Written submission from British Ports Association (FRP0007)

 

British Ports Association submission of written evidence to the International Trade Committee’s UK Freeports Inquiry

The UK ports industry plays a fundamental role in the UK economy, as 95% of the UK’s international trade – imports and exports – is carried through ports. The industry directly employs 115,000 people and handles 500 million tonnes of freight each year. Ports are the foundation of the wider marine economy, which contributes £46.1 billion to the UK’s GVA, supporting all maritime activity from offshore wind to marine recreation and tourism.

The British Ports Association (BPA) is the voice of UK ports, representing over 100 port authorities, who own and operate over 400 terminals and port facilities; facilitating in one form or another 86% of port tonnages and 85% of all vessel calls. The BPA has also been a member of the Freeports Advisory Panel. We are grateful for the opportunity to further comment on the government’s Freeports proposals and are keen to explore how the UK can derive maximum benefit from this policy.

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

  1. Approaching the end of the Brexit transition period, the UK government must consider how to maximise Britain’s competitiveness on the world stage. Global trade will play a crucial part in the UK’s future prosperity outside of the European Union, as well as in its recovery from Coronavirus and what is set to be the deepest economic shock in living memory. Ports, specifically Freeports, will hold the key to this. 
  2. By utilising enterprise and free trade zones, a business environment that is conducive to inward investment can be established; stimulating growth - in all regions of the UK - if managed successfully.

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

  1. The BPA is generally supportive of the bespoke Freeport model suggested within the consultation, which will ensure ports are supplied with tools that will enable them to respond most effectively to business opportunities.
  2. However, the UK port market is competitive, and we are mindful of any policy changes that may jeopardise this. We do not agree with the limit of ten Freeports that the government has previously assigned. Freeport status will benefit ports differently depending on their current traffic, business profile and specialisation. Some will naturally be keener than others, but there will be far more than ten that wish to adopt this status around the UK. We believe establishing just ten Freeports would, therefore, be an arbitrary and unnecessary cap on the ambition of the ports sector. We are concerned about how this limit could impact on regional competition and we encourage the committee to consider how this may potentially prioritise certain regions over others.
  3. With only ten Freeports available for rail, sea and airport operators, we are wary of a situation where a token seaport is assigned the status within each devolved administration, without taking account of the detriment to competition at a regional level.

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 customs elements of the Freeports policy may be relevant to ports that process and trans-ship products, or those that provide hubs for local manufacturing and value-added services. The customs elements of Freeports do not traditionally benefit gateway ports, such as Ferry ports - where freight typically enters and leaves immediately. However, certainly for ferry ports and other types of port, planning incentives and other business easements suggested to be included would be very helpful in helping those operators expand and develop.
  2. We welcome government’s suggestions of a ‘bespoke model’, which could include ‘multiple customs zones located within or away from a port, to maximise flexibility for port operators and businesses’, as they note within the consultation. We believe that the Freeports policy should account for innovative models such as ‘virtual’ Freeport corridors, linking the port to land nearby, if it is not directly next to the port. So, a Freeport is not restricted to be an area around a port with a perimeter fence acting as a physical boundary.  This would mean ports who do not have land available that is directly adjacent to the port area would not be excluded from holding Freeport status.
  3. We are also very supportive of possible changes to the planning process as part of the UK Freeports model. The three main areas of this, outlined briefly, are speeding up the process and granting of planning permissions for appropriate forms of development, ensuring that the marine and terrestrial planning systems relating to ports are closely co-ordinated and providing for the faster delivery of marine licences, and reducing delays arising from environmental legislation such as the Habitats Directive and environmental impact assessments. These changes would be welcomed by all ports, regardless of location.
  4. These elements were suggested last year, by ‘Port Zones UK’, a coalition of British airport and seaport operators assembled by the BPA to present the ideal Freeports concept. The Port Zones UK Freeports ‘manifesto’ can be found here.

Are the proposed criteria for selecting sites to become freeports appropriate? When evaluating proposals, should greater weight be given to certain criteria? What role will the Department for International Trade play in this process?

  1. With regards to criteria for selecting Freeports sites, we understand that government wishes to see applicants evidence how they will use Freeport status to act as a hub for global trade and investment, as well as regeneration, job creation and innovation. However, the final criteria which will be used to assess applications is unclear without the outline of the UK Freeports model being established. However, we would expect these criteria to be inclusive and non-restrictive
  2. Furthermore, we repeat our caution here of limiting the number of Freeports to just ten. On top of our concerns about regional competition, we are wary that despite an applicant fulfilling all the relevant criteria, they could miss out due to the arbitrary cap on the number of Freeports.

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. With regards to the tariffs and customs element of the Freeports proposal, there are some ports with land available in close proximity. Indeed, there are many with land nearby formerly used for industrial purposes that have now declined and whilst a Freeport may not solve all issues surrounding these areas, they could be a useful tool in stimulating economic growth, investment and jobs. However, as mentioned, we very much welcome the possibility of virtual Freeports, which would also have the desired effect of stimulating economic activity in areas that could benefit from this regeneration, where the port does not have available land for development in the immediate vicinity.
  2. However, as previously mentioned, government has a responsibility to supply industry with a level playing field of competition and we would not welcome any intervention in the competitive structure of the UK ports industry. Indeed, there is a risk of displacement and economic disadvantage to areas not selected if the government limits their ambition to just ten Freeports. This can be mitigated by opting not to restrict the number available, and rather granting Freeport status to all operators who submit a compelling application.

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

  1.                                                                                                                                              When it comes to building a ‘Freeport’ model that works for the UK, we recognise that we may be able to take inspiration from other countries’ models, but stress that there is no ‘one size fits all’ when modelling this policy. The BPA believes that a UK Freeport model should be much wider than the traditional ‘customs’ free zone model, of which many of the benefits can be achieved through existing processes. As mentioned, the BPA has set out a much broader and more ambitious freeports manifesto that would include a package of measures around development, consenting and enterprise. That being said, it would be beneficial to consider the strong elements integrated into the Freeports models of other nations, that the UK may adapt to fit our own model.
  2.                                                                                                                                              For example, in recent years France has promoted a policy similar to the ‘port-zoning’ approach we have outlined above. This has meant centring economic policies around port clusters and developing an industrial strategy alongside this. France has adopted more than just a Freeport zone; these port clusters have received the political and strategic attention of central government. For example, environmental rules and infrastructure investment have been designed to complement French port clusters. We would be happy to see this echoed in the UK.
  3.                                                                                                                                              Elsewhere, Freeports have tended to focus on just the customs elements and some have not had the successes expected as a result of this. A lesson from this may be that a broader policy including enterprise and planning easements would appear to be a better approach.

In conclusion

 

  1.             Thank you for the opportunity to comment. We would be delighted to give oral evidence to the committee, virtually or otherwise, should you wish to gain further insight into our views.

 

Richard Ballantyne

Phoebe Warneford-Thomson

 

 

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Chief Executive,

British Ports Association

Policy and Economic Analyst,

British Ports Association