Written submission from The Cromarty Firth Freeport Steering Group (FRP0001)

 

Parliamentary Committee Freeports Consultation

 

Introduction

The Cromarty Firth Freeport Steering Group is a consortium of the following organisations working together around a common goal to regenerate the Inner Moray Firth region in the Scottish Highlands. Becoming a freeport will be the springboard for this region to attract a sustainable 30-year pipeline of work for local companies, high quality jobs for workers across our remote region, environmental advances which raise everyone’s standard of living, and enhanced transport connectivity. More broadly the initiative will attract advanced manufacturing and innovative technologies to the UK, speed up the energy transition and decarbonisation of oil and gas sector, position the UK at the forefront of the global floating offshore wind sector, broadening our export focus, and facilitate the emerging Carbon Capture and hydrogen production and export sectors as we play a role in ensuring the UK and Scotland achieve their net zero ambitions.

Private Sector/Trust

Public Sector

Academia / Third Sector

Port of Cromarty Firth

Global Energy Group

Semco Maritime

RigQuip

Highlands & Islands Enterprise

Highland Council

Skills Development Scotland

HiTrans

University of the Highlands & Islands

Scottish Maritime Cluster

 

The members have input into the submission and what follows is our combined response.

Executive Summary

 

Freeports have the opportunity, if well implemented, to be the catalysts for regional regeneration in remote and/or deprived areas of our country, especially those which are dependent on one large industry. Post-Covid-19 and post-Brexit, they can ensure the UK remains an attractive place to do business and ease trade and investment.

In order to maximise this opportunity, ensure equality and mitigate against negative impacts, freeport status must only be awarded to port’s attracting new business and associated jobs to the UK, and not bestowed upon those who will displace activity from neighbouring ports, or are simply hoping to benefit from a higher return on their private land value.

Submission

 

What benefits might freeports bring to the UK – and how should these be measured? 

  1. Freeports will attract additional trade to the UK, collaborations with international ports and partners, and inward investment opportunities (as has been demonstrated by some of the Enterprise Zones). They will also ease trade post-Brexit. The model could attract advanced manufacturing opportunities and innovative technologies to the UK by levelling the playing field with international competitors; enhancing local content, and reducing the environmental impacts of shipping components half way around the world. This could also lead to expanding our export focus and increasing the opportunity for gender/ethnic/disability equality, where less physical labour activities are conducted. Managed properly, they should transform historically erratic workflows which create the ‘boom and bust’ patterns common with most ports around the UK into sustainable pipelines of high quality work that deliver local content and local jobs for the long term. 
  2. The tariff-free movement of components which serve to make up larger pieces of equipment will minimise delays, improve efficiency and productivity; making the UK more attractive as a base from which to manufacture and maintain equipment and infrastructure.
  3. These factors could be measured on:
  1. In addition, Freeports provide a major opportunity to co-ordinate, focus and amplify the efforts of regeneration stakeholders (industry sectors and their supply chains, ports, enterprise and skills agencies, local government, academia) on a localised project that has both regional and national benefits.  There is a potential agglomeration effect through greater concentration of activities for different key sectors; generating growth in opportunities for skilled (and unskilled) workers; greater public and private sector collaboration; regional regeneration; stimulate innovation in technologies, manufacturing and sustainability.
  2. Regulations within a freeport could be implemented to promote clean energy / net zero initiatives and potentially incentivise the trialling and testing of products which will directly assist the UK to meet its decarbonisation targets.

What negative impacts could freeports have – and how might these be mitigated?

 

  1. The most worrying negative impact is the potential for displacement of activity from neighbouring ports and simply moving business around the UK without adding additional business and opportunities. This must be mitigated, as it is a major threat; particularly to remote ports in disadvantaged areas. It could easily be mitigated by expanding the number of locations awarded freeport status and/or ensuring that only ports in areas of deprivation and which are attracting additional business to the UK are awarded freeport status.
  2. With the increase in economic activity around a freeport comes the need to ensure that local infrastructure is sufficient (transport, internet, etc.) and there is sufficient housing to support any predicted shifts in population. Training and education must be accessible and appropriate to allow for labour pool development and access to the skills required. The strategic, long term view should be considered, with a focus on sustainable projects that have long term financial viability.
  3. Any model also needs to ensure that existing businesses don't simply appropriate freeport activities to benefit from tax or other incentives, as this would mean that those organisations are no longer contributing to the local economy in the same way. This would need to be achieved without disincentivising local businesses from investing and/or expanding using the freeport and is probably best addressed through policy.

 

How comprehensive is the package of measures proposed by the Government in its freeport model – and what others, if any, should be considered? How should these measures be adapted for different locations?  

 

  1. The current package lacks ambition and appeared to originally be focused on land value benefit and/or cargo ports; both of which add little value to UK GDP. Freeport models could achieve so much more, such as:

 

Are the proposed criteria for selecting sites to become freeports appropriate?

 

  1. Freeport selection criteria should incorporate:

 

When evaluating proposals, should greater weight be given to certain criteria?

  1. We believe the following criteria should carry greater weight:

 

What role will the Department for International Trade play in this process?

 

  1. Supporting inward investment strategies e.g. encouraging offshore wind OEMs to operate, recruit and train workers within the freeport region and to increase local content by collaborating with other developers to create a sustainable pipeline of work.

 

What impact could freeports have on the overall regeneration and expansion of industrial areas? Is there a risk of displacement and economic disadvantage to areas not selected – and how could this be mitigated?

 

  1. Freeports could provide a catalyst to regeneration and expansion in regions surrounding strategic ports, particularly for those located in deprived areas where there is an opportunity to level up the UK economy. They provide a major opportunity to co-ordinate, focus and amplify the efforts of regeneration stakeholders (industry sectors and their supply chains, ports, enterprise and skills agencies, local government, academia) on a localised project that has both regional and national benefits.
  2. By making it easier to trade with the UK (post-Brexit) they can attract additional business from other economies, along with inward investment and migration. Rural areas often suffer from depopulation as local people flock to cities for greater economic opportunity. The freeport model has the opportunity to reverse this trend (assuming employment opportunities created and associated economic advantages benefit local people and local businesses) and also attract inward migration of skilled workers who can enhance the local workforce by transferring and embedding their knowledge.
  3. There is significant risk of displacement based on only 10 ports being selected. This could be mitigated by awarding more than 10 or only accepting applications from ports committing to add new business to UK GDP and not simply displace existing business from neighbours. This is particularly critical for ports located in areas of deprivation. An associated risk is that activities are relocated/diverted to a freeport site rather than other regional areas which would have otherwise benefitted.

 

What can the UK learn, and what competition will it face, from established freeports around the world? 

 

  1. Ports often have to respond relatively quickly to customer requirements / emerging industries.  In many countries the ports are owned/operated by the Governments and this facilitates a quicker response. A national approach to our critical strategic assets would be of benefit to many sectors.