Wednesday 30 January 2019
Update on Brexit
Mr Bailiff,
Thank you for allowing me to make this Statement. It is quite long - but I make no apology for that. We are at an important juncture in the Brexit process, with significant consequences for our community - it's important that our government's response is on the record in this Assembly.
The United Kingdom continues to move, inexorably, towards its exit from the European Union. This unprecedented process means that it has been difficult to predict which scenario will end up being the final one - and it seems that the terms 'deal', 'no deal' and 'no Brexit' are used and speculated upon daily. Just last night the UK's House of Commons held another series of votes, the consequence of which is that uncertainty surrounding the final outcome, continues for the time being -and we must prepare accordingly.
The States of Guernsey, as a responsible government, has been considering every reasonable eventuality - and continues its preparations for whatever situation may exist beyond March 2019. This planning has been stepped up in response to the increasing risk of a no-deal outcome which, if no agreement is reached, it must be remembered, is the default position under EU and UK law.
Since June 2016, the Policy & Resources Committee has sought the involvement of this Assembly at each milestone. We have sought to provide regular and detailed updates on Guernsey's work to prepare for Brexit. The Committee's last such update was in September.
Developing situation
Following negotiation between the UK and EU negotiators, the Withdrawal Agreement and political declaration on the future partnership were published in November last year. Last night's decision, effectively directing the re-opening of the negotiation on the Withdrawal Agreement in respect of the Irish backstop, of course, requires the EU's agreement. If and when, either the Withdrawal Agreement or a revised version of it is accepted, then this Assembly will be asked to consider a Policy Letter, enabling the necessary parliamentary process here before any transition period. In this eventuality, this is likely, now, to have to be considered at short notice.
Engagement with the UK and other parties
Our engagement and close working with the UK Government remains a priority.
I wrote to the UK Prime Minister in September, and her response in October reiterated assurances that the long-standing constitutional relationships between the UK and the Crown Dependencies will not change as a result of the UK's decision to leave the EU; and she acknowledged Guernsey's view that a negotiated outcome, rather than 'no deal', would be in our best interests.
[The letters are available online (https://www.gov.gg/CHttpHandler.ashx?id=115959&p=0).]
Robin Walker, the Minister responsible, has reiterated the UK Government's commitment that Guernsey's interests would continue to be represented by the UK.
On Monday, I saw Minister Walker at our quarterly meeting, together with representatives from Jersey and the Isle of Man. I reasserted the importance of the close working relationship between the UK and Guernsey, especially for no deal planning. We also discussed the work to prepare for extending the UK's membership of the WTO, the 'Vienna Convention' on Road Traffic and the extension of the Bailiwick's territorial seas.
The States is working to ensure that the island's contingency planning is closely aligned to the UK Government's planning. This is particularly significant in areas outside the Bailiwick's control and/or where the Bailiwick has an interdependence with the UK.
It is also important for us to continue to develop relationships with other neighbours in Europe. The joint Channel Island offices in Caen and Brussels continue to assist us in getting our voice heard within the EU. Just last week, Deputy Le Tocq and I each had constructive meetings with regional and departmental representatives in Normandy; from the national government in Paris; and from other European countries in Brussels.
What was clear from these meetings, is that EU Member States are making their own plans should the UK leave the EU with no deal. Member States were reassured by the Settled Status scheme for their citizens resident in Guernsey that the Committee for Home Affairs recently announced.
Guernsey's 'deal' planning
The UK Government remains committed to seeking a deal with the EU.
It's essential to the Bailiwick that any deal that is agreed between the UK and EU takes our interests into account, and respects our ancient links with the Crown. Areas such as international trade in goods and services, immigration and transport are paramount to our economy and way of life. We welcome the commitment from the UK last November to help the Bailiwick seek an economic partnership with the EU, that is proportionate to our economic needs - and has an appropriate balance of rights and obligations.
The opportunity for Guernsey to join the UK's Membership of the World Trade Organisation ('WTO') is being actively pursued - and next week Senator Gorst from Jersey and I are expecting to meet with the Secretary of State, Dr Liam Fox, at the Department for International Trade to progress this matter to a conclusion. This would be significant for the Bailiwick's future - and would enable our participation in the UK's economic partnerships with the rest of the world, including under Free Trade Agreements.
