New Clause 25 - Reporting on the impact of new arrangements on each freeport

Finance Bill – in the House of Commons at 7:15 pm on 24 May 2021.

Alert me about debates like this

Votes in this debate

  • Division number 8
    A majority of MPs voted not to require a report on the impact of each freeport on matters including job creation, tax raising, tax avoidance, tax evasion and criminality.

‘(1) The Chancellor of the Exchequer must separately review the impact of sections 109 to 111 and schedules 21 and 22 of this Act on each of the eight freeports in England, and on each of any further freeports that may be established anywhere in the United Kingdom, and lay a report of that review before the House of Commons annually for each designated freeport.

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

(a) job creation within the site(s) and relative to the wider subregion and region within which the freeport is located; and for freeports in Scotland and Wales, relative to the economy of that country as a whole;

(b) revenue from corporation tax and stamp duty land tax within the site(s) designated as the freeport relative to the wider subregion and region within which the freeport is located; and for freeports in Scotland and Wales, relative to the economy of that country as a whole;

(c) levels of criminal activity in respect of fraud, corruption, taxation, customs, duty and excise within the site(s) designated as the freeport relative to the wider subregion and region within which the freeport is located; and for freeports in Scotland and Wales, relative to the economy of that country as a whole;

(d) the extent to which the mix of industries operating in that freeport reflects the aspirations in that respect set out by the freeport bid as approved by the Government;

(e) an assessment of the change in skills and productivity of the workforce in the subregion and region in which the freeport is located relative to the wider subregion and region within which the freeport is located; and for freeports in Scotland and Wales, relative to the economy of that country as a whole;

(f) the level of staffing for HMRC and the UK Border Force in respect of that freeport; and

(g) departmental spending by HMRC and other departments on enforcement in respect of that freeport.’

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

With this it will be convenient to consider the following:

Amendment 24, page 63, line 9, leave out clause 109.

This and the other amendments relating to clauses 109 to 111 would prevent the creation of freeport tax sites in the UK.

Amendment 25, page 63, line 31, leave out clause 110.

This and the other amendments relating to clauses 109 to 111 would prevent the creation of freeport tax sites in the UK.

Amendment 26, page 64, line 1, leave out clause 111.

This and the other amendments relating to clauses 109 to 111 would prevent the creation of freeport tax sites in the UK.

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

I rise to speak to new clause 25, tabled in my name, and those of the Leader of the Opposition and my hon. Friends. The new clause sets out a number of tests that we believe the Government must apply to each and every freeport created in the UK. Before I come to the detail of those tests, I will make a couple of brief points about the Government’s intentions behind freeports. As I said in Committee, Labour wants every area to succeed, whether or not it has a freeport. We want good new jobs to be created right across the country, and our great British industries to be protected and supported. We want to see the UK at the forefront of new green manufacturing and technology, and we want a genuine re-distribution of power and opportunity to places that have been denied that for so long.

The Government clearly believe that freeports are a silver bullet for solving regional inequalities, and I simply remind them that they have been in power for 11 years now. Let me repeat that: 11 years. They must own the choices they have made, such as abolishing regional development agencies, cutting local authority funding, and pulling opportunities away from young people in some of the most deprived regions of the UK. Just recently, they scrapped the industrial strategy altogether. We need a proper plan that creates jobs and opportunities for everyone, regardless of where they live.

I will now turn to the new clause, and to the tests against which we believe our freeports should be judged if they are to succeed. First, freeports must create jobs, not simply move them from elsewhere. Too often, attempts at regional rebalancing have simply shuffled jobs around rather than creating them in the places that need them. We must end the scandal of people being forced to move to the other end of the country to find a decent job. Our test will be this: if someone lives near a freeport, will new opportunities be opened to them that did not exist before? Conversely, if an area does not have a freeport, can we be confident that it will not lose jobs as a result of this policy? Of course, any new jobs must be secure and well paid, with trade union rights—the kind of jobs we have not seen anywhere near enough of over the last decade.

