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Call to drop Solent Freeport plans after Office for Budget Responsibility questions impact

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PLANS for a low-tax freeport covering parts of the Waterside should be dropped, according to an opposition councillor, after its effectiveness was questioned by an official report.

The Solent Freeport announced earlier this year by Conservative chancellor Rishi Sunak would include Marchwood and Fawley oil refinery, granting simplified customs procedures, a streamlined planning processes and tax relief in an effort to boost the economy.

But the Office for Budget Responsibility (OBR), the official body which assesses government finances, warned in a recent report that the eight approved freeports could cost £50m a year and rather than generating fresh income for the UK, would instead mean activity "being displaced from elsewhere".

Fawley oil refinery would be included in the freeport
Fawley oil refinery would be included in the freeport

Now the plan has come under fire from Cllr David Harrison, a Liberal Democrat county council member for Totton South and Marchwood.

He said: "Conservatives have been extolling the virtues of a freeport for the local area, claiming it as a Brexit benefit that will create hundreds of new jobs.

"They are even suggesting that relaxing planning controls and all the tax breaks for the wealthy owners, so that businesses won't have to pay anything, will be worth it because of the economic boost.

Cllr David Harrison
Cllr David Harrison

"I was sceptical from the start. Now the Office for Budget Responsibility, the organisation that guides government policy, has announced that there is likely to be zero benefit.

"Funnily enough, this isn't even a new policy. It was tried before and failed. I think it is better that they drop the idea."

The Solent Freeport is forecast to potentially attract £2bn of investment and 52,000 jobs to the region. The freeport includes Southampton, its airport, and a site in Havant.

The project was defended at a recent meeting of New Forest District Council by its leader, Cllr Edward Heron, who said there was a "small" risk that businesses could switch bases.

NFDC leader Cllr Edward Heron was approved to join the freeport board
NFDC leader Cllr Edward Heron was approved to join the freeport board

But he argued the freeport was more likely to attract multi-national companies seeking to invest "hundreds of millions of pounds" than compete with others in the UK.

Cllr Heron said he was "optimistic" and cited "significant" economic, educational and social benefits the project could bring.

The new OBR report recognised that the Treasury has tried to reduce displacement through the bidding process, by requiring bidders to demonstrate how they would generate extra activity and minimise displacement.

"But given historical and international evidence, we have assumed that the main effect of the freeports will be to alter the location rather than the volume of economic activity, so the costs have been estimated on the basis of activity being displaced from elsewhere," it added.

"To the extent that activity is genuinely additional, it will be revealed in GDP and receipts data over time, though given the small scale relative to the whole economy, such effects would probably be difficult to discern even in retrospect."

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