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Budget confirmation of freeport at Felixstowe and Harwich welcomed as spur to growth

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The Budget confirmation that the ports of Felixstowe and Harwich are to be one of eight new freeports announced by the chancellor has been welcomed by business groups as a spur to growth and potentially ‘thousands new green jobs’ in the region. Companies locating in freeports benefit from tax advantages on imports and exporters as well as and simplified planning rules and lower business rates.

Joe Faulkner head of KPMG’s Norwich office, said : ‘’News that Felixstowe and Harwich have been approved as a freeport is a fantastic boost to the region and has the potential to dramatically change the future economy for our local businesses and the people that work here.The benefits that this will bring to the region in terms of improved infrastructure, inward investment, new job creation in highly skilled industries and boosting connectivity and trade should prove a catalyst for economic growth for generations to come."

Freeport East will be centred upon the Port of Felixstowe and Harwich International Port. Clemence Cheng, executive director of Hutchison Ports, which owns both ports, said: “Freeport East is the perfect location to develop a new Freeport. Its position on the main global shipping routes, and with frequent services over to Europe, makes it the ideal place to attract inward investment. It has 50% of the UK’s offshore wind capacity on its doorstep and, working with our partners we will help drive developments in green energy for use in the transport sector as well as across the wider economy.” Freeport East is working with Ryse-Hydrogen and EDF, operator of Sizewell nuclear power station, to develop a hydrogen hub.

Strong protection

Richard Tunnicliffe, CBI East of England Director, said: “This Budget succeeds strongly in protecting the economy now and kickstarting recovery. It leaves open the question of UK competitiveness long term. “The Chancellor has gone above and beyond to protect UK businesses and people’s livelihoods through the crisis and get firms spending.

“Firms across the East of England will be relieved to receive support to finish the job and get through the coming months. The Budget also has a clear eye to the future; to ensure finances are sustainable, while building confidence and investment in a lasting recovery.

“Awarding freeport status to eight sites across the country – including Freeport East and the Thames region in the East of England – should bring benefits to local businesses and help boost wider regional economies, in addition to bolstering the UK’s global trading position. Firms look forward to working with local stakeholders to make a success of these initiatives and ensure they deliver economic gains for communities across the UK.

Protecting, creating and supporting jobs

Stuart Wilkinson, Head of Tax at EY in the East of England, said: “Today, Rishi Sunak set out his three-point plan, which aims to protect, create and support jobs, fix public finances and build our future economy.

“Among the key highlights were his extension of the furlough scheme until September. This will be welcome news to the region’s hospitality, leisure and tourism businesses, who will also be pleased to see extensions to the business rates holiday and VAT reduction for the sector. Many operators are relying on these measures to remain afloat while trading remains disrupted. The restart grants are also a significant move, which will help businesses to cover ongoing operating costs.

“Although we expect consumer demand to recover relatively quickly, it is important to note that outdoors service will only be profitable for a small portion of the hospitality sector and that, even after the scheduled 17 May full reopening, social distancing measures will likely continue to limit operating capacity in restaurants and pubs. Across all hospitality businesses, many operators also face increased debts and deferred rental obligations, which will need to be managed going forward.

Ambitious target with sugar

Hazel Platt, Partner at Grant Thornton in the East of England, said:“An ambitious budget with business being served a spoon full of sugar today, with the medicine to follow tomorrow. Pushing the well-trailed rise in corporation tax to 2023 may make it a little easier to swallow but it’s still a large relative increase and a potential threat to inward investment in the long term.

“The best way to eat away at the record levels of borrowing is to stimulate growth, and so the new Super Deduction of 130% on capital expenditure, alongside other measures to support digitisation and innovation in the mid-market, is welcome news. Felixstowe being named one of the eight new Freeport locations and an incoming Consultation on R&D tax credits, signals that more incentives for innovation and growth could be on the horizon. “

“While the chancellor is continuing to use fiscal firepower to help businesses get through the pandemic – with the new Levelling-Up fund, Recovery Loans scheme, and the extension of furlough - the fact that all this must be paid for in the medium term was clearly delivered.”

Long term renewal

Suffolk Chamber said it was impressed with how the Budget will support both the short-term recovery and the long-term renewal of our local and regional economy. “We are pleased that the Chancellor has delivered the vast majority of our immediate requests and those of our members, including an extension to the furlough, self-employed, business rates relief and VAT deferment schemes. We are also relieved that the increases in corporation tax will not take effect until 2023. Lobbying by Suffolk Chamber and other chambers across the country has clearly and demonstrably worked.

“We are also delighted that the Freeport East bid is one of eight to have received Government backing today. From the outset, we have supported this initiative, as we believe it will deliver sustainable increases in both local and national jobs, productivity and skills and will make a major contribution in helping us deliver our associated infrastructure campaigns, including improvements to the A14 in Suffolk and the East/West rail link between Cambridge and Ipswich.

“Equally, we hope that Suffolk will be towards the front of the queue in accessing the new Infrastructure Fund for green and net-zero projects: we will certainly be pushing our MPs, local councils and others to ensure that this is the case.

Missing detail

R3 Eastern Chair Alistair Bacon, of AMB Law in the region, said: “The Chancellor’s decision to extend the furlough scheme, to provide further business grants and a new loans scheme, and to continue the business rates holiday will give welcome certainty for many business owners concerned at their prospects over the coming months. The new Super Deduction measure could also be a huge boost for business investment at a crucial time for the economy.

“However, what was missing from the Chancellor’s Budget was detail about the Government’s role once these measures start to be withdrawn. As a key creditor in most corporate insolvencies, the Government has a direct role to play in supporting viable restructuring and business rescue proposals. HMRC in particular has not always taken a constructive approach to these proposals, and we would like to see this change sooner rather than later.

Call for stricter rules on broadband services

Lloyd Felton, chief executive of Essex-based County Broadband, said : “Whilst we welcome the announcement of a new UK Infrastructure Bank, we see this as more of a ‘fund’ rather than a transactional bank, operating in a similar way and, directly replacing, the European Infrastructure Bank that British businesses no longer have access to post Brexit. We suspect the majority of any funding available from this will be more focussed on non-digital infrastructure such as the power sector and will not impact the rollout of full-fibre in the UK. The digital infrastructure sector has already demonstrated its ability to raise private investment supported by significant existing government support from the Gigabit Voucher Scheme and Outside-In Programme recently launched.

“Existing networks are reaching their limit and over the coming months and years the demand for data will soon outstrip capacity. Only new Hyperfast full-fibre networks can deliver the future-ready speeds and reliability we need.  We must increase the rate at which we are building full-fibre Hyperfast networks now if we are to meet the government’s gigabit coverage targets of 2025. It we wait until the last minute it will already be too late. As the rest of the world races ahead, we don’t want to be left peddling a bicycle.”

Last Updated ( Monday, 08 March 2021 10:59 )