Hamish Macdonell

BY HAMISH MACDONELL

Disappearing act

A statistical glitch meant figures for Scottish salmon exported to the EU in January were wildly wrong, but it took a while for HMRC to realise there was a problem

As every economist knows, there are three types of lies: lies, damned lies and statistics.

But that view is not confined to economists. It is now shared by many in the Scottish salmon sector, thanks to an extraordinary episode over export figures.

The collation of our export figures is usually pretty routine. Salmon consignments are registered as they leave the country and flagged again when they arrive at their foreign destination. The figures are then brought together by Her Majesty’s Revenue and Customs and published monthly and that, usually, is that.

However, when the official figures for January 2021 were published, it was clear that something had gone very badly wrong.

Instead of an expected 5,000 tonnes of Scottish salmon landing in the EU, customs officials reported just 87 tonnes: a drop of 97 per cent on the expected figure.

We knew about 5,000 tonnes of salmon had been sent (we had export declarations to prove it). We knew the salmon had passed through the hubs where the export health certificates were issued and we knew the salmon had arrived at its European destinations.

But, according to HMRC, the salmon had vanished somewhere between the UK and the EU.

We are not the only sector to put great weight on our export statistics (we would not be able to champion our success as the UK’s largest food export if we did not have the figures) so we tried to find out what had happened.

At this point, it is worth remembering the context. When this statistics foul-up happened, the UK Government had just set up the Brexit Seafood Task Force (at the behest of the Scottish salmon sector) to find practical ways of solving the paperwork problems that Brexit had introduced.

Everybody, from the Prime Minister down, wanted real, accurate figures for the amount of trade being done with the EU since the Brexit deal came into force. And yet, not only did the customs service not have anything even resembling accurate figures, it did not appear to see the need to put the error right.

The SSPO chased and questioned, harried and pleaded but all we got back was a simple refusal to acknowledge anything had gone wrong.

In a statement reminiscent of the famous Belfast adage about the Titanic – “it was alright when it left here” – HMRC kept insisting that it had published all the figures it had been given.

It was this refusal to engage that was the most infuriating part of this whole saga.

It was almost as if those in charge of data collection did not want to admit there had even been an error. They appeared determined to insist there was not a problem that needed to be fixed, rather than concede something had gone wrong and set about trying to correct it.

We checked with our producers. They had filled in the paperwork properly. We checked with the hauliers. They also confirmed that it would have been impossible to get export declarations without the paperwork being filled in correctly.

We even checked with officials at the European statistics agency and they confirmed that 4,700 tonnes of Scottish salmon had arrived in the EU in January.

In the end, we had to raise the issue publicly, at Westminster’s Scottish Affairs Committee. That attracted mainstream press coverage and the incredulity of MPs.

After that, HMRC did act. Officials got in touch. They started working through their systems and eventually found out what had happened.

There had been a decision to adopt a new, light touch approach to customs from 1 January onwards, in the hope of avoiding tailbacks and queues at the UK Channel ports. Part of this involved dropping a check which registered the goods as having arrived in the EU. To cope with this change, exporters were expected to tick an extra box on the export declaration: something they did not know they had to do.

Above: Cross Channel ferries to France at the Port of Dover in Kent

“According to HMRC, the salmon had vanished somewhere between the UK and the EU”

The result was that produce was leaving the UK, arriving in the EU but not being registered in the UK customs system as having arrived.

But while we now knew what had gone wrong, we were no nearer to getting an accurate, official figure for Scottish salmon exports to the EU.

The irony is that, had HMRC published the correct figure, it would have been a great story for the UK Government. According to the SSPO’s own figures, which have now been collated independently from our member companies, a total of 19,410 tonnes of salmon was exported to the EU from the UK in the first quarter of this year – including 5,030 tonnes in January. This is considerably higher than the 11,150 tonnes exported over the same period in 2020 and actually represents a record Q1 export level.

That is crucial because much that was being written publicly about Brexit was based on the false premise that our export volumes had fallen through the floor.

It is worth noting that, looking deeper into the figures, a more complex story appeared. Yes, more salmon was exported from Scotland this year than last, but at a much lower value.

So while our producers were getting fish to their customers, uncertainties over Brexit, slower delivery times and delays were forcing down prices.

On top of that, Scotland’s salmon producers were having to cope with £200,000 a month in extra costs, a burden imposed by the new Brexit regulations.

What this means is that Brexit has created a complex situation for our producers, one in which increased sales have been tempered by lower prices and increased costs.

That is the background which should be available to all those wanting to analyse this issue but it is a context that has been unavailable because of the statistical problems with the customs service.

This is why getting the figures right is so important. It is impossible to judge the impact of the Brexit changes unless and until the right statistics are available.

We can only hope that this was a one-off and HMRC will produce figures everyone can trust, sooner rather than later. If not, then it will not just be the Scottish salmon sector referring to the HMRC figures in less than praiseworthy terms. FF