Anger over 'haircut' in Brexit funding for ports as chaos rages on

PORTSMOUTH, ENGLAND - JANUARY 08: Maersk shipping containers are seen in the dock area of Portsmouth International Ferry Port on January 08, 2019 in Portsmouth, England. Leader of the Liberal Democrats Vince Cable has visited Portsmouth International Ferry Terminal to hear how a no-deal Brexit may impact the flow of goods travelling to and from Europe through the port. (Photo by Leon Neal/Getty Images)
Portsmouth received funding to upgrade its port. Photo: Leon Neal/Getty Images.

Ports across the UK are set to receive less than half the funding requested from government for new Brexit checks next year, Yahoo Finance UK understands.

Firms are said to have requested £450m ($608m) to build new border inspection posts in line with government requirements, ahead of what one called the “most significant changes to imports in a generation.”

New safety checks will be applied to EU food, plant and animal imports from July, which are expected to cause significant disruption to supply chains. Such checks are currently waived in both directions as the UK and EU follow the same standards within the single market.

But the government only made £200m available in its port infrastructure fund (PIF) for such upgrades and has only allocated £194m this week, according to several industry sources.

WATCH: No-deal Brexit customs checks will be ‘impossible’

More than one in five bids is said to have been unsuccessful, with 12 rejected including five airports, and Dover receiving just £33,000. Felixstowe, at the centre of recent port chaos, reportedly received £13.1m, however.

Every port is said to have received less than they requested, with officials reportedly turning down some bids, cutting others and then applying a 34% “haircut” to all successful bids.

READ MORE: Ports chaos leaves almost half of factories waiting longer for goods

There is frustration among many port chiefs that allocations fell short of their requests, and at the short notice and apparent delays in official decision-making.

Richard Ballantyne, chief executive of the British Ports Association, called it a “real spanner in the works at the 11th hour” for firms’ preparations, warning some many not be ready in time for post-Brexit upheaval of trade rules.

He previously told Yahoo Finance UK that a lack of urgency in government risked disruption to supermarket meat and salad stocks from next July, when full-scale checks are enforced.

Tim Morris, chief executive of the UK Major Ports Group, said there was disappointment that funding allocations were “so late in the day and significantly short of what many ports require.”

READ MORE: Firms sound port chaos alarm as Brexit threatens meat and salad supplies

“We understand that the government has applied an across the board haircut on the eligible proposals put forward by port operators, plus individual projects may have had some specific elements disallowed,” he said.

“Crudely, if you submitted a £6m project you may be looking at a £4m award. So – for a port operator you might now be looking at your plans thinking ‘how can we rescope or change the project to meet a £4m budget’.

“That might well make the border infrastructure smaller and or reduce what it can do whilst remaining compliant.”

Ballantyne added that ports were in a “sticky situation.” Leaders now faced a choice between pushing on with plans without certainty they could cover shortfalls, and re-designing more limited measures without certainty they will meet health chiefs’ requirements, he said.

But it is understood ports were told from the outset by officials they should continue with any plans while awaiting funding decisions.

WATCH: 45% of manufacturers report port disruption hit to stocks

EU and Northern Ireland’s ports will impose checks from January, but the UK government has sought to limit or at least delay disruption by holding off until July.

Facilities need to be constructed for port or government health officials to carry out checks to ensure EU goods meet UK standards as Britain breaks away from the bloc after the transition.

Checks may include physical examination of how goods have been transported and labelled, temperature sampling and laboratory testing, as well as welfare and health checks on live animals, according to ports.

There are still fears the facilities may not be ready in time because of the time taken to secure funding and approval. “Some have to get planning permission, which takes weeks and sometimes months; some have to source materials. If they need to redraw designs, it’s a real spanner in the works at the 11th hour,” said Ballantyne.

“If there’s not a quick fix of additional funding in the next day or two, is this infrastructure going to be ready in time? Probably not for July.”

The BPA plans to write to the Cabinet Office highlighting industry concerns.

READ MORE: 10 global business trends to watch in 2021

Mike Seller, director of Portsmouth International Port, said it had not received the cash it requested for “the most significant changes to imports in a generation.”

“While we appreciate the allocation, this leaves Portsmouth with an £8m shortfall to implement the most critical changes, and omits significant parts of our proposals,” he said.

“Prior to the delays in determining the bid, we were already concerned about the timescale required to make sure we were ready by July. We have now been delayed by a further two weeks and are without any contingency and few options to secure additional funding.”

Not all ports expect delays or criticised funding allocations, however. Charles Hammond, chief executive of Forth Ports, said contractors were already on site and facilities at Grangemouth and its two Tilbury ports would be ready for 1 July. He said it had received £11.7m.

The row comes amid heightened focus on disruption at UK and global ports, linked to higher shipping volumes and Brexit stockpiling. Almost half UK factories reported supply chain problems this month in a leading industry survey, linked overwhelmingly to issues at ports.

Some in the industry expected the PIF grants to be announced earlier this month, but ports were informed only this week and no formal announcement has yet been made.

A government spokesperson said allocations would be made public “shortly.”

“Our ports play a vital role in helping trade flow in and out of the UK and we are making significant preparations to ensure that they are ready for the new procedures coming into place.

“The government has made an unprecedented £200m available to [orts to support new infrastructure - work that ports would normally have to fund themselves.”

The spokesperson also highlighted £470m of funding for in-land infrastructure to serve ports like Dover, which lack space to build it on site.

“These inland sites will handle extra border checks away from ports and help to keep lorries moving.”