Secondly, freeports must deliver improvements in training and skills for local residents. As we begin to recover from the pandemic, the need for re-training will become even more acute. We need a genuine skills guarantee for everyone, and freeports must play their part in that. Labour will be looking to see how companies operating in freeports work with their local communities to provide skills and training opportunities. Rather than a race to the bottom, freeports should be helping to boost skills and open opportunities.

Thirdly, freeports must produce tangible transport and infrastructure improvements beyond the port itself. Too many places still lack basic transport infrastructure, and too many people still find it difficult to get around. The investment that the Government are making in freeports must go towards boosting connectivity for everyone in those areas. We want every community to benefit from affordable and reliable public transport.

Finally, we need a cast-iron guarantee that freeports will be free from tax evasion, smuggling and criminal activity. The OECD, the Royal United Services Institute and the Financial Action Task Force have all warned of the risks. It is not just Labour saying this. The public deserve to know that the Government’s money is not being used to give tax breaks to criminals or dodgy companies. We need to see the highest possible standards upheld within freeports. This means transparency, and stringent regulation and enforcement of all activity within freeports, and we need reassurances that HMRC will not be overstretched as it seeks to manage these risks.

The Government’s handling of the covid crisis has shaken public confidence in the way that taxpayers’ money has been spent. Crony contracts have been handed to Tory party donors, public money has been put at risk during the Greensill scandal and there is no sign that Ministers understand the importance of managing public money carefully. Freeports must not be the repeat of this. We need reassurance that every pound of Government spending on freeports will be used carefully and will not be wasted.

These tests set out ambitions for freeports and for the future of our economy more broadly. We believe that people who work in freeports and those who live near them deserve nothing less. If the Government share our ambition, they should commit to meeting these tests and should support our new clause 25 today.

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means) 7:45, 24 May 2021

We were having a little difficulty getting hold of the speaker at No. 2 on the list, so I will call Richard Thomson and then come back to David Simmonds.

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

I rise to support new clause 25. It is a pleasure to follow Abena Oppong-Asare and I would like to echo much of what she said.

We have had freeports before in the UK, as recently as 2012, and our EU partners still have them, with 72 free zones across the EU territory. Some contributors in these debates have taken an excessively, I think, dim view of freeports. I would like to take a more balanced view, but I still think we are absolutely right to proceed cautiously, and that is why I am happy to support new clause 25. Given the incentives on business rates that are on offer, the potential national insurance exemptions and the exemptions on customs duties, it is absolutely vital to make sure that the economic activity attracted to freeports is not simply being displaced from elsewhere, and that the activity is new, adding value and resulting in economic output that is greater than would otherwise have been the case.

Therefore, when we are measuring that impact, it is important to make sure that the Government do not get to mark their own exam paper by choosing their measures of success after the fact. That is why it is important to be able to report back on job creation, skills and productivity, the impact on tax revenues, the levels of financial criminal activity that have resulted around a development and the details of the resourcing needed to ensure compliance with the law, and also to understand the extent to which the mix of industries that will have grown up around a freeport development match those sought in the original bids.

The Scottish Government have sought to build on the freeport model with a green port version of it that embraces all the potential benefits of freeports, while ensuring that the principles of fair work are enshrined at their heart—the principles of fair work and fair pay through a real living wage—and putting environmental concerns to the fore, through placing carbon reduction at the heart of these developments. These proposals for green ports from the Scottish Government already have widespread buy-in from business, industry and investors in Scotland. The Scottish Government stand ready, armed with the fresh mandate they received from the Scottish people earlier this month, to press ahead as soon as the UK Government are willing to do so.

At the conclusion of the Committee stage, the Minister gave—I hope he will not mind me describing it in this way—a somewhat editorialised account of the development of freeports and green ports in Scotland. We could back and forth roundabout that, but I would much rather move forward, just as the Scottish Government would. I hope the Minister would like to do that, too, and will commit to working as quickly as possible with the Scottish Government to bring green ports to fruition in Scotland.

Photo of David Simmonds David Simmonds Conservative, Ruislip, Northwood and Pinner

My constituency is not one of those that has the prospect of playing host to a freeport, or indeed being very close to one, but it is a subject of interest to my constituents for a number of reasons. I want to set out briefly what those are and why it is so important that the Government are pressing ahead in this direction.

