My name is EZymandias, King of Kings;
Look on my Works, ye Mighty, and despair!
Nothing beside remains. Round the decay
Of that colossal Wreck, boundless and bare
The lone and level sands stretch far away
Nothing is new. Least of all the idea that economic activity may be generated by way of a state identifying a zone, whether in its borders or elsewhere, within which more advantageous rules apply for those doing business, for instance in terms of customs, taxes and constraints over development, and within which zone the state gives an organisation (which may be in part or wholly privately owned) a degree of regulatory autonomy.
The idea is topical. I referred in my 16 July 2022 blog post Neutrality to the “charter cities” idea that has been gaining traction in right wing circles and to Liz Truss’ espousal of “low planning zones: new investment zones around key parts of the United Kingdom with much clearer planning rules so people can get on with building straight away to generate those jobs and opportunities.”
To start to get to the root and very starting point of the charter cities concept, last night I watched Nobel Prize laureate and former Chief Economist of the World Bank Paul Romer’s 2009 Ted Talk, Why the world needs charter cities and I read his related paper, Technologies, Rules, and Progress: The Case for Charter Cities (Paul Romer, March 2010). Romer was one of Rishi Sunak’s professors at Stanford University. Sunak has described him as “brilliant and inspiring” .
If you look at what Romer is saying – or dip into the Charter Cities Institute’s website https://chartercitiesinstitute.org/ (the cheer-leading group for the concept) – it could be said to be rather simplistic (not to say colonial), pointing for instance to the success first of Hong Kong and then of the special economic zones established by China along its coastline, and suggesting that an equivalent model could allow first world countries to establish charter cities within developing countries, to mutual benefit and to the benefit of the population of the host country, who would have the “choice” as to whether to move to and subject themselves to the more economically-efficient (my summary) rules of the charter city.
Of course the usual questions arise: to what extent does such an arrangement impoverish or strip resources from those outside the charter city? How are human rights protected? How is the host country to ensure a fair deal is struck, given the likely inequality of bargaining positions? What of the right to self-determination for those in the area? In the fight against climate change, will this help, or hinder?
Madagascar and Honduras have indeed both explored but not implemented the idea. You may also recall a couple of years ago the media coverage around apparent discussions “between property developer Ivan Ko and the government of Ireland, with the former proposing the construction of a safe haven in the form of a semi-autonomous city in Ireland—one which would allow for the emigration of thousands of Hong Kong residents” (Charter cities: can they solve the world’s problems? (Thomson Reuters, 31 July 2020)).
The charter city label could equally be applied to the proposal/dream/nightmare that was the subject of this 27 July 2022 Guardian piece, Saudi Arabia plans 100-mile-long mirrored skyscraper megacity or indeed to the now abandoned Toronto “smart city” project promoted by Sidewalk Laboratories (part of the Alphabet group which also owns Google) – see Sidewalk Labs folds back into Google. Have “smart cities” had their day? (Verdict, 17 December 2021). Some fundamental issues swirling around those two projects alone for sure, about democracy, sustainability, data privacy and sheer Ozymandian folly.
Of course it’s not much of a step down from charter cities to freeports – it is all down to the detail of the regulatory arrangements and legal protections, as well as a question of scale.
Again topically, on 29 July 2022 DLUHC updated its guidance on Freeports although with no new substantive changes of note that I could see anyway.
From the guidance:
“Freeports are special areas within the UK’s borders where different economic regulations apply. Freeports in England are centred around one or more air, rail, or seaport, but can extend up to 45km beyond the port(s).”
“Our Freeports model will include a comprehensive package of measures, comprising tax reliefs, customs, business rates retention, planning, regeneration, innovation and trade and investment support.
Eligible businesses in Freeports will enjoy a range of tax incentives, such as enhanced capital allowances, relief from stamp duty and employer national insurance contributions for additional employees. These tax reliefs are designed to encourage the maximum number of businesses to open, expand and invest in our Freeports which in turn will boost employment.
Freeports will benefit from a range of customs measures, allowing imports to enter the Freeport custom sites with simplified customs documentation and delay paying tariffs. This means that businesses operating inside designated areas in and around the port may manufacture goods using these imports, before exporting them again without paying the tariff.
Freeports will provide a supportive planning environment for the development of tax and customs sites through locally led measures such as Local Development Orders or permitted development right development.”
