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PORTSMOUTH, England – Boris Johnson’s government has let Portsmouth local council hold the bag on a nearly £8million loan it took out to build a giant warehouse to carry out post-border checks. Brexit which may now never be used.
The purpose-built £25m facility on the south coast of England is just one of many across the country that have cost more than £500m in cash from the public and public sectors private, but are now empty after the government delayed checks on some EU products. to come into force on July 1.
“We currently have £7.8 million in our pockets,” said Gerald Vernon-Jackson, leader of Portsmouth City Council, which runs Portsmouth International Port and runs the border checkpoint. “We have no way of recovering the costs and no offers of financial support from the government.”
The council was able to match the bank loan with £17million provided through the government’s £270million Port Infrastructure Fund. This allowed him to build the new two-acre border infrastructure in less than two years.
Portsmouth council is on the hook for £1m in loan repayments and energy costs in 2022 just to keep the facility running – with its large refrigeration units meant to keep produce like meat cool , cheese and fruit.
“We can’t just turn off the lights and absorb the costs,” Vernon-Jackson said. “In order to know the [Border Control Post] will function properly if required in the future, we need to maintain the facilities in working order to some degree to ensure that they continue to function.”
The municipality had planned to repay its loan by charging fees for the processing of customs checks in the warehouse.
Ports across the country have effectively been “forced to prepare” for post-Brexit trade, said Richard Ballantyne, chief executive of industry group British Ports Association. The UK government outlined the system in October 2020. “Now the government says it was a business decision.”
Yet ports that failed to act would have been “disadvantaged”, he explained, as around 40% of all trucks from the EU carry animal and plant products.
The plans did not last long. In April this year, Brexit Opportunities Minister Jacob Rees-Mogg announced that physical checks on animal and plant products imported from the EU would now not take effect until the end of 2023. The checks were delayed for the fourth time, the minister said, as the government instead pursues a new, lightweight digital customs system.
Put in place post-Brexit controls, Rees-Mogg argued“would have been an act of self-harm” as red tape potentially drives up food prices as inflation hits the UK. The delay will save UK businesses up to £1billion in annual costs, he said.
Yet the announcement of a new digital system “sows doubt about the future of BCPs”, Portsmouth South Labor MP Stephen Morgan wrote in a letter to Rees-Mogg on May 3. “This government’s myopia has left the port with an exorbitant bill for new infrastructure that may no longer be needed.
Unlike many others, the port is owned and run by the local council. “His profits help fund local services, and the impact of this unexpected and unfair bill will be felt across the city,” Morgan warned.
In a response, Rees-Mogg said it was working with the port to “recover costs where possible”.
The building is a “white elephant”, said Portsmouth International Port Manager Mike Sellers, which “could make money” if it could be converted into a traditional warehouse.
Yet that cannot be done until “we have the revised border arrangements”, said Ballantyne of the British Ports Association. “And that won’t happen until this fall at the earliest.”
Ports that have lost, he said, are hoping “for the government to come up with, say, £100m plus a bit more” for changes and support.
Rees-Mogg met MP for Portsmouth North and Trade Policy Minister Penny Mordaunt on Monday to discuss what the government can do to help compensate them. “We will work to find new opportunities for redundant facilities,” Mordaunt said. wrote After the meeting.
The UK government says its property department is looking to help find a new use for the buildings, while arguing that the country’s current state aid regime limits its room for manoeuvre. Plans to reform this regime are expected in the fall, along with the promised new border model.
“We are currently working with ports, including the Port of Portsmouth, on an individual basis to assess the impact of the July import control decision and to resolve any issues or concerns they may have,” said the Cabinet Office. “This includes finding ways to avoid unnecessary additional capital costs and minimize ongoing costs.”
The fall deadline looks optimistic, Ballantyne said. “Knowing the whole Brexit process from before, it’s probably unlikely that we’ll have a clear picture this fall,” he said. “That will probably creep into next year.”
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