The unveiling of new freeports in the UK has devolved into an exercise in miscommunication and dashed expectations, exposing the pitfalls of political overreach.
On Wednesday, Chancellor Rachel Reeves will resist Downing Street’s own recent declaration that the UK planned to establish five new tax-free sites. Instead, government officials admit, she will announce merely the "next steps" for five existing freeports—steps that amount to giving them official clearance to house customs sites.
The confusion was sparked last Friday when Downing Street prematurely trumpeted plans to create “five new freeports” while Prime Minister Sir Keir Starmer was attending the Commonwealth summit in Samoa. The claim left port executives, Whitehall officials, and local mayors in the dark—a puzzlement compounded by the reality that no such expansion was planned. Officials confessed that it was simply a "total cock-up with the comms," a blunder that not only undermined trust in government competence but also inadvertently inflamed political tensions.
The Conservative Party swiftly capitalised on the gaffe, labelling it a "humiliating u-turn" and warning that it would damage already fragile business confidence. Such rhetoric, while pointed, reflects the broader scepticism surrounding Labour's approach to the freeport model—a concept championed by former Conservative leaders Boris Johnson and Rishi Sunak as a Brexit dividend to lure international investment.
Investment Zones, Not Expansion
Instead of announcing new sites, Reeves will approve a previously proposed "investment zone" in the East Midlands, carried over from the previous Conservative administration—a move that aligns with Labour's own industrial strategy. She will also reconfirm support for the existing 12 freeports: eight in England, two in Scotland, and two in Wales. The idea of creating brand-new zones appears to have been a mirage, one conjured by premature announcements.
The freeports themselves, equipped with special customs facilities and tax breaks to promote manufacturing and employment, were designed to provide economic lift-off. But uptake has been limited. According to data shared with HM Revenue & Customs, just six businesses are using customs sites at the eight English freeports. Nonetheless, Reeves is expected to confirm that five of the 12 sites—including Liverpool, Humber, and the Inverness and Cromarty Firth Green Freeport in Scotland—are now ready to fully activate their customs operations. The Humber site, in particular, will receive an additional £25 million in seed funding as part of the move to full operability.
The Labour government, despite holding no “ideological view” on freeports, is pressing ahead, albeit with some recalibration. Prime Minister Starmer affirmed, "We looked at them, they are working well, I think they could work better, so rather than stand them down we’re going to go with it, we’re going to make some improvements so they could work even better."
Starmer added that Labour’s vision is to align the freeports more closely with Local Growth Plans, enhancing their integration with regional development schemes. The areas of specialisation that each freeport embraces—Humber focusing on rare earth metals, Teesside on offshore wind turbine manufacturing, and Plymouth on autonomous maritime vehicles—will become more central to the party’s broader industrial strategy.
A Mixed Record of Economic Impact
Despite lofty ambitions, freeports have faced scrutiny. They have thus far attracted an estimated £6.4 billion in investment and reportedly created 7,000 jobs. Labour’s linked low-tax investment zones in England aim to generate 90,000 jobs by 2033 while drawing £10 billion in private investment, according to government forecasts. Yet, historical evidence suggests freeports often redirect rather than create investment. The Office for Budget Responsibility stated in 2021 that the impact of freeports on UK GDP would likely be "difficult to discern even in retrospect."
While Labour may not be advancing new freeports, the party's willingness to refine the existing model demonstrates a pragmatic approach—one that seeks to balance economic opportunity with a realistic appraisal of the costs and benefits. Whether this balancing act will be enough to shore up waning business confidence remains an open question, but for now, the policy pendulum has swung not towards radical expansion, but incremental improvement.
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