My constituents are part of outer London, a part of the country which for many years and many generations has had an enormous economic pull factor, including for people like me. I grew up in the south Wales valleys. Following the disappearance of a lot of the heavy industry that was there, and despite a huge amount of effort by the Westminster Government and significant investment by what was then the European Economic Community to develop things such as roads, it is a place that has taken a very long time to see a significant financial and economic regeneration. While I remain sceptical, as many in the House are, about the tax situation of freeports in general, it seems very clear that they are a fantastic opportunity to play a big part in the economic regeneration and levelling up of parts of our country that have really struggled.

As a Conservative politician, it seems to me clear that a policy that is about ensuring people have access to work, a policy that is part of a wider agenda of raising people’s earnings and addressing things from child poverty to health inequalities, which still blight some parts of our country, and a policy that is very much about setting the principles of what we want to see as our economy develops, rather than taking a laissez-faire approach—we want to see the wealth not simply created, but spread and shared—is absolutely the right way forward. Freeports can be a significant part of achieving that.

It is absolutely right, as we have heard from a number of Members, that we have a balanced approach to the use of freeports. I think the port of Tilbury was the last of the UK freeports, but they are in common use around the world, The feedback is clearly very mixed about their economic impact. However, it is very consistent that they act as a draw, as a focus for a local economy, that helps to contribute to creating jobs and opportunities. As a country, we need to do that in places that have simply not had the opportunity for that in the recent past.

My constituents, who have significant concerns, for example, about the pressure on land to be released for housing to provide homes for the people who are currently being drawn in large numbers into our capital—contributing to significant housing waiting lists and significantly rising house prices, sometimes meaning that the children of people who have grown up and live locally are simply not able to settle in that area—see a direct benefit, too, to the whole country having the opportunity of economic levelling up. I therefore see this as a direct benefit to my constituents. It is important to the medium to long-term future of our country, and it is absolutely an inherent and appropriate part of the regeneration and levelling up strategy that we have for the whole of the United Kingdom. I absolutely 100% support this direction of travel and I commend it to the House.

Photo of Jamie Wallis Jamie Wallis Conservative, Bridgend

It is a pleasure to contribute to today’s debate on freeports, to voice my continued support for this commitment and to speak against the adoption of new clause 25. For me, new clause 25 typifies the stark contrast that exists between the sides of this House when it comes to delivering for the British people, with the Conservative side supporting a Government focused on delivery and the other side persistent in pursuing yet more division and delay.

As colleagues have already said, freeports will be central to the levelling-up agenda, attracting new businesses and jobs, creating opportunity and investment across areas of Britain. This policy is key to regenerating communities across the UK and I hope that may include my own constituency of Bridgend. Following the closure of the Ford factory in Bridgend, the establishment of a freeport in the Port Talbot and Bridgend area could mean a great deal to my constituents and the whole of south Wales, with the creation of up to 15,000 jobs. It is for those reasons that my constituents would expect me to back the Government tonight.

I am sure Opposition Members do not want to delay the investment associated with the measures in clauses 109 to 111. By implementing them, we will help to unlock employment in areas previously left behind and allow them the opportunity to prosper. The additional reporting requirements for freeports outlined in new clause 25 would impose unnecessary onerous processes, with little to no benefit over and above what has already been put in place; they would just cause further delay.

In Wales, as we know from oral questions to the Secretary of State for Wales in this House last week, the Welsh Labour Government have dragged their feet time and again and have refused to collaborate on this issue with Ministers here. The result is that, although bids have been received and locations have been identified in England, we still do not know what support, if any, a freeport in Wales will get from the Welsh Government.

We were elected to deliver and to get on with the job of making a success of post-Brexit Britain. Clauses 109 to 111 achieve just that. I will therefore be supporting the Government this evening.

Photo of Andrew Jones Andrew Jones Chair, European Statutory Instruments Committee, Chair, European Statutory Instruments Committee

That was slightly unexpected, Madam Deputy Speaker. Thank you very much indeed.

