Plans for tax-free zones at ports post-Brexit condemned by Labour as 'race to the bottom'

Posted On: 
2nd August 2019

Plans to create tax-free zones at ports and airports post-Brexit have been condemned by Labour as a “race to the bottom”.

The Government says freeports will be a huge boost for the economy.
PA Images

The Government said the “freeports” would “turbo-charge growth” and transform the country’s transport hubs.

But Shadow International Trade Secretary Barry Gardiner said the plans “will have money launderers and tax dodgers rubbing their hands with glee”.

No-deal Brexit could lead to 'consumer panic' and rise in organised crime, government document warns

Sajid Javid announces new £2bn fund to ramp up no-deal Brexit preparations

Boris Johnson tells EU: It is up to you if Britain goes for no-deal Brexit

International Trade secretary Liz Truss is inviting ports and airports to bid to become one of up to 10 new zones, which will be created after the UK leaves the EU on 31 October.

She said they will remove “unnecessary checks and paperwork” to reduce costs and bureaucracy and encourage manufacturing businesses to set up in the UK.

Boris Johnson has long been a champion of the idea, which allow firms to import goods to the UK and then re-export them without having to abide by normal tax and customs rules.

Ms Truss said they “will onshore enterprise and manufacturing as the gateway to our future prosperity, creating thousands of jobs”.

But the zones are controversial and have been identified by the EU as a money-laundering risk, and the European Commission recently said they "pose a risk as regards to counterfeiting".

Mr Gardiner said: "This is not new investment and growth. It is a race to the bottom that will have money launderers and tax dodgers rubbing their hands with glee.

“Freeports and free enterprise zones risk companies shutting up shop in one part of the country in order to exploit tax breaks elsewhere, and, worst of all, lower employment rights.”

Fellow Labour MP and supporter of the People’s Vote campaign, Owen Smith, said: “Creating a legal on-shore tax haven is more likely to suck away jobs from businesses that pay their taxes than anything else.

“If that happens at any scale it is likely to undermine the public finances and ultimately lessen the money available to fund the police, schools and hospitals.”