Freeports

Lee Rowley Excerpts

Thursday 11th October 2018 Westminster Hall

[Lee Rowley (North East Derbyshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hanson, and thank you for the opportunity to contribute.

I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), and other hon. Members present, on being the driving force behind this debate, to which it is a pleasure to contribute. In the year and a half that my hon. Friend the Member for Middlesbrough South and East Cleveland and I have been in Parliament, he has been a doughty campaigner on this issue, and has sent me and other new MPs many letters, pieces of information and general perorations telling us about the wonderful opportunity of freeports. I am grateful to have the opportunity to agree with him officially and on the record.

I came here to listen as much as to speak, because this is an area of interest to me but not one that I know a huge amount about. Some of the speeches have been incredibly useful in helping somebody who is new to the subject understand it. People may ask why a Member of Parliament for one of the most landlocked constituencies in the country—roughly 70 miles away from either coast—is talking about freeports, and while other Members have been speaking, I have been trying to work out a way in which I could make a connection. I attended Transport questions earlier, and we received the extremely good news that the go-ahead has been given for the regeneration and connection of the final stretch of the 250-year-old Chesterfield canal, which links to the River Trent at Stockwith, near the constituency of my hon. Friend the Member for Cleethorpes (Martin Vickers), before reaching the North sea at Hull. The canal was threatened for years and years because of the potential for High Speed 2 to rip it up. Hopefully, we can push for a freeport at the end of the Chesterfield canal at some point in the next couple of decades, when that regeneration occurs.

The real reason I am here is that it is so pleasing to see a debate in this place about the power and the opportunity that economic capitalism and liberalism could unleash on populations such as those in the constituencies of the hon. Members who have spoken, before spreading to other constituencies like my own. In the year and a half that I have been here, I have looked over the Order Paper every single day. Often, it seems to be a never ending set of requests for more activity and more intervention, and for more to be done by the state. Sometimes, it is incumbent upon Members to stand back and realise that some of the wider powers and bigger forces that actually improve lives in this country can only act when we let government get out of the way and let people and commerce thrive in the way that freeports would allow if instituted properly, as my hon. Friends have outlined. I am extremely pleased that we are all agreeing that the forces of liberalism and capitalism—much-maligned in recent years—have the power to do good, make our areas richer, put money in people’s pockets and drive our country forward.

Secondly, I want to speak about the opportunities arising from Brexit, which have already been touched on. It is so refreshing to be in a debate in which we do not necessarily talk much about Brexit—although I am going to touch on it in a moment—but about the opportunities that it can bring. This being one of the first debates in the new term, I hope that it is a turning point, and that we can now look beyond Brexit rather than being completely consumed by the seemingly interminable process of it, which I fear will require us to go through significant time, energy and tears yet.

I concur with my hon. Friends the Members for Cleethorpes, for Middlesbrough South and East Cleveland, and for Hornchurch and Upminster (Julia Lopez), that if we are to leave the EU—we are leaving; my constituents voted 63% to leave—we need to leave in a way that gives us the most flexibility, the most opportunity and the most ability to innovate in the coming months, years and decades. That is the prize and the opportunity that our country needs to grasp. If we do not do that—if we fall between two stools and fail to recognise that we have the power to stand on our own two feet independently, while remaining hugely friendly with our European friends and allies—we will not be delivering the Brexit that people voted for in 2016 and, more importantly, we will not be obtaining the opportunities or the value that could come from Brexit. I wholeheartedly endorse the comments made by my hon. Friends: Chequers in its current form does not work and it does not give us the opportunities we have been talking about today, and I will not support it if it is put to a vote in the House.

The third reason for my speech is that this is an opportunity for us to innovate, to change, to look at how our regulations do or not work, and to boost our commerce. The most nimble and most independent countries will thrive in the next few decades, and innovations such as freeports offer us the opportunity to do so. As my hon. Friend the Member for Middlesbrough South and East Cleveland outlined, examples such as Jebel Ali in the United Arab Emirates, which has 140,000 people working there and receives nearly a fifth of all direct investment in the UAE, demonstrates the kind of opportunities that we may be able to grasp if we take them.

