Solent freeport: green light for massive long-term economic boost

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Local businesses and politicians have welcomed the announcement that the Solent will be one of eight new freeports. The Business Magazine reports on reactions to the news.

Southampton, Portsmouth and the surrounding area are set for a huge economic boost, estimated by Solent Local Enterprise Partnership (LEP), which led the successful freeport bid, to be in the order of more than 50,000 new jobs and £2 billion in extra investment.

Businesses and politicians in the region saw the announcement by chancellor Rishi Sunak in his Spring Budget that Solent is to be one of eight new freeports as a once in a generation opportunity.

 

Positive reactions

Peter Taylor, managing partner at law firm Paris Smith, and chair of the leadership team at Southampton Chamber of Commerce that supported the bid, said: “It is tremendous news – a ringing endorsement of the strategic role which the ports of Southampton and Portsmouth, as well as Southampton airport, have both for the region and nationally.”

Paula Swain, partner, national head of commercial recoveries and head of the Solent office for Shoosmiths, is also a director with the Solent LEP. She said: “I am thrilled with this result for Solent, which will help to drive focus and investment in our region.”

Solent Gateway was established to develop Marchwood Port on Southampton Water and will be in the freeport area. “Marchwood Port’s sea, rail and road links, combined with being an 82-hectare freeport tax site and customs site, will enable it to attract a wider client base of interest from across the UK and abroad. It will be very good for the Solent and the wider UK because of our excellent connectivity to the industrial heartland of the UK,” said Richard Parkinson, port director at Solent Gateway.

Based at Southampton docks, DP World Southampton operates as the first or last port of call for many container ships serving the trade route from Northern Europe to the Far East. Aart Hille Ris Lambers, UK commercial director of DP World, said the company was very pleased with the announcement: “DP World Southampton has an important role to connect businesses all over England with a wide range of global destinations.

“We already service important industries across the UK, ranging from car manufacturing to small and large retailers, and we look forward to increasing our service offering with the establishment of the Solent freeport.”

Aldred Drummond, chief executive of Fawley Waterside, which is developing the site of the former Fawley power station, said the timing couldn’t have been better for the major regeneration project. “Gaining freeport status will add incentives for commercial ventures looking to locate at the site, where demolition work is due to be completed this year. It will accelerate the process already begun here,” he said.

Julian Gray, market senior partner, Southampton, at PwC, said: “This is great news for the Solent region and will bring a cost advantage to business as well as creating further jobs.”

David Mundy, partner and parliamentary agent at law firm BDB Pitmans, added: “Bringing the investment and financial stimulus to bear on job creation, innovation and new technologies will be exciting opportunities for the LEP members, the ports and the local authorities.”

Local politicians also emphasised the positives. Brian Johnson, chair of Solent LEP, said: “The announcement represents the start of a new era for the Solent as we begin our work with the Government to create jobs, drive innovation and build sustainable, long-term opportunities now and in the future. The wide coalition of public and private partners brought together by the LEP puts us in the strongest possible position to bring this vision for a Solent freeport to reality.”

Daniel Fitzhenry, Conservative group leader on Southampton City Council, added: “This is an incredible opportunity for our city and the region. I’m very excited to see this plan moving forward to further position our region on the world stage, create new jobs and opportunities, while doing so with a green recovery focus.”

The Solent freeport will play an important role in stimulating additional infrastructure investment and the renaissance of the coastal community, as well as supporting post-Covid-19 economic recovery, Swain believes.

“There will also be an impact on inland sites, combining fiscal relief for investors and exporters with agile planning regimes and coordinated infrastructure programmes that dovetail with the freeport’s existing hinterland,” she said.

Shoosmiths predicts that the Solent area will have a ‘multiplier’ effect, not only on the local economy but also the national economy, since the North and Midlands also depend on the trade flows which pass through the Solent. “Increased activity here will spread benefits further afield,” said Swain.

Johnson thought Solent freeport would be critical to ensuring the UK remains competitive. “The LEP is committed to ensuring that our local communities and, in particular, our young people, can benefit from the opportunities created,” he said.

The city of Southampton has bold ambitions to develop as a destination port with an international reputation. “Business opportunities and jobs will be created across the city and the region. Undoubtedly, inward investment will flow from the Government’s recognition of Southampton and the Solent region in the post-Brexit UK,” said Taylor.

Barry Rickman, leader of New Forest District Council, commented: “Having been involved with the bid, I cannot praise enough Solent LEP, along with our local businesses and authorities for putting together such a sound application.”

 

Wider benefits

The Solent freeport will play an important role in stimulating additional infrastructure investment and the renaissance of the coastal community, as well as supporting post-Covid-19 economic recovery, Swain believes.

“There will also be an impact on inland sites, combining fiscal relief for investors and exporters with agile planning regimes and coordinated infrastructure programmes that dovetail with the freeport’s existing hinterland,” she said.

 

Shoosmiths predicts that the Solent area will have a ‘multiplier’ effect, not only on the local economy but also the national economy, since the North and Midlands also depend on the trade flows which pass through the Solent. “Increased activity here will spread benefits further afield,” said Swain.

