Boris Johnson plots overhaul of shipping regulations to turn London into the Singapore of the West to boost economy by almost £4billion and create thousands of jobs after Brexit
- Plans being drawn up to reform ‘tonnage tax’ to encourage more UK registry
- Claim it could generate £3.75billion and generate 27,500 jobs
- Reform would be barred under EU subsidy laws which cease to apply after Brexit
Boris Johnson has made ambitious plans to turn London into a shipping hub to rival Singapore after Brexit.
Proposals have been drawn up to revamp UK shipping tax laws to allow more vessels – including oil rigs – to be classified as ships in a move ministers believe will raise up to £3.75billion over three years.
They also suggest the change to the way ‘tonnage tax’ is calculated could create 2,500 jobs directly and 25,000 in related sectors.
The reform of rules brought in in 2000 by then deputy prime minister Johnson Prescott would also see the Government underwrite the cost of training cadets.
This is currently paid for by firms and the cost is seen as a bar to their registering in the UK in greater numbers.
Such a move to pay for it would be regarded as a subsidy and would be barred under EU rules that cease to apply to the UK at the end of the year.
London was once the world’s pre-eminent trade port but after the Second World War the advent of containerisation and creation of cargo ships too large for the Thames to handle, it became a shadow of its former self.
Boris Johnson has made ambitious plans to turn London into a shipping hub to rival Singapore (pictured) after Brexit.
Proposals have been drawn up to revamp UK shipping tax laws to allow more vessels – including oil rigs – to be classified as ships in a move ministers believe will raise up to £3.75billion over three years
According to the Financial Times, Government documents highlight Singapore as the benchmark for their aspirations.
David Blumenthal, a tax partner at Clyde & Co, told the paper: ‘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,’ he said.
All commercial ships have to be registered, or ‘flagged’, with a particular country partly to comply with safety and environmental regulations.
Shipping companies in many so-called ‘flag states’ pay corporation tax based on vessel tonnage rather than profit.
Several large maritime firms switched their flag from the UK to EU states after the 2016 referendum, including CMA CGM, the world’s fourth biggest container shipping line.
As of May 31 2019, there 1,229 vessels registered with the British flag, representing 10.5 million GT (gross tonnage). This was down from 1,315 vessels or 16.5 million GT at the end of May 2018, official data showed.
In contrast, at the same time, Singapore’s registry contained 4,465 vessels with a combined 95.4 million GT, figures which have remained relatively stable despite the coronavirus economic crisis.
Separate data from valuation company VesselsValue showed the British flag was ranked 22nd in the world last year, with Panama at number 1 with over 203 million GT.