The first of eight freeports announced for England by the UK Government opened in Teesside last week, promising to create more than 18,000 jobs and boost the local economy by £3.2bn for over the next five years. Meanwhile the political arm wrestle between Westminster and Cardiff Bay continues to thwart plans for creating a freeport in Wales.
A freeport is a zone defined as being outside a country’s customs area which allows goods to be imported without tariffs, excise duties and other taxes being paid, before those goods are shipped out of the ‘free’ zone.Confirmed In Rishi Sunak’s 2021 March budget, the other seven sites in England destined for freeport status are East Midlands Airport, Felixstowe and Harwich, Humber region, Liverpool City Region, Plymouth, Solent, and the Thames area.
The Chancellor said creation of freeports will “unlock billions of pounds of private sector investment – generating trade and jobs up and down the country.”
Subject to business case appraisal, England’s freeports can access a share of £200m of seed capital funding, and in the March Budget statement the UK Government said it remained committed to establishing at least one freeport in each of Scotland, Wales and Northern Ireland.
But achieving that goal seems as far off as ever, with a war of words continuing between the devolved governments and Westminster.
Speaking exclusively to Business News Wales a Welsh Government spokesperson said:
“It is deeply disappointing that the UK Government have launched freeports in England while failing to bring forward firm proposals for Wales.
“We have been clear that any Welsh freeport must receive the same financial support as the English sites, and that joint decision making is in place to ensure smooth delivery across both levels of government.“
The Welsh Government statement added that any freeport in Wales would need “to be delivered in line with our fair work and climate policies to protect people and our environment.
“The UK government is fully aware it is not possible for one government to deliver this in isolation, and it is unfair to leave Welsh businesses in the dark indefinitely.”
“No formal offer has been presented to the Welsh Government and we continue to urge the UK Government to resolve this as a matter of urgency.”
Meanwhile a UK Government spokesperson said that the ball was in Wales’ court:
“We have already presented an offer to the Welsh Government to establish freeports in Wales, and hope that they will work with us to bring the benefits of freeports to Wales as soon as possible.”
Briefing Business News Wales the spokesperson added that “locations will be chosen by a fair, open and transparent allocation.”
Some trade experts have expressed scepticism about the benefits of freeports. Between the 1980s and 2012, the UK Government assigned freeport status to six areas, one of which was Cardiff. Their licences were not renewed by the Cameron government after concerns the zones were being used for tax avoidance.
Still a matter of debate as to their benefits, the Office for Budget Responsibility (OBR) said recently that claims made for freeports in terms of increasing economic activity may be overstated.
“We have assumed that the main effect of the freeports will be to alter the location rather than the volume of economic activity,” an OBR report concluded last month.
In 2020, in written evidence to the House of Commons Welsh Affairs Select Committee, Associated British Ports (ABP) summarised the factors that would determine the success of a site as a freeport.
These included: the site’s proximity to large population centres, the availability of industrially-zoned land, hinterland connectivity, and the potential impact of the freeport in reducing unemployment and addressing long-term structural issues in the local economy.
The Committee noted that the UK Government “must not allow the complexities created by the devolution settlement to disadvantage the bids submitted by Welsh ports.
“For its part, the Welsh Government should recognise the potential opportunities provided by the freeports concept and work constructively with the Welsh ports to deliver outstanding bids.”
Speaking to Business News Wales in recent days a spokesperson for ABP said :
“ABP’s ports Newport, Cardiff, Barry, Port Talbot and Swansea are important hubs for trade, innovation and growth.
“The introduction of freeports in Wales will further enhance the ability of these ports to attract inward investment, accelerate decarbonisation and enable the growth of new manufacturing and green energy industries, including floating offshore wind in the Celtic Sea – and importantly create high-quality, long-term jobs.
“Timing is of vital importance in order to catch the economic rebound post-Covid, and we look forward to working with the UK and Welsh governments, and local partners, to turn this ambition into reality.”
Meanwhile, Andy Jones, CEO of the Port of Milford Haven, said that Wales was “on the cusp of an energy revolution” and that time was of the essence in realising its potential in the face of overseas competition.
“The global businesses along the Haven are committed to the evolution of their assets to create a clean energy hub based on a thriving hydrogen economy, floating offshore wind, and marine energy generation, sustainable fuels and CO2 shipping,” said Mr Jones.
“This important industrial cluster needs a supportive policy, regulatory and fiscal framework to aid this transformation.
“A Haven Freeport, or similar policy intervention, would produce a great economic stimulus for Wales, but we must ensure any intervention continues to support pan-industry collaboration, if Wales is to capture the full opportunity and avoid loss to international competition.”
In March, Newport City Council confirmed it had appointed global marine economy consultants AECOM (who assisted the successful Teesside bid) to assist the council in preparing a bid to the UK Government for Newport to gain freeport status .
At the heart of the impasse in Wales is devolution. Ports policy (including development consents) is largely (with the exception of reserved trust ports) devolved to the Welsh Government. Responsibility for associated infrastructure such as road and rail planning and connectivity is shared between the UK and Welsh Government. Meanwhile industry in Wales waits for a resolution to what remains a political test of wills.