Thursday, 4 Mar 2021

Brexit breakthrough as leaked report shows £3.7bn UK shipping boost to ‘rival’ Singapore

Brexit: Redwood warns of 'EU tentacles' without UK control

On January 1, the UK will finish its transition period and leave the EU, allowing it to set up its own trade agreements. Industry bodies and unions have been questioned over potential reforms to shipping tonnage tax following Britain’s departure from European state aide rules on subsidies. It comes as Prime Minister Boris Johnson and European Commission President Ursula von der Leyen extended negotiations past Sunday, with MPs believing a trade deal is close.

A leaked report from people briefed on the proposals indicated plans to overhaul the UK’s approach to shipping taxation and regulation in a bid to attract more commerce.

Calculations from the leak claimed the proposed policies could see a boost of £3.7 billion to the economy over three years, with 2,500 direct jobs created along with 25,000 in related companies.

Plans for the overhauled shipping industry were to be submitted to the Department of Transport last week, and included proposals intended to expand the UK’s scheme by classifying oil rigs as “ships” for tax purposes.

This is not allowed under EU rules for maritime transport subsidies, and the change would be intended to attract more business.

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The Financial Times reported on the leaked information, and also claimed a £30 million Government funded scheme to train shipping workers has been mooted.

It is also intended to remedy the UK’s shipping issues, with British-registered ship tonnage dropping by a third since the 2016 referendum due to uncertainty about leaving the EU.

The proposals also argue for a “hearts and minds” campaign with the intent to persuade shipping companies to register under the UK flag.

Another proposal includes enabling floating production storage and offloading vessels and drilling rigs to be included in the new tonnage tax regime to give Britain a competitive edge on EU rules.

David Blumenthal, a tax partner with Clyde & Co who handles tonnage tax issues told FT Britain has opportunities in shipping post-Brexit.

He added: “The idea is that if we’re not constrained by EU state aid, we could have more ability to do things that would make the UK more attractive to shipping companies”.

One person close to the proposals stated the plans were “blue-sky thinking”, and a Department for Transport spokesperson refused to confirm the information, adding: “We do not comment on leaks.”

But a spokesman for the Chamber of Shipping confirmed they were exploring options on improving the UK’s status as an international shipping hub, and also added: “As we leave the EU we have the opportunity to develop our national shipping regime as we will no longer be bound by EU rules.”

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Liz Truss, international trade secretary, has recently secured the UK a free trade agreement with Singapore.

Last Thursday saw Ms Truss announced the deal covered more than £17 billion in goods and services, as well as largely replacing the existing agreement between Singapore and the EU.

In total, Ms Truss has signed 58 free trade agreements for the UK post-Brexit, including with Canada, Japan and Australia.

Yesterday the secretary announced a free trade deal with Mexico had also been signed.

Reports have also stated a trade deal between the UK and EU could be debated in the House of Commons next week.

The Telegraph reported Tory MPs have been told to prepare for the chance of a trade deal vote in Commons at the beginning of next week.

Nicholas Watt, BBC Newsnight’s political editor, also tweeted yesterday a trade agreement is close.

He said: “Big buzz in the last hour among Tory MPs that the UK is heading towards a Brexit deal with the EU. Eurosceptics being reassured they will be happy.”

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