Clause 109 - Designation of freeport tax sites

Finance (No. 2) Bill – in the House of Commons at 9:15 pm on 19th April 2021.

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Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs) 9:15 pm, 19th April 2021

I beg to move amendment 54 in clause 109, page 63, line 14, at end insert—

“(1A) An area may be designated as a special area under subsection (1) only when a motion approving the creation of freeport tax sites has been agreed by—

(a) Senedd Cymru,

(b) the Scottish Parliament, and

(c) the Northern Ireland Assembly.”

This amendment would require the Treasury to have received consent from the devolved parliaments on proposed freeport measures before introducing the changes proposed by Clause 109.

Photo of Eleanor Laing Eleanor Laing Deputy Speaker and Chairman of Ways and Means, Chair, Standing Orders (Private Bills) Committee (Commons), Chair, Standing Orders (Private Bills) Committee (Commons)

With this it will be convenient to discuss the following:

Clause 109 stand part.

Clauses 110 and 111 stand part.

That schedule 21 be the Twenty-first schedule to the Bill.

Government amendments 43 to 52.

That schedule 22 be the Twenty-second schedule to the Bill.

New clause 4—Eligibility for capital allowances and stamp duty land tax relief for freeport tax sites—

“No company shall benefit financially from the provisions of sections 110 or 111 unless the company—

(a) recognises a trade union for the purposes of collective bargaining with its workforce,

(b) is certified by the Living Wage Foundation as a living wage employer,

(c) is taking steps to reduce its carbon emissions, and

(d) publishes details of its equality pay gap and has a published plan to reduce disparities.”

This new clause would ensure that the benefits of capital allowances and relief from stamp duty land tax for freeport sites apply only to companies that meet certain criteria relating to employment and environmental credentials.

New clause 5—Economic impact of freeport tax sites—

“(1) Sections 109 to 111 shall not come into force until—

(a) the Secretary of State has published a report, commissioned from the Office for Budget Responsibility, and

(b) the report has been debated and approved by both Houses of Parliament.

(2) The report in subsection (1) must forecast the impact of sections 109 to 111 on—

(a) Government and local council tax revenues,

(b) economic activity in areas directly adjacent to proposed freeports,

(c) UK productivity, and

(d) the provision of jobs paid at more than the median wage.”

The new clause would make the commencements of sections 109 to 111 dependent on the Secretary of State publishing a report that would allow Members of Parliament to assess the economic case for freeports, and on both Houses agreeing that report.

New clause 25—Review of freeports—

“(1) The Chancellor of the Exchequer must review the impact of sections 109 to 111 and schedules 21 and 22 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act and once a year thereafter.

(2) A review under this section must estimate the expected impact of sections 109 to 111 and schedules 21 and 22 on—

(a) job creation within the sites designated as freeports and across the UK as a whole,

(b) revenue from corporation tax and stamp duty land tax within the sites designated as freeports and across the UK as a whole,

(c) levels of artificial tax avoidance and tax evasion across the UK as a whole,

(d) levels of criminal activity,

(e) the necessary level of staffing for HMRC and the UK Border Force, and

(f) departmental spending by HMRC and other departments on enforcement.”

This new clause would require the Government to review the impact of the provisions of the Act introducing freeports and publish regular reports setting out the findings.

Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs)

It is a pleasure to have the privilege of opening the debate on this clause. I rise to speak in support of amendment 54 in my name, which would require the Treasury to have received consent from the devolved Parliaments before it could designate freeport tax sites as outlined in clause 109.

Although the amendment will not be pushed to a vote, the very need for an amendment requiring democratic safeguards and devolved consent is sadly indicative of the Government’s disregard for devolution and the interests, rights and ambitions of the devolved nations. It is jarring that today’s debate, and its pursuit of powers, paid for by taxpayers across the UK, is happening despite the Government’s failure to achieve consensus across all four nations of the UK.

That unilateralism by the Government is not only disappointing but, I would argue, economically self-defeating, as the overwhelming body of evidence, some of which has been gathered by Committees of this place, including the Welsh Affairs Committee, of which I am a member, suggests that freeports will lead to the redistribution of jobs and investment, rather than their creation across the UK, unless the policy is very closely and carefully co-ordinated.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

The hon. Gentleman is absolutely right: one of the prerequisites of the opportunity for freeports is to ensure that every part and every region of the United Kingdom of Great Britain and Northern Ireland benefits. Although every hon. Member is right to claim it for themselves, it is important that we all benefit. Does he agree?

Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs)

I agree with the point that the hon. Member makes. If the freeport policy is to have real benefit and ring true to the rhetoric of levelling up every single nation and region of the United Kingdom, it is clear that no port—or no nation or region—should be disadvantaged by the location of any other. In effect, we cannot have a situation whereby the Government are asking for Welsh, Scottish or Northern Irish taxpayers, along with English taxpayers, to pay for freeports in certain parts of England that may actively disadvantage those in Wales, Scotland or Northern Ireland. If they did, it would appear that the Prime Minister and his Chancellor would be willing to trample over the devolution settlements in pursuit of this freeport master plan.

The Wales Act 2017 largely devolved the regulation and supervision of ports and harbours in Wales to the Welsh Government, while economic development is also of course a devolved competence. UK Government demands, such as capping the number of Welsh freeports to one—an outcome that would likely lead to an overall reduction in the number of Welsh ports—are direct infringements on the Welsh Government’s responsibility for the Welsh economy.

It is therefore especially dangerous that Wales cannot count, it would seem, on its Secretary of State to defend its interests at the Cabinet table. Instead, rather than side with Wales’s democratic institutions, the Secretary of State for Wales has threatened that a freeport will be implemented in Wales come what may, including if Wales’s Parliament were to reject such a measure.

I am conscious that there are others who wish to make perorations on this topic this evening, so I will draw my remarks to a close. I look forward to summing up at the end. Although I will not press the amendment to a vote this evening, I hope that the Minister will consider my remarks and ensure that freeports are established with the consent of all four nations and supported by an engaged public debate. Refusal to do so would be a tacit admission that this Government will not hesitate to trample over Wales’s economic interests and aspirations if they run contrary to the plans drawn up in London.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury 9:45 pm, 19th April 2021

I rise to speak in support of clauses 109 to 111, schedules 21 and 22 and amendments 43 to 52.

The clauses will act in support of the Government’s freeports programme, which is designed to unlock investment in eight regions of England so far, with more to follow in the devolved Administrations. At Budget, following an open and transparent bidding process, the Chancellor announced the locations successful in securing freeport status: East Midlands airport, Felixstowe and Harwich, Humber, Liverpool city region, Plymouth and South Devon, Solent, Teesside, and Thames.

Freeports will be national hubs for international trade, innovation and commerce, regenerating communities across the UK by attracting new businesses and spreading jobs, investment and opportunity. They will bring together ports, local authorities, businesses and other key local stakeholders to achieve a common goal of shared prosperity and opportunity for their regions. In doing so, they will help in the Government’s ambition—indeed, all of our ambition—to level up areas that have been left behind.

The Government’s freeports model enables the UK to take advantage of the benefits of leaving the European Union. The Government have drawn on examples of successful freeport programmes all over the world to develop freeports that will attract significant new investment and encourage development across the UK. The model will enable businesses in freeports to draw on benefits relating to customs, planning, regeneration and innovation, as well as the offer of targeted tax reliefs supported by the clauses in the Bill.

The Government have engaged extensively with ports, local authorities and industry, including through a consultation on the wider programme running between 10 February and 13 July 2020. We have also listened to feedback from a wide range of stakeholders to inform the development of an effective model that will benefit port areas across the UK.

