Anchoring our ports

This article originally appeared in the LGC.

The government’s new freeports are likely to extract wealth and opportunity from local communities, but there is an alternative, writes Sean Benstead.

At this year’s spring budget, the government announced the creation of eight freeports across England to promote regional regeneration, create high-skilled jobs and ensure sustainable economic growth.

The first sites in Humber, Teesside and Thames have just begun operations and the government’s recently released guidance for freeports sets out how they are planning to harness the power of these significant assets. The primary aim outlined in the guidance is to attract new investment, with designated economic zones within existing port geographies where normal tax and customs rules are suspended, alongside simplified customs documentation and the removal of tariffs.

“it doesn’t have to be this way”

In practice, however, freeport designation looks set 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 this way. Early analysis from Cles indicates the potential for ports to act as key anchor institutions and engines of community wealth building, whereby they harness the power of their significant assets for the benefit of people, place and planet.

What’s wrong with freeports?

Despite the government’s initial enthusiasm for freeports, a recent assessment by the Office for Budget Responsibility is less than optimistic about how they will work in practice, warning that tax and regulatory incentives, rather than creating new economic activity, may simply relocate that which already exists. Indeed, evidence suggests that previous experiments in low tax and tariff zones have drastically underdelivered on job creation.

Moreover, experience from other areas suggest that freeports don’t really operate as ports at all. In reality freeports are typically large, fortress-like warehouses which operate as “free self storage” units for the ultra rich, yielding very little benefit to their local economies or creating sustainable growth and regeneration for the communities that need it most.

“a race to the bottom”

Trade unions are also concerned about a race to the bottom on workers’ rights in freeport zones. The vast majority will be located outside of areas with high union density and, given that freeports in the UK are most likely to appeal to companies that prioritise no tax or low tax over other factors like workforce education and training levels, jobs within freeport zones are likely to be low paid agency jobs, with minimal contractual protections.

Ports as anchors

However, an alternative vision, whereby ports join local networks of anchor institutions, could offset some of these issues by enabling them to play a significant role in community wealth building.

Are ports anchor institutions? They are, of course, rooted into a place due to their geographical specificity meaning that they are reliable engines of economic development, as opposed to other forms of inward investment and multinational capital that can easily withdraw their assets.

Ports employ significant numbers of people which offers huge potential for employment practices to be fairly shaped to benefit the local community, as well as the opportunity to recruit directly from local areas of deprivation.

“empowering the local community”

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 required for operational purposes. With swathes of undeveloped land available here, this could potentially be harnessed to support locally rooted and socially productive forms of enterprise. What is more, we could imagine how ports could possibly deploy some of their vacant land to support community energy projects, empowering the local community to address the climate emergency, whilst also tackling issues such as fuel poverty.

Furthermore, ports also hold the potential to build strategic partnerships with other key anchors such as local government, health, housing and educational institutions 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 young people in green energy technology production and maintenance.

As it stands, the government’s guidance for freeports largely ignores our actual ports and their surrounding communities. But while there may be little we can do to curb the extractive nature of new freeports zones, ports with freeport designation can still wield transformative influence beyond this function. By fulfilling their role as anchor institutions, ports can help to transform our economic landscape as engines of community wealth, reaping positive impact for their surrounding communities.