FREE PORTS (Hansard, 31 October 1979)

§ Mr. Anthony Steen (Liverpool, Waver-tree)

I beg to move, That leave be given to bring in a Bill to empower the designation of tax-free zones in inner city areas in the United Kingdom in which United Kingdom taxation, customs and excise duties would not apply. The House will be aware of the serious economic situation facing the country generally and particularly the problems in some of our larger cities, many of which have in the past relied heavily on port-generated traffic and associated industries. The injection of massive Government grants through regional aid, whilst bringing short-term prosperity to deprived areas, has resulted in long-term disasters. Companies close plants in those areas where they have the smallest financial commitment.

In addition, regional aid has relocated industry outside the city boundaries, taking jobs from the inner to the outer areas. That has resulted in declining city centres and increasing numbers of unskilled unemployed.

The principal aim of the Bill is to reverse the outward drift and bring back private enterprise to inner city areas. It is not proposed to do that by offering more Government grants and subsidies but to provide tax advantages that would give a range of incentives for the creation of wealth. There must be a reason for businesses to find risk capital. They will do that only if they believe that there is a good chance of making profits. A tax-free trade zone within a free port is therefore important.

Let me explain how it could work. Initially the Government would designate a number of tax-free zones with coastal or inland port access in the inner city areas where there is sufficient land on the waterfront that can be set apart. In New Orleans in the United States, the port covers 655,000 square feet, occupying some 19 acres of land. Some free ports are larger and others smaller.

Goods landed in these zones do not need any form of Customs entry procedure and do not attract duty, excise taxes or VAT. Once there, the goods can be manufactured, reassembled or consolidated and shipped out to other countries 1266 with the minimum of formality. Duty is payable on foreign goods only when they cross the frontier of the free port and enter Britain.

The House will at once see the advantages of designating a free port. First, overseas plant can be located without the risk of foreign investment. To the small business man it offers the chance of holding on to his capital longer, which helps with cash flow. It frees the small business man from the bureaucracy and paperwork entailed in Customs and Excise duties. He can discard substandard goods and not pay for shrinkage and evaporation. There can be permitted manipulation within the zone, and rates of duty may be lower if merchandise is disassembled or otherwise changed before entering this country. It will also permit storage of goods on which there is a quota limitation for import to Britain until the next quota period.

Besides providing space for manufacturing plant and more bonded warehouse and storage facilities, the zone could also house a world trade and exhibition centre aimed at advertising British goods. The relaxation of planning and building controls would allow businesses to expand quickly and enable buildings to be erected in a free-enterprise atmosphere. As to who would run the port, a board of commissioners would be responsible for maintenance and supervision within the port.

The free port will not reverse the downward trend in some of our major ports, but it is one of a number of measures required to free our economy by allowing private enterprise to function without further Government intervention. Tax-free trade zones in free ports require no Government aid, no increase in the public payroll and no loss of duty.

Those who think that a free port is a centre for the black market and contraband are mistaken. Instead of duty being paid as soon as the goods leave a ship's hold, it is deferred and paid only when the goods leave the zone and come into Britain.

Britain is facing serious problems. There is a slow, continuous loss of private moneys abroad, with the skills and jobs that go with that. The continued fall of the pound is merely one indicator that radical action is required, and we need 1267 action in the private sector. The free port will be one step forward. If we are to set our people free we must trust them, and we can make a start by reducing controls in the public sector.