The government’s new free ports have the potential to extract wealth and opportunities from local communities, but there is an alternative, writes a researcher to Cles.
In this year’s spring budget, the government announced the establishment of eight free ports across England to promote regional regeneration, create highly skilled jobs and ensure sustainable economic growth.
The first sites in Humber, Teesside and Thames have just started operations, and the government’s recently released guidelines for free ports explain how they plan to harness the power of these important assets. The main objective described in the guidelines is to attract new investment, with designated economic zones in existing port areas where normal tax and customs rules are suspended, as well as simplified customs documents and the elimination of tariffs.
In practice, however, the designation of a free port seems likely to grease the wheels of an economic model that facilitates the extraction of wealth and opportunity from our local communities. But it doesn’t have to be that way. Early analyzes from Cles indicate the potential of ports to act as anchor institutions and key drivers of community wealth creation, through which they harness the power of their important assets for the benefit of people, place and society. planet.
What’s wrong with free ports?
Despite the government’s initial enthusiasm for free ports, a recent assessment by the Office for Budget Responsibility is far from optimistic about how they will work in practice, warning that tax and regulatory incentives, rather than create new economic activity, could simply displace what already exists. . Indeed, evidence suggests that previous experiences in areas with low tax and tariff rates have significantly under-achieved job creation.
In addition, the experience of other regions suggests that free ports do not function as ports at all. In reality, free ports are typically large, fortress-like warehouses that function as “free self-service storage” units for the ultra-rich, providing very little benefit to their local economies or creating growth and economy. sustainable regeneration for the communities that need it most.
The unions are also concerned about a race to the bottom of workers’ rights in free zones. The vast majority will be located outside of high union density areas and, given that free ports in the UK are most likely to attract companies that prioritize no tax or low tax over d Other factors such as education and training levels of the workforce, jobs in free zones are likely to be low-paid temporary jobs, with minimal contractual protections.
Ports as anchors
However, an alternative vision, according to which ports join local networks of anchor institutions, could compensate for some of these problems by allowing them to play an important role in the creation of community wealth.
Are ports anchor institutions? They are, of course, anchored in one place due to their geographic uniqueness, which means that they are reliable engines of economic development, as opposed to other forms of inward investment and multinational capital which can easily withdraw. their assets.
Ports employ a significant number of people, which offers enormous potential for employment practices to be fairly shaped to benefit the local community, as well as the possibility of recruiting directly from disadvantaged areas.
Ports also hold a lot of land and assets. The Port of Tyne, for example, has over 250 hectares of land, a fraction of which is needed for operational purposes. With swathes of undeveloped land available here, this could potentially be harnessed to support locally rooted and socially productive forms of business. Additionally, we could imagine how ports could potentially deploy some of their vacant land to support community energy projects, enabling the local community to deal with the climate emergency, while also tackling issues such as fuel poverty.
In addition, ports also have the potential to form strategic partnerships with other key anchor points such as local government, health, housing and educational institutions in order to multiply the benefits they can generate. for communities. Take the Port of Blyth and Newcastle College, for example, which have teamed up to provide skills to local youth in the production and maintenance of green energy technologies.
As it stands, government guidelines for free ports largely ignore our actual ports and their surrounding communities. But while there is little we can do to curb the extractive nature of the new freeport areas, ports designated as free ports can still exert a transformative influence beyond this function. By fulfilling their role as anchor institutions, ports can help transform our economic landscape as engines of community wealth, reaping a positive impact for surrounding communities.
Sean Benstead, researcher, Cles