A good port in a storm?

By Ann McGauran | 07 December 2020

Back in 2016, little-known Conservative MP Rishi Sunak wrote a paper called The Free Ports Opportunity for the Centre for Policy Studies. In it he argued their creation would promote trade and provide a fast response to Brexit.

Now with a rather higher profile, Mr Sunak revisited one of his favoured projects when he delivered last month’s Spending Review. In his chancellor’s speech he said ‘the Union will benefit from plans to create up to 10 freeports as hubs for global trade and investment’, with plans for at least one in each of England, Scotland, Wales and Northern Ireland.

The aim, he said, is to ‘bring jobs, investment and prosperity to some of the most deprived communities’. The new customs model will mean a firm can import goods into a freeport without paying tariffs, turn them into a final good and then either pay a tariff on goods sold into the domestic market, or export the final good without paying UK tariffs.

The bidding process in England remains open until 5 February, with sea, air and rail ports encouraged to apply, working alongside their local leaders, businesses and others. The Spending Review revealed that, ‘up to £10m of resource funding, and the first tranche of a total of £175m of capital funding in England – partly funding from the Towns Fund’ – will be used to establish freeports.

Last month Tees Valley’s Conservative Mayor Ben Houchen announced that the UK’s largest industrial zone, Teesworks, will bid for freeport status. With the UK set to leave the single market and customs union in just three weeks, could freeports be the right policy to drive benefits for local areas and level up the economy?

Thurrock BC is working with DP World and Forth Ports to push forward a bid for a Thames Freeport with London Gateway, the Port of Tilbury and Ford’s Dagenham car plant at its heart. According to spokesperson for Port of Tilbury John Stevenson, initial modelling suggests a freeport would generate more than 30,000 new jobs.

He told The MJ the Thurrock-based combined port and logistics cluster ‘has the scale to grow the associated aerospace, automotive and many complex manufacturing and processing businesses along the Thames’.

Cllr Mark Coxshall is cabinet member for regeneration and strategic planning at Thurrock BC. He told The MJ that with Tilbury having been a freeport as recently as 2012, ‘freeports are in Thurrock’s DNA’.

He added: ‘This [bid] is going to be over a wider area – making sure this grows bigger across the important Thames Estuary of East London, and it will be a fantastic opportunity. The Port of Tilbury is one of the most deprived towns [in England], and looking post-Brexit that’s why it has got £25m from the Towns Fund.

‘The council has got a policy of people being able to “Live Work and Play” in the borough, and this is an integral part of delivering our work strategy. These are good quality highly-paid jobs.’

Luke Raikes is research director for left wing think-tank the Fabian Society. He told The MJ that ‘given it’s all that’s on the table at the moment for a lot of places, it’s perfectly understandable that it’s what they’ll be putting in [bids] for’.

But he said the reality is that freeport status would not make much of a difference to the regeneration of local areas – and ‘what’s really needed is far more investment in infrastructure and training – the classical things which everyone knows will make a local economy grow, but those things are not available.

‘So it’s perfectly understandable that these councils and these ports are coming forward and saying, “look, yes, OK, we’ll have one of these”. But I’d say it wouldn’t be on their wish list if there was anything else on the table.’

He added: ‘Really the impact of these is negligible and there’s a lot of displacement, and the value you get from this not being subject to regulations and taxes is relatively minor.’

Mr Raikes concluded: ‘It is a bit of a red herring to try to conduct what effectively is an ideological experiment with tax and regulation breaks which we know from international examples don’t really work. From international evidence it’s the accompanying infrastructure that makes the difference, not the regulatory and tax elements of the freeports.’

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