The Chancellor, Rachel Reeves, will not be announcing new freeports during the budget announcement on Wednesday despite the government’s announcement last week that they would be doing so. The government had claimed that the new low-tax sites would contribute to job creation and national growth. Instead, the Chancellor will confirm the next funding stage for existing freeports, rather than announcing the introduction of five new ones.
On Sunday, a government official confirmed that a “cock-up with the comms” had occurred, which led to misunderstanding between the freeport sites and the multiple customs areas contained within them, causing the incorrect announcement to be published. The Chancellor will instead be confirming five new customs areas within existing freeports.
Freeports are typically areas located near shipping ports or airports where tariffs are exempt on imported goods. Firms located within these areas also receive certain tax and NI exemptions, resulting in lower national insurance on new employees and property taxes. These areas are intended to encourage economic activity, trade, investment, and job creation.
Although the mistake is unlikely to have a significant impact on investment plans, it will add to the notion that the Downing Street operation is not going as smoothly as it should. Additionally, earlier this month, there were reports of conflict between No 10 personnel, and Sue Gray resigned from her position as Prime Minister Sir Keir Starmer’s chief of staff.
The current freeports are located around ports in various locations such as Inverness, the Forth, Teesside, the Humber, Liverpool, Anglesey, Milford Haven, Plymouth, the Solent, the Thames, and Felixstowe and Harwich. Despite the error in the announcement, the Treasury released a statement reassuring firms planning to invest in low-tax zones that the proposals had not changed, and the government is committed to ensuring the custom benefits remain on offer. Critics have suggested that freeports only move economic activity or jobs from one area of the country to another, rather than creating new opportunities or roles. Although Sir Keir supports the concept of freeports, he believes that local businesses and politics could be more involved in their management, to enhance their effectiveness
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