Sir Keir Starmer has confirmed that the UK government will announce a new investment zone and five additional freeports in the upcoming budget as part of its efforts to spur economic growth. The Labour leader highlighted that this plan is intended to generate thousands of jobs and enhance trade within the UK. Freeports, which are low tax areas, are also a significant aspect of this strategy despite criticism of them for not raising overall job numbers.
The policy of freeports was introduced by the Conservatives, however, Sir Keir did not wish to have an ideological stance just because they were implemented by the previous government. He did stress the importance of some necessary optimisation, including “better structures and more local authority involvement” in the freeport regions.
Freeports are situated in proximity to airports or shipping ports and exclude imported goods from tariffs that would normally be paid to the UK government. Companies based in these areas also pay reduced national insurance taxes on new employees and diminished property taxes. The intention is that freeports will help boost economic activity in areas of trade, investment and job creation.
Critics have suggested that freeports effectively relocate economic activity or employment from one area of the country to another rather than creating new opportunities or jobs. Sir Keir pointed out that freeports should not be the sole source of employment and investment, and that Labour intends to provide growth plans for all areas, including mayors, local authorities and local businesses.
The UK currently has freeports situated in Inverness, the Forth, Teeside, the Humber, Liverpool, Anglesey, Milford Haven, Plymouth, the Solent, the Thames, and Felixstowe and Harwich. An additional freeport exists near East Midlands airport, covering significant portions of Leicester, Derby and Nottingham. The Office for Budgetary Responsibility, which analyses the UK government’s finances, warned in 2021 that tax breaks for freeports in England would result in an annual cost of £50m to the government and that their main effect is to move employment activity from one place to another. Nonetheless, freeports have generated £2.9bn of investment and brought about an estimated 6,000 jobs, according to the UK government
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