Concerns on freeports innovation remain despite nationwide support

Sunrise over Felixstowe Container Port as two tugs shepherd a container ship away from the harbour wall

There remains concern over the impact of freeports in building innovation and encouraging investment into port communities, experts have told PTI. 

Around 35 consortia, comprised of local councils, Local Enterprise Partnerships (LEPs), and businesses across the UK applied to the scheme for their local area prior to the freeport deadline on 8 February.  

Nationally, there is considerable support from seaside ports to become a freeport. Each submission highlighted the transformative potential accompanying tax reliefs and reduction of red tape would mean for driving productivity, innovation, and investment in the area. 

The Solent claims freeport status could attract more than £2 billion ($2.75 billion) into the region – as well as connecting with the nearby Centre for Enzyme Innovation to develop green solutions for the breakdown of plastics in Portsmouth. 

The Thames Freeport consortium’s submission pledged freeport status will look to foster innovation by creating a ‘digital economic zone’ with the Dagenham engine facility from Ford, utilising the river for intra-port movements. In East Anglia, the Port of Felixstowe and Harwich International Port will develop a 68-acre logistics park if freeport status is granted. 

Innovation uncertainty 

The clear benefits behind freeport status will explain why there were a swathe of submissions from port communities around the UK. However, some question the reality on the investment and fostering of innovation that a freeport status could bring. 

David Swinney, Director of Policy and Research at the Centre for Cities, authored a 2020 post outlining how freeport status in Nissan’s Sunderland plant “won’t spur innovation” in the area as the highly-skilled production – such as engineering and design – is facilitated in Cranfield and Paddington, London. 

Speaking to PTI, Swinney argued the government must invest directly in struggling port communities in order to foster innovation and high-skilled production that freeport status promises to bring. 

“We had freeports until 2012 in Britain, and they didn’t do a great deal until they were scrapped,” he explained.  

“If you’re promoting innovation in particular, you’re going to require a lot of high-skilled workers. The freeports idea doesn’t do anything about that, because it’s not tackling the reasons why these businesses are not locating to port areas.” 

How ports come into play 

Anton Moiseienko, Research Fellow at the Royal United Services Institute’s (RUSI) Centre for Financial Crime and Uncertainty, said port operators “have a role to play” in developing the right infrastructure in building innovation such as the likes of the Thames Freeport and Solent. 

“I think the three key components of a successful freeport are business incentives, location and infrastructure,” Anton told PTI.  

“We are seeing that business incentives for the operators are there, or so it seems. The other two factors will likely be decisive, that is whether the location and infrastructure of new freeports will be sufficiently tempting to companies from across the world. Only time will tell.” 

Government target areas 

With just 10 freeport status spots up for grabs, the majority of submissions will go unfulfilled. 

Moiseienko said he imagines the Treasury “will be pleased” with the number of submissions, and that consortiums are keying in on the attractiveness of combining tax, customs, and planning incentives for port communities. 

Considering which port locations the government could target in granting freeport status Swinney suggested there may be a political incentive. 

“The government have said in the past that they will use freeports to ‘level up’ the economy – so you would expect it wouldn’t be in the South-East,” he said. 

“In the North of England, that comes down to where you have seen a Conservative MP become elected and there’s an election coming up in a couple of years’ time. Where they want to be able to point something that was done – or where there is a Conservative Metro mayor in place and want something to hold onto.” 

The fascinating discussion on the viability of freeports will continue until the government is expected to announce which areas have been successful in the Spring.  

Chancellor Rishi Sunak recently described freeports as an opportunity to “turbo-charge post-Brexit trade”.  

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