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New UK prime minister pledges to prioritise free ports

Free ports are a major plank in the economic platform of Britain’s new prime minister, and whatever anyone thinks of his Brexit policy, the uncertainty is now over

‘Let us begin work now to create free ports that will drive growth from thousands of high-skilled jobs in left-behind areas. Let’s start now,’ Boris Johnson has proclaimed

FREE ports will be prioritised as a key economic measure in the wake of Britain’s departure from the European Union, the UK’s new prime minister has pledged.

Shipping and the broader maritime industries also stand to benefit the ruling Conservative Party’s traditional pro-private enterprise orientations, despite an outburst in private conversation that saw Boris Johnson use a four-letter expletive in relation to business.

But what — in general terms — should shipping people be expecting from the fledgling administration?

Mr Johnson secured the job by winning a ballot of party members, beating rival contender Jeremy Hunt by a margin of 92,153 votes to 46,656.

Key appointments so far include Sajid Javid as chancellor of the exchequer, Dominic Raab as foreign secretary, and Priti Patel as home secretary.

Grant Shapps has been given the transport brief, in which capacity he will oversee the work of the shipping minister once the name of the appointee is known.

Existing shipping minister Nusrat Ghani, who has been ubiquitous at shipping events since taking that job in January 2018, was a supporter of Mr Hunt, which may count against her.

Seen as being on the right of his party, Mr Johnson comes to office on the back of pledge to implement Brexit by October 31, come what may.

Trade deals

Like many of his political hue, he regards Britain’s departure from the EU not as a threat, but rather an opportunity to seek new free trade deals with other countries across the globe.

This has proved harder to achieve in practice than in looks in theory; in the three years that have elapsed since the Brexit referendum, the UK has negotiated just 12 free trade deals.

Even that figure that includes such economic minnows as Liechtenstein, the Faroe Islands and Micronesia.

There is no consensus in the country that Brexit will be a good thing in economic terms, and some economists even foresee deleterious consequences.

While Britain’s shipping, ports and marine insurance interests have all studiously maintained official neutrality, many senior figures appear not fully persuaded in private conversation.

However, some in the freight-forwarding sector have warned of potential disruption on customs clearance, thanks to the lack of workers with documentation processing skills.

The Road Haulage Association has been more outspoken, slamming the government of Mr Johnson’s predecessor Theresa May for its “complete and utter lack of clarity” and even “ineptitude” on Brexit.

Department for Transport efforts to procure back-up ferry capacity to guarantee the continued flow of essential supplies has also proved disastrous.

The taxpayer has been left more than £55m out of pocket after the cancellation of earlier contracts with DFDS and Brittany Ferries, as well as no-ship start-up Seaborne Freight. 

The bill was further augmented by £33m, after legal action from Eurotunnel, which claimed it had unfairly been left out of consideration at the tendering stage.

But the maritime industries have in the main maintained their readiness for any eventuality, at least in their public pronouncements.

Instead, they have argued that the main issue from their perspective is the uncertainty of not knowing what will happen.

Uncertainty still obtains to some degree; Mr Johnson enters 10 Downing Street formally committed to seek a renegotiation of the terms of Brexit with the EU.

But the odds on a Brexit on World Trade Organisation terms have clearly shortened on his appointment, with previously discussed possibilities such as UK participation in the EU customs union or UK access to the single market now dead in the water.

Leaving Europe has been notably bad news for the UK Ship Register, which has recently lost about 30% of its tonnage, largely because of the Brexit issue. Finding a way to reverse the decline and perhaps even resume growth will surely be high on the new shipping minister’s to-do list.

Interestingly — given how infrequently the maritime industries appear on the political radar screen — ports feature twice in the short speech Mr Johnson gave on the doorstep of 10 Downing Street after his elevation to head of government.

“So let us begin work now to create free ports that will drive growth from thousands of high-skilled jobs in left-behind areas. Let’s start now,” he proclaimed.

He later promised that “the ports will be ready”, alongside the banks, the factories, business, hospitals and the food and farming sector.

Mr Johnson’s enthusiasm for free ports may have been fired by Rishi Sunak, the new chief secretary to the Treasury, who has a history of singing their praises. He wrote a report on the topic for the Centre for Policy Studies think tank in 2016.

Mr Sunak’s ideas include the introduction of free trade zones around UK ports, in which goods can be traded and manufactured without customs duties or taxes.

The government could also offer tax reductions, a lighter regulatory touch, and tax credits.

Cutting red tape

This would be hard to do within the EU, because members have to prove that free trade zones do not have an adverse impact on trade in another member state. But after October 31, the move becomes easier.

Free ports have the backing of Tim Morris, chief executive of the UK Major Ports Group, who believes they are potentially transformational for some of Britain’s struggling coastal cities.

“What sits behind this interest is an overdue recognition of the role ports and the maritime sector more generally can play in growing employment and prosperity in coastal communities all around the UK,” he said in an email to Lloyd’s List.

“These are communities who often face challenging socio-economic conditions and in most part voted to leave the EU.”

However, he caveats his comments by stressing that free ports should not be seen as a silver bullet, but just one of a range of measures to improve productivity in the ports sector.

Mark Simmonds, head of policy at the British Ports Association, largely concurred.

“We are delighted that the prime minister recognises that ports are important regional and national economic hubs,” he said.

“Many of the benefits of classic free ports can be achieved through existing processes and they will not benefit every port, but still have some merit, particularly in certain Brexit scenarios.”

Meanwhile, Maritime UK has spelled out its wish list to the incoming government in a 1,700 word open letter from chairman Harry Theochari.

The umbrella body is seeking naval protection for British-flagged vessels in the Gulf; preparation to ensure smooth Brexit; free ports; environmental measures; and support for white-collar shipping support services such as law, finance, insurance, arbitration and shipbroking.

Mr Theochari is also requesting a meeting with Mr Johnson.

 

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