Eight English ports are to become freeports under plans announced by the chancellor, who said his policy for the controversial low-tax zones would “exemplify the future economy” and “unlock billions” in investment, trade and jobs.
Businesses located within the freeports will benefit from tax breaks including no stamp duty, full rebates for construction and machinery investment, five years of zero business rates, and lower tariffs and customs obligations.
Most of the zones will be based around England’s biggest coastal cargo ports, including Felixstowe, Liverpool, Hull, Southampton and London Gateway. Plymouth, Teesside and a zone around East Midlands airport will also be designated areas.
While freeports existed, without great impact, in the UK until 2012, Rishi Sunak said the plan was “on a scale we’ve never done before”, creating special economic zones that he said were long established internationally but with “a unique approach” for the UK.
The chancellor said discussions were continuing with the devolved administrations for further freeports elsewhere in the UK, although Scotland is modifying the plan to introduce “green ports”, while Northern Ireland’s post-Brexit status may not allow the same model.
The freeport plan has been championed by Sunak and Conservative politicians in the north of England, where it is seen as a vital tool in the “levelling up” agenda to attract money and jobs to deprived regions.
Sunak told the Commons it was a policy the UK could only pursue now it was outside the EU. There are in fact about 80 freeports within the EU, but the European commission has been clamping down on the zones, which have been linked with money laundering, corruption, tax evasion and organised crime.
Sunak, however, unveiled the policy as the final flourish of his budget speech, setting out his vision for the future of one of the new freeports, in Teesside. “In the past, it was known for its success in industries like steel,” he said. “Now, when I look to the future of Teesside, I see old industrial sites being used to capture and store carbon; vaccines being manufactured; offshore wind turbines creating clean energy.”
He said the freeport would “see innovative, fast-growing businesses hiring local people into decent, well-paid, green jobs”.
The full list of eight English freeports will incorporate East Midlands airport; Freeport East – Felixstowe with Harwich; Humber – including Hull, Grimsby, Immingham and Goole; Liverpool City Region; Plymouth and South Devon: Solent – including Southampton; Thames – combining London Gateway and Tilbury ports; and Teesside.
Each zone includes a port, as the customs and tariffs benefits are designed to allow raw goods to be processed and re-exported more efficiently and cheaply, while legally avoiding normal import duties. However, the zones can stretch as far as 25 miles (40km) and link other areas in new designated “tax sites”.
Spokespeople for winning bidders including Solent and Plymouth said the news would provide massive investment and thousands of new jobs in their regions.
Teesside and Humber will also benefit from a port upgrade fund to develop facilities for offshore wind. the trade association RenewableUK said the combination with freeports was “a big bang moment for offshore wind manufacturing”.
The UK Major Ports Group – some of whose members, including Bristol, did not succeed in bids to gain freeport status – said it looked forward to helping make them a reality. Tim Morris, its chief executive, added: “However, freeports alone are not a silver bullet for addressing deprivation in coastal communities. The government should look at extending some of the low-cost, pro-investment measures in the freeports ‘tool box’ to port areas more widely.”
While the government and ports have said freeports should remain tightly controlled and comply with UK labour, environment and safety laws, there remain concerns over regulation and governance. Details of how the ports and tax sites will be run have yet to be established, with successful bidders expected to draw up detailed plans for their zones.
Owners of ports who are likely to benefit include Dubai’s DP World, which owns London Gateway and Dubai’s Jebel Ali free-trade zone, the Hong Kong-based Hutchison, which owns the terminals at Felixstowe and Harwich, and Peel Group, established by Isle of Man resident John Whittaker – one of Britain’s biggest landowners – which owns the port of Liverpool.
Some critics have questioned whether the tax breaks could be regarded as potentially illegal state aid and breach trade agreements, not least with the EU and the cooperation agreement signed in December.
Another proposal, which the Treasury says will be subject to parliamentary approval, is that firms within the zones will not pay employees’ national insurance contributions for new jobs, potentially until 2031. Unions have expressed concern over that plan.
The Rail, Maritime and Transport Workers union general secretary, Mick Cash, said it would “create a two-tier workforce and turn these regions into bargain basements for multinational companies to enjoy increased profits at the expense of workers’ safety, employment rights and public services”.
The shadow chief secretary to the Treasury, Bridget Phillipson, said: “Freeports are simply not the silver bullet for our economy that the chancellor claims. There’s a real risk that free ports simply move existing economic activity around, rather than increase it.
“With the UK’s low global tariff, experts say the only sector well positioned to benefit is making dog food.”
Source : The Guardian