For the reasons already outlined in the earlier debates, I will confine my remarks to the key points at issue. Clauses 109 to 111 give the Government the power to designate tax sites and, once sites have been designated, to provide relief within those sites for the acquisition of commercial purpose property and new plant and machinery assets, as well as relief on the construction or renovation of buildings.

Photo of Sammy Wilson Sammy Wilson Shadow DUP Spokesperson (Treasury), Shadow DUP Spokesperson (Work and Pensions), Shadow DUP Spokesperson (Brexit)

So far, no freeport has been designated in Northern Ireland, but one of the great fears is that because Northern Ireland remains within the single market rules of the EU, any such measures to set up a freeport could be contested by the EU and the Irish Government because they might give Belfast an advantage over Dublin, for example. How will that issue be resolved, given the terms of the Northern Ireland protocol?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

The right hon. Gentlemen raised a very similar question with me on Second Reading and, as he knows, the Government are engaging very closely with the Northern Ireland Executive. I am not in a position to second-guess what the EU may or may not do in that regard, but we have been very clear that we want to put a freeport in Northern Ireland and we want it to be a strong offer comparable to the freeports available elsewhere in the United Kingdom. That is what we will be seeking to achieve.

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons)

In passing, I thank the Government for designating Freeport East, which includes Harwich in my constituency, as one of the freeports. I am struggling to find how the tax concessions in this Bill avail us of the new freedoms outside the European Union. Will my right hon. Friend identify how the freedoms in this Bill are in contention with the EU state aid rules on tax subsidies? Of course, that would not apply in Northern Ireland, where the EU state aid rules still apply. The Government might as well be completely honest about this: if there are advantages for England of being outside the EU that we do not have because Northern Ireland is still effectively inside the EU, let us hear about them, because we want to know that we have those advantages in England.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

I think my hon. Friend has erred in his logic. It is perfectly possible for us to benefit from the flexibility of setting taxes, as we are, while being able to have a strong agreed offer that satisfies whatever rules may apply in Northern Ireland with the Northern Ireland Executive. They will be of different characters, but there is no reason to think that neither is possible.

Clauses 109 to 111 give the Government the power to designate tax sites and, once sites have been designated, to provide relief within them for the acquisition of commercial purpose property and new plant and machinery assets, as well as relief on the construction or renovation of buildings. These powers will enable the Government to move quickly to enable businesses to begin accessing the benefits of freeports as soon as is feasible.

The Government are committed to tackling non-compliance in the tax system, and freeports are not an exception to that. Anti-avoidance and evasion provisions are included in the Bill, and will be taken across further legislation for the individual tax reliefs. In addition, the Government will take further powers to create a robust system of monitoring in freeports and enable HMRC to request relevant information from businesses. This will ensure that public money is being used effectively in pursuit of the regeneration and development of freeport locations.

Clause 109 will enable the Government to designate the location of tax sites connected to any freeport in Great Britain. The tax reliefs made available as part of the Government’s freeports programme will apply only in these sites, and the Government intend to bring forward legislation to apply these reliefs in Northern Ireland at a later date.

Bidders submitted initial proposals for their tax sites during the bidding process. The Government allowed up to 600 hectares of tax site space to be proposed, across a maximum of three separate sites per freeport. Tax site proposals were also judged against a set of criteria relating to existing deprivation and unemployment, to ensure tax measures will have maximum impact in regenerating those areas. The Government will now work with the successful locations to approve their tax site proposals. Once the successful bids have completed the full tax site assessment process, the Government will designate the agreed areas as tax sites. From that point forwards, businesses will be able to claim and benefit from the tax reliefs.

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons)

I am most grateful to my right hon. Friend; he is being very generous, though whenever I am tackled on a point of logic by a professor of philosophy, I wonder what is going on. But my question is quite an innocent one in this case. In Harwich, there are some businesses very near the tax sites which have been affected by Brexit and would benefit greatly from being included in the tax site. To what extent are the boundaries still adjustable, and is there an issue of principle regarding included businesses that could expand much more effectively? I am thinking of the particular example of a petrochemicals processing business, which exports substantially and would benefit very greatly by being in the tax site. It would generate many more jobs and much more wealth for the United Kingdom.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

Of course, the circumstances for each individual freeport site will be, and I am sure are, very different. I cannot comment on the site my hon. Friend describes, but in general the emphasis of the legislation is very much on new investment and new development, rather than on existing or dead-weight investment. It may well be the case that there are businesses that would propose to make substantial new investments and, depending on the freeport in question, it may be possible for them to qualify for some of the benefits associated with that, but, again, it is not possible for me to comment on individual cases.

Clause 110 and schedule 21 will allow businesses in freeport tax sites in Great Britain to benefit from two new capital allowances: enhanced capital allowances and an enhanced structures and buildings allowance.

On clause 111 and schedule 22, the clause makes changes to provide for a new relief from stamp duty land tax for acquisitions of land and buildings situated in freeport tax sites in England that are used for qualifying commercial purposes. Relief will be available for purchases made from the date a freeport tax site is formally designated until 30 September 2026.

Amendments 43 to 52 amend the provisions introduced by clause 111 and schedule 22 to provide certainty that property investors using sharia-compliant alternative finance are able to benefit from stamp duty land tax relief in the same way as investors using conventional finance. That will be done by taxing the alternative finance intermediary’s acquisition as though it were an acquisition by the investor. The amendments ensure that the tax payable by someone using alternative finance is the same as that which would be payable were the property purchased using a conventional financial product.

Opposition Members have tabled two new clauses relating to clauses 109 to 111. Among other things, they would place additional eligibility criteria in respect of employment rights, equalities and the environment on the claiming of capital allowances and stamp duty land tax relief in freeports. It is important to say that freeports will deliver tangible benefits that will help to level up areas. By imposing those additional criteria, the new clauses would potentially delay the implementation of these measures by making freeports more complicated for businesses to navigate, and therefore reducing their impact and effectiveness. In any case, the Government have a very strong commitment to reducing carbon emissions, which is why this country was the first major economy to implement a legally binding net zero greenhouse gas emissions target by 2050. The Government will continue to ensure that the role of tax is considered alongside other policy measures needed to meet environmental goals.

As I have already indicated, freeports will also have an important role in reducing regional disparities. The rigorous assessment of bids that has been undertaken has ensured that tax benefits are available only in areas that require regeneration and would benefit from being a tax site, helping the Government to level up those that have been left behind.

New clauses 5 and 25 as tabled would have the following effect. New clause 5 would make the commencements of clauses 109 to 111 dependent on the Secretary of State publishing a report that would allow Members to assess the economic case for freeports, and on both Houses agreeing that report. New clause 25 contains a similar request for a review of the impact of clauses 109 to 111 and schedules 21 and 22, and for a report of that review to be laid before the House within six months of the passing of this Bill and once a year thereafter. A robust and transparent bid assessment process, using the criteria set out in the bidding prospectus, ensured that the eight English freeports so far granted all demonstrated a good or better economic case, including a strong economic rationale for their proposed tax site locations.

In the interest of transparency and accountability, the Government have also published a decision-making note that clearly sets out how sustainable economic growth and regeneration were prioritised in this process of assessment. The Government will publish costings of the freeports programme at the next fiscal event, in line with conventional practice. Imposing an additional economic incentive on top of what has been outlined would only risk delaying the delivery of the programme and therefore the associated benefits of the increased investment and employment.

Amendment 54 would make the commencement of a freeport tax site in any UK nation subject to approval by the three devolved Administrations. Ben Lake has already introduced that. Let me say to him that tax is first and foremost a reserved matter unless it is specifically devolved. The UK Government have the power to set tax sites that offer reserved tax reliefs across the UK, and Ministers for the devolved Administrations have the power to set devolved tax reliefs. Devolved Ministers will be accountable to their Parliaments for the use of tax instruments under their control in a freeport tax site within their nation under the proposed plans.

