Freeports: What will they bring to Wales?

There are eight freeports in England, including Thames Freeport

Wales is to get at least one freeport, following an agreement between the UK and Welsh governments.

Freeport status allows firms to import goods and then export them outside normal tax and customs rules.

Interested parties will soon be able to submit their bids, with the UK government saying it will create thousands of skilled jobs.

The Welsh government welcomed the agreement after "considerable engagement".

Eight freeports have already been rolled out in England, with Teeside and Thames already operating.

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But until now, the Welsh and UK governments could not agree a way ahead on getting a freeport in Wales.

Wales' First Minister Mark Drakeford had expressed concerns that freeports in England could mean that work was lost from Wales, amid other policy concerns.

This led the UK government to accuse the Welsh government of delaying the process of setting up freeports in Wales.

Now both sides have reached agreement, the process of choosing which ports get that status begins.

They can be areas with sea, rail or air links. For example, in England, East Midlands Airport has won that status.

The UK government has agreed to provide at least £26m of non-repayable starter funding for any freeport established in Wales, which the Welsh government said represents parity with the deals offered to English freeports.

Both governments also agreed to a "partnership of equals" to deliver any freeports in Wales.

Simon Hart previously said the lack of agreement with the Welsh government was the "source of some frustration"

Welsh Secretary Simon Hart confirmed £26m will be given, adding that freeports will be "genuinely transformational for the areas where they will exist".

Wales' Economy Minister Vaughan Gething said: "Following considerable engagement between our governments, I'm pleased we have been able to reach agreement with UK ministers to establish freeports in Wales.

"The agreement we have reached is fair to Wales, and respects the Welsh government's responsibilities in devolved policy areas.

"However, we have made it clear to the UK Government that a freeport will only be implemented if it can be demonstrated, using robust evidence and analysis, that it will support our fair work agenda and deliver long-term, sustainable benefits for Wales, and value for money for Welsh taxpayers.

"I very much hope that the UK government's willingness to work with the Welsh government as equals on freeports can provide a positive model for future co-operation between our governments on other initiatives."

The UK Secretary of State for Levelling Up, Housing and Communities, Michael Gove, said: "I am delighted that Wales is the latest area in the UK set to benefit from a new freeport.

"The UK government's ambitious freeports agenda will help to level up our coastal communities and create new opportunities for people right across the country.

"Together with the Welsh government, I look forward to seeing innovative proposals come forward that demonstrate tangible benefits for the people of Wales."

What is a freeport?

An agreement has been made between the two governments for at least one freeport in Wales

At the moment, goods or raw materials that enter the UK have to pay taxes or tariffs.

There is no single definition of a freeport but in general it means that companies importing products into the freeport do not have any taxes when they bring them in.

If they use those products to make something else and then export it, they do not have to pay any taxes. They would only have to pay them if the product left the freeport and entered the UK .

A freeport is effectively outside a country's customs borders.

"It's about getting new industry, innovation, new people into the area who are going to be in very good well paid jobs," said Welsh Secretary Simon Hart .

He confirmed that existing businesses would also benefit from the tax break but denied that was helping businesses that did not need it at a cost to the taxpayer.

"This is not about giving a nod and a wink to successful businesses," he said.

He argued that more taxes, like income tax, would be raised if more jobs were created.

"This is not a tax-free environment but an incentivised environment," he said.

In England businesses in freeports also have cheaper business rates, but in Wales that would be up to the Welsh government.

They also pay a lower rate of National Insurance for new staff.

The Scottish and UK governments have agreed to set up two green freeports, with the two governments sharing responsibility.

The ports would focus on low emissions industries and fair work.

The argument in favour of freeports is that they create new jobs and attract investment .

But critics argue that they do not create new jobs, simply encouraging businesses to move from one location to another.

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