Freeports ahoy!
The UK’s plans to create ‘freeports’, to boost post-Brexit trade and provide regional economic stimuli, is now up and running. The first hubs have opened for business.
The first of two ‘freeports’ created by the government opened for business in the United Kingdom recently. The eight sites initially selected all plan to focus on a set of industries connected with green energy production efforts, thereby boosting the country’s decarbonisation ambitions. The UK government has committed a total of approximately GBP 200 million in funding and tax incentives to the scheme.
‘Freeports’ offer port operators and other companies the advantage of deferring tax duty and import VAT on goods in said customs zones. Manufacturers based in a ‘freeport’ will thereby be able to import goods and use them to create products, and not pay tax on them if the finished articles are exported to international markets.
The European Union tends to frown on this type of arrangement, however, on the grounds that they encourage tax avoidance, and because inadequate regulation can lead to the production of fake merchandise. This has contributed to the UK scheme gaining political momentum since the country left the European Union.
Of English – and Scottish – ports
‘Teesside Freeport’, in England’s Northeast, opened in November 2021. Experts have estimated that it will create more than 18,000 new highly-skilled jobs, and generate approximately GBP 3.2 billion for the local economy over a five-year period. Teesside is close to the North Sea, and is thus considered to be ideally placed to serve the offshore wind sector.
‘Teesside Freeport’ has already secured investments worth many millions of pounds from GE Renewables, to build an offshore wind blade manufacturing plant. Experts reckon it will deliver about 1,500 supply-chain jobs. The blades will be supplied to the world’s biggest offshore wind farm, Dogger Bank, which is currently under construction. On top of this the government has also committed another GBP 20 million to create a new deep-water quay to serve the offshore wind industry.
The second facility that has commenced operations is ‘Thames Freeport’, which opened in December 2021. It covers a 34 km-wide economic corridor centred on DP World’s London Gateway terminal, and its adjacent logistics park, as well as the nearby port of Tilbury.
Its proponents see it becoming a “world-class innovation hub”, with significant investment in hydrogen technology, battery storage and electric vehicles forthcoming. The project has become mired in controversy of late, however, after mass redundancies without notice were handed out to nearly 800 British sea staff working for P & O Ferries, a subsidiary of DP World.
‘Humber Freeport’, the UK’s busiest port complex, will open next. It includes Hull, Goole, Immingham and Grimsby, which handle around 17% of UK trade. Five more ‘freeports’ will open in England this year – East Midlands airport, Felixstowe and Harwich (‘Freeport East’), Liverpool City Region, Plymouth and South Devon, and Solent.
The Scottish government is planning to create two explicitly ‘green freeports’ of its own, based on low-emission industries and capable of functioning as air or rail hubs too. A bidding process has started; the longlist includes Dundee; areas around the Firth of Forth; a set of Glasgow sites; Cairnryan; Shetland; Orkney; Aberdeen & Peterhead; and Montrose. The sites hope to start up in 2023.