The Government are determined to establish freeports across the UK, not just in England. That is why we are committed to continuing discussions with the Administrations in Scotland and Wales, when their new Governments have been established, and with the Northern Ireland Executive. The Government intend to have a freeport in each nation, and are determined to deliver that as soon as practicable. They will be national hubs for trade, innovation and commerce, regenerating communities across the country. They can attract new businesses and spread jobs, investment and opportunity to towns and cities up and down the UK, which will boost international trade and economic growth.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

I am happy to take a third intervention from my hon. Friend.

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons)

I am most grateful. Well, it is the Committee stage of a Bill. Ben Lake raised an issue that I had not considered before, which is that the provision of a freeport in a devolved nation might actually reduce the revenue being collected by that devolved Government. Has my right hon. Friend given consideration to that? I cannot see how that would actually happen, but will he give an assurance that there is a means of addressing that if it were to occur?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

As far as I am aware, this is a very remote contingency and I see no evidence to suggest that it might be the case in the context that has been described, but I can certainly tell my hon. Friend that, when the Government engage with the Welsh Government, we will be sensitive and open to discussion of the potential economic effects of a freeport in Wales, as one might expect.

Clauses 109 to 111, schedules 21 to 22, and amendments 43 to 52 will support the development of freeports by encouraging new private investment in each of the eight freeport locations in England. These constitute major aspects of the Government’s freeports programme, which will attract large-scale investment across every region of the UK and make significant contributions to the recovery from the pandemic and to levelling up across the regions. I therefore move that these clauses, schedules and amendments stand part of the Bill.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury) 10:00 pm, 19th April 2021

It is a pleasure to speak for the Opposition on the clauses relating to freeports. I will speak to new clause 25 in my name and the names of my hon. and right hon. Friends. Before I turn to the detail of our new clauses in this group, I would like to say a little about Labour’s position on freeports and regional economic policy more generally.

Labour wants to see good new jobs created in every region and nation of the United Kingdom. We want to see genuine levelling up that hands power and opportunity to areas that have been deprived of them for too long. We want an economic policy that addresses the fundamental challenges facing our country and our constituents: ever widening regional inequality, low productivity and low wages in too many places; a social care crisis that threatens the dignity of older people; and an environmental crisis that threatens us all.

I am afraid that the Government’s approach to levelling up has been far less ambitious. We have seen regions and areas pitted against each other to bid for pots of money, only to find that Conservative Ministers overruled officials and handed funding to already wealthy areas. We have seen nothing to make up for the 11 years of a Conservative Government who have sucked funding and opportunities out of areas that they now say need levelling up. We have seen a total lack of ambition from the Government on supporting a recovery from the coronavirus crisis to build a stronger and more resilient economy. That brings me to freeports and the clauses that we are considering today.

I think we were all a little underwhelmed when the rabbit pulled from the hat at the end of the Chancellor’s Budget speech last month was the reannouncement of his freeports policy. The Opposition simply do not believe that freeports are the silver bullet for our post-Brexit economy that the Chancellor clearly hopes they are. In fact, the evidence is that freeports are likely to have relatively little impact on overall job creation and are far more likely to move jobs from one place to another. We want every area to flourish, whether or not they have a freeport. We know that Ministers are aware of this problem because they asked potential freeports operators to address it in their bids. Our new clause 25 would require the Government to produce an annual review of the impact of the freeports policy on job creation in freeport sites and across the country as a whole.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

I would be grateful if the hon. Lady could tell us whether the Labour party’s position is to support freeports or not to support freeports.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury)

I thank the Minister. I will approach that later in my speech, so I thank him for already guessing what I was going to say.

We really need some honesty and transparency from the Government on this. The estimates of the job creation benefits of freeports made by their advocates so far have been flimsy to say the least. We also need a proper assessment of the risk of job displacement. If freeports simply move existing economic activity around, they risk doing harm to the economic fortunes of neighbouring areas, with no net benefit to the country as a whole. Indeed, a 2019 report by the UK Trade Policy Observatory found that the main effect of freeports was to divert businesses into a port from a surrounding area, rather than creating new jobs, so it is not just Labour saying this; it is the experts saying it too. That may be especially problematic in areas where freeports are situated near a local authority, or regional or even national borders.

Our new clause would require the Government to report on tax avoidance and evasion and criminal activity in freeports and to set out the level of additional staffing and resources required by HMRC and other Government bodies. There are long-standing concerns that freeports allow or encourage tax avoidance and evasion, and there is international evidence that freeports have been used for criminal activity. For example, the OECD has stated that there is

“clear evidence that free trade zones are being used by criminals to traffic fake goods”.

The Financial Action Task Force has said that the lack of scrutiny can facilitate trade-based money laundering through relaxed oversight and a lack of transparency. The TUC and others have warned of the dangers to workers’ rights from deregulation in freeports. We need to take these concerns seriously. As a minimum, the Government should commit to trade union representation in the governance of freeports at local and national levels.

I will now make a few points about the clauses we are considering. First, on the cost of the tax reliefs being introduced, the Government have provided some information on the expected operational costs of HMRC but, as recently as last month, they were unable to estimate the reduced revenue that the Exchequer will receive as a result of these reliefs. I hope the Minister can address that. Clause 110 includes the enhanced capital allowance for plant and machinery spending at 100%, but that is less generous than the 130% super deduction. Presumably, for the period that they overlap, companies will need to consider whether they can claim the super deduction rather than this allowance.

The Chartered Institute of Taxation has raised a number of concerns about the operation of the stamp duty relief in clause 111. One issue is how exactly freeport tax sites will be designated and whether particular buildings can be identified as either in or out the boundary of the tax site. Can the Minister provide some clarity on joint ventures where there is both commercial and residential development? The Chartered Institute of Taxation points out that the clause, as currently drafted, excludes a common commercial arrangement from that relief. Finally, there is the issue of withdrawal of relief for subsequent non-qualifying activity. A small amount of non-qualifying use can potentially lead to withdrawal of all the relief. Is the Minister concerned that the risk of loss of the full relief in such circumstances could discourage investment?

To conclude, the Opposition have real concerns about the Government’s freeports policy. If it is going to succeed and bring the sorts of benefit that those on the Government Benches claim, we need to see more detail on the operation of freeports and how the Government plan to mitigate the risks. We need regular monitoring of the effectiveness and the impact on the country as a whole over the years to come, which is exactly what new clause 25 would require the Government to do. If the Government are confident in their policy, they should be confident in allowing scrutiny of how it works in practice. I call on them to support our new clause.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

I would like to add my support for the Opposition amendments and to seek a commitment from the Government, while the Minister is here, to allow the Scottish Government after the Scottish elections to move ahead with their greenports adaptation of the freeports concept. Freeports do not require Brexit in order to be brought about, and legitimate questions remain about how much additional economic activity they will actually generate, rather than simply displace from other areas of the economy.

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons)

I am most grateful to the hon. Gentleman for allowing me to intervene. There was a freeport in Shannon in the Republic of Ireland before the Republic of Ireland joined the European Economic Community. The tax freedoms that it was granting at the Shannon freeport were significantly curtailed as a result of joining the EEC, because the EEC prevented it from providing those freedoms. That is why we are discussing the question as to whether or not we are using the new freedoms we have, but the fact is we have much more tax freedom outside the EU for freeports than we had when we were in the EU, and hopefully Scotland will benefit from that.

Photo of Richard Thomson Richard Thomson Shadow SNP Deputy Spokesperson (Treasury - Financial Secretary), Shadow SNP Spokesperson (Wales), Shadow SNP Spokesperson (Northern Ireland)

I thank the hon. Gentleman for that intervention, but I think my point still stands. No matter what the spirit of truth might be in his remarks about how constraints were placed on the Shannon free zone, there are freeports in the European Union. Freeports are not something that intrinsically require Brexit of itself in order to be able to be pursued. But certainly I hope there are benefits for Scotland from this. I think those benefits can be manifested best perhaps through the greenports approach, which I would like to expand upon.

