UK Government looks set to overrule Welsh and Scottish governments on low tax ports
The UK Government has signalled their intention to overrule Wales and Scotland’s devolved governments and set up tax-free ports despite objections.
A source told the Financial Times that the UK Government was increasingly willing to bypass the devolved administrations.
Welsh Secretary Simon Hart has previously threatened to impose a freeport on Wales “come what may”.
The Welsh government had said in the past that it would be happy to set up a free port, providing it received the same level of funding as England, but the UK Government has not provided such a guarantee.
Welsh Finance Minister Rebecca Evans said in July that they had “consistently attempted to engage constructively with the UK Government” but that the UK Government was pressuring them “to redirect its resources to deliver a UK Government policy priority”.
The Scottish Government has set out to create its own ‘green ports’ but the UK Government has now signalled it will go ahead and create a free port in Scotland despite their objections.
The SNP have previousy expressed concern that the low-tax zones could be “a haven for criminality, such as money laundering and people trafficking” and destroy jobs elsewhere.
Both governments jointly stated in July that any attempt to impose free ports on Wales and Scotland would “undermine devolution”.
Eight freeports were created in England in the March Budget.
Last month the British Ports Association has told the UK Government not to “enforce” freeports in Wales and Scotland, instead saying that they should be “implemented properly and fairly”.
“There has also been speculation of threats by the UK government to enforce the UK freeport model on the devolved administrations,” they said.
“However, this is not welcomed by industry as in this case, the Freeport package would not include devolved levers such as planning, enterprise and certain tax mechanisms.
“For freeports to be implemented properly and fairly, ports must have access to the same mechanisms or be resigned to being less competitive with ports in England, hindering the model ineffective in devolved regions.”
First Minister Mark Drakeford said in March that they “will not be keen to sign up to a freeport proposal that leads, for example, to a reduction in environmental standards. The UK government has agreed conditionality with the Scottish government in that way”.
“We would look for joint decision making given that devolved and non-devolved responsibilities are at stake in freeports, and again the UK government has agreed joint decision making with the Scottish government.
“Then we’d look for the same level of funding for a freeport in Wales as is being made available to all freeports in England – that’s £25m available to a freeport in England, we’d expect to see the same level of funding for a freeport in Wales.
“If there is progress on those three things that conversation can certainly continue.”