With Britain’s departure from the European Union, a UK Government strategy for bringing a focus on future worldwide trading agreements has included the creation of eight freeport zones.
The freeport model works by allowing companies to import goods tariff-free and only paying once the product is sold into the domestic market. If the finished goods are exported, tariff charges are avoided altogether.
There are also significant UK tax incentives available for businesses investing within a freeport boundary, as there is no liability for National Insurance contributions for up to three years where employees earn up to £25,000 per annum. There is also business rates tax relief of up to 100% on qualifying business premises.
To support investment, there are enhanced capital allowances where companies invest in new plant and machinery assets. This takes the form of accelerated relief and is intended to allow firms to reduce their taxable profits by the full cost of the qualifying investment in the same tax period that the cost was incurred. This reduces the amount of funding needed to pay for the investment.
The location of the selected freeports was announced in March 2021 and followed a bidding process combined with an extended period of consultation with public authorities, port and airport owners and providers of warehousing and distribution services.
The freeport zones are not single locations, as although they may include dominant ports such as Felixstowe, which is Britain’s largest container port, other locations and facilities can be included within a specified geographic area.
Teesside is a good example of this, as in addition to the Teesport complex, it includes port facilities at Hartlepool, Middlesbrough, the Wilton chemical works formerly operated by ICI and Teesside International Airport.
PD Ports, the Statutory Harbour Authority for the River Tees, strongly backed the proposal for a freeport which had been made by the Tees Valley elected mayor, a post that holds significant authority over economic development. After investment of £1 billion by PD ports in the last decade, a further £1 billion is expected to be committed over the next five years that will include a new rail-connected Northern Gateway container terminal.
The Thames freeport will bring expansion beyond the London Gateway container terminal opened in 2013, which was built by Dubai Ports World on the site of a former oil refinery located on the River Thames close to central London. The zone will also embrace Tilbury Docks, owned by Forth Ports, and the Ford Motor Company complex at Dagenham, which is currently an engine plant, but where there is the opportunity for future investment to build electric vehicles.
Like many coastal communities in Britain, the area served by the London freeport is expected to benefit from economic regeneration. The land available for post-industrial development amounts to 1,700 acres, providing space for a distribution park of seven million square metres that can accommodate up to 25,000 jobs.
In transport terms, the establishment of freeport zones has been aided by a policy decision taken by Network Rail, Britain’s railway infrastructure owner, to invest in a Strategic Freight Network to allow greater capacity for rail services provided between ports and inland inter-modal hubs.
A standard has been adopted to allow the operation of lengthy trains of up 775 metres, capable of carrying 120 TEU (20 feet equivalent) containers, with gauge clearance to allow nine feet, six inches high containers to be carried on standard height platform wagons.
Private sector investment in the expansion of port capacity with new and expanded rail connected quays is taking place with the development of more inland distribution depots. New sites at Doncaster, Sheffield and East Midlands airport have recently been opened and supplement the development of long-established terminals that are part of the legacy Freightliner network.
A recent study by Parliament’s National Audit Office that assesses the value for money of publicly funded investment, backed investment in the new freeports and supported the forecast that inter-modal rail traffic would rise by more than three-fold over the next 30 years.
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