Wales' first freeport is expected to be revealed this spring, as both Welsh and UK governments currently judge the three bids put forward. The winner will benefit from £26m in funding from Westminster, the same level of funding secured by freeports in England and Scotland.
Currently England has eight freeports and Scotland was awarded two green freeports last month. In Wales, a freeport will be a special zone which benefits from simplified customs procedures, relief on customs duties, tax and rates relief, and wider government support for trade, investment and innovation.
Goods entering freeports would not have to pay tariffs, import VAT or excise duty until they leave the freeport and enter the domestic UK market. While businesses within the zone would receive 100% business-rate relief for five years and forego National Insurance contributions on salaries up to £25,000 for new hires in the first three years.
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In return, bidders must show how a freeport would support employment with good salaries and embed fair work practices in the wider freeport area, while also contributing to Wales’s Net Zero ambitions. However, critics believe freeports have little net economic benefit, claiming they mainly displace business activity from elsewhere.
The UK Trade Policy Observatory said its analysis had found that the policy would have little effect in the UK because tariffs were already low. The UK had seven freeports between 1984 and 2012, but were wound down due to their limited economic impact.
During a debate in the Senedd, Luke Fletcher MS for Plaid Cymru said a freeport was a policy tried before with little success and would see no means of taxing the profits of those businesses operating within the freeport. While Labour MS Joyce Watson said freeports represented “low tax, low regulation, limited government ideology and a race to the bottom”.
But let’s look at the runners and riders for Wales’ first freeport:
The Celtic Freeport
The Celtic Freeport consortium, which covers the ports of Milford Haven and Port Talbot, promises a multi-site freeport based on green energy.
Associated British Ports, Neath Port Talbot Council and the Port of Milford Haven are behind the bid with input from renewable developers, energy companies and academic institutions.
The bid is based around accelerating separate plans for an offshore wind farm in the Celtic Sea, alongside developing hydrogen and sustainable fuels, and carbon capture and storage.
If successful in its bid, the consortium said it could create 16,000 new jobs via processing, manufacturing and port jobs and generate £5.5bn of new inward investment in modern green technologies, which would work towards decarbonising Wales’ primary industrial cluster and contribute to the government’s net zero target.
It also proposes to pool and re-invest 25 years’ worth of non-domestic business rates growth of around £500m through a number of measures including the South Wales Industrial Transition from Carbon Hub (SWITCH), online adult learning programmes, and the Regional Learning and Skills Partnership.
Roger Maggs MBE, Chair of the consortium, said: “Together, these key players combine to create a compelling proposition for an integrated, multi-purpose freeport for Wales. The Celtic Freeport consortium also provides access to a huge development footprint, a skilled workforce and a network of local, regional and global partners capable of enabling the rapid growth of the floating offshore wind sector and a flourishing hydrogen economy in Wales.
“This could completely regenerate the economies of south and west Wales and beyond and the prospect of exporting floating wind and other green technologies developed here could add to this transformational effect.”
The Anglesey Freeport
Backers for a freeport based around Anglesey have said the bid could attract £1bn of much-needed investment and create 13,000 high-salary jobs across north Wales.
The Anglesey Freeport is a partnership between Isle of Anglesey County Council and Swedish company Stena Line, which owns Holyhead Port and is a major local employer in the region.
A freeport on the island would see the establishment of a secure customs zone at Holyhead and other sites on Anglesey with special tax and tariff arrangements designed to attract major domestic and international investment.
It would simplify travelling through Holyhead and across the UK land bridge providing a boost to the port which has seen its freight trade impacted by Brexit. Trade that previously used the UK as a land bridge diverted to direct routes between Ireland and mainland Europe following the UK’s exit from the EU.
If successful, the bid is predicted to return Holyhead to pre-Brexit levels of trade and cement the area as a hub for innovation in trade and clean energy.
Backers behind an Anglesey freeport have also said that business investment would bring opportunities in R&D investment, service new green technologies and increase manufacturing output in north Wales.
It has the backing of 17 major businesses from a range of sectors including Rolls Royce, Bechtel and Last Energy along with Bangor University.
Stena Line chief operating officer Ian Hampton said: “Stena Line is determined to see a transformation in investment and economic activity for the Anglesey community. We have been part of this community for over 27 years and want to see this bid succeed. We know it can bring in transformational investment, drive innovation and create high-skilled, high-wage, high-value jobs. It can cement the region as a hub of global trading excellence.
“The freeport has many different elements. As well as a manufacturing hub it can become a world leader in blue innovation, help realise the successful vision of the Energy Island Programme and we want to see the establishment of World Customs Academy on the Ynys Môn.”
The Newport Freeport
Newport City Council is leading the bid for a multi-site freeport in south east Wales, the only "inland" proposal being put forward.
The bid proposes Cardiff Airport as the core customs location with complementary tax sites at the Welsh Government-owned Rhyd-y-Blew in Blaenau Gwent, Imperial Park in Newport and a third suggested site at Bro Tathan Enterprise Zone in Vale of Glamorgan.
If successful, it promises to create thousands of new jobs and provide a significant boost to the Rhoose-based airport and support long-term plans to pivot it away from its over reliance on passenger related income for revenues - currently at around 80% but with the aim of increasing non-passenger revenues to 50%.
The airport has significant land around its terminal to accommodate freeport related developments. Freeport status should also significantly boost its air freight traffic.
Leader of Newport City Council, Councillor Jane Mudd said a freeport in south east Wales would have the "potential to attract more national and international businesses, creating thousands of jobs and training opportunities that would benefit residents in the region and provide a massive boost to the local economy".
She said: “Our proposal builds on existing private and public infrastructure investment to create better links between international commerce, regeneration of underused land, academia and high-quality job creation.
“Our bid is about scaling up, not starting up. It meets the Welsh freeport objectives for promoting regeneration, creating jobs and economic growth but it also goes further by fulfilling other essential Welsh and UK government ambitions.
“For instance, the aviation capacity at Wales’ national airport could be a catalyst for economic growth by directly reducing the long-distance HGV cargo destined for the US and far East and unlocking pent-up demand for aviation engineering activities where the region has a reputation for innovation.
“In addition, the Newport Regional Freeport would have the capability to play a key role in the UK government’s aspiration to safeguard and promote the compound semiconductor sector in this country.
“This industry is increasingly vital to all aspects of life. Newport is home to significant research and development as well as global intellectual property.
“From aviation maintenance to high-tech activities, the Newport Regional Freeport would create opportunities for Welsh products, ideas and services to reach international markets much more quickly.
“Only our proposal has the potential to attract a greater range of national and international investment to Wales, providing many more jobs and training prospects for the residents of a region which has communities with high levels of deprivation, and boosting both the local and national economy for many years to come.”
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