Since their announcement in 2021, the UK freeports initiative has made significant strides. The government has designated 12 Freeports across England, Scotland, and Wales, each strategically located to drive regional economic growth and innovation.
These freeports aim to attract investment, create jobs, foster innovation, encourage low-carbon industries, aligning with the UK’s broader goals of stimulating trade and achieving Net Zero. Freeports benefit from a generous package of incentives, excellent port infrastructure (both sea and air), and build on the proud industrial heritages of their regions.
Benefits for UK Manufacturers
It is believed that freeports offer significant advantages to UK manufacturers in the areas of investment, taxation, innovation, collaboration, and employment. By leveraging these benefits, manufacturers can enhance their competitiveness and contribute to regional and national economic growth.
Investment
Freeports have already attracted £2.9 billion in investment. For example:
- The Humber Freeport has secured investment from Pensana PLC to create the UK’s first rare earth processing facility, a critical link in the supply chain for green energy and low-carbon technologies;
- The Teesside Freeport is harnessing its proximity to the North Sea, attracting major investment in offshore wind manufacturing;
- In the South-West, the Plymouth and South Devon Freeport has secured investment from M Subs, who design and operate underwater vehicles, continuing the region’s proud maritime reputation; and
- The Liverpool Freeport, which centres around advanced component and digital logistics manufacturing, is developing capabilities in nano-scale optical components, driven by investments such as the £42 million project by Seagate Technologies.
These examples could be just the beginning. As freeports develop, they are likely to attract more investment, driving innovation and economic growth.
Tax and Tariffs
Manufacturers operating within freeports benefit from enhanced capital allowances, accelerated tax relief on investments in plant and machinery, and substantial reductions in business rates.
Similarly, freeports offer simplified customs procedures and tariff benefits, making it easier and more cost-effective for manufacturers to import raw materials and export finished products.
These financial incentives can significantly lower operational costs, encourage expansion, and, at a time of shifting political landscapes, UK businesses could find themselves with a genuine competitive edge.
Innovation and Collaboration
Proponents of freeports believe that they foster innovation by bringing together businesses, local authorities, and educational institutions. This collaborative environment is leading to the development of new technologies and processes, particularly in sectors like renewable energy and advanced component manufacturing. For example:
- The Teesside Freeport is working on projects related to hydrogen production and carbon capture (a process where carbon dioxide emissions from industrial activity are captured before they can be released into the atmosphere);
- The Teesside Freeport has also established a Digital Trade Testbed, serving as a national asset for testing and implementing digital trade solutions. This project fosters collaboration between businesses, local authorities, and educational institutions to develop innovative technologies; and
- Freeport East has created an innovation hub that brings together businesses, universities, and research institutions, focusing on developing new technologies and processes in the logistics and maritime sectors.
Manufacturers looking to innovate and collaborate must ensure they have strong intellectual property protection and avoid infringing on others’ intellectual property rights.
Additionally, as manufacturers within Freeports develop, innovate and produce advanced components, they must be aware of potential product liability issues.
Employment
Proponents also state that freeports can create long-term jobs and provide new opportunities for skills development. For example, the Liverpool Freeport collaborates with higher and further education institutions to tailor job skills programmes that align with employer priorities, fostering an environment of sustainable growth and prosperity for local communities.
As of December 2023, the UK Government reported that freeports have created over 6,000 jobs, predict that the 12 Freeports announced since 2021 could create a further c.200,000 jobs.
Freeports therefore not only benefit local communities but also present manufacturers with an opportunity to close the significant skills-gap currently troubling the sector.
Given the above, there may be instances where manufacturers require specialist employment law advice, for example, during recruitment drives, to ensure compliance with employment laws relating to, among other things, hiring processes and employment contracts, when employees are not meeting expectations, or in respect of workplace policies.
The Future of Freeports
The UK Freeports initiative is well underway, with substantial investment and job creation already evident. Manufacturers, perhaps more than most, stand to reap the benefits of operating within freeports.
The UK Government is now working to establish Freeports across the whole of the UK. Each Freeport builds on regional sector strengths, key infrastructure, and the connectivity of the ports they encompass to offer unique investment and trade opportunities.
Whilst the opportunity for growth and a fast-changing technical and regulatory environment could bring about notable legal complexities, Nelsons has an experienced team able to advise on matters such as:
Our Commercial Dispute Resolution team can also assist should any matters become contentious.
How can we help?
For more information about legal action for manufacturers don’t hesitate to get in touch with Simon Key (Partner) or Dominic Simon (Senior Associate) in our expert Dispute Resolution team. Please contact the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.
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