Tim Morris: Freeports will be transformational – with the right approach

Tim Morris is the Chief Executive of the UK Major Ports Group.

Increasing trade and prosperity in the UK post-Brexit, or, as coined by the Prime Minister “unleashing Britain’s potential,” featured heavily in the Conservative Manifesto. Boris Johnson reiterated this commitment in his inaugural address to the country on 13th December, stating that the Government would ‘prepare for an economic package to boost British business and to lengthen [the UK’s] lead as the number one destination for overseas investment’.

A key part of this package are freeports, something the Prime Minister has expressed his personal support for in the past. With the consultation on freeports now live and the Budget soon to be announced, the Government is presented with ample opportunity to demonstrate the seriousness of its intent.

Freeports undoubtedly offer the promise, in the right circumstances, to boost post-Brexit Britain’s capability to trade with the world and to produce thousands of jobs in some of the UK’s most deprived areas, a number of which include historical Labour seats that Conservatives won in 2019. However, ensuring that the potential of the proposal is met will require decisive and carefully considered policy.

Freeports are an area, or linked area, that are subject to special rules to boost economic development, including differentiated duty treatment. These duty changes normally involve businesses avoiding onerous tariffs on imports and exports, and different models can be applied to different regions to boost specific industries. A freeport of course does not have to be a seaport. However, as 95 per cent of the UK’s trade with the world is by sea, the focus of this initiative to “boost British business” and “overseas investment” is clear.

With the UK leaving the EU, freeports have come back into focus. The UK has of course had the ability to establish freeports as an EU member- the UK had a total of seven freeports between 1984 and 2012 – and could indeed tweak duty rules today. But the opportunity now before us is to take a step change approach that this country hasn’t done before, really harnessing the potential of a full package of measures including, but certainly not limited to, duty treatment and bottom-up support. We don’t pretend that freeports are a silver bullet, and they must be part of a wider strategy to ‘level-up’ often hard-hit coastal communities all around the UK, but experience from elsewhere shows they can be transformational in the right circumstances.

Tariff and duty changes alone are not enough for long-term, sustainable success. Another vital area where Government can play a decisive role is in establishing planning rules which set out upfront the criteria for development, so locations can capture investment opportunities quickly.

Streamlined processes for approving the movement of goods for import and export will help all businesses, particularly SMEs, trade with the world more. High capacity road, rail and energy links must be in place upfront, so businesses are ready to trade straight away.

Incentives both in terms of funding and accounting treatments such as capital allowances are common across all nations battling to secure inward investment.

Finally, a strong local commitment must be central to making freeports work long-term and deliver benefits to surrounding communities, including through aligning local skills providers with the skill needs of the ‘Zone’.

We strongly believe that the adoption of these measures must be a core part of the new Government’s work. They are most powerfully combined within a freeport model, but can in fact individually bring benefits to the UK’s capacity to trade and to boost coastal communities.

Many port operators, together with local stakeholders, are interested in submitting freeports proposals. For industry and potential investors, it is crucial that the process for becoming a freeport is fair, transparent and evidence-based. Through such a process, a meaningful raft of policy and regulatory levers, as well as strong local support, we are confident that freeports and ports more generally can grow their vital contribution to the UK and all our lives.

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