Finance (No. 2) Bill

Jacob Young Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Jacob Young (Redcar) (Con)]

Let me start by expressing my sadness at the death of His Royal Highness Prince Philip. I send my condolences and those of the people of Redcar and Cleveland to Her Majesty the Queen and the royal family at this difficult time.

I direct Members to my entry in the Register of Members’ Financial Interests as a board member of the South Tees Development Corporation.

In the short time I have, I want to focus my remarks on clause 109 on freeports and on why I was so pleased to see Teesside play such a prominent role in the Chancellor’s Budget. Freeports are not of course new to Britain, but our ability to use them properly was strengthened by Brexit and the Prime Minister’s EU withdrawal agreement. Outside the EU, freeports have a significant role to play in our recovery and in levelling up our left-behind areas such as Redcar and Cleveland, and clauses 110 and 111 will help achieve that.

Our Teesside freeport is the largest in the UK, with a plan to create 18,000 jobs over the next five years. In less than a month since that Budget announcement, we have seen the creation of more than 2,000 jobs in offshore wind, with General Electric building its new turbine blade manufacturing plant within our freeport. However, the journey to this point was not a happy one. One of Teesside’s darkest days was in October 2015 when SSI fell into liquidation, with the end of 170 years of steel making on Tees and the loss of 3,000 jobs overnight. For many of us in Teesside this felt like a fatal blow and a shock from which we could not recover. For me as a chemical industry worker at the time, I remember the sinking feeling that we would be next—the next domino to fall into industrial collapse—but Teessiders throughout time have shown their immense resilience, and we refused to allow our decline to be inevitable.

In 2017, the election of a Conservative, Ben Houchen, as the Tees Valley Mayor began the journey of devolution in Teesside and the transformation of our area. That year we formed a development corporation to cover the site—the first mayoral development corporation outside London. Although there were many bumps along the road, by February 2020 the deal was done to get full control for the rest of the site, taking full ownership of the former steelworks. In July last year, Teesworks was launched, the new name for the now 4,500 acre site, and in August demolition began, clearing the way for the new jobs to come. It is the largest development site in Europe alongside the deepest port on the east coast, publicly owned and led by a Mayor who is determined to deliver for his area.

We started this journey with the loss of 3,000 jobs on Teesside, but now that site sits at the heart of the UK’s largest freeport, with a plan to create 18,000 jobs over the next five years. The Teesside freeport, which covers Teesworks, Wilton, port of Hartlepool, port of Middlesbrough, Wilton Engineering and Teesside airport, will be our gateway to global trade and the engine room for the northern powerhouse. This is our plan to level up our region, transform Teesside and truly build back better. Recoveries of the past have seen some areas boom while other areas go bust, and over the last 12 months we have faced a crisis like no other in our history. Now we will build a recovery like no other, where nowhere is left behind.

Finance Bill

Jacob Young Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[John McDonnell [V]]

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 the Member for Oxford East (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 the Member for Erith and Thamesmead (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.

[Jacob Young (Redcar) (Con)]

It is a pleasure to follow the right hon. Member for Hayes and Harlington (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.

[Robin Millar (Aberconwy) (Con)]

It is a privilege to follow my hon. Friend the Member for Redcar (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.