EU Reset: The Biggest U-Turn to Date

Mike Parr

This article is written by Mike Parr (pictured) who is the CEO UK & Ireland, PML Seafrigo and published by That's Food and Drink as a public service.

In 2016, 52% of the UK voted to leave the European Union in what is now referred to as the Brexit referendum. According to Parliament UK a referendum is when a question is decided by putting it to a public vote. Referendums are an example of direct democracy. Clearly, we no longer live in a democracy.

Yesterday's EU reset announcement makes a mockery of the last nine years. During this period, businesses in the supply chain associated with the fresh produce industry have put a huge amount of time, effort – not to mention significant financial investment - to establish appropriate protocols within the new Brexit trading landscape. 

Producers, logistics suppliers, industry stakeholders and government representatives attended countless meetings to work towards a solution which would allow a fair and seamless transfer of produce into and out of the UK. To say this has been a difficult road to travel is an understatement. The challenging number of U-turns, the persistent failure to listen to those working within the sector, the inability to meet deadlines, the constant whitewashing to suit each government's agenda, I could go on. 

Many companies – including PML Seafrigo – have worked tirelessly to try and remain ahead of the curve and to be “Brexit fit”. In our case, we went as far as investing in a transport and logistics hub with remote HMRC / Defra approved Border Control Post status to enable a faster transit of consignments out of the Port of Dover. 

The site incorporated specialist inspection amenities for Defra personnel. We addressed the need for best-in-class facilities for drivers to match the fundamental services available to them in other European countries. We were at the front of the queue to apply for training to acquire Authorised Operator Status.

Just two weeks ago, discussions were held regarding the much-anticipated plant health border checks, due to commence 1st July.  Baroness Hayman insisted there was to be no easement on the deadline and that the new required checks would be rolled out – this despite the issues the industry has repeatedly flagged concerning Sevington's inability to cope with the required level of inspections. We also voiced our concerns regarding the absence of a definitive list of produce classified as Medium Risk, the lack of clarity regarding the Common User Charge and the unacceptably long evaluation of the pilot Authorised Operator scheme.

And now the Prime Minister has acted unilaterally to reset the rules. Without consulting the nation. Whatever your political persuasion, the fact remains that Brexit was the choice of the UK population, this maverick behaviour is inconsistent with the notion that Britain is a democracy.

We are now faced with the biggest U-turn of them all. And true to form, without any firm guidance to those affected most. There are no specific timings on when the new SPS protocol will start which will cause further bedlam at the border. In the absence of clear guidance, do we default to the original BTOM plans due to come into effect on 1st July or are we able to kickstart the Authorised Operator Status scheme? 

Is the government planning to rollout official inspections throughout a 24/7 window? No thought has been given to the negative impact of inspection checks for non-EU fresh produce, which as Nigel Jenney, Chief Executive at the FPC correctly states accounts for 50% of fresh produce imports. These are countries that have stood by the UK during what can only be described as highly turbulent times. 

We've forged excellent working relationships with non-EU suppliers to maintain the year-round supply of produce. 

How can it be fair to now penalise those that have helped us simply because the government has failed miserably in its attempt to deliver on a cohesive border strategy? And has the government given any thought as to how businesses might be reimbursed for all the time and money spent on working towards the original Brexit plan?

The consumer will be oblivious to all the preparations made by those in the supply chain following the EU exit,  to ensure compliance with the government's instructions. They may be about to find out with the chaos that is about to ensue. 

I truly despair as to what the future holds.

One month to go until Alcohol Duty system changes

Today marks one month until the biggest Alcohol Duty reforms in 140 years come into effect.

On 1 August 2023, the Alcohol Duty system will become much simpler, taxing all alcoholic drinks based on their alcohol by volume (ABV).

This replaces the current Alcohol Duty system, which consists of four separate taxes covering beer, cider, spirits, wine and made-wine.

It's aim is to make the system fairer and responsive to new products entering the market as consumer tastes evolve and change.

Small producers, including pubs and restaurants, will benefit from reduced rates on qualifying products, like draught beer and cider.

The new system reflects the government’s commitment to tax simplification, helping to foster the right conditions for businesses to prosper and the economy to grow, which reportedly one of the Prime Minister’s five priorities.

Exchequer Secretary to the Treasury Gareth Davies said: “Because we left the EU we can make certain our alcohol duty system works for us. From next month the whole system will be much simpler, the duty will reflect the strength of the drink.

“We will also protect pubs and brewers with our Brexit Pubs Guarantee keeping Draught Duty down, and a new Small Producer Relief."

Jonathan Athow, Director General of Customer Strategy & Tax Design, HMRC, said: “After listening to feedback from industry, economists, public health groups and many business owners, the new Alcohol Duty system will be based on the founding principle of taxing alcoholic products by strength, ensuring consistency across the board for the first time ever.

“The new system will support the government’s public health objectives and provide extra support to small producers, pubs and the hospitality sector.”

The new system will create six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

These reforms will replace and extend the existing Small Brewers Relief with Small Producer Relief. This means all small businesses that produce any alcoholic products with an ABV of less than 8.5% will be eligible for reduced rates on qualifying products, if they produce less than 4,500 hectolitres per year.

To support the hospitality industry, and recognising the vital role played by pubs in our communities, there will also be a reduced rate for draught products, which is known as Draught Relief. This will reduce Alcohol Duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants.

The reforms will mean every pint in every pub across the UK will pay less duty than their supermarket equivalent, in line with the government’s Brexit Pubs Guarantee.

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for 18 months from 1 August 2023 until 1 February 2025.

To support innovation and responsible drinking, low strength drinks below 3.5% ABV will be charged at a new lower rate of duty. In making these changes, the government aims to encourage product innovation and ensure the Alcohol Duty system works for business and consumers.

More information on the new Alcohol Duty rates and reliefs can be found on GOV.UK.

Those involved in the production of smaller quantities of alcoholic products, can check the reduced rates of duty that apply to them by using the Small Producer Relief calculator. HMRC is also running a series of live webinars throughout July 2023 and in the months ahead to further support the alcohol industry through these changes.