Brexit: UK businesses reject government's 'max-fac' customs plan

Firms of all sizes back model that rules out border checks, survey finds

Businesses have decisively rejected the government’s “max-fac” Brexit trade proposals in favour of near-frictionless trade with the EU after the UK leaves the bloc, a survey suggests.

A poll of leaders from 800 companies of all sizes found that more than twice as many would opt to maintain a system with no customs checks rather than the latest Downing Street idea, even if it takes longer to implement.

“Maximum facilitation” would see customs checks imposed but aim to streamline them as much as possible. Even firms who do not trade across borders backed alternatives to max-fac by a two-to-one margin.

While big businesses were least likely to express support for max-fac, no size category of firm backed it overall, the survey by the Institute of Directors (IoD) found.

The figures will be seen as a blow to the governments’ faltering Brexit plans and come just a day after the British Chambers of Commerce (BCC) warned that the patience of UK businesses was reaching “breaking point”.

It found that fundamental questions on trade, tax and customs had yet to be answered and that, out of 23 areas it identified as key for business, the government had made a start on addressing just two.

Now the IoD's poll has heaped more pressure on Theresa May’s team.

On standards and regulations, 55 per cent of directors said they believe that maximising EU market access and minimising regulatory divergence was most important for their organisation.

That was well ahead of the 15 per cent who said tailoring standards to domestic needs was most important or the 12 per cent who backed realigning rules with other countries such as the US.

HM Revenue and Customs warned in May that max-fac could cost firms £20bn a year. The organisation’s chief executive, Jon Thompson, told MPs the option of a “highly streamlined customs arrangement” would be significantly more costly than a more comprehensive customs partnership.

Cabinet ministers are set to meet at Chequers on Friday to discuss another new approach to Brexit from Number 10, details of which have yet to be revealed.

“As the Government discusses options for post-Brexit customs this week, they should take note of the strong preference among business leaders for a solution which keeps trade friction to an absolute minimum,” said Stephen Martin, Director General of the IoD.

“Pursuing an option that relies on facilitations and simplifications doesn’t seem to cut it for our members. In short, ‘max fac’ is not the favoured route for keeping trade in full flow.

“We’re in uncharted territory here, and so far we have no clarity on what customs position the UK will adopt. What is clear, however, is that the firms who are actually responsible for driving forward 'Global Britain' want to see an outcome that avoids making trade with our biggest market more difficult, even if that takes longer to put in place.

“They want to see the Prime Minister leading her Cabinet out at the end of this week with an agreed position, and then pushing on with negotiations with the EU.”