Guernsey's 'no deal' planning - including governance
A no deal scenario could lead to disruption and delays for goods crossing the borders into and out of the UK - largely due to customs arrangements between the UK and EU requiring additional checks when the UK becomes a third country. There could be a knock on effect on established logistic chains within the UK, risking disruption in the availability of goods in Guernsey. Securing continued supply and access to the supply chains of essential goods will be crucial for our community.
The UK, Crown Dependencies and the EU have all embarked on contingency planning to try to manage and limit the potential impacts. Over the last six months, the Bailiwick's contingency planning has focussed on the supply of essential commodities such as food, medicines and medical supplies, fuels and chemicals. The plans also consider the Bailiwick's energy provision and consumption - and our reliance on transport links to move people and goods.
The Civil Contingencies Authority ('CCA') is responsible for the Bailiwick's emergency planning, in particular where any worst case scenario might engage the Civil Contingencies Law [the Civil Contingencies (Bailiwick of Guernsey) Law, 2012]. The CCA has been meeting regularly for some time and will continue to do so. However, not all decisions within the no deal contingency Brexit planning process will relate to an 'emergency' within the meaning of that law; and so it would not be lawful for the CCA to take any action at this stage.
In order to bridge the gap for cross-Committee decisions that may need to be made urgently to react, the CCA proposed that certain Committees consider the establishment of a Brexit Transition Group ('BTG').
The BTG is comprised of the Presidents of the Policy & Resources Committee, the Committee for Home Affairs, the Committee for Health & Social Care and the Committee for the Environment & Infrastructure, consistent with the CCA membership. The Presidents of the Committee for Economic Development and the States' Trading Supervisory Board also participate in the BTG, given the significant Brexit interests relating to their respective mandates.
The BTG has no separate terms of reference or executive government powers. Its mandate is made up of the collective Committee mandates of its membership. Working within our Committee Rules, each of its composite Committees has resolved to delegate to a single Member to allow quick, strategic decisions to be made, if required, for no deal Brexit-related purposes only. Each Committee will maintain responsibility for the Brexit contingency planning work which relates to its own mandate.
I stress that whenever it is possible to make decisions through the conventional Committee system that will remain the way to conduct business, even if timings mean that it would fall outside usual Committee meeting schedules. The BTG simply helps to maximise our flexibility of response, which has been a watchword of our entire approach to Brexit from day one.
Whilst sitting as the BTG, those Presidents of Committees who serve both on the CCA and the BTG will consider matters from their respective Committee's point of view rather than with their collective CCA responsibilities in mind. The BTG will act as a focal point for States-wide Brexit contingency planning work and the CCA will assume ultimate ownership in the event of an emergency situation. It's hoped that the BTG will not be called upon regularly to make decisions. However, should it be necessary, the BTG will provide an opportunity for greater cross-Committee communication and ownership of contingency planning and mitigation.
Given the special nature of the BTG it must and will ensure that it keeps all its constituent Committees informed of decisions made by its members. Regular updates will be supplied.
What is the impact of no deal?
Whilst both the UK and the EU maintain that negotiating a deal is the priority, the probability of a 'no deal' scenario has increased significantly and it is only responsible to plan for this risk.
For Guernsey, the main impact of the UK's exit from the EU is the change in how the borders operate. Additional border checks as goods enter the UK and EU will, as I have said, affect logistics, supply chains and the movement of goods.
Guernsey will change from being within the EU Customs Union to having 'third country status' with the EU for the purposes of free movement of goods. We will still have free movement of goods with the UK in accordance with our established constitutional position, and the customs arrangement recently negotiated with the UK by the Committee forHome Affairs.
One of the things that traders can do to minimise the impact of the checks and help the flow of goods is to ensure that they have the correct paperwork. In November 2018, the Committee forHome Affairs issued guidance for traders to help businesses prepare for the new border checks.