As I say, the Scottish Government have developed their own version, the greenports, which seeks to embrace all the potential benefits that could come through freeports, while aligning that with ensuring the principles of fair work are enshrined, ensuring that workers within the greenports are paid a real living wage and that the reduction of carbon emissions is embedded at the heart of those developments. A re-elected Scottish National party Government will seek to implement those greenports, making public sector support contingent on businesses complying with that fair work first agenda, paying that real living wage and implementing the Scottish business pledge: our values-led partnership between Government and business based on boosting productivity competitiveness through fairness, equality and sustainable employment, and on delivering on concrete plans to reduce carbon emissions in line with supporting the Scottish Government’s ambition to reach net zero by 2045.

The Scottish Government proposals for these economic development zones already have widespread buy-in from stakeholders, who are desperate to start bidding to run the greenports. It was heartening to hear from the Minister his commitment to seeing freeports in all parts of the UK. Nevertheless, if the people of Scotland choose to re-elect a Scottish National party Government, the Government need to accept the mandate that comes from that and, if there has been an element of heel dragging, to hasten the process of coming to an agreement on the rules around these proposed greenports so that the bidding can begin immediately.

Having taken positive steps to end the race to the bottom on corporate taxation, as we heard in an earlier debate, I think it is important that the UK Government do not allow those who take advantage of freeport status to neglect or otherwise elude their obligations to the workforce, to the environment and to the building of long-term, sustainable value in the regions where they are located and the wider economy.

In the year that the world is coming to Scotland to plan our future at the COP summit, I think it is absolutely fitting that we should be able to develop greenports to demonstrate our ambitions on sustainable, inclusive economic growth as we transition to a net zero economy. A fair, sustainable greenport model can be an exemplar of those values, while adding value to Scottish goods, services and the country’s brand. The UK Government, once the Scottish elections are over, need to get on board with this and back the innovative approach of the Scottish Government model so that we can get the bidding process under way.

Photo of Ruth Edwards Ruth Edwards Conservative, Rushcliffe

The east midlands is one of the regions that was fortunate to benefit from a new freeport in this Budget. Spread across three sites in Leicestershire, Derbyshire and my own constituency of Rushcliffe, we hope to establish a green technology park on the site of one of the UK’s last coal-fired power stations, at Ratcliffe-on-Soar.

Hearing contributions from the Labour party in recent weeks, and from the shadow Minister just now, we would be forgiven for thinking that, with the arrival of a freeport, Rushcliffe will become some sort of wild west, with disputes over stolen art, organised crime activity and tax avoidance settled with a shoot-out in the drinking establishments of Ratcliffe-on-Soar. Quite a picture, but one that ignores the extensive steps the Government have taken to prevent illicit activity, such as background checks for businesses that want to locate in a freeport, including their beneficial owners, and a register of businesses operating in each freeport site, to which HMRC, the National Crime Agency and Border Force will all have access. Successful freeport bids also had to demonstrate their approach to inventory systems, physical security, personnel security, cyber-threats and international regulations.

Opposition Members also argue that, rather creating new jobs, freeports will suck in jobs and investment from other areas, like some avaricious black hole. We already know that that is not the case. We have companies such as Intelligent Energy, based in the constituency of my hon. Friend Jane Hunt, bidding for Government support from the automotive transformation fund to build the UK’s first hydrogen cell gigafactory, and where do they want to locate it? The east midlands freeport. It could create around 600 jobs, and I ask my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy to look kindly on the bid, which would ensure that the east midlands, a region set to be disproportionately affected by our transition to a low-carbon economy, will also benefit.

The businesses and universities that back the east midlands freeport believe that it will generate up to 60,000 new jobs across the region—not just at the freeport site, but in local supply chains and service industries. Raw materials, warehousing, distribution, construction, logistics, engineering, IT—I could go on. The potential for new jobs and training opportunities across the region is enormous. Currently only 17% of graduates stay in the east midlands after university. We are clearly experiencing a brain drain, and policies such as freeports, which encourage new businesses and industries to cluster around sites, will help to address that.

Finally, we have heard that we have had freeports for years, and that they have been ineffective, but did we really, or did we have them in name only? I would say the latter. Bound by the tight regulations around state aid and trade policy, which were central to our EU membership, we were severely hampered in what we could do. Now, as an independent country, we have control over our trade and customs policy. We can design more flexible rules that are closer to World Trade Organisation equivalents.

We need to look to the example of US foreign trade zones—the US equivalent of freeports. Using these zones, companies such as Pfizer were able to ensure the swift, competitive roll-out of its vaccine. The foreign trade zones model helps to cut costs on various pharmaceutical ingredients and allowed Pfizer to store its vaccine in the zones indefinitely until it was approved by the US regulator before being shipped for use immediately. Ultimately, that flexibility not only supported American jobs, but saved lives all over the world, including here in the UK.

In conclusion, freeports are a hugely important tool for rebalancing our economy across the regions and restructuring it in the face of the huge changes it faces in the coming years. They are not a silver bullet, but they are a key part of a strategic set of policies that my right hon. Friend the Chancellor has set out in this Budget, an alternative set of which we are still waiting for from the Labour party. What are its ideas for rebalancing our economy? How will it increase prosperity and opportunity for communities across our country? Who knows? The plans remain shrouded in mystery, or maybe they just do not exist.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 10:15 pm, 19th April 2021

New clause 4 stands in my name and those of several right hon. and hon. Members. As I said in the debate on the provisions for super deductions, if the Government are giving tax breaks to businesses, then the Government, as guardians of the public interest, should demand something in return. The provisions in new clause 4, listed as (a) to (d), are modest demands that many Members, especially those on the Opposition Benches, think should be required of all businesses anyway. It is important that public money supports public goods and good public outcomes, like a fair day’s pay for a fair day’s work, like tackling climate change, in which we all—individuals, Government and businesses—must play a role, and like eradicating the gender pay gap, a process this House began over 50 years ago with Barbara Castle’s groundbreaking Equal Pay Act 1970.

The Minister referred to those as “complications”. I do not believe that paying decent wages, tackling climate change or overcoming the gender pay gap are complications. I believe they are essential criteria for any policy for the future. If we are to tackle rising poverty—if the Government want to do that—there is an opportunity here to end in-work poverty by guaranteeing the real living wage in companies locating to freeports. We have 4.3 million children in poverty, and most are living in households where at least one parent is in work. Government policy must act to tackle low pay.

Low pay holds people back and is often linked to insecure work, which is why the Government should also act to end zero-hours contracts. Insecure and low-paid work means insecure housing and instability for children. The Government should put down a marker in this policy for the society we want to be. As things stand, from what we have heard in the debate so far, it is a society for a few to profit and the rest to struggle. This new clause is about hardwiring fairness and justice into our economic system, and about levelling up. It should not be in conflict with any stated aim of the Government, and I hope that they accept the new clause or at least consider the issues about how we tackle this range of policies and use the state to enable that to happen.

New clause 5 also stands in my name. In its analysis of the Chancellor’s Budget, the Office for Budget Responsibility said of freeports:

“Further details have been announced in the Budget but came too late to be incorporated into our forecast. We will return to this in our next” economic and fiscal outlook. So this is policymaking as a leap in the dark. It is not evidence-based, but done on the basis of supposition and, largely, ideology, given what we have heard so far. What I seek to do in new clause 5 is create an evidence base for policy, on which this House can assess the merits and drawbacks of such a policy. There are reasons to be concerned. Many Members of this House will recall the debates about enterprise zones in the 1980s. Those zones did little to benefit local workers and simply transferred jobs and investment, rather than stimulating it. In an assessment of the enterprise zone policies of the 1980s, the Centre for Cities think tank found:

“The first two rounds…created 58,000 additional jobs (directly and indirectly), but over 40 per cent of those jobs were created by businesses that had relocated to enjoy the tax cuts”.

