Taxation (Cross-border Trade) Bill

Anna Turley Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Anna Turley (Redcar) (Lab/Co-op)]

I want to take the opportunity provided by this Bill to raise an important opportunity that could bring as many as 90,000 jobs to this country—and, in particular, many to my own constituency. It relates to part 2 of schedule 2 and can otherwise be referred to as the introduction of free ports.

Around the world there are approximately 3,500 free trade zones employing 66 million people across 135 countries. There are currently none in the UK. Conferring free trade status on a UK port would place it administratively outside of customs territory. It would mean that goods could be imported, manufactured or re-exported inside the free trade zone without incurring domestic customs duties or taxes, which is paid only on goods entering the domestic UK economy. As well as bringing benefits through customs taxes and duties, free zones also support economic activity through financial incentives such as research and development tax credits, regulatory flexibility, and tax reductions. They are recognised around the world as playing a major role in retaining, re-shoring and growing domestic manufacturing activity and boosting trade. In the US there are 250 free trade zones, and they also play a major role in the economies of Singapore, Hong Kong, Indonesia and the United Arab Emirates.

Ports are already a vital strategic asset for the UK, accounting for 96% of all trade volume and 75% of trade value. The free port concept builds on our maritime history and an existing UK strength. The creation of a free port would increase employment and economic activity in areas where economic need is high and could play a major role in rebalancing our London-centric economy. Of the country’s 30 largest ports, 17, including Teesside in my own constituency, are in the bottom quartile of local authorities in the index of multiple deprivation. I make no apology for lobbying for such a status on behalf of the port in my constituency. Teesport has strong structural advantages for being favoured for free port status. It has a deep-water facility providing lock-free access to the sea, with strong road and rail services. Teesport is versatile and adaptable. The facility handles 5,000 vessels and 40 million tonnes of cargo a year. The port is integral to the Teesside manufacturing complex, incorporating chemicals, engineering, renewable energy, and agri-tech. The South Tees development corporation is overseeing the former SSI site—the biggest industrial opportunity the UK has seen since the second world war. When the Government closed the steelworks in 2015 and 3,000 Teessiders lost their jobs, the Government promised to do all they could. On the Prime Minister’s most recent visit, she told us that we had to look to the future. Well, we are—the question is, are the Government?

The development corporation—the only one outside London—has set out its ambition to create 20,000 additional jobs in high-value manufacturing over a 25-year period, adding £1 billion in gross value added for the local economy. This would be substantially enhanced through the creation of a free port. Incorporating the development corporation area, together with the Teesport facility and in conjunction with adjacent industrial sites such as Wilton and North Shore, into a free port area would help the region to build on its current strengths in chemicals, steel, energy and logistics, and realise our vision to become the most attractive place in the country for high-value manufacturing.

Led by the north-east process industry cluster and the former hon. Member for Hartlepool, Teesside is the location of the largest integrated chemical complex in the UK and the second largest in western Europe in terms of manufacturing capacity. The sector has inputs to a range of other key industries such as aerospace, automotive, and life sciences. The sector is highly productive and competitive but faces a number of challenges such as increasing global competition, high operating costs, the need to attract investment from global parent companies, and skills shortages. A free port could be part of a range of policy solutions to maintain and enhance the attractiveness of investment in this sector in the UK and on Teesside. Free port status for Teesside could make the area the gateway of the north, rebalancing the economy and making the region’s manufacturing base more competitive and attractive.

This Bill provides an opportunity to establish the legislative basis to enable such a system to be set up in the UK, potentially giving a quick and powerful boost to the British economy as we go forward in Brexit negotiations. However, such a zone is not dependent on leaving the EU. Other member states have free ports, including the ports of Bremerhaven in Germany, Le Verdon in France, and Shannon in the Republic of Ireland. In fact, there are currently 85 free port zones within the European Union. Moreover, the Secretary of State is already empowered to designate free ports by statutory instrument under section 100A of the Customs and Excise Management Act 1979, which is still in force. Indeed, the UK itself had five free trade zones until 2012, at which point the statutory instruments that set them up expired, so the framework is in place and the opportunity is there. I hope that this Bill can clarify the situation. Part 2 of schedule 2 allows the Government to regulate on free ports. I hope that the Minister therefore agrees that this is the perfect moment to reopen the debate on free ports, to be bold, and potentially to create a new one—preferably on Teesside.

I conclude by asking the Minister the following questions. First, does he agree with the principle of free ports, and does he recognise the role they can play in driving and rebalancing our economy? Secondly, will the Government be using this Bill to amend the free port powers created by the Customs and Excise Management Act? If so, will they use the opportunity to bring forward powers to enable Teesport to become a free port or subject to special customs arrangements?