Great Western Freeport bid – economic opportunity or unregulated risk?

A cohort of business leaders have thrown their weight behind the Great Western Freeport bid, which it is claimed will create 50,000 jobs in the region.

Part of the government’s ambition to forge a “new era of global trade in the UK” post-Brexit, Avonmouth’s deepwater port has been earmarked as one of up to ten sites in the country that could potentially become ‘little or no tax zones’.

It would essentially mean the port would operate outside of Britain’s borders for tax purposes and is an initiative hailed by supporters as an opportunity to level up economic growth, with the potential to boost the region’s coffers by some £3billion a year.

But critics have raised concerns about the risks associated with such low tax, low regulation zones and argue the claims of economic growth and job creation need to be more rigorously scrutinised.

University bosses, CEOs and regional business leaders are among those who signed a letter to the chancellor backing the bid for a Great Western Port, which has been submitted by the West of England Combined Authority (WECA).

“We strongly support the government’s ambition to create a new era of global trade in the UK and enable stronger, successful and more resilient, inclusive local economies,” states the letter.

“With a deep sea port at its heart, the proposed Great Western Freeport is perfectly placed to realise this ambition, as a world class hub for global trade and investment. In doing so, it can deliver the government’s industrial strategy and drive to rebalance and level up economic growth across the UK.”

Based at Bristol Port, the Great Western Freeport would have additional tax and customs sites at Avonmouth and Severnside, Junction 21 Enterprise Area and Gravity Smart Campus – locations WECA says have been selected for their proximity to areas of deprivation, regeneration prospects and potential for large scale job creation, directly and indirectly through the related activities and supply chain.

Those behind the Great Western Freeport bid claim it could create 50,000 new jobs – photo courtesy of Bristol Port

Jerome Thomas, a Green councillor for Clifton and metro mayoral candidate, says his party is sceptical about the likely benefits of freeports and argues there are other higher priority areas for investment and job creation to build a thriving, sustainable economy.

“The claim that the planned Port of Bristol Freeport could create 50,000 jobs seems wildly exaggerated,” Thomas tells Bristol24/7.

“We need to carefully evaluate the job claims, better understand which businesses and employers will be benefitting most from any tax breaks, and find out more about who will be left to pick up the costs from any tax breaks that are given.”

He conceded there might be employment benefits that come from a freeport enterprise or regeneration zone where employer taxes and business rates would be reduced, but – citing trade expert Dr Anna Jerzewzska – argues freeports are likely to shift jobs rather than create new ones.

The figures quoted by WECA have been generated using an economic model designed by Plymouth Business School. Those behind it say the modelling takes into account displacement and deadweight effects and still shows a significant net gain in relation to jobs and Gross Value Added (GVA) for the region.

Furthermore, they say the analysis has not captured other benefits, such as the economic impact of increased export, more capital investment, increased attractiveness for inward investment or any uplift in research & development activities.

It was in 2019 that Boris Johnson publicly endorsed a report calling for the introduction of tax free ports. His backing came weeks after First Corporate Shipping Ltd, which trades as The Bristol Port Company, donated £25,000 to both Johnson and his rival in the Tory leadership contest at the time, Jeremy Hunt.

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Read more: Johnson backs ‘free ports’ proposals weeks after donation from Bristol Port Company

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The private company owned by Terence Mordaunt and David Ord purchased a 150-year lease of the Avonmouth & Royal Portbury Docks from Bristol City Council in 1991.

Welcoming WECA’s bid, The Bristol Port Company said it would be a “transformational opportunity, helping to drive economic growth and recovery as our region emerges from the Covid-19 pandemic”.

The company says it will boost the region’s reputation as a global leader in high-value design and innovation, building upon the existing strengths in aerospace, nuclear, digital engineering and food; with a focus on green manufacturing and technologies, helping to support climate emergency priorities.

Analysis by University of Sussex economists however states potential benefits and savings for businesses operating in freeports are likely to be limited in the UK and warn any economic benefits could simply be diverting activity from elsewhere.

This is one of the concerns of North Somerset Liberal Democrat councillor Patrick Keating, who argues the freeport proposal raises more questions than answers.

He has questioned how the freeport will be policed to ensure that it does not “facilitate an influx of untaxed and illicit products” and challenged regional leaders on whether it is right to be “delivering corporate tax breaks”.

Bristol’s Labour mayor Marvin Rees, meanwhile, has said he is open to the concept but wants to ensure it will genuinely mean new jobs for the region and not simply displacement of existing roles.

WECA submitted the bid to the government in early February and expects to hear back next month.

Adding his backing, Tory metro mayor Tim Bowles tells Bristol24/7 the freeport proposal and economic boost it could bring is not one he is willing to let pass by.

“The Great Western Freeport will build on our strengths in innovation, help us tackle deprivation and will make us a national hub for inward investment and manufacturing,” said Bowles.

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