Wales freeports for Milford Haven-Port Talbot, Anglesey

Rishi Sunak and Mark Drakeford with harbour master John Goddard at Holyhead, where they announced the freeports

Two Welsh freeports are to be created which aim to bring 20,000 jobs and investment worth £5bn.

Bids from Celtic Freeport, at Milford Haven and Port Talbot, and Anglesey Freeport have been given the green light by the UK and Welsh governments.

Freeports are zones where companies benefit from tax and duty relief and simplified customs processes.

Each was chosen to exploit renewable energy opportunities and are expected to contribute to UK net-zero ambitions.

The BBC has been told Celtic Freeport's bid scored highest during the competition run by the UK and Welsh governments.

It was based around maximising local benefits of a separate plan for a floating off-shore wind project in the Celtic Sea.

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According to official figures, Wales had an export trade worth £115bn between 2016 and December 2022.

A third bid, based around Newport and Cardiff Airport, failed.

Celtic Freeport will be based around Port Talbot and Milford Haven ports, in the counties of Neath Port Talbot and Pembrokeshire respectively.

'Stay local'

"I think it's a really big opportunity for our local area," said Andrew Scott, 16, who is studying his A-levels at Pembrokeshire College.

A-Levels pupil Andrew Scott says the Celtic freeport will encourage young people to stay in Pembrokeshire

He said he was interested in engineering and the renewables sector since plans to build wind farms off the Pembrokeshire coast were announced.

"It's giving young people like myself the opportunity to stay local," he explained.

"I plan to do a degree, and I hope to come back to Pembrokeshire and to work in this sector once I've achieved that higher education"

Anglesey Freeport will be based around Holyhead, Rhosgoch, Anglesey prosperity zone, and science park M-Sparc.

Celtic Freeport Consortium chairman Roger Maggs said there was now potential to access £5.5bn of private and public investment.

"The future is exciting," he said.

Tata Steel, which has a site in Port Talbot, said it was delighted the Celtic Freeport bid was successful.

Pembrokeshire council leader David Simpson said Celtic Freeport would unleash "green industrial potential".

Neath Port Talbot council leader Steve Hunt said it was "an absolute game changer" for his county and Wales.

Anglesey council leader Llinos Medi said freeport status would be an important to securing a brighter future for Ynys Môn and north Wales.

"Too many of our young people have had to leave their communities to find decent jobs and a secure future. We want that to change, and freeport can help."

The Celtic Freeport will be based around the ports of Port Talbot, pictured, and Milford Haven

Ian Hampton, executive director at Stena Line it was an "excellent opportunity to drive forward sustainable economic growth, green energy, jobs, and skills"

"We are delighted for the people of Anglesey and north Wales, and excited about the positive commercial prospects that can be turned into a reality."

CBI Wales director Ian Price called it a "double boost for the economies and communities in both north and south Wales".

Rishi Sunak speaks to RAF air cadets during his visit to RAF Valley on Anglesey on Wednesday

Freeports were introduced by the UK government to try to promote regeneration and jobs.

Eight have been created in England and two announced in Scotland.

However the UK government's budget watchdog, the Office for Budgetary Responsibility has said historical evidence suggests freeports' "main effect" will be to move economic activity from one place to another.

Responding to such concerns, Welsh Secretary David TC Davies said the two new freeports had specific roles and were set at certain distances to avoid the risk they suck up investment from other parts of Wales.

"They are not going to be taking jobs from elsewhere," he said. "They're going to be building prosperity into areas that desperately need and frankly deserve it."

He said the 20,000 jobs figure had been rigorously assessed, but conceded it would take "up to 2030 and beyond" to create them.

"It will take time for these areas to ramp up and get used to changes," he said.

'Fresh opportunities'

The UK government will provide up to £26m funding for each of the Welsh freeports.

UK Prime Minister Rishi Sunak was in Anglesey on Wednesday. On Thursday he and Wales' First Minister Mark Drakeford met in Holyhead to announce the freeports.

Mr Sunak told BBC Wales the news had been "warmly welcomed by local communities, there's a real buzz as we've been walking around today".

"Everyone's got a real lift from this announcement and they're already getting, I think they said to me, 40 different companies have been in touch thinking about trying to invest here [and] create jobs for the local community," he said.

"That's great for Wales, and that's what we want. We want to drive growth we want to create jobs and opportunity. These freeports in Wales will help us do that. "

Holyhead has expressed an interest in gaining freeport status

Mr Drakeford said the freeports were expected to be operational by the end of the year and would create a "platform for those industries that will shape the future of Wales".

"If we know anything, it is that the supplies of oil and gas on which the world has relied will run out," he said.

"We will all then need new supplies of energy and Wales is perfectly placed to be part of the renewable energy of the future and the freeports will provide us with an entry point into all of that.

"They're really important in themselves, but they are more important because of the way that they will allow those renewable industries to be created here in Wales."

What is a freeport?

At the moment, importers of 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 to pay 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.

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

But critics argue they do not create new jobs but simply encourage businesses to move from one location to another.