More than 60,000 new jobs could be on the way to the North East if a bid to become one of the UK’s new freeports is approved, business and political leaders claim.
It is hoped that the scheme would give the region’s economy a £3.4bn boost over the next 10 years if it is given the go-ahead by the Government, by creating special economic zones where businesses can operate outside of normal tax and customs rules.
The North East officially lodged its bid on Friday, with the proposed “virtual free trade zone” involving the ports of Tyne, Blyth, and Sunderland – plus Newcastle International Airport, the Nissan plant in Sunderland and the neighbouring International Advanced Manufacturing Park.
Among the competitors also vying for freeport status is Teesside, where Conservative Tees Valley mayor Ben Houchen has been a vocal champion of the plans – which it is claimed could boost Teesside’s economy by £2bn and create 32,000 jobs.
It has been reported that at least 30 UK ports and airports are considering bids to become freeports – competing for “at least 10” slots made available by the Government, at least seven of which will be in England.
Critics of Chancellor Rishi Sunak’s freeport programme warn that they run the risk of becoming havens for tax avoidance and that many businesses will simply use them to relocate into the low-tax areas rather than create new jobs.
North of Tyne mayor Jamie Driscoll has been among those who have doubted the freeport model, saying last year that some around the world “have simply displaced economic activity from one place to another or have been opportunities for tax avoidance” – though he added that the North East’s bid “gets around those problems”.
The Labour mayor said on Friday: “The North East has always been a strong manufacturing and exporting region. We want to secure the future for our workers, our kids and our grandkids. This means developing our low carbon industries and building a green future.”
The consortium of local ports, councils, combined authorities, and business organisations that has lodged the bid said on Friday that the freeport would “deliver outstanding economic benefits” and create 61,458 new jobs across the construction, manufacturing, logistics, energy, innovation and business sectors.
Their proposed trade zone is described as a “multi-site, digitally connected and enabled cybersecure boundary area, with robust customs zones”.
Port of Tyne CEO and interim chair of North East England Freeport, Matt Beeton, said the region had an “unrivalled” bid.
Martin Lawlor, CEO at the Port of Blyth, added: “This bid consortium offers unrivalled clean growth and manufacturing expertise, and we have the vision, ambition and experience to make this a flagship freeport the UK can be truly proud of.
“We are excited by both the innovation within our bid and the transformative impact our freeport will have on the region if we are successful.”
The Government says that freeport areas will benefit from a package of tax reliefs, simplified customs procedures, duty suspensions on goods, and a streamlined planning process to aid brownfield redevelopment.
But Sunderland MP Bridget Phillipson wrote this week that, while it makes “obvious sense” for local councils to try and secure freeport status for their area, there is “very limited evidence that free ports create jobs”.
Writing for Labour List, the Shadow Chief Secretary to the Treasury said: “If a company can move 20 miles, benefit from lower tariffs, and still have access to the same workforce and same markets, it makes sense for it to do so. By itself, this doesn’t make the company more productive, or increase demand for their goods in the wider economy, or increase the tax take for the Treasury.
“On top of that, concentrating businesses within particular boundaries can have planning and transport implications for local areas – perversely, it may end up intensifying deprivation in the area beyond the immediate vicinity of the free port.”
Coun Graeme Miller, leader of Sunderland City Council, said the freeport bid had “the ability to transform the whole of the North East”.