Freeports

Martin Vickers Excerpts

Thursday 11th October 2018 Westminster Hall

[Martin Vickers (Cleethorpes) (Con)]

It is always a pleasure to serve under your chairmanship, Mr Hanson, and I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) on securing this important debate at a particularly opportune time. The UK is an island nation and has always been very dependent on our ports; indeed, 90% of all our trade by volume, and 75% of our trade by value, passes through UK ports. Post Brexit, we have an opportunity to capitalise on this and to open up the country to world markets at a level never previously seen as possible.

I take note of the slight differences between the two previous speakers’ views on whether membership of the EU restricts us in doing that; my understanding is that it certainly does, and it is worth noting that the Mace report referred to previously says that leaving the EU and the customs union can be seized on as an opportunity to enhance the UK’s ability to achieve these things. Let us ignore whether they are, strictly speaking, allowable at the moment; the fact is that Brexit is going to happen, and it provides the window of opportunity that we need.

Taking certain areas around a port or an airport and putting them outside the domestic customs area, as my hon. Friend the Member for Middlesbrough South and East Cleveland said, is good for business. It is also worth noting that the designated freeport need not be entirely adjacent to the port estate. In my constituency, there is an industrial estate called Europarc, which straddles the Grimsby and Cleethorpes constituencies. In discussions I have had with operators there, they can see great value in designating that as a part of the freeport zone.

As has been outlined, freeports allow us to import goods from abroad, and goods leaving the area can be sent abroad, without the usual duties—it incentivises domestic manufacturing. Around the world, there are something like 3,500 freeports, but sadly there is none here in the UK. That puts us at a considerable disadvantage and poses a serious risk of us slipping behind some of our trading partners and competitors.

The Chief Secretary recently visited my constituency. On that occasion, I hosted a discussion on freeports, which included Associated British Ports—the port operators of Grimsby and Immingham—Humberside Airport, Young’s Seafood, the Humber local enterprise partnership and the Hull and Humber chamber of commerce. It was highly encouraging to hear the strong levels of support from those organisations, which encompass both the public and private sectors. On the day, the Chief Secretary tweeted that freeports for the north could give the UK a £9 million boost. I say to the Minister that an even more senior Minister than his good self has already committed to the fact that freeports will give us a £9 million boost. Since the Treasury says so, we know it must be true.

ABP, which owns and controls much of the port infrastructure in my constituency and the surrounding area, is incredibly positive about the prospect of freeports being rolled out across the country. If done properly, there is absolutely no doubt that there could be numerous benefits for this major port operator and, more importantly, for local businesses that feed into the area around our major ports. When I took Simon Bird, the port director for the Humber ports, to see Brexit Ministers some months ago, he outlined the concept of a freeport corridor between the various ports, perhaps on the east and west coasts. I know Ministers were enthusiastic about it at that stage, and it is something that could be looked at in the future.

By exempting products from import tariffs, businesses can process and manufacture goods to be exported to a third country. That reduces costs, increases profitability and leads to greater local investment. By allowing products to enter the zone and have duty paid when they leave it later, businesses can warehouse and process goods and improve cash-flow cycles and efficiency. That is especially beneficial for sectors that depend on just-in-time management, such as the fishing and fresh food sectors—that is of particular importance to my constituency, where 5,000 people are employed in fish processing.

Another reason to support freeports is tariff inversion. Finished products generally face lower tariffs than the parts that make them. If the Humber were to be made a freeport, cars could be brought into Immingham and Grimsby, as they are today, along with additional upgrade components. There are also tax incentives: we can incentivise companies to generate new economic activity within freeport zones, and this can be done by a range of methods, such as offering reduced rates of corporation tax, rewarding job creation with lower levels of employment rates, or by setting a lower rate of VAT on goods brought in through the zone. I fully agree with the hon. Member for Redcar (Anna Turley) that it is absolutely vital that we do not use the freeport concept to reduce employee standards in the workplace.

