policy reversal

The United Kingdom’s commercial ports have invested heavily in building new Brexit border infrastructure, spending around £100 million on high-spec inspection facilities in preparation for checks on EU food and plant imports.

However, these investments could be rendered redundant if a Labour government implements its plan to ease trade friction with the EU by striking a veterinary — or sanitary and phytosanitary (SPS) — agreement.

One of Keir Starmer’s key election promises is to secure an SPS agreement with the EU, potentially removing the need for checks on agri-food imports. While this would benefit businesses by reducing paperwork and costs, port operators are concerned about the financial implications of such a policy reversal.

They are seeking assurances that they will be compensated for their investments if Labour wins the general election on July 4 and successfully negotiates the EU deal.

Richard Ballantyne, chief executive of the British Ports Association (BPA), emphasised the financial strain on ports that have developed facilities in anticipation of the new regime. “We would be looking for some kind of financial resettlement to make sure they have not been left out of pocket,” Ballantyne told POLITICO.

Port operators have not only spent £100 million on Border Control Posts (BCPs) but have also received £200 million from the taxpayer through the Port Infrastructure Fund. The estimated annual running costs for a typical BCP facility range between £100,000 and £200,000, adding to the financial burden.

A report by parliament’s independent audit body put the total cost of implementing the border regime since Brexit at £4.7 billion. A Labour reversal of the policy would mean that “a lot of that investment and preparation has been completely wasted,” Ballantyne noted.

If the existing scheme is scrapped, the compensation claims from ports would depend on the specifics of the replacement scheme and how much money they could recoup through fees in the meantime. Ballantyne suggested that a decommissioning fund might be the simplest solution, allowing ports to demolish or modify the BCPs as needed.

The BPA has informally discussed this idea with Labour officials, though no formal agreements have been made. Geraint Evans, CEO of the UK Major Ports Group, expressed similar concerns, stating that any policy change should allow ports to recover costs through a government fund.

Under a veterinary agreement, the UK would remain aligned with EU single market rules on food and agricultural products, plant and animal health. This alignment would mean that goods crossing between the EU and the UK would meet shared standards, eliminating the need for health checks and reducing bureaucracy at the border. This could lead to fewer lorry queues and less supply chain disruption.

However, the extent to which trade barriers can be removed depends on the type of alignment a Labour government would agree to. David Henig, director of the UK Trade Policy Project at the ECIPE think tank, highlighted that there are two forms of veterinary agreements — one that removes barriers and one that reduces them.

There is currently no consensus within Labour or the EU on which form would be pursued.

Tom Southall, deputy chief executive of the Cold Chain Federation, supports the idea of a veterinary agreement in principle. “Anything that removes that bureaucracy and red tape we would support,” he said.

However, he acknowledged that such a move wouldn’t be universally popular, given the significant investments businesses have made in preparing for the current rules. Any new system would need to be developed in close consultation with the industry.

As the general election approaches, the Labour Party’s stance on Brexit and its potential impact on UK ports will be a critical issue for both voters and businesses. The promise to ease trade friction with the EU may provide long-term benefits but poses significant short-term financial challenges that will need to be carefully managed.

Image: PortStrategy

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