28.Under the Government’s proposed design, freeports can be situated around any mode of port—seaport, airport or rail port. Bids were required to include at least one port of any mode; and bids with multiple ports, including of different modes, were permitted. In response to questioning on establishing freeports at sites other than ports, the Chief Secretary said the intent of the policy was to boost trade and that:
Currently, 95% of our goods pass through our maritime ports, so there is a natural synergy in combining innovation around the regulators, greenage and quality with regeneration opportunities, which often sit around port sites, and where there are also opportunities from a trading perspective.
The bidding prospectus also set out that freeports would have to define an outer boundary of a maximum of 45 kilometres (km). The primary customs site and related subzones (where customs benefits arise) and tax sites (where tax benefits would be applied) had to be contained within the boundary. The Chief Secretary to the Treasury told us the 45km limit was not a physical boundary and there was scope for innovation within it. He later added that there was a degree of openness to be flexible if there was “a particular bespoke reason”.
29.In its consultation document, the Government set out its intention to establish “up to 10 Freeports across the UK,” including at least one freeport in each of Scotland, Wales and Northern Ireland. In its response to the consultation, the Government indicated that it was open to approving additional freeports “in the event of a large number of high-quality proposals”. The bidding prospectus subsequently stated that “further awards may be made if bids are particularly strong” but noted that the final number of freeports must be limited “to control costs and maximise agglomeration benefits”. The Government also indicated that it would seek regional distribution in the allocation of freeport sites by selecting one freeport per Local Enterprise Partnership.
30.Prior to the Government’s clarification on the final number, port operators told us that they were keen understand why only ten freeports were being considered “if there are wider benefits that could be had”. Richard Ballantyne, Chief Executive Officer of the British Ports Association, referenced “the arbitrary figure of 10 freeports”. He said that this increased the stakes of the policy somewhat and would mean that there would be winners and losers. UKMPG said the selection should be “steered by the number of truly compelling bids”. While he did not offer a view on the ideal number of freeports, Andrew Carter, of Centre for Cities, told us “by definition, these are area-based type interventions” requiring boundaries to be set and some degree of selection and prioritisation.
31.Concerns were also raised about the inclusion of a geographic or modal spread in the policy. UKMPG contended that:
The cap of 10 would become even more concerning if there was some form of attempt to ‘share out’ the 10 amongst UK nations / geographically and transport modes. That risks restricting potentially compelling bids in particular categories.
Our colleagues on the Welsh Affairs Select Committee similarly concluded that:
The UK Government must neither artificially cap the number of potential Freeports in Wales, nor create a ‘Welsh Freeport’ purely for optical or political purposes. All bids should be assessed on their merits even if that results in no Freeports, or several, being awarded to Wales.
Following the announcement of freeport locations in England, it is clear the Government has sought to include a degree of geographical and regional distribution in the policy.
32.The Chief Secretary to the Treasury said the Government had committed to establishing up to ten freeports in the Conservative Party 2019 General Election manifesto but that “Our position is that if we receive high-quality bids, we will be open to considering the number.” Minister Hall later added that the Government was seeking to “focus investment on a smaller number of places to increase the attractiveness for investors” but that it was open to a limited number of additional freeports if there were exceptional proposals. The Government has confirmed that there will be eight freeport locations in England, suggesting the final figure will exceed ten should at least one freeport be established in each of the devolved nations. It said the reason for eight locations was to remain consistent with the policy of prioritising bids with high regeneration and private sector involvement, and to ensure geographic spread.
33.During our inquiry, we heard a range of views on whether the number of freeports to be established should be capped. We welcome the flexibility the Government has demonstrated on the final number of freeports. There were eight successful freeport bids for England, and we assume that this means the total number of freeports in the UK will likely exceed ten, given the Government’s intention that at least one freeport will be established in each of the devolved nations.
34.The bidding process for freeports in England ran from November 2020 to 5 February 2021 with submissions made to MHCLG via an online portal. The Government said that bids would be assessed initially against pass/fail criteria set out in the bidding prospectus. Passing bids would have their full submission assessed against five further criteria:
Following this, it was proposed that officials would draw up a long list of candidates in March 2021 to be presented to ministers to make the final decision on successful locations in the spring. The bidding prospectus included a commitment that “Once successful bidders are announced, MHCLG will publish the rationale for their selection under this process.” The Government announced the location of freeports in England as part of the Budget on 3 March. We note that this was ahead of the timeframe set out in the bidding prospectus. HMT and MHCLG published a decision-making note outlining the process for determining locations in England and the scoring of bids in March 2021. The Government expects the first freeports to be operational from late 2021. It has also indicated that it has no plans to designate any additional freeport sites in England.
