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UK Government policy on freeports

The 2019 Conservative Party Manifesto included a commitment to create up to ten freeports around the UK. According to the Government, freeports are intended to be national hubs for global trade and investment across the UK. They aim to promote regeneration and job creation as part of the Government’s policy to level up communities. In addition, the Government sees them as hotbeds for innovation.

The March 2021 Budget announced eight freeports in England: East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth & South Devon, Solent, Teesside and Thames. Five have received final government approval (Plymouth, Solent, Teesside, Felixstowe and Liverpool).

Freeports benefit from incentives relating to customs, tax, planning, regeneration, infrastructure and innovation. English freeports which have been given final government approval will each receive up to £25 million in seed funding plus significant sums in locally-retained business rates.

Freeports in Scotland, Wales and Northern Ireland

The UK Government wants freeports in all four countries of the UK. The relevant policy areas are a mixture of reserved and devolved powers.

The UK and Scottish Governments have reached agreement that there will be two green freeports in Scotland. In January 2023, the two governments announced that bids from Inverness and Cromarty Firth, and the Firth of Forth had been successful.

The Welsh and UK Governments have also agreed that one or more freeports will be established in Wales. Three bids have been submitted and the outcome is expected to be announced in Spring 2023.

No freeports have been announced for Northern Ireland so far.

Subsidy control

The new UK subsidy control regime, set up by the Subsidy Control Act 2022, is fully operational from 4 January 2022. It sets out the requirements and principles public authorities must follow when providing financial assistance to businesses. The UK is also bound by World Trade Organization rules on subsidies and its commitments under free trade agreements, including the Trade and Cooperation Agreement with the EU. The state aid provisions in the Northern Ireland Protocol may have implications for freeports in Northern Ireland.

Criticisms of freeports

Critics of freeports point to the risk that they will simply transfer business away from other areas of the UK without increasing the overall size of the economy. There have also been concerns about risks relating to money laundering and tax evasion.

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