The Port of Liverpool’s ‘freeport’ designation, removed in 2012, has been reinstated in the Chancellor’s budget announcement, and is expected to bring investment, trade and jobs to the city region.
The Liverpool City Region bid for freeport status, submitted to the Government ahead of the 5 February deadline, is one of eight winning applications. The other designated freeports are East Midlands Airport, Felixstowe & Harwich, Humber, Plymouth and South Devon, Solent, Teesside, and the Thames.
Freeports are specially designated economic zones where usual tax and customs rules do not apply, to encourage import, export and other commercial activity. For example, imports can enter a freeport with simplified customs checks and without paying tariffs.
The Port of Liverpool operated under freeport status until freeports were abolished in 2012 by the then-coalition government. The revival of freeports by Prime Minister Boris Johnson’s administration is part of Whitehall’s policy shift towards light-touch regulation and low-tax commerce.
The new freeports will contain areas where businesses will benefit from more generous tax reliefs, customs benefits and wider government support to areas of the country in need of regeneration.
Asif Hamid, chair of the Liverpool City Region Local Enterprise Partnership, which coordinated the bid, said: “This is a groundbreaking announcement for the city region. The multi-gateway, multi-modal freeport will enable key sites to attract new investment, create jobs, support the wider economy and increase levels of innovation.
“It also has the potential for future opportunities in hydrogen, offshore wind and tidal power, ensuring that our city region becomes a focal point of the Government’s net-zero carbon ambitions and a global beacon for investment in renewable technologies.”
According to the Budget announcement today, the Government will have to legislate for powers to create so-called ‘tax sites’ in freeports, which would in turn be approved and confirmed by ministers. Tax and other benefits include:
- Full relief from Stamp Duty Land Tax on the purchase of land or property within freeports, provided it is purchased and used for a qualifying commercial purpose. The relief will be available until 30 September 2026.
- An enhanced 10% rate of Structures and Buildings Allowance for constructing or renovating non-residential properties within freeports and bringing them into use on or before 30 September 2026
- An enhanced capital allowance of 100% for companies investing in plant and machinery for use in freeport tax sites up until 30 September 2026.
- Full Business Rates relief for all businesses operating in freeport sites, and certain expanding businesses, available to apply for until 30 September 2026. Relief will apply for five years from when each beneficiary first receives relief.
- National Insurance relief for employers operating in freeports from April 2022, subject to parliamentary process and approval. This would be available until at least April 2026 with the intention to extend for up to a further five years to April 2031.
The winning freeports must now complete their business cases and have their governance arrangements signed off by Government before commencing operations later this year.
The Port of Liverpool straddles Liverpool and Sefton boroughs, with the main operations at Seaforth docks in Sefton.
The three development areas proposed for tax sites in the Liverpool City Region freeport are: Peel L&P’s Wirral Waters mixed-use scheme, Langtree’s Parkside colliery regeneration in St Helens, and Stobart’s 3MG (Mersey Multi Modal Gateway) development in Widnes. Peel L&P’s proposed multi-modal terminal on the banks of the Manchester Ship Canal was also included in Liverpool City Region’s bid, despite it being in Greater Manchester.
Peel Ports, the operator and port authority of the Port of Liverpool, supports the freeport bid. However, Sefton Council has previously said it “strongly opposes” reinstating freeport status for the area unless the environmental and social impacts of growth at the port –particularly road traffic – are mitigated. The council has been contacted for comment.
Anthony Hatton, director of strategic projects at Peel L&P, said: “We’re delighted to hear the Chancellor’s announcement that the bid to become a freeport has been successful and that our Wirral Waters and Port Salford developments have helped to the strengthen the case. As a hub for global trade and investment, the freeport will promote levelling up through regeneration, attracting foreign investment, creating new jobs and facilitating innovation, particularly in low carbon technology.
“Meanwhile, Wirral Waters is a nationally significant regeneration site that will support manufacturing and, through the creation of a £23m Maritime Knowledge Hub, will be a focus for dedicated maritime and decarbonisation innovation.
“The inclusion of our Port Salford tri-modal freight facility and distribution park will provide an inland customs site with rail access to the Port of Liverpool and the West Coast Mainline.”
Despite the freeport win, Steve Rotheram, Metro Mayor of the Liverpool City Region, said that, overall, the budgetary measures announced by the chancellor today “fall short of the comprehensive long-term recovery plan and investment…that regions like ours need if the Government is to achieve its stated aim of ‘levelling up’”.