35.Atkins told us that “a good selection process enables sound, evidence-based decisions and inspires confidence amongst stakeholders”. To achieve this, it said there must be clarity about how the different aims will be prioritised, the criteria for assessment, the format for evidence presentation and the mechanism for evaluation. In the case of freeports, it said:
The selection process must enable applicants to succeed on merit whilst allowing government the flexibility it needs to achieve the mix of Freeport types and locations that best serves national and regional interests.
We heard calls from port operators to ensure the allocation process was transparent. UKMPG welcomed the use of a “competitive bidding process” and emphasised that “it is crucial that the process for becoming a freeport is fair, transparent and evidence based”. Charles Hammond, of Forth Ports, indicated that this transparency applied to the bids, the data accompanying the bids and the weighting given to different criteria. Simon Bird, Regional Director, Humber at Associated British Ports, added that the Government was likely to receive a large number of applications and as a result, “it is going to have to be transparent and we all need to understand why those 10 have been selected”. Richard Ballantyne cited the risk of challenges following the allocation process and said that it “has to be watertight”.
36.Our evidence emphasised the importance of transparency in the bidding and allocation process. We welcome the publication of the decision-making note for bids in England. We recommend that the Ministry of Housing, Communities and Local Government establish a formal means to give feedback to unsuccessful bidders.
37.DIT held initial responsibility for the freeports policy. In September 2019, the Secretary of State for International Trade hosted the first meeting of the Freeports Advisory Board alongside the then Chief Secretary to the Treasury and the then Maritime Minister. The Department also initially led on engagement with the devolved governments. The freeports consultation was signed by the Secretaries of State for International Trade, Housing, Communities and Local Government, and Transport; and the Chief Secretary to the Treasury. The freeports team within DIT was listed as the point of contact for responses. In the spring of 2020, policy responsibility for freeports transferred to HMT. The consultation response was signed solely by the Chancellor of the Exchequer. The subsequent bidding prospectus was signed by the Chancellor and the Secretary of State for Housing, Communities and Local Government. In addition, the Government has indicated that HMRC, Border Force, and the National Crime Agency alongside other departments and agencies such as the Department for Environment, Food and Rural Affairs (Defra), the Home Office, and the Animal and Plant Health Agency will play a role in the operation and administration of freeports. In respect of this, Charlotte Morgan, Partner at Linklaters LLP, told us that “it is important to understand how all of those Government authorities and Departments and local government will co-ordinate together”.
38.Despite the inclusion of the objective to establish freeports as national hubs for trade and investment, DIT’s role in the policy appears to have diminished over time and is now focused on the provision of business support. Ministers from both DIT and HMT initially declined to provide us with oral evidence on the policy, suggesting that it would be more appropriate for the other to attend. In correspondence, the Minister for Exports, Graham Stuart MP, confirmed that DIT was not one of the departments with responsibility for the policy. Nonetheless, the bidding prospectus stated that DIT would work “with successful bidders to establish a clear and relevant trade and investment support approach within Freeports”, and that it would provide a business support programme to successful bidders. In response to questioning on responsibility for freeports within the Government, the Chief Secretary to the Treasury told us that HMT and MHCLG had co-designed the policy and that DIT would have a role “working with the successful bidders on the trade elements”. He also indicated that the Department for Business, Energy and Industrial Strategy (BEIS) “has a role with business perspectives”.
39.The Secretary of State for International Trade has said that the founding of freeports “will drive enterprising growth in port cities and towns across the country as we turbo-charge trade across the world”, however, DIT has not yet set out how it will seek to engage with successful freeport bidders or what specific support it will provide to businesses operating within freeports. Further, the Department’s ongoing work programme is relevant to the freeports policy. One of DIT’s key objectives is to support UK businesses to grow internationally in a sustainable way. We heard previously that the Department had adapted due to the Covid-19 pandemic and was seeking to improve its business support offering through sector specific supports and e-commerce tools. Nonetheless, the Department’s existing strategy for exports, published in 2018, does not address how support for freeport operators and businesses operating at freeports will be integrated within this offering. DIT also has responsibility for the UK Global Tariff which will be relevant to the long-term competitiveness of UK freeports. Further, the Department is in the process of negotiating a number of free trade agreements and freeports will be subject to the subsidy provisions agreed within them (see Chapter 4).