The competition for having a freeport from colleagues around the House before the decisions showed how widely welcomed this policy was. We saw colleagues’ delight when their areas were successful. It is clear that freeports are part of a broader levelling-up agenda, which is at the heart of the Government’s policy and has significant public approval. When knocking on the doors of Hartlepool, I found support for initiatives to boost the economy of that area. I do not represent a freeport area in Harrogate and Knaresborough, but there is clear support, and it is therefore surprising that the Labour party is not more aligned behind it.

A well-designed freeport policy can boost trade. The key to that is the alignment of local bodies, whether the ports or the businesses, with local authorities to grow opportunity. Of course, all that is underpinned by tax reliefs and tax incentives. It is most important that we get tax reliefs on buildings and plant purchase right. If the policy does not deliver, we will have wasted public money and we will have seen the displacement of economic activity, rather than incremental economic activity. Even more significant, of course, would be the missed opportunity. The areas that are receiving freeports are those that have not had the chance that other parts of the country have had over the past decades. I know that my right hon. Friend the Minister knows that.

The Labour party has said measures are necessary before it can even consider supporting the policy, but there are already measures in place to monitor, collect and review data. The Treasury always monitors and reviews its policies. I have seen that from my own experience, but it is a truth that we all know. Therefore, new clause 25 addresses a concern that is, frankly, already solved; it is not necessary. On transparency, costings will be published at the next fiscal event—in other words, in the usual way. On data collection for freeports, we will be collecting data on reliefs, monitoring effectiveness and so on. The main question now is not about monitoring; it is about how those running the freeports can make them bigger, seize the opportunities and maximise the chances available.

As this health crisis morphs into an economic one, the focus is moving to recovering livelihoods as well as saving lives. All the levers that can drive growth must be pulled and freeports are clearly a part of that. It was very good to see the proposals in the Finance Bill. I will be supporting them strongly this evening.

Photo of John Martin McDonnell John Martin McDonnell Labour, Hayes and Harlington 8:00, 24 May 2021

I am glad you are sitting down, Madam Deputy Speaker, because I do not want to shock you. I want to see if we can try something different tonight. Let us try and undertake some rational policy making. Let us try and base policy on evidence, shall we?

I have tabled a number of amendments—Nos. 24, 25 and 26—as a humble seeker after truth, basically, because I do not think the Government have made the case for freeports. I also think that the risks of this policy are huge. It could accelerate tax avoidance in this country on a massive scale and cause economic damage to the neighbouring areas of freeports. We are shovelling huge tax giveaways to corporations and developers for, as far as I can see, literally no return to society.

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.”

The OBR have therefore not made a comment—we await it. Freeports were not assessed by the OBR. However, it is not just the OBR that does not know the answer about the effects of freeports; neither do the Government. My hon. Friend Anneliese Dodds asked the Treasury on 16 March what estimates it had made of the total annual cost of tax reliefs granted to the freeports. The Chief Secretary to the Treasury replied on 22 March to say—rarely have I seen this from a ministerial response—that

“it is not appropriate to comment on estimates at this stage.”

This is in the middle of policy making! He continued:

“they will therefore be scored at a future fiscal event.”

Therefore, what we are being asked to do tonight is sign off a blank cheque that will be filled in at a later date.

This is just irrational. Shoddy policy making on this scale is becoming all too familiar with this Government, but this is a bit of a shocker. It is just not good enough, so it would be really useful if tonight the Minister took us through the answers to a few simple questions. What are the annual costs of the proposed tax reliefs when the freeports are set up? What is the estimate of increased economic growth that will come from them? What is the estimate of increased job creation stimulated by the freeports? What is the estimate of increased tax revenues to the Exchequer as a result of this policy? And, to reinforce that, where is the evidence? If there are answers to those questions, where have they come from? Have they been independently assessed?