Many tangible benefits would be felt quickly by local businesses and communities where freeports are implemented. Some of our best ports are in the northern coastal communities that have been run down over the years, as referred to previously. Freeports would enable regeneration in these communities through private enterprise rather than at the expense of the taxpayer. Freeports are an opportunity that can be seized on to ensure that businesses are attracted to those northern communities that have been left behind, and to make the most of competitive global trading markets.

It is for that reason that I launched the all-party parliamentary group on freeports a few months ago, and I thank my colleagues for electing me as the group’s chairman. I hope the APPG can keep this issue on the political agenda—I appreciate Ministers are rather bogged down at the moment with the details of Brexit. Perhaps we need to concentrate more on the opportunities of Brexit.

The areas around the ports, including my own—the Grimsby-Cleethorpes-Immingham area—have been ranked in the bottom quartile for deprived areas. A policy that leads to a boost in investment has got to be welcomed. Five of the UK’s major ports are located in the north. Together, they handle more than 10 million tonnes of goods and contribute £5 billion of economic value each year. By tonnage, the Grimsby and Immingham docks complex is the largest in the country. It ranks first in the UK for trade in coal, second for metal ores and third for oil products. The port of Immingham alone is responsible for providing fuel for 10% of the UK’s energy production. Clearly, it is vital for the UK’s energy strategy that freeport status further unlocks that potential.

In the Humber, there is a strategic focus on energy—specifically renewables. The continuing investment in the renewable energy sector is another example of the investment and job opportunities in Immingham and the surrounding area. As coal declines, biomass has grown, and Immingham is crucial for the import of the biomass that is supplied to the Drax power station near Selby.

We talk a great deal about rebalancing the economy and ending the north-south divide. That is a mission of every Government, but we have yet to achieve it in any meaningful way. In 2016, the northern economy created £330 billion of economic output, but had the north and south been balanced, it would have been about £400 billion. That is £70 billion more—equivalent to £15,000 per household in the north of England. If the Government are serious about addressing that imbalance—and I know they are—freeports are a logical means to that end.

Hon. Members have already referred to the report from the consultancy company Mace, which puts forward the idea of freeport status for seven northern ports. It states:

“The successes of the Humber—the ‘Energy Estuary’—demonstrate the sheer scale of sector-specific successes that can be achieved”.

Freeports would be a sensible way to expand that success, for not just the north of England but the whole country.

There is also the possibility of combining freeports with existing enterprise zones to create supercharged freeports, which would be a powerful force for economic growth and job creation. Mace calculated that declaring those seven ports across the north as supercharged would boost trade by £12 billion and create 150,000 jobs in the north. That would be a momentous step for the northern powerhouse and would prove beyond doubt that the idea is more than just a slogan. Projections show that the supercharged freeports could close the north UK productivity gap by 15%, which would be another welcome step in rebalancing the economy.

Freeports are inextricably linked to Brexit. The success of this policy requires the UK to have full control of its trade policy and customs arrangements. Freeports can be properly implemented only in a post-Brexit world. Although technically possible within the EU, red tape and restrictions from Brussels would make them somewhat ineffective and would seriously hinder our ability to become a truly global Britain. The Shannon free trade zone, set up in the Republic of Ireland in 1959, has been decimated by the Republic’s membership of the EU. Having discussed the matter with industry experts, I am convinced that the current plans for our relationship with the EU, as outlined in the White Paper, would be insufficient to make a success of freeports. I fully concur with the comments of my hon. Friend the Member for Middlesbrough South and East Cleveland about the Chequers deal. We have got to establish full control over our trade and economic policies. That crucial message was delivered during the referendum campaign, and we need to deliver on it properly.

Cleethorpes, Grimsby and Immingham make up the North East Lincolnshire Council area, which voted 70% for Brexit. As one of the MPs for that area, I am determined to press the Government on every possible occasion to ensure that what those people voted for is delivered. A freeports policy would instantly end the criticism that the Brexit decision was about being little England. This is an opportunity to broaden our trading capacity and look to the growing economies in India, China, the far east, South America and so on, rather than solely focus on the EU economies, which are static at best.

I urge the Minister to be brave, break out from his brief, go along with the Chief Secretary and give us a real boost. Let us talk about the opportunities of Brexit, rather than the problems of getting there. Over to you, Minister.