Free ports in the United Kingdom

Locations of proposed freeports

Free ports in the United Kingdom are a series of government assigned special economic zones where customs rules such as taxes do not apply until goods leave the specified zone. The theoretical purpose of such free ports is to encourage economic activity in the surrounding area and increase manufacturing. Critics of such schemes, including the parliamentary opposition, see them as possible tax havens and open to money laundering.

The first free ports in the United Kingdom opened in the 1980s under Margaret Thatcher, as an attempt to combat de-industrialisation and a declining economy. Several free ports operated throughout the United Kingdom, however by 2012 the Conservative-led government decided not to renew their licences.

As part of the 2021 United Kingdom budget, Chancellor of the Exchequer Rishi Sunak announced that eight new free ports would be created.[1] They are East Midlands Airport, Felixstowe and Harwich, Humber region, Liverpool City Region, Plymouth, Solent, Thames and Teesside.[1]

## History[edit]

In their 1983 manifesto, The Challenge of Our Times, the Conservative government outlined its plans to establish 'experimental' free ports as a part of its regional policies to modernise the British economy following the early 1980s recession.[2] After winning a second term at the general election Margaret Thatcher's government assigned free port status to six areas; namely Belfast, Birmingham, Cardiff, Liverpool, Glasgow Prestwick Airport and Southampton. These free ports experienced limited success during their lifetime and by 2012 Prime Minister David Cameron decided not to renew the free port licences. One Teesside MP blamed the failed experiment on "an uncharacteristic lack of ambition by the Thatcher Government" and "the regulatory constraints placed on them by the EU".[3]

In 2016, the then backbench MP—and later Chancellor of the Exchequer—Rishi Sunak published a white paper for the Centre for Policy Studies outlining his ideas for post-Brexit free ports similar to those in the United States. The paper titled The Free Ports Opportunity suggested that creation of such ports could create 86,000 jobs and help fuel the Northern Powerhouse by bringing increased trade to deprived areas.[4] After the Conservative Party's victory in the 2019 general election, plans were announced for ten free ports to be set up by 2021 with regions bidding for free status.[5] Up to 40 bids for free port status were received during the process.[6]

During the 2021 United Kingdom budget, Chancellor of the Exchequer, Rishi Sunak announced that eight new free ports would be created.[1]

Location  | Ports(s)[7]

|

Thames  | London Gateway, Port of Tilbury, Ford Dagenham
Freeport East  | Port of Felixstowe, Harwich International Port
Liverpool  | Liverpool Waters, Wirral Waters
Humber  | Port of Immingham, Port of Hull, Port of Grimsby, Goole
Teesside  | Teesport, Hartlepool, Teesside Airport
Solent  | Port of Southampton, Southampton Airport, Portsmouth International Port
East Midlands  | East Midlands Airport
Plymouth  | Devonport

Other countries in the United Kingdom have also floated ideas for freeports. The Scottish government announced plans for so called sustainable "green ports",[8] the Welsh government said it would continue providing it received the same level of funding as England[9] and the Northern Ireland Executive said it was working with the HM Treasury to implement its own version.

## Criticism[edit]

Proposal for free ports in the United Kingdom have been heavily criticised by opposition parties, trade unions, think tanks and various economists. Reasons for this include the possibility for use as tax havens, smuggling and a way to erode worker's rights.

Despite claims of a cross party consensus, Labour Party members showed opposition to the idea with a speaker at a Labour conference describing them as "job-destroying".[10] Further to this, Labour party leader Keir Starmer called it "giving up" and "blind faith".[11] Former Shadow Chancellor of the Exchequer John McDonnell suggested it to be '"a revival of a failed Thatcherite plan from the 1980s, designed to cut away at regulation and our tax base."

At a Liberal Democrat conference in 2019, members passed a motion for the abolition of free ports due to the increased risk of money-laundering and tax evasion.[12] Similarly the then Home Affairs spokesperson—and later leader— Sir Ed Davey suggested the UK could become the world capital of money laundering.

In Scotland, the Scottish National Party (SNP) was sceptical, with trade minister Ivan McKee calling them a "shiny squirrel" to distract from the consequences of Brexit.[8] adding "the reputation of freeports across the world is mixed, with concerns about deregulation and risks of criminality, tax evasion and reductions in workers’ rights".[8] First Minister Nicola Sturgeon also raised concern over them being "low-cost, low-wage, low-value opportunities".[8] Despite these remarks, in 2021 the SNP announced its own version of free ports, called 'green ports', which they say will adopt "best practice which helps deliver our net-zero emissions and fair work principles, alongside supporting regeneration and innovation ambitions".[8]

## References[edit]

1. ^ a b c "Freeports: What are they and where will they be?". BBC News. 3 March 2021. Retrieved 3 March 2021.
2. ^ "Tha Challenge of Our Times: Conservative Party General Election Manifesto 1983". Margaret Thatcher Foundation. Conservative Party. Retrieved 7 March 2021.
3. ^ Simon Clarke, MP for Middlesbrough South and East Cleveland (11 October 2018). "Freeports". Parliamentary Debates (Hansard). Vol. 647\. Parliament of the United Kingdom: House of Commons. col. 168WH–172WH. "All those [1980s] freeports, however, failed to achieve the success that we have witnessed in others around the world, because they did not offer anything like the advantages that could be acquired in many other freeports outside Europe. That was partly due to an uncharacteristic lack of ambition by the Thatcher Government, but mostly due to the regulatory constraints placed on them by the EU."
4. ^ Sunak, Rishi (2016). The Free Ports Opportunity (PDF). London: Centre for Policy Studies. ISBN 978-1-910627-40-2.
5. ^ Goodman, David (10 February 2020). "U.K. Begins Search for Free Ports as Spending Pledges Mount". MSN. Bloomberg News.
6. ^ Peters, Tom (15 February 2021). "Local Labour leaders should beware the false promise of free ports". Labour List. Retrieved 7 March 2021.
7. ^ "U.K. Names Eight Freeports in Bid to Boost Post-Brexit Trade". supplychainbrain.com. Keller International Publishing. Bloomberg News. 3 March 2021. Retrieved 7 March 2021.
8. ^ a b c d e Grant, Alistair (21 January 2021). "SNP accused of 'humiliating climbdown' over UK freeport plans". The Herald. Glasgow: Newsquest. ISSN 0965-9439. Retrieved 7 March 2021.
9. ^ Wells, Ione (5 March 2021). "Risk freeports could drive trade away from Wales, Welsh ministers claim". Wales: Politics. BBC News. Retrieved 8 March 2021.
10. ^ "Labour Conference Sees Free Port Opposition". portstrategy.com. 4 October 2018. Retrieved 7 March 2021.`{{cite web}}`: CS1 maint: url-status (link)
11. ^ "Keir Starmer responds to the Budget". Labour Party. 3 March 2021. Retrieved 8 March 2021.`{{cite web}}`: CS1 maint: url-status (link)
12. ^ O'Donoghue, Daniel (16 September 2019). "Lib Dems accused of 'economic vandalism' after conference attack on free ports". The Press and Journal. Aberdeen: DC Thomson. ISSN 2632-1165. Retrieved 7 March 2021.