We are asking questions about the future, but we should look back, because this is not a new policy. Those of us who have been in the House a while—and that does not take long—can recognise this as a rebranding of the enterprise zones policy that the Conservative party wheeled out in the 1980s under Michael Heseltine and also in the last decade, when George Osborne fronted it up. Let me remind the House what the Public Accounts Committee said in May 2014. Its report was pretty damning about George Osborne’s enterprise zones, describing them as “particularly underwhelming”. The Committee criticised the Government for over-optimistic claims about job creation. The job numbers did not materialise—it is as simple as that. The Centre for Cities think-tank found that the jobs that were created were “overwhelmingly low skilled” and therefore low paid.

Enterprise zones were not just a disaster; they raised people’s hopes and shattered them in many areas around the country, and in many ways led to some of the disillusionment with politics and Government overall. Tax breaks for corporations in underinvested areas just does not make an industrial strategy. My view is that the Government should be investing, but in a planned upgrading of the infrastructure of this country, not making areas fight for scraps in this form of pork barrel politics.

The Conservatives’ strategy of tax breaks for developers and big business as a way of stimulating growth failed in the 1980s and again in the 2010s, and it risks failing again in the 2020s. The Government are asking us all to take a leap in the dark, and having twice before witnessed that leap in the dark, I think the result will be the same—it will be failure. I know that a number of Members, including some Ministers, have said it will be different because of Brexit and claim that being outside the EU gives greater freedoms than were available to enterprise zones, but if that is the case, why can they not quantify them and put that evidence in front of the House, in some form of rational policy making? The UK Trade Policy Observatory, based at the University of Sussex, has pointed out that as UK import tariffs are already low, any further tariff reduction would

“have next to no benefits”.

I am pleased that Labour’s Front-Bench team is behind new clause 25, which my hon. Friend Abena Oppong-Asare moved eloquently, as it is welcome. If passed, it would at least have the effect of creating a robust framework for the House to assess the success or failure of freeports policy, but surely no Members of this House who consider themselves to be serious, rational policy makers can vote for something like this proposal, which is so lacking in any evidential base.

Photo of Jacob Young Jacob Young Conservative, Redcar

It is a pleasure to follow John McDonnell, although he will forgive me for not taking any economic advice from him. He talks about economic assessment with no sense of self-awareness that he was the man responsible for the 2019 Labour party manifesto. I believe I am the first Member to speak who shall represent a freeport area, so, on behalf of the people of Teesside, may I say thank you to the Government for designating us a freeport zone?

I wish to speak against new clause 25, which would only delay the implementation of our new freeport policy. I direct Members to my recently updated entry in the Register of Members’ Financial Interests, as a member of the new—currently shadow—Teesside freeport board. If we consider the intentions behind new clause 25, we will see that they are ones that Teessiders know all too well. Labour never wanted our new freeports, despite them being in places such as Redcar and Cleveland, Middlesbrough and Hartlepool, places that Labour used to say it cared about. True to form, new clause 25 is the Labour party in desperation to see our freeport policy fail, so that it can simply say, “I told you so.”

The same attitudes were shown in Labour’s position on the EU referendum, and the people of Teesside have already shown them how they feel about that. Our new freeport in Teesside will create 18,000 jobs over the next five years, and since the freeport designation in the Chancellor’s Budget, we have already seen the announcement of more than 2,000 jobs coming to Teesside, with GE picking Teesside as the destination for its new wind turbine blade manufacturing, supporting the Government’s plan for a green industrial revolution. Adding more bureaucracy, form filling and complications through new clause 25 would only delay those new jobs and prevent us from getting on with the task at hand, which is the transformation of Teesside.

In Redcar and Cleveland we are proud of our area’s industrial heritage and the vital role the steelworks and foundries have played in the past, providing those raw materials to build the railways, ships and bridges that were once the envy of the world, and in many cases still are. The fires in our furnaces were the beating heart of the industrial revolution, and now with hydrogen, wind power and carbon capture all promised and planned within our freeport zone, it will be Teesside’s innovation and technology that leads our green industrial revolution.

When Labour lost Hartlepool, the front page of The Northern Echo held a column from a former Labour MP saying that Labour needs to listen. Well, now would be a good time to start, but instead, here we are again, with the public supporting our freeport policy and Labour voting against it. Labour Members may not want any election advice from me, but I have some for them anyway: stop dwelling on problems and start looking to the potential and to solutions. Stop standing in the way of our freeport policy and work with us to make it a success. Stop talking Teesside down and start helping us to turn it around, and vote against new clause 25 tonight.

