‘As it stands, the Bristol Freeport plan leads to more questions than answers’

Metro mayor Tim Bowles recently tweeted that “the Great Western Freeport could create 50,000 direct jobs and 30,000 in the supply chain. That’s why I want to bring this enormous opportunity to businesses, communities and residents in the West of England and beyond.”

His successor as Conservative candidate for WECA mayor is also on record as being “a big supporter of Free Ports and Free Economic Zones.”

But the reality of free ports is far from the hyperbolic claims of Bowles and the West of England Tories.

The risks associated with these low tax, low regulation economic zones are real and serious, and local politicians, media and residents must subject the Bristol Freeport plans to much more rigorous scrutiny than they have received so far.

Firstly, let look at what a free port really is. Generally, these are zones where goods can be brought in and out of the country without paying tariffs and allow for looser labour rights and environmental protections than elsewhere.

Supporters of free ports argue that these low tax, low regulations give a competitive edge to business inside the zone, supposedly leading to broader economic gains.

However, experience shows these claims do not stack up.  Starting with Bowles’ fantastical claims about direct job creation numbers – the chancellor, Rishi Sunak, has stated that all ten free ports proposed for the UK would only lead to 80,000 news jobs across the country – can we really believe that 50,000 of these would be in Bristol?

And in any case, previous UK experience has shown that free ports fail to deliver job creation on a significant scale. As the Centre for Cities highlights, “between 2012 and 2017 the zones had created just 13,500 sustainable private sector jobs,” 95 per cent of which were lower skilled.

With this in mind, Bowles claims of 50,000 new jobs from the Bristol Free Port alone seem somewhat far-fetched.

Bowles said that a free port could bring “enormous opportunity to businesses”. Photo: WECA

Bowles’ tweet goes on to claim that the Freeport is an “enormous opportunity.”

But time and time again, detailed academic studies, such as excellent work carried out by the University of Sussex, show that free ports do not create new economic activity – they simply cannibalise it from elsewhere in the country.

Even the Treasury has admitted that “there is evidence in some cases that zone-based policy can have a displacement effect,” with lower employment in nearby areas outside the free port boundary. These concerns have been echoed by a range of stakeholders, including the British Chambers of Commerce.

Supporters claim that by being able to import parts tax free, manufacturers can gain a competitive advantage when they re-export goods to other countries.

However, research again shows that these benefits are non-existent, particularly in the UK where post-Brexit tariffs on parts and components for manufacturing processes are already low.

Without going into painful levels of technical detail, there are very few UK industries that would see any real benefit from this so-called “tariff inversion” – The University of Sussex research shows that in the UK only pet food producers would see any real value from this.

So, if there is no real trade advantage, why then are Conservatives so keen on the free port idea?

It might well be that free ports are a driver of deregulation. Within the bounds of a free port, regulations protecting workers rights and the environment can be slashed – reducing costs for employers operating in the free zone, but creating an uneven playing field with neighbouring businesses on the “wrong side of the fence.”

Thus, questions need to be asked about which businesses get to gain these benefits, and how the boundary of the free zone is drawn. At the moment, the process used to determine the boundaries and scope of a possible Bristol Freeport is far from clear.

Bowles claims 50,000 new jobs will be created through a Bristol Free Port. Photo: Bristol Port

The government’s plans also allow for planning and development to be deregulated within the bounds of the free port. Given the serious – and emotive – nature of planning, it is right that development is controlled by democratically accountable local authorities – not handed over to an opaque private body.

North Somerset is working on a new local plan – hand in hand with residents- and it would be a backwards step if a large body of land in Bristol and North Somerset was allowed to be developed with no oversight.

Local government finances are hard pressed at the moment, as local authorities seek to meet the costs of the pandemic, while dealing with skyrocketing bills for social care and other vital services.

But Bowles seeks to entice businesses into his free zone with special tax breaks, while the WECA website explicitly states that economic activity in the free port will be subject to little or no taxation.

At the height of a pandemic and with Brexit weighing down the economy, is this the right time to deliver corporate tax breaks and reduce the amount of funding available to need the needs of local residents – particularly when the activities in the free zone will not deliver any real new economic benefit?

There is also risk that free ports can facilitate activities out of sight of the taxman. As KPMG state in a 2018 report on illicit tobacco in Europe: “Free trade zones are a perfect habitat for smugglers and counterfeiters. Owing to their limited oversight and advanced infrastructure, many of these special economic areas are used to ship, sell, store and produce counterfeit or contraband goods, including cigarettes and other tobacco products.”

Patrick Keating questions the claims made about free ports. Photo: Patrick Keating

How will the Bristol Freeport be policed to ensure that it does not facilitate an influx of untaxed and illicit products into our communities?

So, is it the case that Bowles – and his successor Samuel Williams- is making up headline grabbing jobs figures to drive through a project that creates significant risks for Bristol and North Somerset – while unlikely to generate new economic activity?

Why are the Tories so keen to give tax cuts to only a few businesses who happen to operate within a certain geographic area? What assessment has been done on the impact on nearby areas that fall outside the free port boundary?

As it stands, the free port plan leads to more questions than answers. The people of Bristol, North Somerset and the wider region deserve answers to these questions, and local politicians and media need to subject the free port plans to rigorous scrutiny.

Patrick Keating is a North Somerset Liberal Democrat councillor and is the LibDem Parliamentary spokesperson for Weston-super-Mare.

Main photo: Bristol Port

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