What actually is a freeport? And other questions about Freeport East
- Credit: Adam Boughey
Yesterday in his Budget the chancellor gave the go-ahead for Freeport East, a tax-free port in East Anglia. Here is everything you need to know.
What is Freeport East?
Freeport East is the plan for a tax-free port centred around Felixstowe and Harwich. But it will affect other areas of the region.
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 man in charge of the bid, George Kieffer, said he sees the impact of the project spreading as far as Norfolk.
Yesterday, Rishi Sunak gave the project the greenlight.
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Mr Kieffer said: "We are delighted to have been chosen by the chancellor as one of the first new freeports in the UK since 1984.
"Freeport East offers a unique opportunity to build a truly global trade hub at the same time as accelerating opportunities in green energy and helping level-up the economy.
"We look forward to working with Government to further develop our business plan and to realizing the potential that this opportunity represents.”
But, what exactly is a freeport?
Freeports are areas that 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.
For instance, a clock manufacturer could import clock hands from France and clock faces from Algeria into a freeport without paying import tax. They could then turn the parts into a finished clock in a factory within the freeport area, before exporting the clock to Germany.
What are the next steps for Freeport East?
Bosses at the project are hoping to break ground on it within 18 months. Mr Kieffer said "the hard work starts now" the project has been given the go-ahead.
He said: "We received a letter yesterday from [Robert Jenrick] the secretary of state for housing, communities and local government, asking us, over the next week or so, to finalise our governance structure. Obviously that needs to be before local government goes into purdah at the end of the month.
"Then we will start work on submitting the outline and full business cases for the Freeport East proposal."
Who is involved in the project?
The project is backed by businesses and local government from around Suffolk and north Essex. Among the major partners in the project are Hutchison Ports UK which runs Felixstowe and Harwich ports, Harwich Haven Authority, Haven Gateway Partnership, New Anglia and South East Local Enterprise Partnerships, Suffolk and Essex County Councils, East Suffolk Council and Tendring District Council.
The project also gained the backing of 20 East Anglian MPs.
Why is this happening now?
In short, Brexit. The ports are seen as a way to spur on investment after the UK left the EU. Leaving the EU also means that the UK has more control over how big the tax breaks it gives in freeports are.
Boris Johnson has long spoken of freeports as part of his plans for the UK post-Brexit. The chancellor Rishi Sunak has also been a fan of the idea of freeports for a long time. In 2016, he wrote a paper outlining how he believed they could be used to revive manufacturing in the UK.
The UK had freeports for a long time. They gained popularity under Margaret Thatcher but the laws backing them were allowed to lapse under David Cameron in 2012.
What will it do for the region?
Mr Kieffer, the boss of the freeport bid, said it could be "the silver bullet for the East of England’s lagging economy".
“When we talk about ‘levelling up’ it is not just about the Red Wall seats in the north," he said. "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.”
The people behind the bid say it is estimated that a freeport in the East would create 13,500 jobs and secure up to £650million of investment for the region.
Despite this, there is no government infrastructure spending attached to the project directly but is hoped that spending would follow in due course.
Will it mean more crime around the port?
Other freeports around the globe have been linked to crime.
Mr Kieffer said: "Certainly freeports overseas have been linked to money laundering, the importation of drugs, importation of stolen artworks and tax avoidance.
"It's not a problem that either Felixstowe or Harwich has ever experienced and they are signed up to the highest security measures.
"In fact, we work quite closely with the National Centre for Cyber Security and other organisations.
"Felixstowe is one of the few ports that has its own police force.
"There's no doubt people will try, but we'll have to detect and stop them."
Will there be more lorries on the road?
While it would seem natural that the project will involve more development Mr Kieffer said: "I do not necessarily see this adding lorries to our roads.
"This is not about putting more business through the ports. It is actually about using the ports to be a focus for additional employment, sometimes in different areas.
"The manufacturing will be essentially orientated towards re-exporting it. So once it arrives in the freeport, it goes out again."
However, he admitted that should major businesses locate themselves at the freeport's Gateway 14 development, he could foresee more traffic on the roads between Felixstowe and Stowmarket.
More questions? You can read more about Freeport East here.