Brexit: Many small businesses still not ready for leaving EU despite £70m campaign, MPs warned

Some 200,000 UK businesses face extra red tape from start of January

The transition to Brexit is due to take place on 31 December (REUTERS)

Well over a third of small businesses are still not convinced that the UK will transition out of the EU at the end of this year, despite a government information campaign costing £70 million to let them know, MPs have been told.

Prime minister Boris Johnson has repeatedly vowed that he will not request an extension to the transition period which ends on 31 December, and is ready to take the UK into a no-deal Brexit if a free trade agreement cannot be reached in that time.

But the senior civil servants running the transition project told the House of Commons Public Accounts Committee that many of the 200,000 firms which export to Europe are expected to be “frustrated” by new red tape which will suddenly be required in the New Year.

The UK has deferred some of the additional paperwork until July, but new EU import requirements are expected to be implemented from 1 January.

The Cabinet Office’s director general of transition, Jess Glover, told the cross-party committee: “If I'm a small business and I want to export a goods to the EU, I won't be able to do that unless I have built in the import requirements that the EU has in place.

“What will happen to me as that small business is that I won't be able to do the thing that I want to do. I will then learn that I haven't been able to do that thing and I will then, I think, learn that there's something I need to do in order to be able to export my business. But I will have to face that frustration.”

Cabinet Office permanent secretary Alex Chisholm told the committee that a budget of £70m had been allocated to provide a public awareness campaign over the period to 21 March, following on £100m spent on encouraging individuals and businesses to prepare for the possibility of a no-deal Brexit last year.

But he told the committee that, with just 84 days to go, many small businesses still did not expect the transition to go ahead as Mr Johnson has said. Many were preoccupied with the coronavirus crisis and had not turned their minds to the new post-Brexit arrangements, the committee heard.

“When we've been doing polling, we’ve seen that a number of small businesses - I think it was 43 per cent at the last count -still believed there was going to be an extension at the end of the transition period,” said Mr Chisholm.

“I can understand why they might think that because of the learned behaviour from the previous administration but … there isn't going to be an extension and they really need to be ready for the end of the calendar year in December.

“We’ve been trying to get that message out very clearly through our public communications through engagement, small business groups, through statements from political leaders, and through our information campaigns.”

Mr Chisholm said he believed the figure had since reduced to around 36 per cent - still well over a third of the total.

But he said: “We want to get it right down because it's really important that small businesses are not thinking they can just postpone their preparations, they need to get ready now.”
The committee was told that companies expecting an extension had “no motivation or incentive to do anything about getting ready” for the abrupt change in the business environment when the UK leaves EU rules and regulations on 31 December.

Businesses will be targeted with campaigns running up to the end of the year to try to persuade them to take action, the MPs heard.