Freeport hype

This week the government published its response to a consultation on creating freeports in the UK. Unsurprisingly given the hubris surrounding the idea, the conclusion is to pursue it. Some of you will already know that this is a subject close to my heart, given that I was Freeport Manager for the Port of Tilbury in 1990s, in the last incarnation of the freeports concept in the UK.

I am struck by the official news announcement: https://www.gov.uk/government/news/government-outlines-new-plans-for-freeports-to-turbo-charge-post-brexit-trade, in particular the order of the listing of the three key attractions envisaged. Firstly comes “streamlined planning processes” and secondly a “package of tax reliefs”. Last to be mentioned is “simplified customs procedures and duty suspensions on goods”, i.e. what freeports in their pure definition are actually all about.

This confirms what I have suspected all along about this process – that “freeport” is just a catchy name for “enterprise zone” and this idea can only be a success if it comes with significant enterprise zone benefits. The freeport areas established in UK ports in the 1980s and 1990s eventually withered and died because freedom from customs duties was not enough on its own. More or less the same benefits can already be gained by importers and exporters through existing customs procedures.

UK port operators are enthusiastic about the current government plans and who can blame them? If you have the opportunity for your port area to become a preferred enterprise zone with favourable planning rules and tax benefits, why wouldn’t you?

What worries me is that the danger that most of the “new” business will simply be existing jobs and economic activity relocating from now disadvantaged locations in the rest of the UK. Tellingly two thirds of respondents to the consultation stated that they felt that there was a significant risk of such displacement taking place. The government has said that when assessing bids from UK ports, it will consider any potential displacement impacts and that “bidders will be invited to provide evidence and potential displacement mitigations as part of their bids”. One to watch….