It also found that each job

“cost the public purse £26,000 (in 2010-11 prices), which was significantly more expensive than other policies” for job creation that we were being pursued at that time. The same policy was brought back under the Government of David Cameron, championed by the then Chancellor George Osborne. Analysis of those zones by the Centre for Cities showed the jobs supposedly “created” in these zones were often just relocated from elsewhere. Unfortunately, the evidence showed that they were also overwhelmingly low-skilled and low-paid. Tax breaks in underinvested areas are not an industrial strategy. New clause 5 is a simple plea for evidence-based policy making, and one I hope the Government will accommodate in their future discussions.

I hope the Government will also accept new clause 25 in the name of the Opposition Front-Bench team, because it too demonstrates that evidence-based policy requires policies to be reviewed, and that the evidence base has to be assessed throughout implementation of any particular policy. The case for freeports has not been made and the risks are significant. There are risks of accelerating tax avoidance, and actually doing economic damage to areas neighbouring freeports is a real concern. To leap into a policy with such a lack of evidence and of account taking of past practice is worrying, to say the least.

This is the last time I will speak at this stage of the passage of the Bill, so I would like to place on record that, after listening to the debates on Second Reading and today, even I am shocked at the undeniable evidence of the scale of corporate capture of this Government, going well beyond anything we have seen under the last two Tory Prime Ministers. The central purpose of this Government, on the basis of these policies—both the super deduction and holding back the corporation tax increase, as well as the freeports—appears to be simply to line the pockets of corporations with taxpayers’ money and to render them free of any effective regulation that would make them accountable to a wider community. I therefore honestly and fervently fear for the future of this country in the hands of this Government.

Photo of Jane Hunt Jane Hunt Conservative, Loughborough

I rise to speak in favour of the Bill.

Freeports will play an important role in the Government’s levelling-up agenda, bringing much needed opportunities for economic growth and social mobility to areas that have historically seen low levels of investment and less opportunity. That is why, over the past year, I and my fellow east midlands MPs from both sides of the House have worked hard, alongside our local enterprise partnerships, businesses, local authorities and educational establishments for the east midlands, to become a freeport site. I was delighted by the announcement at the Budget that East Midlands airport will be one of eight ambitious new sites across the UK. This decision will ensure that the east midlands cements itself as a hothouse for innovation and becomes a dynamic environment for innovators, businesses and regulators to generate and test new ideas and technologies.

Crucially, the freeports will be vital to the development and expansion of local businesses that are the driving force of the east midlands economy, and of the green agenda for the nation. The east midlands, being part of the midlands engine, is also the heartland of the UK’s manufacturing sector, and the freeport will help to transform this manufacturing base through new technologies, creating a whole new industrial sector locally. The extended supply chain across the country will also fully benefit from this through products and services being fed into the business base at the freeport. The impact of this decision will not only be seen in the basic mechanics of what a freeport does to act as a customs hub for imports and exports; it will also create a highly skilled ecosystem, becoming a magnet for inward investment and business expansion, and acting as a springboard for opportunity throughout the region, creating an estimated 60,000 new skilled jobs. As such, new businesses will be attracted to Loughborough and its surrounding towns, seeking to reap the benefits of being situated close to a freeport. Indeed, interest has already been expressed by several organisations in taking advantage of the benefits a freeport would bring, either by moving to the area or expanding locally.

Loughborough is already home to a flourishing life sciences sector. We have the education powerhouses of Loughborough College with its new T-level centre and thriving apprenticeship scheme, as well as Loughborough University with its degree and above level skills that support business start-up and expansion, often through research and subsequent development of spin-off businesses. We have the physical infrastructure required for incoming businesses at Loughborough University’s science and enterprise park and Charnwood campus, and the educational expertise required to provide both a skilled local workforce ready to take up the new employment opportunities created by the freeport and the research base to drive innovation.

This is about jobs and livelihoods. It is not a reaction to covid. Freeports were in our manifesto, and I fully support the idea.

Photo of Sarah Olney Sarah Olney Liberal Democrat Spokesperson (Business, Energy and Industrial Strategy), Liberal Democrat Spokesperson (Transport) 10:30 pm, 19th April 2021

I wish to speak to clauses 109 to 111 relating to the powers to designate sites as freeports and associated provisions.

This has been a turbulent year for the UK economy, with the expected disruption of Brexit and the unexpected and unprecedented impact of the coronavirus pandemic. Now that we can, hopefully, look forward to the end of the pandemic and its associated lockdowns, it is time for the Government to put forward their bold and radical plans for kickstarting the UK economy to enable growth and skilled employment in all corners of the country.

The Government have had plenty of time to think about how they plan to deliver the benefits of Brexit that we have all been promised. I expected the Chancellor to jump at the chance to realise those benefits through the Budget and this Bill—and he has delivered freeports. This is it: the big idea, the bold move, the economic leap forward that our freedom from EU shackles has finally granted us. Except, of course, we have always had the freedom to initiate freeports in this country. We last had them in 2012. The reason we have not had them since is that their economic impact has previously proved to be negligible.

Research into freeports in other countries has shown that they do little to boost exports as opposed to imports, and there is very little evidence that they create new economic activity as opposed to redirecting existing economic activity from elsewhere. This risks trappings thousands of workers in insecure work with reduced rights, in areas with reducing opportunities for alternative employment. Any increased economic performance arising from freeports is therefore unlikely to trickle down to higher living standards in local households and communities.

What is the plan for economic growth in areas of the UK that are not lucky enough to have been awarded a freeport? The Budget and this Bill are silent on that matter. Elsewhere, the Government have scrapped their industrial strategy, replacing it with a glossy brochure full of photographs but very little content. More seriously, there has been no real attempt to quantify the impact of leaving the EU on UK business and trade, and what that might mean for our economy as a whole.

We have already seen a big short-term impact on the level of trade across the channel. It will take a while for the full picture to emerge, clouded as it is at the moment by the pandemic and the unwinding of pre-Brexit stockpiles, but there is no doubt that the increased paperwork is an expensive burden on our small businesses—and that is before import controls are introduced and the impact of the scrapping of mutual recognition of professional qualifications has been fully realised.

The UK economy has a difficult road ahead, and nothing in the Budget or this Bill demonstrates that the Government have a plan to lead us to new sources of productivity or prosperity. The Liberal Democrats are not opposed in principle to freeports, but they are not a sufficient solution to the current challenges of our economy. They fall a long way short of what is required to compensate for our leaving the EU and to restart our economy in the wake of the pandemic. Thank you, Madam Chair.

Photo of Bernard Jenkin Bernard Jenkin Chair, Liaison Committee (Commons)

I am very pleased, Dame Eleanor—if I may address you correctly—to make common cause with Sarah Olney at the outset. We can agree that freeports are necessary but not sufficient to deal with regional disparities and levelling up.

I am none the wiser from the contribution by Abena Oppong-Asare whether the Labour party is in favour of freeports or against them. I would just point out to her that I spent a certain amount of my period in opposition, which was a miserable 13 years, as shadow Secretary of State for the regions, and though the Labour party was elected in 1997 with a very sincere determination to reduce economic disparities between London and the other regions of England and the other parts of the United Kingdom, it failed, and those disparities got wider.

