UK is getting two Brexits as Shell cuts Dutch ties

Publish November 18, 2021
oil and gas

Britain's small businesses are being stifled by waste and red tape, writes Chris Blackhurst

Two emails land in my inbox, only minutes apart. One is bearing the news that Shell os to move its headquarters and tax residence to London. The other is from a friend detailing the stifling bureaucracy his family firm must cope with when dealing with the EU.

It prompts a double take. A major company choosing to dump the Netherlands and basing itself in the UK; this after Unilever took a similar path. That must be a sign of confidence in the post-Brexit economy. Meanwhile, a small business struggling under the weight of red tape caused by Brexit. It does not make sense.

To compound the point about Shell, soon after the announcement broke, Kawasi Kwarteng, the UK business and energy secretary, tweeted that the oil giant’s decision was “a clear vote of confidence in the British economy”. Analysts at Redburn, the equity research house, hailed it as “a clear post-Brexit win for the UK”.

The fact that Shell is headed by a Dutchman, Ben van Beurden, and that one effect of the move will be the dropping of the “Royal Dutch” part of its name, only added to the British flag-waving. Closer inspection, however, reveals it is not quite as billed.

Shell is not exactly relocating lock, stock and barrel from The Hague; this is not the same as a business uprooting its operations in one country and shifting to another. It will still maintain a large presence in the Netherlands. It is more of a paper move, only affecting a small number of back-office support roles.

Ever since it was formed in 1907 from the merger of the Royal Dutch Petroleum Company and the Shell Transport and Trading Company, Royal Dutch Shell has had a convoluted dual structure. Its head office is in the Netherlands but it is registered in London. Unilever, the consumer goods supplier, was also created the same way, via an Anglo-Dutch marriage.

Both companies and another Anglo-Dutch combine, Relx, the former Reed Elsevier, have decided to simplify affairs, to be run from one place with one set of shareholders. Unilever toyed with going to the Netherlands but decided to remain in the UK; Shell and Relx have switched from the Netherlands to the UK.

It is no coincidence that all three are Anglo-Dutch. The main reason they give is because the Dutch impose a withholding tax on dividends. But it goes deeper than that. The Netherlands is perceived by many at the top of the international business community to be a more awkward environment in which to operate than the UK.

The green lobby is stronger and more hostile,(no small consideration when you’re a fossil fuels producer) and enjoys greater support from pension funds and institutional investors. Workers have a louder voice in how affairs are managed. Seeking approval for deals can take longer.

In short, Dutch society, steered by its politicians, is seen – rightly or wrongly – as being less amenable to capitalism.

Shell and the others are wishing to make life easier, to afford themselves greater flexibility and speed. In terms of a major jobs dividend for the UK, there is none. It is a badge of honour for the UK, that is true (and if the moves went the other way there would be anger and dismay) but to say it is down to Brexit is incorrect.

It is more to do with the sheer inconvenience and cost of keeping a dual structure, coupled with frustrations regarding the Netherlands.

Nevertheless, there’s a feeling that some EU countries are instinctively not so pro-business, an image that the free-wheeling Boris Johnson and his colleagues like to foment – with the Netherlands being one of them.

The problem is that at the other end of the UK corporate spectrum, among smaller businesses, that more relaxed, laissez-faire approach on high translates into a government that simply does not appear to care about the day-to-day difficulties imposed by Brexit.

Unlike their larger brethren, these enterprises do not have entire departments specialising in trading with the EU. When withdrawal loomed, the bigger players set about training their staff for the new world; that simply did not happen lower down. If there are forms to be completed those managing the firm very often must do it themselves, along with the myriad tasks they’re required to fulfil. This, do not forget, when there was no form-filling pre-Brexit.

So, the other email that arrived shortly after the one about Shell was from a pal who is involved in the management of his family’s jewellery business. They are now bogged down, he said to me recently, “in endless paperwork and huge processes with customs and courier companies”.

When Britain was in the EU, they could place an order with an EU manufacturer and the piece of jewellery would come back usually within days. “Now it can take up to four months.”

Older members of his family “remember when trade was last this difficult. It was in the 1960s. All the things that became progressively easier after we joined the EU have now been removed.”

They could use suppliers based elsewhere, outside the EU, but have not been able to find one that is suitable, plus they like to deal with the suppliers they’ve built up relationships with over decades.

To show what he means, he emails a FedEx shipment form. It is so the company can import some jewellery from Germany.

To clear customs they must include the following information:

– Reason for import – why are the goods entering the UK, eg, home use, after repair, for repair, exhibition, GB returns, etc. If they’re returns, they must be within three years and evidence of their export is required

– Clear description and tariff heading if available

– Harmonisation code [a special EU code that has to be looked up and typed in]

– Confirmation of market value (plus repair charges if applicable)

“This is the daily impact of Brexit,” he says. “We now have to email this information, separately, for each order to each parcel delivery service.

“On days where we receive a dozen packages from the EU, this pointless bureaucracy takes two hours: 25 per cent of someone's working day. For a value-subtract process that achieves nothing. We are wasting wages to achieve nothing.”

He adds: “This process cannot be automated by email. And each courier has their own (and sometimes variable) format. There was no such process prior to Brexit.”

This experience is being repeated everywhere. This, and not Shell, is the reality of Brexit; and it is this that Mr Kwarteng should be doing his utmost to resolve.

thenationalnews

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