The Government’s “Freeport model has 3 objectives:
a) establish Freeports as national hubs for global trade and investment by focusing on delivering a diverse number of investment projects within the Freeport regions, make trade processes more efficient, maximise developments in production and acquire specialist expertise to secure Freeports position within supply chains.
b) create hotbeds for innovation by focusing on private and public sector investment in research and development; by being dynamic environments that bring innovators together to collaborate in new ways; and by offering spaces to develop and trial new ideas and technologies. This will create new markets for UK products and services and drive productivity improvements, bringing jobs and investment to Freeport regions.
c) promote regeneration through the creation of high-skilled jobs in ports linked to the areas around them, ensuring sustainable economic growth and regeneration for communities that need it most. Local economies will grow as tax measures drive private investment, carefully considered planning reforms facilitate construction and infrastructure is upgraded in Freeports”
People of course point to the fact that it was Sunak who as Chancellor in 2021 announced the establishment of the latest round of eight English freeports:
- East Midlands Airport
- Felixstowe & Harwich including the Port of Felixstowe and Harwich International Port
- Humber including parts of Port of Immingham
- Liverpool City Region including the Port of Liverpool
- Plymouth & South Devon including the Port of Plymouth
- Solent including the ports of Southampton, Portsmouth and Portsmouth International Port
- Thames including the ports at London Gateway and Tilbury
- Teesside including Teesside International Airport, the Port of Middlesbrough and the Port of Hartlepool
How the planning system will operate within them is still uncertain and no doubt will be a patchwork quilt of differing arrangements. The Government’s Freeports bidding prospectus (November 2020) said this on the subject:
Bidders will be able to take advantage of the planning reforms set out in the Consultation Response related to permitted development rights and simpler, area-based planning – in particular Local Development Orders (LDOs).
The government recognises the advantages that wider planning reform can bring to Freeports development. Therefore, as part of a longer-term programme of reform to England’s planning system, the government is exploring the potential to go further in these areas, as well as the potential to test ambitious planning proposals in Freeports, taking advantage of the controlled spaces that they offer.
In addition to the measures set out in the Freeports Consultation, the government is actively exploring a new, simpler framework for environmental assessment, as well as intending to review the National Policy Statement for Ports in 2021.”
(Dear reader, you will have noticed that 2021 has since come and gone).
For further reading I also recommend the House of Commons library paper, Government policy on freeports (14 February 2022).
I mentioned that this is the latest round of freeports. I’m sure we can expect the incoming prime minister to expand the initiative. But let’s not forget that freeports are nothing new and (aside from some nuanced detail around state aid) they are not really a dividend from our old friend in the corner, Brexit. Seven freeports operated in the UK at various points between 1984 and 2012.
Another great theme of the current prime ministerial tussle has been both candidates’ attempts to emulate their professed idol Margaret Thatcher. As a milk drinker I may be biased – as education minister in 1971 she took away free milk from the over sevens. I was seven. (Rishi and Liz weren’t born).
Shortly after she came to power in 1979, the Local Government, Planning and Land Act 1980 was enacted (“lug plaa” as we all called it) which paved the way for the creation of a new type of urban development corporations, including most notably the London Docklands Development Corporation, which was given wide planning and compulsory land acquisition powers, with the area also given enterprise status under the Act. Here is the rather quaint 26 April 1982 press release.
The Survey of London: Volumes 43 and 44, Poplar, Blackwall and Isle of Dogs gives this account:
“In order to provide substantial inducements for firms to move into Docklands, the Government, with effect from April 1982, designated much of the area centring around the West India and Millwall Docks as an Enterprise Zone, as provided for under the 1980 Local Government, Planning and Land Act, with the intention of encouraging and speeding up development. The boundary was carefully drawn to exclude those sites which had already been, or were in course of being, developed, such as Billingsgate Market (see plan C). (fn. 5) The chief financial concessions were: freedom from local rates for a ten-year period until 1992, no development land tax, and 100-percent capital allowance for new commercial and industrial buildings, to be set against corporation and income taxes. In December 1986 the Financial Times, in announcing the proposed relocation of its printing works to Docklands, calculated that the £20,850,000 cost of the site and building would be reduced to £15,400,000 by the tax concessions offered in the Enterprise Zone. (fn. 6)
In addition, there were simplified planning procedures: the zone was set up with an overall planning scheme, and any proposed development that conformed to that scheme was deemed to have been given planning consent, unless it was considered a particularly sensitive site and therefore specifically excluded from the general planning provision. (fn. 7) Similarly, development within the zone was normally free of ‘use class’ planning controls, so that a structure originally intended to be a factory or warehouse could be converted to office use during the course of construction, without requiring further permission.”
The House of Commons Library, research briefing Enterprise Zones (21 January 2020) is a useful summary of where we now are with enterprise zones. 38 Enterprise Zones were designated between 1981 and 1996. When the coalition government came to power in 2010 Chancellor George Osborne announced the creation of further EZs. As at 2020 there were, I think, 44 in England, in Scotland, 7 in Wales and 1 in Northern Ireland.
Again, no doubt additional EZs may be in prospect.
What of any of this in the Levelling-up and Regeneration Bill – and is it going to be given a Sunakian/Trussian polish in September? The Bill does already provide for locally-led urban development corporations, away from the previous 1980 Act centralised model (how truly local is local depends of course on the carrots and sticks deployed by the centre) but are we going to see any more ambitious/radical ideas come into play?
This has been an only-scratching-the-surface and leaving-you-to-join-the-dots sort of blog post. Even getting this far has taken me, on-screen at least, all around the world. I don’t have all the answers. Be wary of those, on all sides, who pretend that they do!
Simon Ricketts, 30 July 2022
Personal views, et cetera