31 March 2022
Phill Hall, our Mersey Port Director, explains some of the key factors involved in making freeports a success, such as the one for the Liverpool City Region.
It’s estimated that a free trade zone for the Liverpool City Region will contribute around £850m (gross value added) to the economy and create 14,000 jobs, as well as leading on solutions to meet local Net Zero carbon targets for 2040.
That sounds good, but what does it actually mean?
After all, until recently, the Port of Liverpool was already the largest freeport in the UK, before the designation was replaced by Customs Warehousing in 2012. This status offers beneficial Customs and Excise terms, allowing companies to store and trade goods more cost effectively.
A freeport can go far beyond this though.
There could be other types of relief, such as tax or rates. Investment incentives and government support, or even the relaxation of some regulations, are all possibilities.
One feature though that is generally common to freeports is there being a concentration of commercial and industrial activity around a major port. It’s all about getting the right balance of location, space, connectivity, facilities, labour and skills.
For the Liverpool City Region, the many partners involved have put forward a plan featuring three main elements.
Firstly, three tax zones will be designed to attract new business operations and generate extra investment. They will benefit from a range of special regulatory and tax benefits. These include enhanced capital allowances, stamp duty and other buildings and land reliefs, employer national insurance contributions relief, business rate relief, and local retention of business rates for local authorities hosting the tax zones. In particular, there is an emphasis through the tax zones on encouraging and supporting businesses that import, process, manufacture, and re-export goods.
The three proposed locations for the tax zones are (a) Parkside, St Helens close to the M6 and M62 and including the former Parkside Colliery, for advanced manufacturing and logistics businesses; (b) 3MG in Widnes, offering direct connections to national road and rail networks, and a site that’s already involved in the hydrogen economy; and (c) Wirral Waters, comprising significant areas of dockside land capable of attracting a range of port-centric businesses, advanced manufacturing, innovation and research and development activities.
Secondly, there will be customs zones across industries from advanced and biomanufacturing, to logistics and ports. Imports can enter freeport customs zones with simplified customs procedures and do not have to pay tariffs. Businesses operating within these designated areas can take advantage from the deferment of tariffs until their products are moved elsewhere, to another part of the country. They can avoid tariffs and full procedures altogether if they bring in goods to manufacture on site before exporting them again to an international market.
Thirdly, the process of running the freeport creates a major new opportunity to bring together all the partners necessary to drive forward the future prosperity of the Liverpool City Region. There will be a management board made up of the public, private and academic sectors, with a formalised governance structure behind it that can make key decisions and provide the strategic steer required for effective delivery.
Liverpool has a head start in some ways, at least as far as the port itself is concerned. Behind the fence, we have been diversifying through logistics activities across the port estate, allowing us to expand our business and provide various benefits to customers.
Today, we now shunt more than 50,000 containers per year across the site, for storage, handling and processing. That’s nearly 10% of all containers currently coming through Liverpool and represents a massive increase in this activity for us in recent years.
That said, port-centric logistics is not really a new concept. Indeed, our grain terminal – which has been in place for decades - has three production facilities attached to it, and that’s no coincidence.
So, that’s part of what we bring to the process, and while we are obviously the city’s global gateway, it’s important to remember that we are just one partner in this regional effort to attract new investment, create jobs, support the wider economy and increase levels of innovation.
You can read more detail about the freeport proposal on the Liverpool City Region website.