This is a very difficult thing to address, and the answer is that we should use every tool in the box. We should use every tool we possibly can. It is also perfectly clear that all the tools are not available if a country stays in the European Union. Some of the tools were taken away from the Republic of Ireland at its Shannon freeport when it joined the European Economic Community, and it got worse; the notion that tax advantages or tax incentives were artificial tax subsidies was extended.

Of course, we want to see other tax advantages extended to other parts of the United Kingdom, such as differential rates of corporation tax, which we have extended to Northern Ireland, but only with the permission of the European Union to treat Ireland as a separate entity—which has a double edge to it that we perhaps do not want to pursue. We should be able to do that on a sovereign basis and to bring Ireland into the sovereignty of the rest of the United Kingdom in the longer term.

I wish to emphasise that the freeport east was very much driven by the need for levelling up. I see my hon. Friend Jackie Doyle-Price nodding in sympathy, because she shares this problem. The perception is, “Oh, you’re in the rich south-east. You don’t need any help. It all needs to be directed to other parts of the United Kingdom.” Well, I can tell the House that I have red wall voters in my own constituency. Places like Clacton, Jaywick and Harwich are hard bitten by economic decline. Average weekly earnings in Tendring district, which is Clacton and Harwich, are £556, compared with a GB average of £587, and incidentally below the rate in Liverpool, which is historically regarded as deprived. We have a project that could generate, we hope, 13,500 jobs. The hon. Member for Richmond Park and others are right: we have to make sure that the minimum is substitution and the maximum is additionality. That is the challenge of making sure this works.

I will concentrate on what is in the Bill. I very much welcome the tax provisions in clauses 109 to 111, but there are bits missing from the Government’s additional proposals. Not mentioned in the Bill are the enhanced structures and buildings allowances, or the lower national insurance contributions, or the business rate reliefs proposed in freeport sites, or the local retention of business rates, so I remain concerned that we are offering only what is allowed under EU state aid rules. I will be grateful if the Minister, when he replies to the debate, addresses those points and says how those other tax reliefs will be provided.

It is worth mentioning that the Shannon freeport zone was regarded as such a success that it was imitated and adopted by China, which now has a freeport zone programme that it regards as an important enhancement of its economic competitiveness. I ask those who are cynical about freeports to open their minds, to look at the successful freeports and free trade zones around the world, and to learn from them, as well as listening to what one might call the “economic statics”—the people who think everything is about substitution and nothing is about releasing additional creativity.

I take seriously the points raised by the hon. Member for Erith and Thamesmead about compliance with the necessary conventions, such as authorised economic operator certification, World Free Zones Organisation safe zones rules and the OECD code of conduct for clean free trade zones. Those are all important, but let us recognise that, unless we avail ourselves of all the freedoms available to freeports, they will not deliver the benefits we want. I am reminded that when he was a Back-Bench Member of Parliament, the current Chancellor produced a very interesting report, “The Free Ports Opportunity”, which was published by the Centre for Policy Studies, price £10, which was rather more radical than the Treasury’s current offering. Some of us are a little worried that we will not see that enthusiasm and radicalism. Let us go step by step, let us work incrementally —that is not a criticism, but this is something to build on for the future.

Let us also recognise that the real benefit of freeports is not the tax incentives, but the customs facilitation. We must have really modern electronic customs systems to make the customs advantages of being in what is called a customs inversion zone real. Otherwise, it becomes a bureaucratic nightmare and we will not get the advantages we should get from it. Also, if it is a bureaucratic nightmare, it is the less savoury elements who benefit, not the legitimate businesses.

That is the challenge. We have a great opportunity, for which I really thank the Government in respect of my constituency and others. Incidentally, I think the freeports around the United Kingdom—this is a United Kingdom policy—should be working together. I wonder whether the MPs who represent the freeports that have been designated should get together, stop this mutual suspicion—which is understandable, as we have been competing for designation—and start working together to press the Government for the positive changes that will benefit all our freeports in the future.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Labour, Salford and Eccles

I will limit my brief comments to freeports. Detailed Government assessments on the operation and impact of freeports are sadly not yet available. As we have heard tonight, the OBR has stated that the announcements made in the Budget came too late to be incorporated into its forecast. If the Government recognise this, they must understand that they have a duty to provide such evidence and legislative reassurance in response to legitimate and wide-ranging concerns on the operation and impact of freeports.

There are concerns that, rather than complementing a local economy by stimulating the growth of new business, existing businesses may simply opt to relocate to freeports. Certainly, the Government have not made it clear how they will mitigate against the significant geographic movement of jobs away from one area and into a freeport—how they will avoid a wild-west scenario of pitting regions against each other, nor the prospect of lost revenue for local authorities from business rates, for example, if businesses opt to relocate to such a zone.

The job creation numbers are equally sketchy. The Chancellor argued back in 2016 that if the UK’s approach performs as well as that in the USA, freeports would create more than 86,000 jobs, but as the Centre for Progressive Policy found, this figure was a cut-and-paste job, being simply the number of people employed in the US free zones adjusted for the relative size of the UK population. There was no data on the labour market impact on specific regional economies or industries, nor any mention of the need for bespoke local skill strategies to feed into this.

On workers’ rights, the TUC has repeatedly warned about the gradual erosion of workers’ protections in these zones. It stated:

“Free ports are a Trojan Horse to water down employment protections”— in a “race to the bottom”.

Finally, as we have heard tonight, there are real concerns that freeports could create a bonanza for money launderers and tax evaders. Indeed, the EU reported in 2018 that freeports were

“conducive to secrecy. With their preferential treatment, they resemble offshore financial centres, offering both high security and discretion and allowing transactions to be made without attracting the attention of regulators or direct tax authorities.”

The Government must address these concerns before pressing ahead. To that end, new clauses 5 and 25 would allow the Government to create an evidence base for freeports, which the House can then examine, and new clause 4 would impose standards and protections. If the Government are serious about addressing these concerns and building in clear legal protections, they will support these new clauses tonight.

Photo of Jackie Doyle-Price Jackie Doyle-Price Conservative, Thurrock

I commend the Government on the ambitious agenda running through this Finance Bill. It needs to be ambitious because the last year has been a very painful one for us economically. We must do everything we can to foster renewed growth, renewed job creation and, indeed, renewed wealth creation.

I have listened to the speeches from Labour Members. They raise some important things, but if I seriously believed that this freeport policy was going to undermine workers’ rights and lead to massive non-compliance with health and safety and tax legislation, I would not support it. I am supporting it because I have real ambition for my local community and my area, and I am very proud and pleased that the Thames freeport has been chosen as one of the eight. I assure the House that this is going to be the transformation of Thurrock after a very long time.

My hon. Friend Sir Bernard Jenkin referred to the fact that people often see levelling up in terms of north versus south and we have heard that a lot, but nothing could be further from the truth; in fact some of the most deprived areas in our nation are our coastal communities, so it is absolutely right that freeports should be one of the headline levelling-up policies.

Although my constituency sits alongside our great capital city of London that everyone sees as wealthy, I represent three of the 100 poorest towns in this country: Tilbury, Chadwell St Mary and South Ockendon. Tilbury will be the heart of our freeport; I have been very keen to champion that, and am so pleased to hear it. My right hon. Friend the Minister will be pleased to hear that we have hit the ground running in Tilbury and Thurrock, and with London Gateway and indeed with our friends in Barking and Dagenham at Ford, in starting to realise the impacts of freeport status.

I hope the Treasury can keep up with us; it is not usual for Governments to keep up with the innovation of private-sector employers, but I commend the speed with which the Treasury has pushed forward with this policy. If we are to realise the impact and dynamism of driving economic activity we have to be fleet of foot in responding to current circumstances, not least given the year we have been through.