Johnson thought Solent freeport would be critical to ensuring the UK remains competitive. “The LEP is committed to ensuring that our local communities and, in particular, our young people, can benefit from the opportunities created,” he said.

The city of Southampton has bold ambitions to develop as a destination port with an international reputation. “Business opportunities and jobs will be created across the city and the region. Undoubtedly, inward investment will flow from the Government’s recognition of Southampton and the Solent region in the post-Brexit UK,” said Taylor.

He puts Southampton’s level of ambition as akin to creating a ‘Singapore of Europe’. “A leading port city which is a great place to live and work and which also offers a warm welcome to visitors,” he said.

Fitzhenry agreed: “It will help to further position our place on the world map as a ‘global gateway’. It will help to regenerate our area and leverage in further investment in transport infrastructure, as well as attract new ideas and opportunities to tackle challenges like unemployment and climate change.”

 

Employment and green opportunities

The timing of chancellor Rishi Sunak’s announcement in this year’s Spring Budget means the development of Solent freeport could help the region emerge from the economic downturn caused by the Covid-19 pandemic.

“This opportunity will help to create new jobs for our residents, but also help to create new apprenticeships and opportunities for people who have lost their jobs as a result of Covid-19, or who want to develop new skills,” said Fitzhenry.

He continued: “It will help to drive our wealth-creating economy and encourage an entrepreneurial culture, through supporting new research and development at our world-leading universities and local colleges in the technology, green and marine sectors.”

Solent Gateway is already talking to several foreign companies interested in establishing a footprint in the south. “I have no doubt that being a freeport will generate a lot of additional high-quality jobs, which is great news as we face a challenging post-Covid-19 economic environment,” said Parkinson.

Gray said: “There continues to be debate around the government’s ‘levelling up’ agenda, however, measures designed specifically to address this, such as the announcement of the Solent freeport, will hopefully kick-start the practical action needed at a local level to make levelling up a reality.”

Another area ripe for investment is the green economy. Richman said: “We need the ability to grow new jobs and attract trade, especially in sustainable and green industries. It gives great hope for the next generation to lift some areas that have got left behind in recent times. The whole development of the waterside will play a major role in revitalising the area around the New Forest and enhance its preservation as a national treasure.”

Drummond said Fawley Waterside aims to be a net-zero carbon new town. “We have an extraordinary opportunity to transform what has been a strong carbon economy and to look at growth prospects for the next 100 years.”

 

Addressing concerns

Of course, there are potential downsides to freeports. The Government sought to allay concerns by saying that the eight nominated freeports will have to adhere to the OECD Code of Conduct for Clean Free Trade Zones and meet money laundering regulations. Freeport operators and the businesses that use them will be checked to ensure they have “adequate policies in place to ensure control over the movement of goods”.

Fitzhenry said: “It is right to be mindful of the associated risks and concerns on freeports, including fraud, unpaid taxes and excise, HSE compliance and staff terms and conditions. But we have commitments that staff T&Cs will rightly be maintained and, through proper management, fraud and HSE concerns can be mitigated.”

Taylor emphasised: “It is beholden on all stakeholders across the Solent region to make decisions and take actions which will optimise the full benefits that can be derived from the freeport status.”

 

Next steps

Fitzhenry expects things to move fairly quickly. “My understanding is that a further business case will now be put together and submitted to the Government for final approval in the autumn, with the freeport status going live by the end of the year,” he said.

Swain sees a lot more hard work ahead to ensure ambitious plans become reality. “All the successful freeport bidders will now need to knuckle down and work out how they are going to implement the plans they were asked to formulate in what was very short order. We will all be hoping that the Solent freeport will be up and running by late 2021 to deliver on its promise to bring growth and prosperity to the region,” she said.

As part of the discussion process, in March PwC and the Southampton Chamber of Commerce are hosting a virtual roundtable presentation and discussion forum on the city’s future role. “Our panel of experts from around the city will discuss the ambition for growth of the port, along with jobs for the maritime city, how the education sector can assist businesses with skills for the city, along with an update on how the city is growing in the future,” said Gray.

Mundy said: “In a sense, this is the beginning of the challenge. Pulling together to maximise the opportunity will require goodwill, imaginative advice and a desire to keep the impetus of the successful coalition running. The enthusiasm generated by the successful bid is a great place to start.”

 

Freeports: What the chancellor announced

In his Spring Budget, chancellor Rishi Sunak declared that the government’s freeport policy was “on a scale we’ve never seen before”. He said it was a policy “to bring investment, trade, and, most importantly, jobs, right across this country” and would provide “an unprecedented economic boost across the UK”.

Describing freeports as special economic zones with different rules to make it easier and cheaper to do business, Sunak highlighted the main benefits:

Simpler planning – to allow businesses to build

Infrastructure funding – to improve transport links

Cheaper customs – with favourable tariffs, VAT or duties

Lower taxes – with tax breaks to encourage construction, private investment and job creation.

The other seven freeport locations are East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Thames and Teesside. The Government has committed to working with the devolved administrations in Wales, Scotland and Northern Ireland to consider further freeports.

 

Source: The Business Magazine