Finance (No. 2) Bill

Debate between Bernard Jenkin and Sarah Olney

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[Sarah Olney [V]]

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.

[Sir Bernard Jenkin]

I am very pleased, Dame Eleanor—if I may address you correctly—to make common cause with the hon. Member for Richmond Park (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 the hon. Member for Erith and Thamesmead (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 the Member for Thurrock (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.

Speaker’s Statement

Debate between Bernard Jenkin and Sarah Olney

Tuesday 13th April 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

Further to that point of order, Mr Speaker. I feel privileged, on behalf of the Liberal Democrats, to extend our most sincere condolences to Dame Cheryl’s family, and to all her many friends both across the House and beyond, on the extremely sad news of her death.

I feel very privileged to have served with Dame Cheryl on the Public Accounts Committee over the past year. Despite our engagements being mostly remote during this very extraordinary time, I learned a great deal from listening to her as she held civil servants to account. She was always elegant, always gracious, but woe betide any Department for Transport official who arrived unprepared for her dignified and tenacious grillings on the progress of HS2.



It has been a pleasure to hear the memories of the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) and the right hon. and learned Member for Camberwell and Peckham (Ms Harman) with their own experiences and obviously long association with Dame Cheryl. I feel quite acutely the loss of what might have been. Despite her long service in this House—I was surprised to find that she was only 68, not because she looked older but because of how long she had served—she had a great deal more to give. She has been taken from us far too soon. For those of us who are much newer to the House, I feel we have lost the great potential to have benefited from her wisdom, gathered over many years. I would like to take the opportunity once more to extend my sincerest condolences.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Further to that point of order, Mr Speaker. Like my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown), I was elected in the same year as Cheryl in 1992 and knew her for over 30 years. As a shadow Minister and then a Minister, she was, like so many women, probably underestimated because she did not employ sharp elbows to get in front of her colleagues. When I was Chair of the Public Administration Select Committee and then the Public Administration and Constitutional Affairs Committee, she always made well-informed, principled, shrewd and wise contributions to our inquiries as well as, indeed, advice to me. She knew how to get far more out of witnesses than most people because she was also gentle and polite. She became, particularly in later years, one of my most trusted friends.

She was an exemplary employer of her staff, who were devoted to her. She was terrific fun and, as has been said, she was a champion of women in politics. When she lost her beloved husband Jack, she raised a fund in his memory for Women2Win, which has helped promote more women into Parliament, as a mark of how much he had supported her in her political career.

Her failing health and then cancer were particularly bitter for her, because while outside the covid measures the House now allows proxy voting for MPs who are expecting a baby or have just had one—she would call them women, I have to tell you—we still do not give proxies to people who are incapacitated by sickness. Perhaps we should have a campaign to rectify that and call the campaign “Cheryl’s Vote”. We will sorely miss a trusted colleague and a dear friend.