More than one port in Wales should be awarded freeport status, the Welsh Conservatives have said. The party called on the Welsh Government to work with the UK Government to deliver two freeports in Wales, though Economy Minister Vaughan Gething said a second freeport would require the same financial support from the Treasury.
There are three bids from ports competing to become the first freeport in Wales and benefit from £26m of funding support from the Westminster administration, the similar funding deal secured by freeports in England and by the Scottish government.
Speaking in a debate regarding freeports during the Senedd, Welsh Conservative Shadow Minister for the Economy Paul Davies MS said he hoped that more than one bid was successful and that Wales enjoyed multiple freeports across the country.
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“The UK Government freeport programme is a key component of its levelling up agenda and is part of the government’s efforts to help build back better and drive economic growth post-pandemic,” he told cross-party Ministers.
“It’s my hope that the upcoming announcement from the UK Government and the Welsh Government confirms that multiple Welsh freeports are successful, so that the benefits of freeports can be felt throughout the country.”
However, in response to the calls in the Senedd Mr Gething said a second freeport would need the same funding mechanism to replicate the £26m.
He said: “If there is to be more than one freeport then the UK Treasury needs to make financial resources available. It should still be the case that there should not be a Welsh freeport, delivered with devolved powers and asked to forgo devolved taxes, with a lesser settlement from the UK Treasury than any other freeport anywhere else.”
He added: “If there is more than one outstanding bid then the UK Treasury will need to act to make that a reality.”
The three freeport bids include the Celtic proposal, covering Neath Port Talbot and Pembrokeshire, which wants to accelerate innovation in green energy projects which it said would create 16,000 new jobs and £5.5bn of new inward investment.
The Port of Holyhead, through its owner Stena Line, has also submitted a bid with Anglesey Council which it said, if successful, would attract £1bn in investment and create 13,000 new jobs in north Wales.
The third bid is a multi-site freeport bid in south-east Wales from Newport City Council with Cardiff Airport, which is aiming to increase non-passenger revenues to 50% ending the airport’s reliance on passenger generated income.
Cardiff Airport was acquired by the Welsh Government in 2013.
On whether the Welsh Government faced a potential conflict of interest with regards to assessing the Cardiff Airport freeport bid, Mr Gething said the Welsh Government-owned land could be a part of the bid but that didn’t guarantee any bids a privileged position.
“There is a professional process between the two governments and our officials are assessing the bids that have come in and I look forward to receiving the advice on those bids and then to go through the decision-making process.
“So, I don’t accept there is a conflict of interest and we do have processes that insulate decision-makers from those particular issues.”
The idea of a freeport aims to create economic activity near shipping ports or airports. Freeports are exempt from taxes, called tariffs, that are normally paid to the UK government, and firms inside the freeport can benefit from lower rates of national insurance if they take on new staff.
Although there is some skepticism over the economic benefit of a freeport in Wales. Luke Fletcher MS for Plaid Cymru said a freeport was a policy tried before which had little success.
“One of the key arguments in favour of freeports is the creation of jobs and on the face of it I think the numbers are incredibly optimistic at best. How many of those jobs would be new jobs and not jobs displaced from elsewhere?,” he said.
“We only need to look at enterprise zones. 41% of jobs in enterprise zones established in the 1980s were jobs relocated from elsewhere in the UK.”
He added that there would also be no means of taxing the profits of those businesses operating within a freeport. “Profits that Welsh workers would have made for those companies,” he said.
“I think the question we should all ask ourselves is whether or not we believe businesses should pay taxes and contribute to public services like everyone else, especially during a cost of living crisis.”
Labour MS Joyce Watson said freeports represented “low tax, low regulation, limited government ideology and a race to the bottom”.
Responding to the arguments against a freeport, Mr Gething said: “I recognise there are different views in the room on the pragmatic approach to freeports. Welsh ports have a long history of helping to shape the economic, social and cultural fabric of Wales.
“Today they remain a feature in establishing new trading links across the globe and growing the UK as well as Wales’ international trade and investment potential.”
“The freeport programme is a compromise between the UK and Welsh governments. It has the potential to support our economic priorities across Wales, to stimulate a net growth in jobs, create high quality employment opportunities and support decarbonisation as part of our journey to net zero.”
“I have been very clear that we are looking to grow, not displace economic activity. And I have been very clear that fair work is an essential part of what any freeport bid must deliver.”
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