When it comes to favourite things, ‘Raindrops on roses and whiskers on kittens,’ may do for Julie Andrews, but Britain’s uber-ambitious Chancellor, Rishi Sunak has his eyes set on far grander targets: namely freeports and charter cities. In Sunak-speak such projects will deliver a new utopia of jobs, prosperity and opportunity, particularly in deprived areas. This is the Chancellor who’s allocated a generous chunk of the levelling up fund, to his own affluent and prosperous constituency. Perhaps prosperity and deprivation replace each other in Sunak-speak?
Conservative women may call him ‘Dishy Rishi,’ and many an Indian matron may look upon him with a fluttering heart, but millions of us are wary, suspicious and downright disgusted by a Chancellor who voted (along with other Tory MPs) not to provide free school meals for children from vulnerable families during school holidays. Let’s set this side-by-side with the award of PPE contracts worth hundreds of millions of pounds to friends, cronies and donors of the Tory party; no dearth of funds in the treasury for them.
It appears that our Chancellor believes the rich deserve more and the poor deserve less. Barbaric as it may sound; short-sighted and hostile as it is, such is the truth at the heart of Mr. Sunak (and his pals in government). Therefore, if Sunak is super-excited about freeports and charter cities, the rest of us need to be vigilant and watchful.
The words ‘freeports’ and ‘charter cities’ have been flying around in the ether and are probably as familiar as cornflakes to us by now, but what exactly do they mean, what will they create, and are they really the best thing since sliced bread?
Eight freeports have already been announced and they are: East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teeside. Set near ports or airports, they can cover an area of 45km across, are ‘special economic zones,’ that benefit from reduced taxes, rates and regulations. “These special economic zones make it easier and cheaper to do business, as they allow goods—including valuable artwork, cars, and jewelry—to be imported and exported while avoiding customs duties. They can also be used to import raw materials, which can be transformed in situ into finished products ready to export.”
The Chancellor has touted freeports as a component of the government’s ‘levelling up policy,’ stating they’ll bring ‘investment trade and most importantly jobs right across the country.’ Sunak has emphasised they wouldn’t have been possible if Britain had remained in the EU. Not true. There are dozens of freeports spread out across the EU, from Ireland to Italy, however EU investigations have found them to be a haven for money laundering and tax evasion.
Apparently Sunak became a fan of freeports when working in the US, however his own report in 2016, admitted that much of the work offered was in warehousing and production. This is low-skilled work, limiting the income of workers. How is that ‘levelling up’?
The EU isn’t the first organisation to be critical of freeports. Perhaps the Chancellor should have a look at Conservative Party history and check out why freeports were closed during Margaret Thatcher’s time, when they were known as ‘enterprise zones.’ ‘One evaluation of the similar enterprise zones created by the Thatcher government found that they cost the public £17,000, at 1994 prices, for each additional job.’ The public pays for the physical infrastructure of building and maintenance of roads, fences, and other facilities, as well as for the pressure on schools and hospitals when workers relocate.
A report by the think tank UK in a Changing Europe, warns that free ports are no ‘magic bullet,’ and reiterates the hidden cost to the public: “The main beneficiaries from the initiative will be the businesses and super-rich individuals who take advantage of the tax breaks they offer, while the public will bear the cost of the infrastructure required to make them function.”
Richard Murphy goes even further and gives a stark warning. ‘My fear, to be blunt, is that the aim is to introduce tax havens in the UK ‘. Richard is a visiting professor in accounting at Sheffield University and was asked to look at the issue of freeports by Fair Tax Mark.
No surprise there then. With the rich getting ever richer, tax havens must be bursting at the seams. The super-rich, including Chancellor Sunak of the United Kingdom, need expanded capacity.
Back to our Chancellor’s list of favourite things, and next to freeports come charter cities. My motto is, if Sunak’s supporting them, we should surgically examine them. As far as I’m aware the idea of charter cities was first put forward by Paul Romer, a Nobel Laureate and a former Chief Economist of the World Bank in a TED TALK in 2009. They were proposed as a mechanism for lifting people out of poverty by creating a dynamic employment and business area.
A transcript of the talk is available here, but it can be boiled down to five main points: 1. existing rules in a nation can lead to under-development. 2. For economic progress to occur, the old rules need to be replaced by new rules. 3. A nation is a mighty beast and it can be difficult to change the rules. 4. Therefore create new kinds of cities, which can be semi-autonomous, and exist according to a charter agreed between the city and the nation. 5. Have a developed nation, or nations as guarantors (this element has aroused stinging accusations of colonialism).
The pertinent questions are: who represents the city in these charter negotiations with the nation state: progressive social groups? Women’s groups? Workers? Business? Tory donors?
Paul Romer was involved in the planning stages for the charter city in Honduras, but eventually resigned, as transparency became an issue, amid suspicions that organized criminal elements were exerting influence.
The Charter Cities Institute states ‘We believe that charter cities have the potential to lift tens of millions of people out of poverty.’ None of us would have an argument with that aim, however, along with prosperity, people also need fair treatment, professional law enforcement and civil liberties.
In Sunak-speak, freeports and charter cities are presented as the solution to raising employment levels and transforming the living standards of communities. I’m totally in favour of those aims. My only reservation is that tax-havens aren’t known for their social conscience, and the charter cities of Sunak-speak will certainly end up serving the super-rich, far more than the unemployed. Utopias, as ever, remain out of our reach.