freeports Freeports – a golden opportunity?

One of the Government’s policy levers for re-igniting the economy, generating new jobs and prompting inward investment is freeports, writes David Mundy, partner and parliamentary agent with law firm BDB Pitmans

Looking both ways – as domestic drivers and aids for rebalancing the economy but also the UK’s windows to the world, freeports are an initiative originally championed by Rishi Sunak when he was a newly elected backbench MP back in 2015 as part of a vision for a post-Brexit Britain.

Times have changed. Covid-19 has smashed in upon the world of trade and investment. Rishi Sunak is now chancellor of the exchequer. But freeports have remained a constant ambition and feature of the emerging policy landscape. The Government’s prospectus document has recently been published. But are the Government’s ambitions (and timetable) realistic in the current climate of uncertainty?

The bidding process for freeports opened for applications on Monday November 16, 2020. The bidding prospectus can be found here. The

prospectus applies to freeport applications in England only; separate processes will be run in each of the nations of the UK. The deadline for applications is 12.00 noon on Friday February 5, 2021.

What are freeports?

A freeport is a special type of port where normal tax, customs and other regulatory rules do not apply. The basic concept is that imported goods can enter a freeport with simplified customs documentation and without paying tariffs. Technically, such goods do not pass through customs or excise borders despite having crossed a land border. Firms can import goods and process or store them within the freeport boundary. Some goods can then be re-exported outside normal tax and customs rules. Domestic import duties and tax only become payable (sometimes at reduced rates) on goods entering the economy. Advantages include the avoidance of paying import duties twice, once on the import of raw materials, and again on the processed product. Costs are lowered and competitiveness is increased. The port operators can also benefit from concentration of economic activity. freeports include sea, air and rail ports.

The full armoury of economic levers and regulatory interventions that may accompany freeport status are set out in the prospectus. They include:

• customs benefits; • tax reliefs;

• simpler, more streamlined planning rules.


• access to a share of the £175 million seed funding;

• innovation funding; and

• wider Government funding, including the Green Energy Fund and Ports Infrastructure Fund.

What are freeports for?

The overall ambition is to deliver the Government’s core objectives of:

1 Establishing freeports as national hubs for global trade and investment across the UK;

2 Promoting regeneration and job creation; and

3 Creating a hotbed of innovation.

With an eye on the impacts of Covid-19, regeneration and job creation are key considerations. Bids in deprived or vulnerable areas which demonstrate an ability to deliver investment and innovative-rich freeports are said to be “more likely to be successful in their application given the Government’s lead objective”.

Who can apply for freeport status?

Air, sea and rail ports are all eligible to apply and bids from multiple ports (eg a seaport and a rail port) are possible. Bids are being invited from “bidding coalitions”, which means ports, in coalition with local and international businesses, academic institutions, local authorities, mayoral combined authorities and Local Enterprise Partnerships are encouraged.

What are the geographic parameters?

Freeports must be contained within an ‘outer boundary’, which is set at


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