, potential for longer queues at UK ports will be greater.
This could be exacerbated by a new EU Entry and Exit passport scanning system, especially at ports like Dover, where EU officials carry out border checks on the UK side, the report said.
These new biometric checks on UK passengers crossing into the EU have yet to be tested, the report states.
Furthermore, passenger volumes are expected to increase this summer as Covid restrictions ease.
In a statement the committee said: "This is a particular risk at the juxtaposed controls, such as Dover, where EU officials carry out border checks on the UK side of the border and where queues might build up in the UK.
"The Home Office is in conversation with the French authorities about how they might operate the new controls without causing queues but those conversations are at an early stage. It is important that the checks that will apply to HGV drivers do not delay throughput of the lorries."
The UK government has said it will create "the most effective border in the world" by 2025.
However, the PAC report said that this was "optimistic, given where things stand today" and MPs on the committee were not convinced by the plan to deliver it.
The reports said that as the new controls on goods leaving the UK for the EU, as well as the UK's own controls, have taken effect, extra costs and delays have resulted.
"For example, traders may have to pay an intermediary to help them complete customs declarations and traders in sanitary and phyto-sanitary (SPS) goods selected for physical inspections will have to pay fees to both government and the port," the committee said.
"Traders may also need to pay tariffs if their goods do not meet 'rules of origin’ requirements and there are internal costs associated with complying with the additional requirements."
In 2019, the UK customs service HMRC estimated that complying just with new customs rules could cost UK and EU businesses £15 billion per year.
HMRC told the PAC in November it had not updated its 2019 estimate, but that there are indications that the costs to businesses would be less than that estimate.
The committee called on the UK government to support small and medium-sized businesses who were facing additional costs.
The government has already targeted support to 10,000 higher-value businesses which had previously only traded with the EU, while others were supported through the £20 million SME Brexit Support Fund.
However, the committee said that "narrowly defined criteria meant that many businesses could not access this support and only £6.7 million was paid out".
The report noted the impact of the Northern Ireland Protocol, which took effect from 1 January 2021.
"The [UK] government told us that the requirements of the Protocol had had a significant impact on Northern Ireland trade including causing considerable diversion of trade," the report said.
"For example, trade between Northern Ireland and Ireland has increased significantly – goods flowing from Northern Ireland to Ireland having increased by 61% year on year between January and August 2021 and goods from Ireland to Northern Ireland increased by 47% over the same period."
The report said that HMRC had told the committee that it would be spending £360 million over two years on a Trader Support Service to help companies trading into Northern Ireland make customs declarations on behalf of affected businesses.
HMRC told the committee that the majority of businesses moving goods from Great Britain to Northern Ireland were using this service.
The UK department of agriculture (Defra) is also providing up to £200 million by the end of 2023 for the Movement Assistance Scheme to help cover certification costs for the movement of agri-goods between Great Britain and Northern Ireland.
So far £10 million of that money has been spent.
Responding to the report from the Public Accounts Committee (PAC) that "the only detectable impact" of Brexit so far is "increased costs, paperwork and border delays", Tamara Cincik, CEO of Fashion Roundtable, who sits on the UK Trade and Business Commission, said: "It’s a bad first day for the new Minister for Brexit Opportunities, as far from the golden age of trade we were promised, the government’s patchy Brexit deal has only delivered red tape, delays, added costs for business and less choice for consumers.
"With even more checks and delays on the horizon, the government must act urgently on the recommendations made by the UK Trade and Business Commission, including the reopening of the SME Brexit Support fund with a simplified application process and more substantial grants."
