Treasury officials have been accused of “killing off” freeports, by lacking ambition in tax cuts and a cap that will limit the number to 10.
Whitehall is said to be opposing the policy, claiming the perks of freeports will lead to less tax revenue and existing businesses moving to these new designated zones from elsewhere in the country, the Telegraph reported.
“We’ve got about 140 locations across the country that handle freight. If the government does agree with this policy, why is it just restricting it to eight now and maybe two or three more?” Richard Ballantyne, British Ports Association’s chief executive, said.
“I think there is some reservation in parts of government about the loss of tax revenue that these zones may create and there are some understandable concerns they could just stimulate the movement and transfer of activity instead of new investment. But these ports are competing on an international level with European ports.”
Sources disclosed that at the heart of the decision to oppose freeports there is the Treasury’s understanding of everything as a “zero sum game.”
“For the Treasury everything is a zero sum game: one side wins and therefore another must be losing. It is a misunderstanding of the dynamics of the economy,” a senior Tory told the Telegraph.
“Whatever suits civil servants will become government policy because the ministers aren’t coming up with anything or they’re blocked or delayed and civil servants know there will be another reshuffle within 18 months so they can just wait out any minister who is trying to push for something.”