A frequently-cited ‘Brexit benefit’ actually brings no economic uplift to the UK, the Treasury’s watchdog has concluded.
Eight English ports are being granted controversial tax breaks to “generate trade and jobs”, the chancellor has claimed – at a cost of £200 million to the taxpayer.
But the Office for Budget Responsibility (OBR) has dismissed the claim in its assessment of the budget and spending review, in an embarrassment to ministers.
“We have assumed that the main effect of the freeports will be to alter the location rather than the volume of economic activity,” its report says.
“So the costs have been estimated on the basis of activity being displaced from elsewhere.”
Brexit
The report’s findings come a week after Michael Gove told parliament that the reintroduction of freeports will be an advantage of the UK leaving the EU.
Speaking to the House of Commons, the secretary of state for housing, communities and local government said: “Freeports are one of the many advantages that all the nations of the United Kingdom could enjoy as a result of our departure from the European Union”.
He overlooked that around 80 of them already exist within the EU.
What are Freeports?
Freeports allow goods to be imported temporarily without tariffs, excise duties and other taxes being paid – before those goods are shipped on again.
The eight “freeports” will be created at East Midlands Airport, Felixstowe and Harwich, the Humber region, the Liverpool City Region, Plymouth, Solent, Thames and Teesside.
“The government also remains committed to establishing at least one Freeport in each of Scotland, Wales and Northern Ireland,” the Budget book reads.
In March, in his last Budget, Mr Sunak said the policy was a route to “unlocking billions of pounds of private sector investment – generating trade and jobs up and down the country”.
He also claimed they were a boost from Brexit, because the UK was constrained as an EU member – even though 7 freeports existed in the UK between the mid-1980s and 2012.
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