Post-Brexit duty-free port network idea condemned by Labour

Labour has denounced a plan by Boris Johnson to create duty-free ports around Britain after Brexit as a boon to money-laundering and tax evasion that will diminish employment rights. The British government will on Friday appoint an expert panel to advise on the establishment of freeports, where businesses can import, warehouse and re-export goods duty free.

The government claims that the ports could be free of "unnecessary checks and paperwork, and include customs and tax benefits" and would boost economic growth around the country. But Labour's shadow international trade secretary Barry Gardiner said the plan would not bring new investment or 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,” he said.

“The British people did not vote for this new administration and they certainly did not vote to see their jobs and livelihoods threatened in favour of gifting further tax breaks to big companies and their bosses.”

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Scepticism of experts

Trade experts are sceptical about the value of freeports, which often simply move economic activity from one place to another and do not reduce friction at the border. But international trade secretary Liz Truss said the ports would do for towns and cities across Britain what an enterprise zone in London's Docklands did for the capital.

Freeports would use onshore enterprise and manufacturing as the “gateway to our future prosperity, creating thousands of jobs”, she said.“We will have a truly independent trade policy after we leave the EU on October 31st. I look forward to working with the Freeports Advisory Panel to create the world’s most advanced freeport model and launch the new ports as soon as possible.”

The announcement follows a warning from the Bank of England that Britain faces a one in three chance of tipping into recession in the next six months and that a no-deal Brexit would see inflation rise and sterling fall. Sterling lost 4 per cent of its value against the dollar in July, its worst performance in a single month for almost three years.

‘Listen to economy’

The chief executive of BMW, Harald Krüger, warned Mr Johnson on Thursday to "listen to the economy" on Brexit and to avoid leaving the EU without a deal.

“Listen to the economy and listen to the people. You need to have a dialogue, I hope you can come to a compromise that is acceptable to everyone,” he said.

Mr Johnson’s government announced an extra £2.1 billion (€2.3 billion) for no-deal Brexit planning, lifting the total allocated by the government to £6.3 billion. The money will pay for extra freight capacity and warehouses to protect the supply of vital medicines, the training of 500 new border officers, support for exporters and a £138 million public information campaign.

Labour’s shadow chancellor John McDonnell accused the government of wasting public money in pursuit of what he described as an avoidable no-deal Brexit.

“This government could have ruled out no-deal and spent these billions on our schools, hospitals and people,” he said.