Freeports like that announced for Tees Valley in today’s Budget are unlikely to be a magic bullet, according to a new report. Their main impact – and any associated reductions in regulation – are likely to be to relocate rather than create economic activity and jobs.
That said, according to the author, Professor Catherine Barnard of Cambridge University, freeports in the UK could be part of a broader industrial and regional policy, drawing on recent experience with enterprise zones.
Freeports are defined by the government as ‘secure customs zones located at ports where business can be carried out inside a country’s land border, but where different customs rules apply’.
The benefits for businesses located in a freeport, according to the report, are simplified customs procedures, relief on customs duties and cash flow benefits. Proponents argue that they will also create jobs.
Opponents, however, argue that jobs will only be re-located from elsewhere in the country, that the ports need costly security infrastructure and could be abused for money-laundering, tax evasion or other illegal activities.
However, the report concludes that while as a general policy tool it is doubtful that freeports could lead to the sort of transformation that the government seems to be hoping for: ‘Since freeports are very much on the agenda, for areas of deprivation, being awarded a freeport would be a boost’.