Photo of Robin Millar Robin Millar Conservative, Aberconwy

It is a privilege to follow my hon. Friend Jacob Young. Like him, I shall take this opportunity to make a few brief remarks in support of freeports, although, as hon. Members would expect, they will be in support of a freeport in Wales, and north Wales in particular. In doing so, I shall speak against new clause 25.

Freeports and free economic zones are a common feature of international trade, with dozens utilised by our closest allies. Not only have they propelled many of the world’s previously impoverished nations to prosperity, but there are well-established international frameworks for their operation. Indeed, the OECD code of conduct for clean free trade zones is an example, to which this Government have already pledged compliance.

The measures set out in new clause 25 are simply unnecessary, and the additional costs, such as the paperwork proposed, will only reduce the attractiveness of Britain’s ports. Let us make no mistake: the ultimate bearer of extra costs will be not multinational business, but the workers of this country who will miss out on prosperity from export-driven work.

Wales occupies a vital position in UK trade. If we consider just the Republic of Ireland, we will see that in 2019, two thirds of goods carried from the Republic of Ireland came via Wales, and four fifths of goods carried to the Republic of Ireland went via Wales. I also note that Holyhead is on the international trade routes that link Dublin to Moscow, such is the strategic importance of the location and role of Wales—particularly of north Wales. It is essential, therefore, that we create an environment there that is attractive to investment and private finance. According to the British Venture Capital Association, Wales has one of the lowest average investments from venture capital in the UK, accounting for just 3.3% of all funding over the period 2016 to 2018.

A freeport offers a structured environment for investment. Whether linked with the advanced manufacturing cluster of north-east Wales—Wales’s hottest economic growth spot—or the green energy projects and innovation found on Ynys Môn, or the leading telecoms research at the University College of North Wales, the structured reliefs and incentives of a freeport offer businesses and investors a clear and attractive proposition and are a clear demonstration of the Government’s commitment to the area.

This Finance Bill makes clear the Government’s aim of growth, development and levelling up for Wales. It also presents an exciting opportunity for co-operation and collaboration with the Welsh Government. With their assistance on, for example, the additional reliefs possible for the planning laws within their control, there is an opportunity not only to deliver a freeport in Wales, but to create one of the most attractive freeport models for investment in the UK.

In conclusion, our United Kingdom is an island nation and a trading nation, and our prosperity has always come from across the seas. Freeports are an essential step towards stronger trade and exports in a global Britain, and this Finance Bill will deliver that. In Wales, we know that, although we are outward-looking, our strength comes from within. For centuries, we have exported our goods and resources around the globe. North Wales slate has roofed the world, and copper from the Great Orme in Aberconwy was used to forge bronze-age implements used in areas ranging from Brittany to the Baltic.

A freeport in Wales—in north Wales—is an opportunity to ensure our connection to a global economy, to bring investment and growth that will bring jobs, and to secure our tradition of global export for another generation. I shall be voting against new clause 25.

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

I thank all Members who have commented or spoken in this debate on freeports. As the House will know, freeports are a very important part of the Government’s policy to level up the British economy and to bring investment, trade and jobs to parts of the country that in many cases have not had the economic vibrancy that we as a nation would have wished. They symbolise and reinforce the opportunities provided by this country’s status as an outward-looking trading nation, open to the world.

As colleagues have already made clear, the excitement about freeports is tangible. My hon. Friend Andrew Jones was absolutely right to highlight the excitement and energy that the process of competition has developed. That is itself an important sign of the Government’s intent in areas that have been, I am afraid, in far too many cases ignored and patronised by the Labour party. My hon. Friend Jacob Young was also absolutely right. What was the headline—Labour needs to listen? He said that now would be a good time to start, and how right he was.