Our ambition for the Thames freeport is to create 25,000 new jobs. I remind the House that one of the sites included in the Thames freeport is the old Petroplus oil refinery. It basically fell out of use because of overcapacity in petrol production as we moved to diesel. We are seeing the same with the Ford site; as diesel engines become less productive that site will fall vacant, too. They are both brownfield sites that could not legitimately be used for housing, so it is absolutely right to do what we can to foster business investment in them, and that is exactly what we are doing. And I look forward to welcoming young people as they leave their schools and colleges in my area and throughout the rest of south Essex taking advantage of what will be skilled, productive jobs that contribute to the wealth creation of our nation.

Only this week we heard of a new partnership as part of the Thames freeport, with Tarmac for a dedicated aggregates facility for import and export on the River Thames, and it will include investment in manufacturing capability. So within weeks of the freeport designation being announced, we are seeing new investment—and that is new investment, not displacement.

This is all about taking advantage of the real advantages that accrue to areas like mine—coastal communities that have hitherto not had their ambitions realised. In my constituency of Thurrock, however, we have made the most of what advantages we have. We are within one hour’s travel of 27 million people; anyone investing in production or import or export at Thurrock is right next to the majority of England’s marketplace.

So I say to the Labour party and any naysayers that this is all about opportunity. This is all about making the best use of our ambition for post-Brexit Britain—being able to take advantage of the fact that we will have fewer rules governing how we do things and that we will have the ability to make links across the world.

There is little more I could say in support of this. I welcome the speed with which the Treasury has embraced it, and there will probably be more details to ensure that we fully realise the customs capabilities, as my hon. Friend the Member for Harwich and North Essex said. This is a policy whose time has come; this is a policy that is rooted in Britain’s status as a maritime nation, and it is exactly the sort of approach that we should be approving now that we have left the European Union.

Photo of Ben Bradley Ben Bradley Conservative, Mansfield 10:45 pm, 19th April 2021

I wish to speak in support of the new clauses and amendments listed earlier by the Minister and in support of the plans to deliver freeports, and the benefits they can bring, across the United Kingdom. This Finance Bill is vital for our recovery plans in the coming months and years. Freeports are intended to be national hubs for global trade and investment across the UK, and to promote regeneration and job creation as part of our levelling-up agenda. Post-Brexit Britain stands to benefit hugely from being able to compete more effectively in a global market and to offer UK-based businesses the chance to take full advantage of new trading opportunities, to expand and to innovate within the UK.

As a Nottinghamshire MP, I want to refer specifically to the freeport based around East Midlands airport, in conjunction with local plans for a development corporation at the Ratcliffe power station, which is shortly to be decommissioned and the site put to this new use. Taken together, these proposals present a huge opportunity for bringing investment and employment to our region and to my Mansfield constituency. The site at East Midlands airport has a unique mix of logistics and transport connections, with an inter-modal hub bringing together air freight with major road and rail arteries right in the centre of the UK.

This is a chance for the east midlands and this unique inland freeport model at the UK’s largest pure cargo airport to take full advantage of the Government’s agenda for growth through a green recovery—we hope that green energy can form a big part of the east midlands’ future—and through new technical skills. It can play a key part in our levelling-up agenda and, as my hon. Friend Ruth Edwards explained, it can help us keep talented people working in our constituencies in the east midlands instead of feeling that they have to disappear to the major cities to find opportunities. The partnership between Nottingham Trent University and West Nottinghamshire College in my constituency can support this development with skills development while equally benefiting from it themselves.

As the Minister explained, clauses 109 to 111 give the Government the ability to designate sites and offer tax incentives and reliefs at those sites. The sites are fairly and openly assessed, and across the east midlands my colleagues and I are delighted that our area has been successful. We estimate that these plans could bring up to 60,000 jobs to the region over the coming years, and my constituents stand to benefit from that in a big way. We are most grateful to the local authorities, the local enterprise partnerships and the businesses involved in putting the bid together. I ask the Minister to ensure that as much support as possible is available for our region to be able to put together the best possible business case, with advice and support from the Government and from his Department during the next phase.

It is telling that, before the freeports have even been set up, Labour’s amendments are already seeking to restrict and limit the benefits for businesses that invest in these sites, thereby limiting the potential for growth and job creation for my constituents. The point of these sites is to encourage innovation and investment, but it is typical of Labour Members to put ideology before jobs and livelihoods in working-class communities. They would rather fight for more power for their trade union bosses than for more wealth creation for our region and jobs for my constituents. In fact, it sounded a lot like the shadow Minister, Abena Oppong-Asare, did not really want to see this investment happen at all, despite offering no other suggestions for how Labour would regenerate these communities. John McDonnell, despite all his experience in this place, still has not worked out that it is businesses that create jobs, and that helping business is not an end in itself but a means by which to create more of the jobs that are so vital for areas such as mine that have needed them for a long time, and for our economic recovery after covid. Maybe he will get it one day, but I doubt it.

I support the Minister and the Government’s approach to delivering the new freeports. I am grateful that they have chosen the east midlands as one of the sites, with its unique location right at the heart of the country and all the potential that that brings for our region, and I will be supporting the Bill in its entirety.

Photo of Virginia Crosbie Virginia Crosbie Conservative, Ynys Môn

This Finance Bill gives us the freedom to look at freeports around the world and to propose innovative and exciting new possibilities for the UK. Last year I set up the Anglesey freeport bidding consortium, which includes Stena, Anglesey County Council, Bangor University and the North Wales Economic Ambition Board. We have approached our bid by asking the question: what problems could a freeport on Anglesey solve? By looking at the problems, we are building a freeport model that will offer benefits not just locally but globally.

Our first problem is local. After almost two decades of disinvestment under the Welsh Labour Government, Ynys Môn’s gross value added is now among the lowest in the UK. With large employers such as Anglesey Aluminium and Rehau closing down, it is highly dependent on seasonal tourism. Our island haemorrhages young people every year because there are no quality jobs for them locally. What better place for the Government to use their freeport model to create jobs and opportunity? How better to show levelling up at its most effective?

Our second problem is national. Brexit has impacted the flow of trade across the central corridor from Holyhead to Dublin. A collaboration between a freeport in Northern Ireland and a freeport on Anglesey would create a virtual special economic zone corridor and significantly improve the customs and trade route between Great Britain and Northern Ireland.

Our third problem is global. How will we hit our 2050 net zero carbon target, as energy island Anglesey is already leading the way in green energy: we have on and offshore wind farms, tidal energy, solar farms and we are about to establish a hydrogen production plant in Holyhead. We also have the best nuclear site in the UK—Wylfa Newydd. The UK needs innovative solutions, large-scale infrastructure and significant investment to achieve its 2050 target. The exemptions, tax and tariffs incentives, customs facilities and regulatory easements available to freeports would make Anglesey a global, sustainable energy investment base of choice.

Our final problem is that of re-establishing the UK’s place on a global stage outside of the EU. The competition for global capital is fierce and UK freeports are in competition with those all over the world. Ambitious and forward-looking proposals such as ours will future-proof the UK’s position as a world player. By holistically applying the levers available, the freeport of Anglesey could become the jewel in the UK’s crown.

Photo of Ian Paisley Jnr Ian Paisley Jnr Shadow DUP Spokesperson (Communities and Local Government), Shadow DUP Spokesperson (Culture, Media and Sport)

I thank the hon. Member for giving way. I did not want to cut her off in mid-flow; she is making a brilliant speech. I hope that, when the Government respond to the points being made tonight, they will take the opportunity—I agree absolutely with what she has just said about Anglesey—to affirm that Northern Ireland will be entitled to a freeport and that it will not be blocked because of the arrangements that we have with the protocol and the EU.

Photo of Virginia Crosbie Virginia Crosbie Conservative, Ynys Môn

I thank the hon. Gentleman.

