Could the freeport revolution turn the tide in the East of England?
- Credit: Adam Boughey
A tax-free port in East Anglia could be the “silver bullet” the region’s economy needs to close the gap on the rest of the country, according to man behind the project.
It is estimated that a freeport in the East would create 13,500 jobs and secure up to £650million of investment for the region.
Freeports are exempt from import taxes on goods coming into the area which are not destined for the UK – effectively treating the area covered by the freeport as if it is not part of the country for tax purposes.
In theory this would make the area more attractive to manufacturing businesses because they could import materials tax-free before exporting their products elsewhere.
Put simply, the success of this bid would have huge reverberations from north Norfolk to Essex, Lowestoft to Bury St Edmunds.
The Freeport East bid is focussed on Bathside Bay at Harwich and the Port of Felixstowe Logistics Park but includes proposals for tax and customs sites inland.
These sites include the planned new development at Gateway 14 near Stowmarket and Port One in Great Blakenham.
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But the positive economic aftershocks for Norfolk would also be huge.
First the government needs to grant the licenses and there are only 10 up for grabs – seven in England and one each in Scotland, Wales and Northern Ireland.
A decision is expected from the Treasury in the March 3 Budget and, if successful, the first ground could be broken on Freeport East within 18 months.
According to George Kieffer, chairman of the partnership which submitted the bid, Freeport East has a good chance of being accepted.
“I personally feel quite confident,” he said. “The reason I feel so confident is that the principal criterion the government has given is to ‘level up’ areas of deprivation.
“When we talk about ‘levelling up’ it is not just about the Red Wall seats in the north. There is often a misapprehension that in the East and the south-east we’re all so wealthy that we don’t need anything.
“We have the most deprived ward in the whole country, Jaywick, near Clacton, on our patch and we also have areas of Felixstowe and Ipswich that have significant deprivation levels.
"When you look at the average wages in Ipswich they are lower than they are in Liverpool.”
According to Mr Kieffer, the economic benefits will not just be confined to east Suffolk and north Essex.
“This could be the silver bullet for the East of England’s lagging economy,” he said.
It is hoped that government infrastructure spending will follow a successful bid.
Mr Kieffer highlighted the A120 in north Essex, the A14 and the Ely railway junction as areas where improvements could be made to improve freight traffic to the Midlands and the north.
While the tax sites all have to be within 30 miles of each other — a distance which only extends as far north as mid Suffolk — it is hoped that the freeport will also attract more investment elsewhere throughout the region.
Mr Kieffer said: “I see the benefits of this extending way beyond Felixstowe and Harwich and up into Norfolk.”
In part these wider benefits will be down to the freeport’s focus on innovation among its manufacturers.
A large part of the freeport’s bid is centred upon the East’s burgeoning energy sector and the benefits that can bring to the region as a whole.
“We want to see a focus on zero carbon, by also using new types of fuel like hydrogen. The port of Felixstowe itself has committed to becoming carbon neutral by 2030.
“The beauty is that it ties us in with the energy coast. Sizewell B has a hydrogen generator already there. If Sizewell C goes ahead, they are committed to making more energy there and the freeport would be one of the obvious users.
“This hydrogen technology has applications in agri-tech and agriculture which is a very important sector throughout East Anglia.
“This is not about putting more business through the ports, in terms of freight. It is about those ports to be a focus for additional employment, sometimes in different areas.
“For instance, it could be in offshore wind, or in the energy sector more generally.”
Freeport East will also work closely with the region’s universities and colleges.
“We need to make sure that when the jobs arise, our colleges and universities, and that includes University of East Anglia, are actually ready to supply the workforce because the world is not going to standstill,” Mr Kieffer said.
“I think the government wants this to happen quickly, not only to capitalise on our finally leaving the EU, but also as a recovery from the economic impact of the pandemic. We’re probably looking at a five year time horizon.
“There is a lag between the provision of those skills and the workforce being ready.
“That’s why it’s important that we start working with universities and colleges now. Rather than wait until the businesses arrive and says ‘right, where are my workers?’.”
C-J Green, Chair of New Anglia LEP, said: “As our region looks to recover from the Covid-19 pandemic and adjust to the changes following the UK’s exit from the EU, it is vital that major infrastructure projects are supported to deliver the investment and regeneration which will be needed over the coming years.
“We believe that Norfolk and Suffolk, with our significant coastal communities and deprivation, is a prime candidate for support through the Government’s Levelling Up agenda.
“The project would deliver thousands of jobs, fantastic opportunities for our local supply chain and bring long-term economic benefits.
“Freeport status would provide a catalyst for job creation, new economic activity, and additional development in our region.
“It would bring new specialised production and manufacturing jobs, as well as logistics, research and development and support service activities, providing immediate job opportunities in emerging and expanding industries.”
What is a freeport?
Freeports are sites where normal tax and customs rules do not apply.
They can be airports or maritime ports, and can be made up of a consortium of both as long as all sites are within a similar geographic location.
At a freeport, imports can enter with simplified customs documentation and without paying tariffs.
Businesses operating inside designated areas in and around the port can manufacture goods using the imports and add value, before exporting again without ever facing the full tariffs or procedures.
If the goods move out of the freeport into another part of the country, however, they have to go through the full import process, including paying any tariffs.
Freeports are not a new creation - the UK had freedom to create them when it was part of the EU.
There was a total of seven freeports between 1984 and 2012 such as Liverpool and Southampton, after which UK legislation changed and their use was not renewed.
Who else applied?
A total of 33 bids have reportedly been made for freeport status.
The details of all of which have not been announced.
More bids are yet to come in, with the governments of Northern Ireland and Wales not yet opening its application process.
Of those which are confirmed, bidders include Teesport, Liverpool City Region, the Great Western Freeport made up of Royal Portbury and Avonmouth Docks and Humberside.
On top of this airports are also eligible for applications with Heathrow, Gatwick and East Midlands Airport also confirming they are in the running.
Bournemouth International Airport has also confirmed it has submitted a ticket for freeport status in partnership with Poole port.
In the capital London Gateway, a container port on the Thames, has also submitted a joint application with commodities port Tilbury, alongside carmaker Ford Dagenham.
The initial flurry of interest will leave many disappointed with just ten spots to fill across England, Scotland, Wales and Northern Ireland.