The majority of goods arrive on ships ('RoRo' and 'LoLo') which arrive twice daily supplying the Islands with food, medicines and medical devices, and other essential goods, predominantly from Portsmouth. The ability to import and export goods is essential for the local economy and community.
The States of Guernsey is in regular contact with the UK's Department for Transport, which is co-ordinating the UK Ports' response to a no deal scenario, to ensure that there is full understanding of the Bailiwick's needs. We are also working closely with the Hampshire authorities to ensure that any disruption is kept to a minimum. This underpins all of the work relating to goods, including food, medicines and chemicals.
Food
The majority of the UK's food supply comes from the UK, with the remainder originating from the EU and the rest of the world. Most food and drink from the UK is received regularly from UK-based warehousing through Portsmouth. Delays at that port could cause disruption, particularly in the supply of fresh foods.
It's not expected that the supply will cease, but there may be some things we are used to seeing on the shelves year-round that might not be available until the supply lines adjust to the 'new normal.' This may mean consumers notice a reduction in choice for a period. This will be similar to disruptions that we already occasionally experience in the supply of fresh foods for short periods, for various reasons. There could also be a knock on impact on prices.
The States is maintaining its engagement with supermarkets, retailers, wholesalers and the freight industry and is monitoring supply and logistics chains for food to ensure that government is appropriately supporting industry.
Medicines and medical supplies
The relationship Guernsey has with the UK for healthcare means that we are part of the NHS supply chain for essential medicines and medical equipment. We are included in the UK's contingency plans for medicines, which include the stock management being undertaken by NHS suppliers.
In recent months, Guernsey officials have been in weekly contact with the UK Department for Health to ensure that the UK's contingency plans for medicines, medical supplies and medical gases include provision for the Crown Dependencies, so that access to essential supplies can continue as normal.
Consequently, the Committee for Health and Social Care does not need to stockpile medicines and medical supplies at this time. We will continue to liaise with the UK Government and relevant UK authorities to regularly review this in light of any disruption at Portsmouth; we have researched alternative options as part of our work on emergency planning to ensure that our own supplies are adequate, if there was any immediate disruption.
Fuels
The Bailiwick is dependent on the importation of hydrocarbons for the power station and domestic fuels.
The UK has a resilient market for fuels which means that disruption in fuel supplies is not expected. The States is actively engaged with local fuel supply companies to review current supply chains for fuel and to understand the industry's own no-deal planning.
Guernsey can generate enough electricity on island. The island normally imports electricity from France via Jersey using submarine cables, although this supply is currently reduced because of technical limitations on the cable between the islands.
It is not expected that there will be any significant disruption to the supply of fuels or electricity.
Chemicals
Guernsey imports a number of chemicals, mostly from the UK, to ensure a clean water supply, sewage processing, hospital cleaning and maintenance, manufacturing at Guernsey Dairy, and airport operations, as well as for other food-health related purposes. A review of stock levels of the most essential chemicals has been undertaken, and where possible, adequate provision has been prepared for the anticipated period of disruption.
Movement of people
Travel
It is not anticipated that travel between Guernsey and the UK, by either air or sea, will be directly affected by a no deal Brexit.
Any disruption to ferry services between Guernsey and the EU is only likely to occur as short term delays as a result of logistics at UK and EU ports that have a knock-on impact to ferry operations and schedules.
It's expected that there will be contrasting immigration controls in the UK and EU in the event of a no-deal Brexit. British citizens travelling into the EU will be subject to third country checks at EU ports of entry. This, again, may cause short term delays.
We will be keeping this situation under review and will consider necessary contingency plans to alleviate disruption locally whenever possible.
Passports
When the UK leaves the EU, there will be new rules for British passports for travel to the Schengen Area (made up of certain European countries). This will include passports issued by the Guernsey Passport Office.
If residents plan to travel to the Schengen Area from 30 March 2019, to avoid any possibility of their adult passport not complying with the Schengen Border Code, they should check the issue date to make sure the passport is no older than 9 years and 6 months on the day of travel. For example, anyone planning to travel to the Schengen Area on 30 March 2019 should have a passport issue date on or after 01 October 2009.
[Further information in relation to the Schengen Area and advice on passport requirements can be found at www.gov.gg/passports.]