40.In 2020, DIT told us that it was also developing an investment strategy. The Government later announced the creation of a new Office for Investment to support high value, inward investments. The Minister for International Trade, Ranil Jayawardena MP, has indicated that freeports will form part of the Department’s investment offer:
We continue to radically transform the United Kingdom’s investment offer, including through freeports, to drive economic and productivity growth in every corner of the United Kingdom. For example, the newly created Office for Investment will work closely with existing and new investors to unblock issues and corral the whole of HM Government to work together to improve the business environment.
41.We heard that local government also had a role to play in the delivery of the freeports policy. Councillor Kevin Bentley, of the Local Government Association, told us that “it is important that we in local government are equal partners in this, because we are on the ground working with our ports authorities”. He cited examples of how local government would be involved in the delivery of the policy including through regulatory services, regeneration, planning and transport. The consultation response and bidding prospectus outlined the role that local authorities, mayoral combined authorities and Local Enterprise Partnerships were expected to play in supporting bids and as members of bidding coalitions.
42.To succeed, the freeports policy will require extensive cross-departmental co-ordination. HM Treasury and the Ministry of Housing, Communities and Local Government have responsibility for the policy, while other departments will play a role in the operation and administration of freeports. We are concerned that, in light of the disagreement between HM Treasury and the Department for International Trade about which department was best-placed to give evidence to our inquiry, the necessary cross-departmental collaboration and clear accountability required to implement the policy is absent. We recommend that, in its response to this Report, the Government set out how it will ensure effective accountability and cross-departmental collaboration in the implementation of the freeports policy. We recommend that the Department for International Trade has oversight of the policy, and administration of freeports, to support businesses to grow internationally.
43.The objective to establish freeports as national hubs for global trade and investment across the UK is of particular interest to us. This objective, and the Department for International Trade’s role in supporting businesses to grow internationally, means that it should have a central role in the development and implementation of the freeports policy, yet this appears to have diminished over time.
44.We recommend that, in response to this Report, the Department for International Trade provide further information about how it will support the Government’s objectives for freeports and set out its approach to freeports within its export and investment strategies. In addition, we would welcome clarity from the Department on how the new Office for Investment will be utilised to attract investment to freeports. We also recommend that the Department for International Trade set out how it will tailor its business support and trade promotion activities to the businesses located at freeports.
77 ; see also
80 UK Major Ports Group ()
82 UK Major Ports Group ()
83 Welsh Affairs Committee, Second Report of Session 2019–21, , HC 205, para 63
93 HC Deb, 9 March 2021, [Commons Chamber]
94 Atkins ()
95 Atkins ()
96 UK Major Ports Group ()
100 “Liz Truss hosts first meeting of the Freeports Advisory Panel”, Department for International Trade press release, 6 September 2019;
102 HM Government, Freeports Consultation Boosting Trade, Jobs and Investment Across the UK (February 2020), p 11
109 HC Deb, 11 January 2021, [Commons Chamber]
111 International Trade Committee, First Special Report of Session 2019–21, , HC 815, pp 5–7; see also Oral evidence taken on , HC (2019–21) 534, Qq85–86
112 Department for International Trade, Annual Report and Accounts 2019–20 (July 2020), pp 20–21; see also Department for International Trade, Export Strategy supporting and connecting businesses to grow on the world stage (2018)
113 Department for International Trade, Annual Report and Accounts 2019–20 (July 2020), p 36; see also UK Trade Policy Observatory, Tariff inversion in UK Freeports offers little opportunity for duty savings (28 July 2020)
115 International Trade Committee, First Special Report of Session 2019–21, , HC 815, pp 13–14, “New Office for Investment to drive foreign investment into the UK”, Department for International Trade press release, 9 November 2020
116 [UK Trade with EU: Import Duties], 19 January 2021; see also “New Office for Investment to drive foreign investment into the UK”, Department for International Trade press release, 9 November 2020