How customs reform could rebuild Britain

Barndoor Director Chris Alley sets out how free ports could revolutionise trade and manufacturing in the UK

For thirty years Britain staggered on after the war.  The “sick man of Europe” weighed down by militant unions, rampant inflation and obsolete business practices, Britain was locked into a spiral of decline. At its zenith the dead remained unburied and rubbish piled up on the streets.  It was not until economic reforms, ironically pioneered by Jim Callaghan’s ailing Labour Government, that Britain started to turn the corner.  Enthusiastically embraced by Margaret Thatcher in the 80s with the “Big Bang”, liberal economics allowed the City to become the global financial centre we know today and the UK to become the 5th largest global trading economy (IMF 2018).

However, many regions of the UK have felt left behind by this economic revival that has focused wealth, jobs and growth around London the south east primarily in service industries. Industries around which entire communities were centred declined, were lost and left with nothing. Historic economic links were lost and the UK’s competitiveness in global markets declined as the economy became ever more EEA and EU focused and the restrictions placed by the UK as members of the Customs Union. One of the prime drivers of Brexit was that a large swath of the working population outside London and the south east have seen their incomes stagnate in the last two decades.  

Regions like Northern England, Glasgow, North and South West Wales and Northern Ireland are amongst many regions that have felt left behind and forgotten by Westminster – which seems fixated on London and the Financial services industry. Even Labour, both at a national and local level, when in power have failed to deliver on their promises to areas like the North, having taken long taken the Northern vote for granted. While at the same time hamper attempts at rejuvenation of the regions, such as the Northern Powerhouse, which received attack by local Labour governments and MPs. This can in some way explain why many people in the old industrial and Labour heart lands voted in favour of Brexit in 2016 and why those in London cannot understand why.

What is necessary is for those in Westminster to unlock the full potential of those regions that have been left behind before and take them along post Brexit. This would go some way to share the benefits of Brexit and to build a deep enough economy to weather any of the economic storms waiting for the UK when we leave.

There have been many people who have been looking at Brexit as an opportunity to revitalise the industries and economies of their regions. Ben Houchen, the Mayor of Tees Valley, has been a particular champion in this regard. His push for granting Teesport “free port status” is a crucial part his plan to reinvigorate the region.

Free Ports provide special freedoms to trade, within a specific area around a major port. Free Port status supports the expansion of international trade by offering exemptions from certain operational, regulatory and customs requirements. Current Custom Union regulations bar the creation of free ports.

A previous Centre for Policy Studies report written by Rishi Sunak MP in November 2016, titled “The Free Ports Opportunity, How Brexit could boost trade, manufacturing and the North” looked at some of the potential benefits of Free Ports to the UK economy post Brexit.

Mr Houchen has gathered cross party support and the backing of around 50 industry leaders in Tees Valley for his Free Port campaign. This has resulted in the Government taking notice and viewing Free Ports as one of many new solutions for a post Brexit era. Government ministers have backed his proposal for a study into the benefits of Free Port status for the Tees Valley region.

Teesport may be pioneering this new push for Free Port status, but it is not the only one. Grimsby on the Humber is one of them and there have been calls for ports in Wales to make a serious bid for Free Port status. By freeing up regulation and encouraging investment, it has been argued that free port status could drive growth and increase jobs. Maybe it’s time for a study into the benefits of free port status Wales.

The idea of Free Ports was floated in evidence to a Welsh assembly committee’s inquiry into Brexit’s impact on ports, in which the Economy Secretary Ken Skates has said it is worth investigating. However, Welsh politicians would need to learn lessons from Ben Houchen’s campaign to get Teesport granted Free Port status; to ensure Wales is able to take advantage of any opportunity that Brexit may send its way, as well as insulate itself from any economic turbulence once it, along with the rest of the UK, walks out of the EU and into the unknown.