At his Spring Budget speech, Chancellor Rishi Sunak has unveiled his plan to create jobs and boost the country’s economic recovery in a post-COVID world. Part of that plan is selecting 8 Freeport locations across England, but what exactly is a Freeport? Business Leader explains.
What is a Freeport?
The concept of ‘Freeports’ is not a new one, in fact, they have been around for centuries. In the 19th century, favourable tax breaks were given on alcohol and tobacco. Today, Freeports are areas, usually around shipping ports or airports, designated by a government with little to no tax. The tax charge is also deferred with tariffs only needing to be paid on goods leaving the port, instead of the usual condition of paying upon arrival.
These favourable tax conditions are set up to encourage economic activity and boost the local area. There are estimated to be roughly 3,500 Freeports across the globe, employing around 66 million people.
Singapore is one of the most notable examples of a global Freeport, a country praised by many for its handling of the COVID-19 pandemic. Southampton and Liverpool made up part of the seven Freeports in the UK between 1984 and 2012. Boris Johnson also hinted that he was considering these ports in 2019 before taking up his post as Prime Minister.
Where will England’s new Freeports be?
The eight new Freeports in England are:
- Thames (including London Gateway Port and the Port of Tilbury)
- Liverpool City Region
- East Midlands
- Freeport East (Felixstowe and Harwich)
- Plymouth & South Devon
What does it mean to the local region?
Rishi Sunak has confirmed in his budget announcement that the Thames Estuary has successfully secured Freeport status. This comes in the first wave of announcements of successful bids and marks a huge milestone for the Estuary’s economic recovery post-Brexit and post-Covid.
The Thames freeport will unlock £400m of port investment in deprived areas and create more than 25,000 quality jobs, with significant investment in upskilling opportunities.
Thames Estuary Envoy, Kate Willard OBE said: “We are absolutely delighted to have been selected as a freeport location. We believe that the Thames Estuary is the right place to have freeport status, and are so pleased that the government thinks so too.
“In 2020, the Thames Estuary Growth Board set out six key principles for a freeport bid, setting the direction and making clear to any bidders the outcome we need from a Thames Freeport. These principles were: economic, investment, innovation, environment, regeneration and community. The last one of our principles is the most important to us.
“We have tirelessly lobbied government and campaigned to show our support for the Thames Freeport, as we know just how beneficial it will be to our region, especially to those who need it most.
“Getting a freeport is an essential part of the Estuary’s recovery and will help it to level-up at this crucial moment in time, post-Brexit and post-Covid. The Thames freeport will unlock £400 million of port investment in deprived areas and create more than 25,000 quality jobs, with significant investment in upskilling opportunities.
“The Thames Freeport that DP World, Forth Ports, Ford Dagenham and Thames Enterprise Park will deliver will be a pioneering, world-class freeport, and a magnet for inward investment.
“This is a real triumph for the Thames Estuary and one which will help us fulfil our action plan, The Green Blue, which sets out our steps to fulfilling the huge, untapped potential of the region. A key part of our action plan is to champion good, green growth – that means sustainable, economic growth that works as one with our environment and natural resources, never against them. The Thames Freeport is vital for this.
“We are looking forward to celebrating this success and seeing through the potential that the Thames Freeport will bring. We’re in a good place.”
Industry reaction to today’s Spring Budget
Paul Struthers, Managing Director of Sage said: “Our research shows that SME trade has the potential to generate £290 billion annual revenue for the UK. Unlocking just 10% of this potential could add £29 billion per year to export revenues, supporting around 215,000 direct jobs and 50,000 additional jobs in the professional and scientific sectors alone. We welcome today’s announcement of free ports as an important first step in giving SMEs the confidence to trade back to prosperity. To ensure the opportunity they afford is accessible to businesses of all sizes we also reissue our call to Government to introduce a new SME Trader Support Service, which will support SMEs’ appetite to trade and build business confidence to export.”