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Irwin Mitchell assesses Solent freeport opportunities

By Dan Teuton
25 May 2021

Southampton previously held freeport status up until 2012, when the UK Government discontinued the initiative. Now, nine years later, it has regained this status. What does this mean in practical terms? Law firm Irwin Mitchell examines the opportunities offered by Freeports.

Freeports operate both as reduced tax sites that offer business rates relief, and as customs sites that facilitate the tariff-free movement of goods. This means that goods that arrive into freeports from abroad avoid the usual tariffs; the same goes for goods that are exported from the freeport. By lowering duty and paperwork costs freeports encourage imports, thus stimulating economic activity.



To give a real-world example, freeports allow manufacturing businesses to import the materials necessary for production, make finished goods and export them – all while benefiting from cheaper imported inputs/components in comparison to those businesses located outside the free zone.

An additional benefit of the freeport initiative is that businesses within the free zone that intend to export goods within the UK will benefit from tax-free storage, enabling businesses to defer customs payments. Storage in the area will therefore become increasingly appealing. Recently, DP World announced a £40 million investment in a major programme for the improvement of the container terminal in Southampton.

Increased manufacturing opportunities will in turn create new employment spaces. By the Solent Local Enterprise Partnership (LEP)’s estimations, the freeport has the potential to create 52,000 jobs. The Solent freeport initiative will be a positive force for the city of Southampton, especially as it expects a fall in employment as a result of the Covid-19 pandemic.

The Solent 2050 economic strategy, created by the Solent LEP, proposes that the Solent will be at the forefront of the UK’s coastal renaissance by harnessing new technologies and approaches to revitalise the coastal communities. With a predicted £2 billion investment the Solent will build on its sustainable technology development, for example, enzyme centres for the breakdown of plastic and approaches to decarbonisation. It is envisaged that universities in the region will contribute research to the freeport scheme and it is hoped that the enterprise will catalyse innovation in maritime, autonomy and green growth.

Logistically, the Solent freeport will be comprised of three areas: the ports of Southampton and Portsmouth and Southampton Airport. The theory is that free zones that include inland sites expand the diversity of sites available, thus giving more options to investors.

Additionally, the inclusion of inland sites within a free zone enables the linking of regional supply chain inputs, thereby increasing the attractiveness and effectiveness of freeport incentives. It is thought that the freeport will be facilitated through the deployment of innovative customs procedures and technologies to track the secure movement of goods between sites.

Some have voiced concerns that freeports merely divert business to a specific area rather than generating new business opportunities within a given region. However, the Solent LEP remains hopeful that this once-in-a-generation opportunity will revitalise the region with its new opportunities and that the initiative will push for sustainable practices which will support the Solent in the race to net zero.