Vehicles
Last year, the States approved the extension of the 'Vienna Convention' on Road Traffic to help guarantee the freedom to drive in the EU. The Committee for the Environment and Infrastructure is working at pace to bring forward legislation to achieve extension by 29th March. This will help Guernsey drivers and vehicles looking to travel within the EU.
Pet Travel and Equine
Pet and horse owners will still be able to travel to Europe with their animal after the UK leaves the EU, whatever the Brexit outcome. In the event of no deal, they may need to take some additional steps for their animal to be able to travel. It's recommended that owners contact their vet at least four months in advance of the proposed travel date to check what they need to do.
Workforce
Guernsey-based EU nationals form an important part of our community both economically and socially. Irrespective of the outcome of the UK-EU negotiations, the UK Government has repeatedly stated that it intends that EU citizens residing in the UK will retain all rights after the UK's Exit. This Assembly made a similar declaration of intent in March 2017, seeking to respect the rights of EU nationals in the Bailiwick.
Last week, the Committee for Home Affairs announced that, alongside the UK and Jersey, Guernsey will not charge for EU Nationals to register in our own Settlement Scheme. This decision is consistent with that political declaration. This scheme will apply in any event, whether the Withdrawal Agreement is accepted by the UK or in the case of a no deal scenario. The scheme provides certainty for residents and businesses. Similarly, Guernsey's Population Management regime will remain in place, after the 29th March 2019, whatever outcome is arrived at.
It has been agreed between the UK, EU and the Crown Dependencies that the Common Travel Area will remain intact. The CTA comprises the UK, Ireland and the Crown Dependencies. This means that free movement can continue in this area.
Fishing and exports
The Policy & Resources Committee is recommending that the Bailiwick's territorial seas be extended to 12nm and has published a Policy Letter for debate this week. It has been given added impetus by Brexit.
The Committees forEconomic Development and for the Environment & Infrastructure have been working closely with the UK Government so that the necessary administrative and legal arrangements are in place to support trade from the island, including for fishery products, movement of animals and related products. We have been liaising with the regional authorities in France through the Bureau des Iles Anglo-Normandes. We welcome the announcement that St Malo will establish a Border Inspection Post, which should help support trade from the Channel Island. We look forward to receiving more details in due course.
Customs
In November 2018, the Committee for Home Affairs agreed a new customs arrangement with the UK Government. This guarantees continued tariff free trade between the Bailiwick and the UK, whilst retaining Guernsey's fiscal and regulatory autonomy.
The agreement is essential for the Bailiwick's economy and will be implemented when the UK has left the EU. It demonstrates the close and detailed cross-Committee work that is going on between the Policy & Resources Committee and the Committeefor Home Affairs. I would like to pay particular tribute to Deputy Prow's important role in this work. The two Committees have also agreed that Guernsey should continue to benefit from international arrangements on customs matters, such as the Common Transit Convention and to retain access to the Single Administrative Document framework.
Data movement
Guernsey has adopted legislation based on the EU General Data Protection Regulation (GDPR) and has been granted adequacy status by the EU Commission. This will not change as a result of Brexit. The Committee for Home Affairs has published a Policy Letter, being considered this week, outlining the plan to enable the continued exchange of data between Guernsey and the UK. This will provide certainty to businesses operating from Guernsey both in the UK and Europe. We will continue to engage with the EU to ensure that this mitigation strategy is understood.
Engagement with industry
The States has been working since the referendum with the business community on Brexit-related matters.
I wish to recognise and thank the Committee forEconomic Development for leading in this area - and many in the private sector who have engaged so positively to work together with government on Brexit issues.
The first phase of work included fact-finding and developing an understanding of the issues faced by businesses. This included a series of Brexit engagement workshops in the autumn of 2017. That work informed the commissioning of a Brexit Business Survey to ascertain the Brexit preparedness of businesses in the island; and to identify the flow of goods and services. The survey findings were reported back to government during the final quarter of last year - and have informed further meetings with business representative bodies and individual businesses regarding concerns and potential solutions.