Unfortunately, despite all the good reasons I have for bringing a freeport to Anglesey, the Welsh bidding process has not yet started. The Welsh First Minister has cited concerns about economic displacement, but my biggest concern is the economic displacement that will occur when trade that could have come to Anglesey goes instead to one of the eight English freeports announced in the Chancellor’s Budget. Ports such as Liverpool are already six months ahead of us in this process.

I absolutely support the Finance Bill and the opportunities that it gives the UK now that we are free from the shackles of Europe. I look forward to seeing Anglesey become a freeport, attracting new investment and creating the good, quality jobs that the island so desperately needs and deserves.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater and West Somerset

I am absolutely delighted to take part in this debate and also to follow my hon. Friend Virginia Crosbie. We share a nuclear power station. I look forward to the fantastic day that we build at Wylfa.

I must say that the Chancellor has done a remarkable job in supporting the economy during this pandemic. He has also kickstarted the economy without a shadow of a doubt. Economic regeneration and regional economic regeneration does have to come with various—dare I say it?—caveats. I advise extreme caution when shelling out any extra cash to Somerset County Council. I would not spend a penny on it. Somerset County Council is incompetent, profligate and, worst of all, unbelievably pompous. It has failed to get broadband working. It has signed contracts that it does not understand, which has cost the tax payers millions of pounds. It adds absolutely nothing to the development of the local economy, except, unfortunately, hot air. Oh yes, Somerset County Council loves to claim credit for everything, but that is either exaggeration or lies.

Somerset is run dishonestly and it does not deserve to be taken seriously. My constituency has the biggest infrastructure project in the whole of Europe. Hinkley Point C nuclear power station is taking shape. Who masterminded this local planning? Who carried the burden? It was Sedgemoor District Council. Sedgemoor is one of the four districts that Somerset wants to gobble up in its greedy ambition to become a unitary authority. Why? It is because the district councils do not squander public money. They save it and have shown that they do so year after year. What does Somerset County Council bring to the party? They bring nothing but trouble and, I am afraid, waste. It pleads poverty, and begs for more, but it does not deserve a bean.

Across the country, our secondary school head teachers are furious with the council for ordering extra cuts that will hurt the most vulnerable children in our society who desperately need all our help. The heads have no confidence in the overpaid oaf in charge of Somerset schools. I do not think that I have confidence in any of them in the council, and I am not sure that I ever had. The staff of Chief Executive Pat Flaherty call him “flat battery”, which is a little worrying. He actually could not start a Dinky toy, let alone regenerate the economy.

Most people say the council is a waste of space and money—this has been going right across Somerset for the past few months. The public is not being fairly consulted about the unitary dream, which is, I am afraid, a scandal that lies at the door of the Secretary of State of Housing, Communities and Local Government. This is at the heart of the problem. The county chose to bid for change, just as the pandemic started. It is crazy timing. Why the rush? It should have waited. People have suffered because of this, but the Government danced to its tune and postponed the county elections, which were meant to take place next month, depriving the voters of a democratic say. I worry about the state that we are in.

Instead, a pathetic online consultation has been offered. What help is that to us anywhere across the county? It ends tonight, and is still open, believe it or not, to Vladimir Putin, Kim Jong-un, and any other tinpot dictator who wants to take part. People can do so from anywhere in the world. The consultation, I am afraid, is a con. The district councils want Sedgemoor people to help the Government to choose. They are ready to run the legal referendum, which they will do, but my right hon. Friend the Secretary of State for Housing, Communities and Local Government says that it is too late for the decision. He even sent them a letter that I believe was threatening—a grave mistake.

Somerset people are proud. The last battle on British soil was here. They take their democratic rights very seriously, and they will be determined to win—make no bones about it. It is the people, not a pathetic county council, who hold the key to economic regeneration in Somerset. They are the hard workers. They are the people who go out every day and strive to push our county forward, be it at Hinkley Point or any of the other massive companies that we have down there. As long as the Chancellor remembers that, I will always support economic regeneration, provided that the money goes to the people, districts and others who we know will spend it carefully and wisely, and ensure that we can be proud of Somerset, not embarrassed by a bunch that do not care.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury 11:00 pm, 19th April 2021

I thank colleagues, not least my hon. Friend Mr Liddell-Grainger, for a very entertaining and rowdy end to the debate. Let me pick up some of the points that have been raised on this important subject.

Abena Oppong-Asare asked about expected revenue for freeports. As she will be aware, it is not really appropriate to comment on that at the moment. These tax sites have not yet been agreed. The revenues, or at least the associated tax costs, are very much site-specific. I am therefore not in a position to comment on that, but of course once the sites have been agreed, the appropriate estimates will be brought forward.

Rebecca Long Bailey argued—indeed, it was a recurrent theme—that freeports would have the effect of watering down employment protections. The Opposition have no evidence for that viewpoint at all. There is no deregulatory agenda whatever with freeports. Businesses and freeports will have to abide by UK worker and environmental regulations, national minimum wage standards, workers’ rights and the rest of it, just as any other company would anywhere else in the UK.

Richard Thomson raised the topic of freeports in Scotland. He did not remind the Committee, but he will be aware, that the Scottish Government originally rejected the idea of a freeport, then rather changed their tune when they saw the local reaction. I encourage him and the Scottish Government, whatever their complexion after the election, to step forward and engage with the Government so that we can agree a freeport in Scotland.

My hon. Friend Sir Bernard Jenkin talked about the different elements, and was worried that somehow the offer had been watered down. I reassure him that, although he did not notice that the structures and buildings allowance is legislated for in the Bill, the employer national insurance contributions relief will be legislated for in a forthcoming Bill and the business rates relief will follow in due course.

My hon. Friend Jackie Doyle-Price rightly talked about the magnificent port at Tilbury. I have visited it myself, and a thoroughly splendid and impressive thing it is too. Finally, my hon. Friend the Member for Bridgwater and West Somerset put in what I think we can all agree was a typically low-key and restrained performance, for which we very much thank him. He put me ineffably in mind of a great moment in a work of literature and film with which I am sure the House will be familiar: “Animal House”. There is a marvellous moment where John Belushi’s future senator John Blutarsky says, “Was it over when the Germans bombed Pearl Harbor?” There is a pause, and someone says, “Leave him, he’s rolling.” That is what I felt we should do with our dear friend the Member for Bridgwater and West Somerset. With that, I will sit down.

Photo of Ben Lake Ben Lake Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Environment, Food and Rural Affairs), Shadow PC Spokesperson (Education), Shadow PC Spokesperson (Digital, Culture, Media & Sport), Shadow PC Spokesperson (Health and Social Care), Shadow PC Spokesperson (Housing, Communities & Local Government), Shadow PC Spokesperson (The Constitution and Welsh Affairs)

It is a pleasure to close the debate this evening. We have had a very beneficial debate on two main points about freeports and regional economic development. We had a very good discussion about the merits or otherwise of freeports for the areas in which they are located, and although I think we will continue to discuss whether any growth of investment generated by the sites will be new, partially new or a substitute for or displacement of economic activity elsewhere, it has been a good debate nevertheless.

My final point leads on from the question of whether any growth in investment would be new or a reflection of displacement of activity from elsewhere. That is particularly important when it comes to the question of levelling up and addressing regional inequalities and disparities. We still need to discuss that further. One potential solution in Wales’s case, for example, may be to look again at the cap of just one freeport in Wales. Perhaps we should have at least two. I am looking to other Members—perhaps that is one way to address the disagreements we have had tonight.

Either way, we have had a very good and beneficial debate and although I do not want to press my amendment to a vote, I hope that the Minister will consider how the Government can better work with the devolved Governments to address some of these concerns and the need to co-ordinate policies for our economic development. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 109 to 111 ordered to stand part of the Bill.

Schedule 21 agreed to.