Chancellor Jeremy Hunt extends tax incentives in Freeports to 10 years in a move that Mersey Maritime CEO Ruth Wood says could turbo charge investment in Liverpool city region. Tony McDonough reports
Mersey Maritime chief executive Ruth Wood has welcomed an announcement by Chancellor Jeremy Hunt that tax incentives for Freeports will be extended to 10 years from five.
Speaking after Mr Hunt delivered his Autumn Statement Budget to the House of Commons, Ruth said the Liverpool City Region Freeport, which went live earlier this year, had already put Merseyside on the radar of global investors.
“Extending the tax incentives from five years to 10 will give potential investors even more confidence that this is a genuine long-term opportunity,” she told LBN.
A flagship policy in the Conservative’s 2019 election manifesto, Freeports are designated zones where normal tax and customs rules do not apply.
These can be airports or other hubs as well as maritime ports. At a freeport, imports can enter with simplified customs documentation and without paying tariffs.
LCR Freeport went live in January this year with an initial £25m of funding from the Government. Its primary customs sites are the Port of Liverpool in Seaforth and Liverpool John Lennon Airport.
There are also three tax zones – Wirral Waters, the £100m Parkside scheme in St Helens and the 3MG multi-modal terminal at Widnes. It will also encompass other industrial and logistics sites.
Ruth added: “The extension appears to be positive news for Freeports and for the region.
“It will hopefully bring further inward investment opportunities which alongside private investment, such as Peel Ports’ recent launch of a £10m green automotive hub in Eastham that will service the Stellantis electric van factory, show the region is already an ideal location to do business of all kinds.”
In his speech, Mr Hunt claimed he had delivered “the biggest business tax cut in modern British history”. It was, he added, an “Autumn Statement for a country that has turned a corner. An Autumn Statement for growth”.
He outlined 110 measures that he claimed would “boost business investment by £20bn a year”. They included making the capital allowance tax scheme, a measure announced in the last Budget that was meant to last for just three years, permanent.
It allows UK companies to deduct 100% of the cost of capital equipment. Mr Hunt added: “He said: “This is the biggest-ever boost for business investment in modern times, a decisive step towards closing the productivity gap with other major economies.”
The main National Insurance rate – which is paid on earnings between £12,570 and £50,268 – was cut from 12% to 10%. This will take effect from January 6.
And the National Living Wage has been extended to include 21 and 22-year-olds and will rise by £1.02 to £11.44 per hour from April. The National Minimum Wage, for 18-20 year olds, will also increase by £1.11 to £8.60 per hour.
There was also specific sector support. A £4.5bn package will include £2bn support for the automotive industry, £975m for aerospace, and £520m for the life sciences sector. And £500m will be invested over two years to create innovation centres for AI.
Paul Cherpeau, chief executive of Liverpool Chamber, echoed Ruth Wood’s comments about the Freeports tax change and welcomed the emphasis on increased productivity and investment.
He said: “Innovation is a key pillar of our city region economy, so we welcome any targeted measures that encourage R&D and boost investment in areas such as technology, advanced manufacturing, visual arts and clean energy.
“Extending financial incentives to Investment Zones and Freeports from five to 10 years should also help to encourage businesses to take longer term planning and growth decisions.
“If delivered, reforms to the planning process and greater access to the energy grid promise to accelerate business investment and businesses will be encouraged by the decision to make full expensing a permanent measure.
“It is also good to see the Chancellor taking active steps to reduce the scourge of late payments and adopting a more responsible approach in government procurement processes.
“Our members in hospitality, retail and leisure will be relieved to see the 75% business rates relief for eligible operators extended, while also freezing the business rates multiplier for those sectors during a very challenging time for many operators.”
Bill Addy, chief executive of Liverpool BID Company, which represents more than 800 businesses in Liverpool city centre, welcomed the continuation of the 75% business rates discount for retail, leisure and hospitality.
“It will help businesses to create their budgets for the New Year,” he said. “A freeze on alcohol duty is good news for hospitality.
“But a great deal of uncertainty remains. In March, the energy scheme for business ends, meaning that there is no support for increasing bills in the next financial year.
“This is one of the biggest challenges facing small and independent businesses, cultural institutions and property owners up and down our high streets as energy costs and utilities are rising faster and steeper.
“We have to work to make it affordable to keep your doors open, to maintain vibrant city centres that service a mixed use economy.
“We need more certainty and support that comes from an understanding of the challenge businesses in our great cities are facing, that helps them to face the future with confidence and feel that they can thrive, not just struggle to survive.”
Gillian Miller, chief excutive of Liverpool’s Royal Court theatre and chair of St George’s CIC echoed Bill’s worries about the impact if energy bills.
“It’s always good for cities if people have a little more money in their pockets, but we need some real support to help cultural, retail and leisure businesses to survive,” she said.
“With no ongoing support to tackle energy bills you do fear that some institutions will find it too difficult to keep their doors open once the current scheme ends in March.”
Sophie Gilmore, managing director of training venture HybridTec, which has opened a new green skills academy in Liverpool, welcomed extra funding for apprenticeship but said he hadn’t gone far enough.
“There are close to 1m vacancies in the economy due to skills shortages, and this is only going to be a major drag on the economy,” she explained.
“So, while the Chancellor has restricted the Apprenticeship Levy, there’s no denying that more needs to be done to reduce the skills shortage and I welcome the increase of £50m worth of additional funding for specific engineering apprentices.
“One way of doing this would be to increase the commitment to growing the green energy sector in order to support both local and national net zero targets.”
And Sean Keyes, managing director of civil and structural engineering firm Sutcliffe, added: “I think increasing the National Living Wage is in fact a negative. While raising the National Living Wage in London may work, what it’ll do in the provinces is make employers think more closely about employing a young person.
“It’d actually make more sense to employ somebody older with more experience for the same amount of money, making it even harder for young people to find their first employment – and that’s not what I want.
“What I’d prefer to see would be for the Government to put some actual funding into encouraging companies to upskill its young people, similar to the Kickstart programme.”
The Office for Budget Responsibility quickly put a dampener on the Chancellor’s attempt to create a positive narrative.
It said: “The overall 3.5 per cent peak-to-trough drop in Real Household Disposable Income per person between 2019-20 to 2024-25 is still the largest reduction in real living standards since ONS records began in the 1950s.”
Labour’s Shadow Chancellor Rachel Reeves was also unimpressed. She said “growth has hit a dead end” under Conservative leadership.
She focused on the OBR forecast of a downgrade in economic growth pointing out it has been “revised down, next year, the year after, and the year after that too”.
Nothing that has been announced today “will remotely compensate” for the impact of mortgage rises and cost of living pressures, she added, saying working people remain “worse off” after announcements and that British people “will not be taken for fools”.