Officers from across the States, co-ordinated by Economic Development and Policy & Resources officers, are engaging with importer and exporters on the island to understand their concerns and to raise awareness of Brexit issues. The number and frequency of those meetings is - perhaps understandably - increasing.
Our island businesses can be confident that the States will do all it can to support them - and to keep them informed as the situation develops. Some of this engagement is in public forums, but much more of it is not - we absolutely understand that many businesses do not want to have those discussions in public.
My plea, then, is this: any business that has a concern, or wants more information, or needs support in relation to an opportunity - please come and talk to us. Our door is firmly open.
Pan-Island approach
We are working closely with colleagues in Jersey, as there may be pan-Channel Island solutions to some 'no deal' challenges. We are also liaising closely with the Isle of Man. As we engage with the UK, the shared approach has helped our case to be heard and taken into account. It's vital that information is shared early between the UK and the Crown Dependencies to ensure that our planning is aligned, particularly in areas where we are all dependent on UK supply chains.
Legislation and policy work
The UK's exit from the EU, the ending of Protocol 3 and the repeal of the European Communities Law [the European Communities (Bailiwick of Guernsey) Law 1973], will have a significant effect on our laws and statute book. The legislation that is required to give this effect - and otherwise in response to Brexit - is considerable and wide reaching. The Law Officers and their team have done an outstanding job of subsuming this additional burden, on top of their existing workload. I would like to acknowledge and thank the Law Officers - and the legislative drafting team in particular - for the support and commitment they and their team have provided.
It is likely that the three jurisdictions of the Bailiwick will need to consider further legislative changes. Some of this may be at short notice. Notwithstanding this Assembly's decision to allocate more resources, this situation will put unavoidable pressure on the rest of our legislative agenda.
Brexit has also had an impact on Guernsey's policy and operational work, some of which could not be anticipated. The additional or seconded resources being used by the UK to manage Brexit are vast. It is testament to our own civil service, whose support we must also commend, that it has been able to deal with the wide-ranging complexities largely within existing resources, whilst continuing to deliver services to our community.
We can be immensely proud that our small jurisdiction has reacted nimbly to assimilate and respond to a huge range of technical issues, many of which have not arisen for more than 40 years.
Resource implications
As part of the 2019 Budget Report, the States approved a £3m Brexit Transition Fund. This number was not a budget, a forecast or an estimate. It was simply a prudent allocation based on the information available at that time. The final expenditure may prove to be greater than or less than this sum, dependent on many variables - and it's being monitored carefully.
In December, the Policy & Resources Committee earmarked £500,000 of the Brexit Transition Fund for contingency planning for a possible 'no deal' situation. The Committee continues to keep resource requirements under constant and close review, in conjunction with other committees and St James' Chambers.
In conclusion
Sir, thank you for letting me give this extended statement. The Assembly and our community should have confidence that we are fulfilling our duty to prepare the island for all eventualities as the UK leaves the EU, including the risk of a disorderly no deal exit. Whilst Guernsey offers stability - politically and constitutionally - we will not be immune from the effects of Brexit. Whilst we will welcome an end to the current uncertainty, we will not wait for an outcome in the UK to ensure that we protect our own interests. We have modelled the potential impact of the UK leaving the EU on 29th March with no deal. We have designed mitigation strategies and will keep them under review as we respond to the evolving situation.
Brexit has been and will remain a very frustrating process. We did not participate in the UK's referendum. We did not ask for it. But its delivery is affecting us. It is drawing time, people and money away from our own government's priorities. But there is no point in complaining about it; instead, we must just pragmatically get on with it.
Sir, we will, of course, continue to keep this Assembly updated in as timely a manner as is possible. We can reassure but we cannot assure. There will be some disruption - particularly in the early days if there is a no deal exit at 11pm on 29th March. However, nobody need lose any sleep. The States will continue as we have from day one of this story: providing cool, calm leadership enabling professional planning and good decision making. We will react flexibly to find prompt and pragmatic solutions to challenges as they emerge. The community should be confident that we have - and will continue to do - all that we reasonably can to plan for - and mitigate - any changes coming from a deal or no deal exit or from some other end to the saga.
