in the back
Pirates ahoy on the Thames!
Freeports , Issue 1577
thames-freeport.jpg
PORT IN A STORM? DP World's London Gateway, part of the giant Thames Freeport
RISHI SUNAK may have left the Treasury, but development of his beloved freeports is unlikely to miss a beat – and plans for policing those freeports are akin to putting Dracula in charge of a blood bank.

The eight freeports Sunak announced last year present perhaps the greatest fiscal threat of any tax policy, so it's alarming the job of policing the largest of them, Thames Freeport, has been handed to a company the government itself has described as, er, a "pirate".

The boundaries of tax-free sites need to be rigorously monitored, while illicit activity such as smuggling has to be detected and deterred. A couple of years ago the EU clamped down on its own freeports after finding a "high incidence of corruption, tax evasion [and] criminal activity".

When ministers formally approve a freeport, they also designate a "responsible authority". Under the outsourcing of regulation, however, this is not a public authority but a private company. In Thames's case it is none other than P&O Ferrymasters Ltd – the logistics arm of the P&O Ferries group that in March sacked 800 workers without warning, shortly after which its boss Peter Hebblethwaite admitted to MPs he had intentionally broken the law by failing to consult the staff. This prompted transport secretary Grant Shapps, who had said P&O Ferries was "acting like pirates of the high sea", to call Hebblethwaite's parliamentary evidence "brazen, breathtaking".

Marking its own homework
Just a week after his appearance in Westminster, Hebblethwaite also became a director of P&O Ferrymasters Ltd. The company's role as "responsible authority" comes about through the ownership of the largest site in the Thames Freeport, the Thames Gateway port, by Dubai-based DP World (which also operates a notorious haven for counterfeit trade in the Jebel Ali Freeport in the Gulf). This latter company is also parent of P&O Ferries and P&O Ferrymasters and will thus be marking its own homework.

Among 15 separate responsibilities devolved to P&O Ferrymasters are to "take reasonable steps" to ensure that "no unauthorised activity is carried out", that "no goods leave the free zone" when they shouldn't, and to "notify HMRC of any customs rules breaches". It will be expected to apply these standards to its own huge distribution centre within the freeport, occupiers of which include the London City Bond tax-free booze warehousing facility. It was customs fraud at this company a couple of decades ago – in which duty-free drink was illegally diverted into the UK market (Eyes passim) – and the mishandling of its prosecution that led to the tightening of Customs and Excise's evasion work.

Global shipping upheaval
At the other freeport to have named its responsible authority, Teesside, the job goes to a company little-known outside the maritime world: Middlesbrough-based Casper Shipping Ltd, which makes the bulk of its money from brokering and chartering freight vessels. Post-lockdown and on the back of global shipping upheaval, in 2021 it trebled its turnover on previous years to £30m. As its boss and owner Michael Shakesheff reported in April: "The group is heavily involved with advising and the consultations around the freeports currently being developed in the United Kingdom."

In 2019, as the freeport idea was shaping up in Whitehall and Tees Valley mayor Ben Houchen eyed the opportunities, Casper smartly set up a subsidiary called Casper Customs Ltd. It was dormant when it last filed accounts and there is no sign of the Casper group having any experience in regulatory work.


Stripped Tees

THREE weeks after the Eye pointed out the six-month delay by South Tees Development Corporation – prime mover in the Teesside freeport – in filing key accounts for companies managing the land, the authority finally produced some numbers. They give an intriguing insight into the deal agreed with local businessmen to take control of a large swathe of the site.

By March last year South Tees Developments Ltd, wholly owned and funded by the corporation, had bought land costing £24.5m from Tata Steel, the Indian company that left the area in 2015. It required decontamination, existing structures to be demolished and preparation for redevelopment to enable use by businesses coming into the freeport.

The company has already, however, written down the value of the land by nearly £5m – hardly a vote of confidence in the plans. But the devaluation could prove useful to local property developers Martin Corney, Chris Musgrave and Ian Waller, who also happen to be supporters of Tees Valley mayor and development corporation chairman Ben Houchen.

A note in South Tees Developments Ltd's accounts reveals that a company called Teesworks Ltd has an option to buy the land for a price "determined by an independent valuer".

Teesworks Ltd was a 50:50 joint venture established in 2020 between the developers and the development corporation before, at the end of last year, the men were handed a further 40 percent stake, taking their control to 90 percent in highly opaque circumstances (see Eye 1570).

Its task is to develop the whole 4,500 acres of the South Tees site with other arrangements in place to acquire yet more land. Thus does a large swathe of Britain's industrial heritage and the future of the government's flagship freeport pass into the hands of well-connected property developers.

More top stories in the latest issue:

FEEL THE BURN
Pension fund Aviva's wood-fuelled power station at Barry Docks in south Wales is still getting red-carpet treatment from the regulator and authorities.

FISHY FAULT
The All England Lawn Tennis Club aims to make a "positive and sustainable impact" – but the salmon it serves comes from a notorious fish farmer.

LOSING HEARTS
Defibrillators installed in community buildings and supermarkets are being rendered useless thanks to a shortage of items such as new pads and batteries.

ROCKY START
A new £10m school for children with special needs in Dorset had to close less than two weeks after opening, after incidents described as "unsafe".

BEST IN SHOWDOWN
A court has ruled that five companies set up to manage Alfie Best's park home sites in West Sussex were straw companies – ie purporting to be run by others.

BEYOND REDEMPTION
The government hoped its Help to Buy loans would enable it to share in any profit made by householders – but the post-Grenfell reality is very different.

CHEQUE UP
After a U-turn from the Post Office, "full and fair redress" will be made to those who applied for "historical shortfall" compensation after the scheme closed.

SHIP OF FOOLS
Imagine Cruising promised passengers an "80s Extravaganza" cruise aboard Virgin Voyages' Valiant Lady, but it turned out to be far from plain sailing.

CRISIS POINT
An inquest has heard how a young woman who was experiencing suicidal thoughts was sent to a women's crisis house with untrained staff.

REGULATION ISSUE
Seven years after the Eye exposed the glaring and dangerous loophole in the regulation of psychologists, it may finally be closed.

To read all these stories in full, please buy issue 1577 of Private Eye - you can subscribe here and have the magazine delivered to your home every fortnight.

Next issue on sale: 24th August 2022
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