Freeports ‘will need to justify special status’


The Government's plans for up to 10 'Freeports' in the UK have been met with scepticism, despite claims that they would ‘unlock a new era of jobs and prosperity’.

A consultation document suggests the new zones could be open for business in 2021, with the locations announced by the end of this year. Once the 10-week consultation is completed, the Government will invite sea, air and rail ports to bid for Freeport status on a competitive basis.

Cranes at Liverpool Docks

Officials said freeports, which offer tax breaks to exporters, ‘will also offer an exciting opportunity for cutting-edge customs, transport and green technologies to be trialled in controlled environments, before being adopted more widely in relevant sectors of the economy’.

Minister for the Northern Powerhouse, Jake Berry, said: ‘People across the Northern Powerhouse can look forward to a new era of jobs and prosperity unlocked by this new generation of Freeports.

‘They will unleash the potential of communities both by boosting trade with our friends across the globe and transforming surrounding areas into hotbeds of innovation where businesses will grow and create new well-paid jobs.’

Henri Murison, director of the Northern Powerhouse Partnership said: ‘We have a number of international gateways across the Northern Powerhouse, from the Humber to the Mersey, the River Tees to Barrow, that could benefit from incentivised status to attract industry.'

But he added: 'The detail of these proposals will need to guarantee significant additional growth, in particular in trade, to justify their designation.’

Labour’s shadow chancellor, John McDonnell, described the plan as ‘the revival of a failed Thatcherite plan from the 1980s, designed to cut away at regulation and our tax base’ adding: ‘There is very little solid evidence that so-called free ports create jobs or boost economic growth.’

Jason Millett, CEO of consultancy at Mace, said its research suggested the country could achieve the most significant economic boost by ‘supercharging’ Freeports and combining them with enterprise zones.

Officials said the 2020 Freeports model could include:

  • Goods brought into a Freeport do not attract tariffs until they leave the Freeport and enter the domestic market
  • No duty is payable if they are re-exported
  • When raw materials are imported and processed into a final good, duties are only paid on the final good
  • Freeports could be located inland as well as adjacent to ports. This can reduce relocation or investment costs for existing manufacturing sites near ports
  • A full customs declaration would not be required to move goods into a Freeport. This saves businesses time and makes it easier to import goods.
  • Planning reforms to help seaports develop within their boundaries and empower local councils to greenlight much-needed local construction projects
  • A regeneration agenda to level up the local areas around Freeports
  • Innovative environments to trial new technologies
  • Challenge-based initiatives to build collaborative partnerships between ports, businesses and innovators.

In addition, the Government is considering tax measures that aim to:

  • Increase investment in infrastructure, construction and machinery in Freeports to raise productivity.
  • Incentivise research to stimulate innovation in Freeports.
  • Cut costs associated with processing goods through a port.
  • Reduce the costs of hiring workers working in Freeport sites.

Officials claimed the UK’s ‘high standards with respect to security, safety, workers’ rights, and the environment’ will not be compromised.

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