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Jeremy Hunt will extend some tax breaks available to UK freeports by five years in next week’s Autumn Statement to avoid what experts have called a “cliff edge” in fiscal support for the new zones, according to government figures.
The government has authorised the creation of eight of the sites in England, two in Scotland and two in Wales, all of which are in various stages of development. It also hopes to set up a freeport in Northern Ireland when power sharing at Stormont is restored.
Prime Minister Rishi Sunak has cited the freeports — which benefit from tax and customs relief and simplified import-export procedures — as one of the benefits of Brexit, although Britain previously had five until 2012.
The sites are also a cornerstone of ministers’ attempts to “level up” different regions of the UK, aimed at promoting job creation, regeneration and trade.
The government hopes the schemes will boost economic growth, but critics say they risk simply displacing economic activity from other parts of the country.
Under the government’s original policy, most of the tax breaks available would only be available for companies up until either April or September 2026. One exception was business rate relief which could be enjoyed by companies for up to five years from when they first set up in a freeport.
Despite the cut-off being nearly three years away, that proviso has prompted warnings from experts, executives and regional leaders that the policy as drawn up represented a “cliff edge” that would deter investment.
Companies that sign up to build premises in a freeport may still take several years to gain planning permission, construct their factories or warehouse and for them to become operational.
In order to help companies set up operations inside the freeports, Hunt will extend some of the tax breaks from 2026 to 2031, according to government officials.
In addition to easing concerns around future investment, the move would reduce the chances of an incoming Labour government unravelling the policy. The main opposition party has no plans to close freeports but they are not a priority.
The Treasury said: “We don’t comment on speculation ahead of fiscal events.”
Kevin Shakespeare, director of strategic projects at the Institute of Export and International Trade, a representative body, said the freeport tax extension would be “absolutely right” for the long-term future of the schemes.
“Freeports now have the opportunity to take long-term decisions and play a key role in attracting more investment into the UK,” he said.
Sites proceeding with freeports include Liverpool City region, Plymouth & South Devon, Teesside, East Midlands Airport and Felixstowe & Harwich.
Dylan J Williams, chief executive of Anglesey freeport — one of the two chosen Welsh sites — said Hunt’s proposal would be “positive news”.
“An extended period of tax breaks makes Anglesey freeport a stronger and more attractive proposition,” he said.
In March, Hunt announced a dozen new “investment zones”. They will have some features in common with the freeports, such as tax reliefs and business rates retention, although they must involve partnerships with universities.