At least 30 ports and airports around the UK are considering bids for just 10 slots to become freeports — special economic zones that will benefit from lower taxes — which were presented by Brexiters as a benefit of leaving the EU.
The level of interest will come as a boost to Boris Johnson, who has hailed freeports as a key tool in the UK prime minister’s “levelling-up” agenda aimed at tackling regional inequality.
The deadline for bids in England is Friday — with winners announced by the spring — but the process is moving more slowly in Wales, Northern Ireland and Scotland.
Before becoming chancellor, Rishi Sunak presented freeports as one of the benefits of Brexit. In reality the UK had several freeports while it was within the EU and axed them in 2012 when the Conservatives were governing in coalition with the Liberal Democrats.
The Treasury is currently consulting on specific advantages that could be conferred to selected sites, which can be as large as 45km across.
As a backbench MP in 2017, Mr Sunak wrote a paper advocating freeports — a zone considered to be outside its home country for customs purposes, allowing goods or components to be brought in tariff-free, only incurring duties at the point of export.
Ministers also want to offer potential tax breaks such as lower employer National Insurance contributions, R&D tax credits, lower stamp duty and a light-touch planning system.
But there is scepticism about Mr Sunak’s claims that freeports would create “national hubs for trade” and “turbo-charge” the UK’s economic recovery. Instead industry is concerned it would instead simply shift investment from one location to another.
Moreover, a recent European Parliament report on the risks of tax evasion and money-laundering in freeports, highlighted one in Luxembourg that had become a depot to store high-value art.
Adam Marshall, head of the British Chambers of Commerce, has said his members were nervous that jobs could be “displaced”, while an internal Treasury document conceded that “zone-based policy can have a displacement effect”.
Under Mr Sunak’s plans, there will be at least seven freeports in England and one each in Scotland, Northern Ireland and Wales.
The Scottish government last month announced its own plan for special economic zones, dubbing them “green ports”. These would offer a package of tax and customs reliefs but would also have to pay the “real living wage”, commit to sustainable growth and contribute to Scotland’s net zero carbon target.
A list of 33 potential candidates (some including more than one site) has been compiled by an industry lobby group, based on a mix of public and private pronouncements. It includes 17 in England, eight in Scotland and four in each of Wales and Northern Ireland.
The geographic spread of confirmed bidders and the limit on the number of freeports suggests there will be some intense local battles. On the north-east coast, for example, Tyneside, Teesport and Humberside have applied.
At least two UK airports — East Midlands, and Bournemouth International, which has teamed up with the nearby port of Poole — have also said they will bid.
London Gateway, the container port on the Thames, has submitted a joint application with Tilbury — a commodities port — and Ford Dagenham, where the carmaker has an engine plant.
The Welsh government has not yet opened a bidding process because it is concerned the low-tax zones will simply attract businesses that would have located elsewhere and result in lost revenue.
A Welsh government spokesman said: “We remain open to the prospect but continue to seek reassurance from the UK government about the associated risks, and that they will be treated as favourably as freeports in England.”
Northern Ireland has also not yet opened its bidding process.
— to www.ft.com