Posted on April 24, 2022
Most of the free zones will be located around England’s largest coastal cargo ports, including Felixstowe, Liverpool, Hull, Southampton and London Gateway. Plymouth, Teesside and an area around East Midlands Airport will also be designated.
Everything is now moving very quickly in the United Kingdom, and England is on the front line. Already eight English ports or airports are to become free ports under plans announced by Chancellor of the Exchequer Rishi Sunak (Finance), who said his policy for controversial low-tax areas “would exemplify the economy future” and would “unlock billions of investments”, promoting trade and jobs.
The development of free ports
The Chancellor said discussions are continuing with devolved administrations for other free ports elsewhere in the UK, Scotland, Wales and Northern Ireland, although Scotland wants to introduce so-called green ports , while Northern Ireland’s post-Brexit status may not allow for the same freeport model.
Rishi Sunak talks about a “scale never reached before”creating special economic zones which he said had long been established internationally, even though the freeports initiated by Thatcher existed in the UK until 2012.
The freeport plan has been championed by Sunak and by conservative politicians in the north of England, where it is seen as a key tool in the ‘rehabilitation’ program (level up) to attract money and jobs to these disadvantaged regions.
Sunak unveiled his policy as the final flourish of his budget speech, setting out his vision for the future from Teesside, in one of the future new free ports:
“In the past, he was known for his success in industries like steel. Now when I look to the future of Teesside I see former industrial sites being used to capture and store carbon; vaccines are produced; offshore wind turbines create clean energy. »
He said that the free port “would see fast-growing, innovative companies hiring locals for decent, well-paying, green jobs.”
The full list of eight freeports English will include 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 the ports of London Gateway and Tilbury; and Teesside.
Each zone includes a port or airport, as customs and tariff advantages are designed to allow the processing and re-export of raw goods more efficiently and at lower cost, while legally avoiding normal import duties. However, zones can extend up to 25 miles (40 km) and connect other zones in new designated “fiscal sites”.
Spokespersons for the winning bidders, including Solent and Plymouth, said the news would provide massive investment and thousands of new jobs in their areas.
Teesside and Humber will also benefit from a port upgrade fund to develop facilities for offshore wind. Trade association RenewableUK said the combination with the freeports was “a great moment for the manufacture of offshore wind turbines”.
Another proposal, which the Treasury says will be subject to parliamentary approval, is that companies located in the zones will not pay national insurance contributions to employees for new jobs, potentially until 2031. unions have said they are concerned about the plan. We imagine from here the reaction of our CGT which in fact, by its braking, has already reduced French port activity, to the point of making it insignificant on an international scale.
The legal issue of tax breaks
Some critics have questioned whether the tax breaks could be seen as potentially illegal state aid and in breach of trade agreements, including with the EU and the cooperation agreement signed in December.
Opposition Labor leader Keir Starmer coincidentally felt that the priority should instead be to make life easier for companies trading with the EU and affected by the new post-Brexit trade rules:
“ Instead of blindly trusting freeports, the Chancellor better make sure the government’s Brexit deal works for UK manufacturing, which faces more bureaucracy, and for our financial services “.
That said one does not preclude the other.
Richard Ballantyne, chief executive of the British Ports Association, warned that of the deprived coastal towns that did not make cuts, “there will be losers” following this policy. A study carried out in the United Kingdom as part of a think tank Changing Europe concluded that freeports do not offer a magic bullet for economic transformation.
Yet Prime Minister Boris Johnson’s government is betting that the hubs will attract innovation and investment, aided by reduced customs and tax burdens, to raise the bar. Other benefits include simplified planning rules and access to infrastructure financing.
Businesses located in freeports will benefit from tax relief, including no stamp duty (tax), full refunds for investment in construction and machinery, five years of zero-rate for businesses, and lower tariffs and customs obligations.