If I may, I shall go on briefly to talk about the Finance Bill in relation to freeports. The Bill will enable the creation of freeport tax sites in the early stages of the measure, where businesses can benefit from tax reliefs including a stamp duty land tax relief, an enhanced structures and buildings allowance, and an enhanced capital allowance for plant and machinery. But it is important to see that these measures are, in turn, being combined with simpler import procedures, duty benefits in customs sites to help businesses to trade, planning changes to accelerate much-needed development, additional spending on infrastructure and a freeport regulatory engagement network to try to bring the regulators and firms together to test new technology safely and effectively. That makes up a comprehensive package designed to boost trade, to attract inward investment and to drive productive activity, and thereby to level up communities. As the House will know, the Government have engaged extensively with ports, local authorities and industry experts, including through a consultation on the wider programme, to ensure that the whole policy is maximally effective.

It is astonishing that the Labour party should oppose this policy. I cannot believe that Opposition Members really want to deprive successful freeports such as those that have been announced at East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool city region, Plymouth, Solent, Thames and Teesside of having tax sites. That could ultimately harm their ability to attract inward investment and create jobs. How are they going to explain to the voters of Teesside, Liverpool city region and the Humber, let alone the voters of those other places, that that is the decision they have taken? But then I reflect on Labour’s attitude towards the super deduction, which is a deduction specifically focused on capital-intensive businesses. Many of those that will benefit are in the north and the midlands. That is a crucial part, in and of itself, of levelling up, and I think those two joint failures on the part of the Labour party should be linked together to understand their full import.

Of course, the Government have sought to build in protections wherever possible, including transparency in decision making and in how the sustainable economic growth and regeneration that we are seeking are being prioritised, as well as a robust bid assessment process and the like. It is important to say that, before funding is allocated and tax sites are designated, each freeport will need to pass a specific business case process that includes assessing how effectively those tax sites can be monitored for compliance with the tax rules. Legislation will contain mechanisms to prevent or combat illegitimate claims for those reliefs, so those protections are in place.

Let me say one other thing, which is that the Government remain committed to establishing freeports in Scotland, Wales and Northern Ireland as soon as possible. I was sorry to hear what my hon. Friend Dr Wallis said about the experience highlighted the other day. We of course want to work as quickly as possible with the devolved Administrations—I say the same thing to Richard Thomson—to accelerate the policy and bring freeports to all parts of the country. As the House will know, we are working with the Northern Ireland Executive to ensure that a Northern Irish freeport will both meet our international obligations and be attractive to businesses wishing to invest in Northern Ireland.

I am confident that Opposition Members do not want to delay the investment associated with the relevant clauses. The implementation of that investment will help to unlock employment and stimulate growth in areas that have too often been left behind, so I urge the House to reject amendments 24 to 26 and new clause 25.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury) 8:15, 24 May 2021

I thank all Members who have spoken for their contributions. In particular, I thank my right hon. Friend John McDonnell, who raised a number of concerns—including on tax avoidance and the potential damage to nearby areas—about how freeports will operate.

The Government Members who spoke in the debate are obviously more optimistic about the potential impacts of freeports on the communities that they represent. In respect of the comment made by Jacob Young, let me say that no one is talking Teesside down. I am very clear that we want to make sure that everyone will succeed, whether or not they have a freeport in their area. Why is that a bad thing?

We believe that our new clause and the tests it contains set out a reasonable way to assess the impact of freeports on their local areas and the country as a whole. We on the Opposition Benches are ambitious for our country, but we need to see clear evidence that freeports are going to be effective in meeting the challenges that we face. I therefore call on Members to support our new clause, because it is the right thing to do.

Question put, That the clause be read a Second time.

Division number 8 Finance Bill — New Clause 25 — Reporting on the Impact of New Arrangements on Each Freeport

A majority of MPs voted not to require a report on the impact of each freeport on matters including job creation, tax raising, tax avoidance, tax evasion and criminality.

Aye: 267 MPs

No: 357 MPs

Aye: A-Z by last name


No: A-Z by last name


Absent: 20 MPs

Absent: A-Z by last name

The House divided: Ayes 268, Noes 357.

Question accordingly negatived.

The list of Members currently certified as eligible for a proxy vote, and of the Members nominated as their proxy, is published at the end of today’s debates.