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freeports


45km. As a general rule, this means that the furthest permitted distance between any two sites (eg a customs site and a tax site) within the same freeport is 45km and that the largest area that a freeport outer boundary can cover is a circle of diameter 45km. However bids judged to be designed simply to maximise the area contained within the Outer Boundary without clear economic rationale will not qualify.


Within the outer boundary, there must be:


• at least one port (air, sea or rail); and


• at least one customs site, to which the customs measures/benefits would apply.


Tax reliefs/exemptions would apply within that area and up to three individual sites of prescribed size may be permitted, where a demonstrable economic case is made out. However the overall area of the tax sites within the freeport must in no case exceed 600 hectares overall or they will fail the bidding process. There are likely to be significant advantages for businesses to be located within the tax site and this may cause a level of contention and need for negotiation.


The tax site rules are important and should be read carefully. Consistent with the concept of promoting deprived areas there is a preference for tax sites to be located within areas that are below national average GDP and above average national unemployment currently or over the past five years.


What form does the bidding document take?


There are two broad sets of questions: essential information and detailed bid information.


The essential information is pass/ fail. If the responses to any of these questions is incomplete or incorrect, then the bid fails. The essential information includes a map of the outer boundary, the customs and tax sites and a clear rationale for choosing that boundary and those sites, evidence of local authority support and how the location of any tax site mitigates against


THE BUSINESS MAGAZINE – JANUARY/FEBRUARY 2021


displacement of economic activity from deprived areas.


The detailed information required must demonstrate compliance with the following criterion:


• ability to deliver against Government’s objectives;


• deliverability of proposal at pace. Amongst other things, details of costs and funding required to deliver the proposal must be provided, along with an implementation plan (describing how, when and by whom specific milestones or targets required to deliver the coalition’s freeport strategy must be achieved), proposed governance arrangements, details of how the freeport proposal will support delivery of the UK’s Net Zero ambitions, monitoring and evaluation plans; and


• a high level of private sector involvement. This requires bidders to confirm the primary type of business that are part of the bid and/or that the bidder aims to attract, along with the specific trade and investment support measures that would benefit the proposal.


When will the results be announced?


In spring 2021, following the conclusion of the Government’s bidding process. Successful bidders will then be granted seed funding to support governance set-up costs and will be asked to develop detailed business cases for their spending plans through the summer.


How many freeports are likely to be established?


The Government has committed to at least 10 (and one in each of the four nations of the UK) but the prospectus indicates that the Government expects there to be a single freeport per Local Enterprise Partnership (LEP) area and there are currently 39 LEPs, so the numbers are not entirely clear. The overall theme of the prospectus is that, if bids are good enough, the Government will not hold back in awarding freeport status but clearly subject to the numbers cap.


The complexity and demands of this prospectus should not be understated. Bidding coalitions will necessarily be working up their detailed proposals before and around Christmas. But with Brexit negotiations still up in the air in mid- December and the transition period about to expire, ports, especially seaports, have plenty of other things to occupy their attention. Stir in the disruption to supply lines caused by Covid-19, ports are having to deal with a major policy initiative at a time of acute challenges.


David Mundy


For more information about BDB Pitmans’ ports expertise visit:


bdbpitmans.com/ports


businessmag.co.uk


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