Chancellor Rishi Sunak will reportedly look to slash taxes and red tape to a cluster of cities and towns next year to provide a post-Brexit economic boom for Britain.
The Sunday Telegraph reports that Sunak is drawing up plans to create 10 “freeports” in towns and cities across the UK where they will see sweeping taxation and regulatory changes.
Towns and cities will be able to bid to be one of the 10 freeports this year, with the Treasury to decide by next spring on who has made the cut.
Some of the potential changes in these new economic zones includes research and development tax credits, increased capital allowances, reductions in stamp duty and business rates, and relaxations of planning laws.
The freeports would also be outside the UK’s customs territory, meaning that imported goods into these areas would do so without tariffs or import VAT.
Sunak’s plans to create regulatory and taxation freeports is in response to the UK’s exit from the EU transition period and will be spurred on by the current coronavirus economic downturn.
It comes as Sunak this week announced a range of measures aimed at stoking demand in the British economy, such as a cut on VAT for the hospitality and tourism sectors and an increase on the stamp duty threshold to £500,000.
He told MPs: “People need to know that although hardship lies ahead, no one will be left without hope.”
Today, the government also announced it would spend £700m on preparing the UK’s borders for the end of the Brexit transition period.
The funding is being spent on 500 new border guards, IT systems and essential infrastructure at Dover and other ports of entry as the UK prepares for the end of the post-Brexit transition period on 31 December.
The UK is set to have its border checks up and running in full by next January, after the coronavirus crisis forced a six-month delay of plans.
This has led to some tensions in cabinet, with international trade secretary Liz Truss writing to Gove and Rishi Sunak this week to express concerns that the delay could lead to illegal smuggling and a legal challenge from the World Trade Organisatoin (WTO).
Cabinet Office minister Michael Gove appeared on the BBC this morning to quash concerns about a cabinet row and trumpet the new spending.
“I’m absolutely certain that everything we do is compliant with the law, indeed, is designed to ensure we can not just comply with law, but keep people safe and also facilitate trade as well,” he said.
“The critical thing about our new border infrastructure is that it’s there both to allow us to trade with Europe but also to make it easier to trade with the rest of the world.”