There are also manufacturing opportunities. My constituency is an old manufacturing area, as well as an old mining area, and it still has a significant amount of manufacturing. If freeports can contribute in any way to bringing back some manufacturing, with a focus on high-skill manufacturing, building on what we have, we should all welcome that.

In summary, I am still trying to work out how to get a freeport 70 miles away from a coast. I will continue to think that through at my leisure. Divergence is sometimes an opportunity, as this is. I hope that we, as a Government and a country, will take up such opportunities, because if we do we can be extremely successful in the years to come.

[David Hanson (in the Chair)]

We have an abundance of time for the Front-Bench speakers, so there is no need for them to restrict themselves to the normal 10 minutes each.

--- Later in debate ---

[Judith Cummins]

I will come on to the importance of defining what is a freeport. A 2011 review of special economic zones by the World Bank suggested that many such models had become white elephants, with the cost of revenue lost to the Exchequer outweighing the benefits. At the same time, The Economist reported that they create distortions in economies and that many fail, leaving a long trail of failed zones that either never got going, were poorly run or in which investors gladly took tax breaks without producing substantial employment or export earnings.

Reports have repeatedly surfaced from free enterprise or free trade zones around the world that demonstrate lax enforcement of labour laws. Polish workers have been sacked for an illegal strike against poor working conditions at a business located in a special economic zone. There are similar examples in China, Cambodia and elsewhere. The European Parliament’s director general for external policies found that often in such zones

“the governance of labour rights may differ from the rest of the country and fall below international legal standards”.

If the Government are considering such a model, will they tell us how they intend to ensure that workers’ rights are protected and enforced? Will the Minister tell us what discussions he has had with trade unions?

Serious concerns have been raised about how a combination of tax incentives and relaxed monitoring and supervision, even by competent regulators, has resulted in a reduction in finance and trade controls and enforcement, creating opportunities for money laundering and the financing of terrorism. The intergovernmental Financial Action Task Force raised precisely those concerns in the inaugural review of free trade zones in 2015. It noted that

“the same characteristics that make FTZs attractive to legitimate business also attract abuse by illicit actors”.

The Financial Action Task Force also noted that FTZs have been used in the transport and production of weapons of mass destruction.

[Lee Rowley]

I am grateful to the hon. Lady for outlining all the potential issues, but does that mean we should not have freeports because those things may happen?

[Judith Cummins]

I said at the beginning of my speech that this is a timely debate, because these things need to be said. However, until we get the deal we cannot rule anything in or out, because the devil is always in the detail.

The United Kingdom must not be allowed to become a bargain basement tax haven off the coast of Europe. That includes not allowing any schemes that would allow the abuse of workers’ rights, financial checks, export licencing regimes or money laundering checks. Although we recognise the various calls for a freeport review from industry groups, from the Key Cities group to the British Ports Association and the British Hospitality Association, we must note that it is only one aspect of their much larger call for coastal communities to have a strategy to ensure that investment and growth are facilitated across the UK. That includes investing in transport and infrastructure and improving port connectivity.

Today’s debate must not be used to mask failures by this Government: a failure to bring forward any coherent proposal for our future trading relationship with the EU; a failure to give our exporters any clarity about what their future trade environment looks like; a failure to adequately prepare for Brexit at our ports; a failure to properly invest in transport infrastructure; and a failure to develop any coherent plan to support economic growth and investment in our coastal communities.

I look forward to the Minister’s response to the points that other hon. Members and I have raised. My hon. Friend the Member for Redcar (Anna Turley) spoke eloquently of her local community; she shared her ambition for a freeport to unleash the economic potential in her area. All Members spoke about the importance of defining what we mean when we speak about freeports and the importance of rebalancing our economy. Crucially, I urge the Minister to commit today to consult properly with all Members of Parliament who represent potentially affected areas, because they deserve to be heard.