64.This chapter highlights a number of issues, based on the evidence we have received, which the UK Government should take into consideration as part of the freeport consultation process. It concludes with some general observations on freeports and questions which the Government needs to answer if freeports are to be established in the UK.
65.Professor Potter suggested that bids for freeports would require a “consortium-based approach (either formal or informal) and incorporating public and private sector bodies”. A similar view was expressed by Associated British Ports which advocated the benefit of grouping ports together in “logical groupings that support particular trades or industries,” which may operate across boundaries between different regions in the UK. They added:
We would recommend that the bidding process seeks to encourage supply chain solutions and adopts a definition of ports that recognises the scope for multiple individual terminals to be grouped together.
66.Professor Potter also recommended that local public sector bodies should work with ports on developing their plans. According to Professor Potter, this would “avoid any potential conflict of interest (either perceived or actual) when discussing Freeport appraisal with the UK Government”. He suggested that “Public sector bodies established to boost economic development in the areas around the ports would be natural partners”, for example the North Wales Economic Ambition Board (Holyhead), Haven Waterway Enterprise Zone (Milford Haven) or the Cardiff City Region (South East Wales).
67.However, Milford Haven Port Authority suggested that a ‘Special Purpose Vehicle’ (SPV) may need to be created, given the absence of Local Enterprise Partnerships (LEPs) that are prevalent in England:
An SPV would be a separate legal entity holding legal, planning and regulatory powers, often called a Free Zone Authority internationally.
68.Milford Haven Port Authority also raised questions about the governance structure of a potential freeport in Wales. They recommended that governance must be led by the private sector with local councils supporting the bid as key stakeholders to ensure that freeports achieve their objectives in a “sustainable and timely manner”. They added:
Each approved Freeport will require an appropriate governance structure that sets out, amongst other things, how the Freeport is managed, and its benefits monitored. Whilst the detail would come later, we would expect at a high level the benefits to be documented and assessed in a benefits realisation plan.
69.There needs to be greater clarity about how the bidding process for freeport status will work, including whether consortium bids are to be encouraged and what role public sector bodies could or should play in the process. There also needs to be clarity about the governance structures that will be required for freeports, and where public bodies will fit into these structures.
70.If the UK Government chooses to proceed with freeports after the consultation process then it should, as a priority, publish details on the bidding process that it intends to adopt. The UK Government should consider using the bidding process to encourage bids by consortiums (including multiple terminals) and should explain what role bodies such as city regions or enterprise zones could expect to play. The bidding process should also provide clarity about the governance structures that would be expected for freeports and could, for example, include an illustrative example of such a structure.
71.As mentioned in para. 37, Professor Potter stressed, in his written evidence, the need for infrastructure to develop a freeport, both to ensure the flow of information and goods.
72.The British Ports Association indicated that some Welsh ports are situated within surrounding available land that was previously used for industrial purposes, which could be used as a “useful tool in stimulating economic growth and investment”. They welcomed the UK Government’s intention to create a “bespoke model” which would include “multiple customs zones located within or away from a port, to maximise flexibility for port operators and businesses,” as specified within the consultation. The Association called for “innovative models” such as “virtual Freeport corridors” linking the port to land in close proximity. Stena Line Ports Ltd, in their written evidence, also called for any customs checks and processes arising from freeports to be digital in nature.
73.The British Ports Association also voiced their support for potential changes to the planning process as part of the establishment of freeports. Such changes would, according to the British Ports Association, entail:
speeding up the process and granting of planning permissions for appropriate forms of development, ensuring that the marine and terrestrial planning systems relating to ports are closely co-ordinated and providing for the faster delivery of marine licences, and reducing delays arising from environmental legislation such as the Habitats Directive and environmental impact assessments.
74.The establishment of freeports is likely to have implications for port infrastructure and for customs, and planning, processes. Ahead of any bidding process, it is important that clarity is provided as to the customs processes that will be required at freeports, as well as the infrastructure implications. The UK Government should also work with the devolved administrations, local government and key stakeholders in the freight, ports and airports sector to discuss what changes would be required to planning processes to accommodate the establishment of freeports.
75.Freeports could offer benefits to the Welsh, and broader UK, economy, but it is clear that they are not an economic panacea. If implemented effectively they could form one of a broader number of measures to ‘level up’ the UK economy.
57 Associated British Ports (FRE0002)
58 Professor Andrew Potter (FRE0003)
59 Port of Milford Haven (FRE0006)
60 Professor Andrew Potter (FRE0003)
61 British Ports Association (FRE0004)
62 Stena Line Ports Limited (FRE0005)
63 British Ports Association (FRE0004)
Published: 8 May 2020