The Adam Smith Institute’s latest paper, written by Sam Ashworth-Hayes, argues that freeports can turbocharge growth in the UK economy if they focus on redressing the UK’s unique policy failures.
Some academic economists are sceptical of the ability of freeports to add value to the British economy, arguing that they primarily divert (rather than create) economic activity;
Policymakers need not risk this being the case—freeports offer an exciting opportunity to create growth by addressing inefficiencies within the British economy;
This paper sets out four ways this can be achieved;
Creating a light-touch planning regime, providing fast and certain planning permission for high value economic activities;
Providing significant packages of local investment to alleviate concerns about crowding of public services and infrastructure, with short run disruption smoothed by offering payments linked to the port’s success;
Implementing a tax regime designed for growth, including full expensing for capital investment, the simplification of customs processes, and the elimination of property taxes;
Establishing a regulatory sandbox, allowing governments to trial regulatory changes across a sample of freeports, testing policy alternatives against one another and getting real world feedback on their performance.
By tailoring the freeport model to address the UK’s unique policy failures, these facilities can boost growth and provide a proof-of-concept for beneficial future reforms to the wider economy.