Plans to create up to 10 duty-free or low-tax ports and airports across the UK – promised by Boris Johnson in his Tory leadership campaign – are being launched by the government.
Liz Truss, the new International Trade Secretary, is creating a new Freeports Advisory Panel to advise the government on setting them up in areas such as Teesside, Aberdeen, and Belfast.
The government aims to create the first new freeports after the UK leaves the EU and claims they will “turbocharge” growth and ensure towns and cities across the UK benefit from a Brexit trade boost.
“Freedoms transformed London’s Docklands in the 1980s and freeports will do the same for towns and cities across the UK,” said Ms Truss, who succeeded Liam Fox in the new PM’s Cabinet clear-out.
“They will onshore enterprise and manufacturing as the gateway to our future prosperity, creating thousands of jobs.
“We will have a truly independent trade policy after we leave the EU on October 31.
“I look forward to working with the Freeports Advisory Panel to create the world’s most advanced freeport model and launch the new ports as soon as possible.”
But Labour’s Barry Gardiner MP, shadow international trade secretary, said: “This is not new investment and growth. It is a race to the bottom that will have money launderers and tax dodgers rubbing their hands with glee.
“Freeports and free enterprise zones risk companies shutting up shop in one part of the country in order to exploit tax breaks elsewhere, and, worst of all, lower employment rights.
“The British people did not vote for this new administration and they certainly did not vote to see their jobs and livelihoods threatened in favour of gifting further tax breaks to big companies and their bosses.”
Freeports, zones designated by a government as areas with little to no tax in order to encourage economic activity, are not a new idea. The first were the medieval Cinque Ports of southern England.
In the 1980s, Margaret Thatcher’s government created freeports in Birmingham, Belfast, Cardiff, Liverpool, Prestwick and Southampton, but David Cameron’s coalition government stopped renewing their licences in 2012.
A freeport remains in operation on the Isle of Man – a crown dependency and therefore not part of the EU or UK – and there are currently 82 in the EU, including historic free ports such as Copenhagen and Bremen.
In the United States, where they are known as Foreign Trade Zones, there are over 250, employing 420,000 people.
In Miami, for example, more than seven million tons of cargo pass through every year. Businesses within the zone can import, warehouse and re-export products duty-free or defer paying tax on products while they are stored on site.
The government claims the new UK freeports will be hubs for business and enterprise for manufacturing and services, potentially free of unnecessary checks and paperwork, and enjoying customs and tax benefits.
Ministers claim they will reduce costs and bureaucracy, encourage manufacturing businesses to set up or re-locate and create jobs for local people through liberalised planning laws.
“We are exploring freeports as an innovative way to drive growth and support thousands of high-skilled jobs across the UK,” said the new Chief Secretary to the Treasury, Rishi Sunak.
“We will focus on those areas that could benefit the most, as we look to boost investment and opportunity for communities across the country.”
Ms Truss is visiting Teesport with Tees Valley Mayor Ben Houchen, a Tory MP elected in 2017 who has championed freeports.
Other ports which have already expressed an interest in the bidding process include the Port of Tyne, Milford Haven, and London Gateway.
“Teesport played a crucial role in this nation’s historic trading past, and is key to our great trading future,” said Mr Houchen.
“Creating a freeport right here would turbocharge jobs and growth, bringing investment into the region and making us a global hub of enterprise and innovation.”