HomeBusiness‘Right place at the right time’: freeports model gives fillip to St Helens regeneration scheme
‘Right place at the right time’: freeports model gives fillip to St Helens regeneration scheme
September 23, 2022
Since the last shift at Parkside colliery in St Helens clocked off in 1993 and its two shafts were capped, nature has progressively taken over: scrubby silver birches have seeded themselves on the hardstanding all over the huge site alongside the M6, which once employed 2,000 local people.
But peer through the trees and the piles of fly-tipped junk this week and there were signs of life: bulldozers were busy working on a taxpayer-funded access road, to join this long-neglected site to the adjacent motorway.
It is the first stage of what St Helens council, which owns a 50/50 stake in the project with the local developer Langtree, hopes will be a 1 million sq ft distribution hub, and ultimately an even larger manufacturing centre, bringing potentially thousands of new jobs.
“For us, employment and high-value jobs is what this site is really all about,” says the council’s director of place, Lisa Harris. “We want to make sure that there are local benefits for local people.”
The Parkside project was conceived almost a decade ago, and it is one of hundreds of schemes around the UK poised to benefit from the tax cuts and other incentives that form a central part of the Conservatives’ dash for growth.
It may be a good 20 miles from the sea, but Parkside is part of the Liverpool city region’s freeport. Notwithstanding the name, the freeport takes in not just the port of Liverpool itself but a 28-mile (45km) area around it, including a long-planned regeneration project across the Mersey in Wirral Waters, a huge transport hub in Widnes and this former colliery site in St Helens.
Future investors will be able to take advantage of a slew of tax breaks including capital allowances, stamp duty relief and reduced employer national insurance contributions on new workers. Crucially for champions of Brexit, they also include customs privileges, allowing imports to arrive (and be stored) tariff-free and with light-touch checks, in designated customs zones.
One of these will sit at the historic port of Liverpool, which is owned – as is much of the land around – by the private firm Peel Ports and which was brought to a halt this week by striking dockers.
Steve Gerrard, the national coordinator for freeports at the Unite union, which is organising the action, says that aside from a dispute over pay, they are concerned that workers will not feel the benefits of the freeport project. “What they’re going to be looking to do is undermine terms and conditions. There’s a risk that what you get is a race to the bottom.”
The Labour-controlled Liverpool city region combined authority, which has oversight of the entire ambitious scheme, denies this, insisting that despite freeports being distinctively Conservative, it will implement it in its own way.
The regional mayor, Steve Rotheram, said when the bid was announced: “I want to attract investors into our region who believe in and support our local ambitions – those who will help us to protect workers’ rights and uphold standards, and who want to work with us to regenerate and invest in the areas that need it most.”
Rishi Sunak championed freeports even before he was chancellor, and he confirmed eight sites in his final budget, with a bidding process ongoing on for three more, in Scotland and Wales. But after Kwasi Kwarteng’s mini-budget on Friday, it is clear that the Liz Truss government wants to supercharge this model and replicate it throughout the country.
As many as 38 new “investment zones” will be created. These will lack the customs benefits of the freeports, but alongside tax incentives there will be a dramatically simplified planning system.
As a Treasury factsheet put it, “there will be designated development sites to both release more land for housing and commercial development, and to support accelerated development. The need for planning applications will be minimised and where planning applications remain necessary, they will be radically streamlined.”
Kwarteng called it “an unprecedented set of tax incentives for business to invest, to build and to create jobs right across the country”, which will last for a decade.
Councils already in early discussions stretch from Cornwall to Cumbria, and include the Liverpool city region, which is still awaiting confirmation that the business case for its freeport plan has been accepted, and will have to decide whether to take up these new powers. Significantly, for those such as Liverpool with a regional mayor, the offer will include more control over funding.
Angela Eagle, the Labour MP for Wallasey, whose patch includes Wirrall Waters, says the government’s tax-cutting, deregulatory approach is firmly shaped by Truss’s free-market ideology.
“She seems to be wanting to establish tax havens internally in the country, where the law doesn’t apply. There’s no sign that any of these things ever actually work,” Eagle says. “They are completely faith-led, and their faith is market fundamentalism, with Ayn Rand [the US libertarian] as one of their saints. They’re completely divorced from reality.”
Using tax breaks to tempt inward investors is by no means new: it was part of the Thatcher government’s toolkit as it sought to kickstart regeneration in areas including London’s Docklands, and the Conservative-Lib Dem coalition introduced a new generation of enterprise zones from 2012. Freeports are not new either: the UK had seven, of which Liverpool was one, between 1984 and 2012.
Analysis by the Centre for Cities thinktank of the Cameron-era enterprise zones found that over five years they created fewer than 14,000 jobs, against the Treasury’s forecast of 54,000. Of those, more than a third were existing jobs that had moved from elsewhere, and the overwhelming majority were low-skilled.
“That comes about because these zones are trying to cut the costs of doing business. But these are cheap places to do business anyway,” says the thinktank’s Paul Swinney. “You’re making them even cheaper, and that appeals to a certain type of business, that is doing something quite routinised.”
Adam Hawksbee, the director of levelling up at the thinktank Onward, agrees that tax incentives are only part of the picture when investors are looking for opportunities. “The other big thing is what in investment terms they call the table stakes: what does the land supply look like? What do education and skills in the area look like? How many people are economically active?” he says.
Many of the areas earmarked for the new investment zones are not obviously in need of levelling up – a phrase noticeably absent from Kwarteng’s statement. Truss’s home patch of Norfolk is on the list, as are Suffolk and Greater London. Scully says the planning powers may be more significant here.
“Where planning bites the most is not in struggling places, where getting planning through is relatively straightforward; where planning really bites is in the greater south-east,” he says.
At Parkside they are optimistic the freeports model will give this project – almost a decade in the planning – a fillip. Harris says it gives the council “more tools in our toolbox which we wouldn’t have had previously”.
John Lucy, the director of the overall Liverpool freeport, of which this is just one small piece, says he hopes it will benefit from two big trends – the push for energy self-sufficiency since Russia’s invasion of Ukraine, with zero-carbon projects a key part of Liverpool’s plans; and the worldwide move towards shorter, simpler supply chains.
“Because of the way the world is now, there’s a lot of near-shoring and onshoring of manufacturing,” he says. “All these global supply chains, the existing model is just being totally ripped up. For once, we seem to be in the right place at the right time.”
As the dramatic market reaction to Kwarteng’s statement underlined, however, this and other major investment projects are being launched against the nail-biting backdrop of economic and financial instability, with interest rates likely to continue rising sharply.
But in Liverpool, lapped by so many waves of regeneration over the decades, they are hoping this latest iteration helps give the historic port and its surrounding area renewed economic impetus.
Lucy says: “All of these areas have been vacant and in need of regeneration for three decades or so. If this doesn’t help, this doesn’t help, but it’s better than nothing, and there’s no plan B locally or nationally, so it’s as good a place to start as any.”