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RAISED DOUBTS: About the benefits freeports will bring

RAISED DOUBTS: About the benefits freeports will bring

Teesside Freeport was launched on Thursday, Image: Stuart Boulton/Teesside Live

A spending watchdog has raised doubts about the benefits freeports will bring ahead of Teesside becoming the country’s first. 

Teesside Freeport was launched on Thursday with the project aiming to bring 18,000 new jobs to the region in the next five years.

But a report by the Office for Budget Responsibility (OBR) has raised questions about the economic boost the new trading zones will bring.

The watchdog’s analysis referred to analysis by the Centre for Cities think tank, which found the impact of job creation at past enterprise zones in the UK had been “underwhelming”.

The OBR did find the tax incentives for the new freeports were “more generous” than the old enterprise zones.

However, it judged the new freeports would mainly move economic activity, rather than create it.

The report stated: “Given historical and international evidence, we have assumed that the main effect of the freeports will be to alter the location rather than the volume of economic activity.”

Tees Valley Mayor Ben Houchen launched the Teesside Freeport on Thursday to cover Teesworks, Wilton Engineering, Teesside Airport, the Port of Middlesbrough, Port of Hartlepool, Liberty Steel, LV Shipping and Teesport.

Ben Houchen

Official launch of the Teesside Freeport with Tees Valley Mayor Ben Houchen, Image: Stuart Boulton/Teesside Live

Freeports are designed to have less stringent customs procedures where businesses also benefit from a range of tax incentives.

These include relief from stamp duty and employer national insurance contributions for additional employees.

But some studies have warned the UK’s past experience with freeports and enterprise zones risked diverting business from other parts of the UK, rather than creating new economic activity.

Mr Houchen believed the freeport would put more money in people’s pockets and create more jobs with higher wages.

When it came to the OBR’s verdict, the mayor said it was an “interesting economic argument” but he didn’t think it would be true for Teesside.

“Because we’ve got large brownfield land which other potential freeports don’t have, you can bring manufacturing and process jobs into the freeport,” said Mr Houchen.

“Whereas if you look at places like London Gateway, which is getting its own logistics and development hub, they don’t have that much development land to create those well paid jobs.

“I can understand why they’ve done it, but Teesside is a unique opportunity.

“GE would not be coming to Teesside if it were not for the freeport, they have a facility in Cherbourg and they could just expand that.

“They didn’t, they came to Teesside because it was more cost effective to build a new one on Teesside than it is to stay in Cherbourg.”

He added: “The second part of the answer is, if I’m being brutally honest, as a parochial regional mayor, even if I’m wrong, I don’t care, because it ultimately means more jobs for Teesside.

“If those jobs are being relocated or moving from Birmingham, Manchester or Scotland, it doesn’t matter to me.

“My job is to create jobs for Teesside.”

The mayor added that the “proof would be in the pudding” but believed the OBR would be “proven wrong”.

Mr Houchen said: “The problem with the OBR and some people who are more critical of freeports is they closely associate them with enterprise zones.

“There have been some exceptions like Tees AMP, but by and large across the country they’ve been pretty poor.

“So some government officials and the OBR say this is just another iteration of enterprise zones.

“Our argument is it is different.”

The freeport is set to be up and running in the middle of November.

Stockton North MP Alex Cunningham told the Commons the forecasted benefits of the new freeport were “extremely limited”, referring to the OBR report.

The Labour MP added: “We’ve been promised tens of thousands of jobs and now it appears the government’s own Office of Budget Responsibility suggests that is nonsense.”

Andy McDonald, MP for Middlesbrough, welcomed the prospect of 18,000 jobs coming to Teesside through the freeport, but shared doubts about working people having “a voice and a seat at the table”.

He said: “Many of us have long since warned of the risks of displacement and given the words of the OBR, those warnings cannot now be ignored.”

Redcar MP Jacob Young revealed he’d been named “Mr Freeport” in Westminster at Thursday’s launch.

The Conservative MP said the freeport would bring a “transformation of Teesside”.

Mr Young added: “Now we look onto the largest brownfield development site in Europe, the UK’s largest freeport and confirmed yesterday, the UK’s first post-Brexit freeport.

“This is the biggest opportunity for our region since someone looked up at Eston Hills and said ‘you know what, I reckon there is iron in there’.”

 

Words: Alex Metcalfe, Local Democracy Reporter


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