That is a very good question on an interesting topic. I will make a couple of background points. We had free ports in the UK up to 2012, I believe, but they were not used. There are other customs procedures that do pretty much the same thing without the need to relocate and be near a port, so those procedures are more popular than free ports.
What the UK Government is planning to do now, with the consultation on free ports and the report that came out of that, is a mixture of a free port procedure in relation to customs and other incentives—tax incentives, support and additional provisions for companies. It is not necessarily purely a customs procedure.
From a customs perspective, free ports can be a useful tool, but they are not necessarily so. The very successful free ports are located in areas such as the middle east, where tax provisions are perhaps slightly more flexible than they are in the UK, so the big benefits of free ports that we see there might not be able to be replicated in the UK from a customs perspective.
It is worth mentioning that a free port adds one more customs border, because the free port itself is surrounded by yet another customs border, so it adds even more paperwork and red tape.
There has been a lot in the media about illegal activities, and the European Commission issued a report on the subject a while back. It is not a new topic. Free ports have been known to be places where various activities take place. A number of people in different disciplines know them for different purposes. For investors, free ports are a fantastic place to store expensive art and other investments because of their duty-free nature and the incentives that they provide.
I guess that everything will depend on the number of controls that are implemented in the free ports and how much illegal activity goes on. That brings me back to how much red tape and how many additional procedures are involved in free ports, given that they require oversight, additional inspections and so on.
On whether they can be helpful or not, I note that a number of UK ports have applied or, at least, are thinking about applying for free port status. I am not saying that free ports cannot be beneficial, but I think that, in many cases, ports are expecting this to completely change their situation. There was an article about a port a day or two ago, and the headline said that free port status is key to its survival. I do not think that the benefits of a free port can be so great as to be the key to survival. If the situation in a port is that dramatic, I do not think free port status will change it.
There have been other reports about ports that have already invested in new technologies and have special plans for green investment, green infrastructure and so on, and they are applying for free port status. Again, I am not necessarily sure that the benefits will equal the up-front investment. I am also not entirely sure who will be making that investment. I am not sure whether it will just be the port or whether the Government will support it. However, up-front investment is required in fencing off the port, making sure that it is secure and providing additional staff, procedures, IT systems and so on.
The benefits of free ports might be slightly oversold. I am not saying that there are no benefits; I am just not entirely sure that they are as great as a lot of ports are expecting them to be. I think that the ports might be a bit disillusioned once they have received the status. Again, we will see what happens. We need to see what specific provisions will be granted to ports with the status, but I would be quite cautious about how much it can change things. It can be helpful for ports that are already doing well and operating well, but it is definitely not something that will significantly alter a port’s activities.