Freeports are not a new concept. In fact they are already enshrined in Customs legislation and have been for some time in terms of the free movement of goods in and out of a designated geographically area within the legal borders of a jurisdiction.
In the 1980s, Margaret Thatcher’s Government created a number of Freeports in the UK and added a number of tax breaks in an attempt to stimulate regional economic activity and growth. However, these failed to live up to expectations and in 2012 the Conservative Government of the time decided not to renew their licences.
So now they are back and in the March 2021 budget, the Chancellor announced the sites that will form part of the next round of Freeports. At present, the detailed planning is being undertaken by the various local government and regional business growth hubs in order to hopefully make them a success this time.
As you would expect, there are arguments both for and against Freeports at a regional level. The positive being the attraction of inward investment, specialist skills and jobs into an area that then permeates through the regional economy and education system. However, those that are against them argue that a Freeport focuses investment on a specific area which only benefits those that happen to be able to access that area. They question the impact on areas in the region that are not in a Freeport and whether the Freeport will achieve the levelling up it is supposed to?
We must also be conscious of the political debate around Freeports. Both the main opposition parties and the nationalist parties (SNP/Plaid) are against Freeports for the same reasons; the narrow focus of investment and the failure to achieve levelling up. The question is what happen to Freeports after change of Government? We will probably not know the answer to until that eventuality happens. Will the uncertainty undermine the impact of the Freeports?
Key to success for Freeports?
Freeports are happening. The key question is how can they be made a success? If they work, they can be a model for what could happen in other areas across the country even if they may need to be near a major transport hub in order to stay true to their original concept.
Although each Freeport will have its unique circumstances, there are some key requirements that each area will need to focus on in order to make Freeports a success. There is a clear need to ensure that all of a region’s stakeholders not only communicate but also collaborate in the delivery of their Freeport.
It will be absolutely critical for the whole region to be joined up and feed into the Freeport design and delivery. This will have to include local planning around infrastructure for roads, rail, air and sea as well as engaging the whole community that feeds into making the whole project a success.
For example, making sure that the local education and university system delivers job seekers with the right skills for the industries that will be encouraged to operate in the Freeport. Once the Freeports are created, the knock on impacts will need to be considered. Will there be suitable and sufficient housing for people who are attracted to the Freeport which in itself will create a prosperous local job market.
Our recent BDO Midlands survey has already indicated that 62% of businesses have an appetite to be a part of a Freeport and invest in the future of Freeports. You would expect this to be similar across the country in those regions that have been chosen to host one of the new Freeports.
While a Freeport should bring success and prosperity to a local area, it should also be remembered that businesses operate for the benefit of shareholders. In the longer term if Freeports do not deliver the benefits that were promised or have them taken away on a change of Government, businesses will move onto the next opportunity. The overall issue that needs to be built into the development of Freeports from a regional perspective is the long-term sustainability of the concept. This will be key to delivering on the Governments overall wish to deliver a levelled up economy.
Visit our Freeports hub for more information