Freeport status can boost whole region
DANIEL CLARK explains how economic benefits will be felt throughout Plymouth and South Devon
THOUSANDS of jobs and hundreds of millions of pounds in investment are set to be created by the new Plymouth and South Devon Freeport.
The major new plans will provide a new world-class innovation space, enabling the Westcountry to build on its global reputation for marine innovation and advanced engineering.
The Freeport will anchor some large employers, including Princess Yachts, protecting existing jobs and ensuring they can expand their local operations. It will unlock 130 hectares of development land to provide space for high value advanced manufacturing and logistics companies.
The business case shows that the establishment of the Freeport has the potential to unlock £314 million in inward investment and create 3,584 jobs. The Freeport will contribute positively to the achievement of Carbon Net Zero, councillors have been told.
The Plymouth and South Devon Freeport was one of eight successful bids announced in March last year, with an outline business case submitted last November. Devon County Council’s Cabinet last week unanimously supported backing the business case, the timeline for investment, and funding arrangements. It follows decisions previously made by South Hams District Council and Plymouth City Council in relation to the project.
THE VISION
The Freeport aims to grow the local and regional economy by building on the unique national capabilities in marine, defence and space industries and through a focus on key assets such as Devonport Naval Base and the opportunities of growing supply chains around these capabilities, supporting the whole of the regional economy.
The Freeport can also support the Government’s wider levelling up agenda and stimulate local skills, jobs and higher wages. The creation of a supportive tax and regulatory environment can foster innovation and develop further strong collaborations with the University of Exeter and the University of Plymouth. A number of sub-sector specialisms, including marine autonomy, maritime decarbonisation, smart port shipping and offshore renewable energy, have been identified within the business base which have the potential to increase productivity and develop links with other specialisms such as digital and low carbon technologies.
SOUTH YARD
Devonport Naval Base’s South Yard encompasses the Oceansgate development and the existing facilities owned by Princess Yachts, Babcock International and the Ministry of Defence (MoD). The site is economically underdeveloped, with much of it being made up of under-utilised buildings, some of which are the subject of preservation orders. Plymouth City Council (PCC) is negotiating with the MoD to acquire an extended lease over under-utilised facilities that remain within its control.
The total value of the developments proposed at the site, which include a new marine innovation centre, mobility hub and manufacturing facilities, is around £63 million and it is anticipated all of the development will come forward between 2022 and 2025, with the exception of later phases of Oceansgate.
Princess Yachts employs 3,000 staff on the South Yard Site. The company has an advanced concept for a new 88ft superyacht which will be the first to integrate all of its sustainability initiatives through the use of efficient design, electrification and sustainable materials. The Freeport will offer an opportunity to create a flagship centre for luxury yacht manufacturing, creating 450 direct jobs and expanding the value of regional supply chains.
As an anchor tenant, Princess Yachts will develop a new factory on land which it already owns within the site and Babcock will also redevelop two key buildings ‘behind the wire’ of MoD owned land on the site for new manufacturing capacity;
LANGAGE
Langage is located on greenfield land in close proximity to the A38 Expressway and is allocated in the Joint Local Plan for employment purposes. It will be developed as a tax site incorporating a customs zone to provide industrial and manufacturing space for high-value manufacturing and engineering companies, focusing primarily but not exclusively on the marine, defence and space sectors.
Public investment will support preparation of the site and transport links, including a new cycle/pedestrian bridge over the A38 to serve both Sherford and Langage. Private investment is expected to be attracted to build advanced manufacturing units, logistics facilities and a plant for renewable hydrogen with a lower carbon footprint.
The site will also be home to a green hydrogen plant and a mobility hub (EV charging, etc) to facilitate delivery of critical sustainable and low-carbon transport options. Development is anticipated to come forward in two phases, taking place between 2022 and 2027.
Phase 1a will be delivered first, encompassing a customs zone and other plots on land owned by Langage Energy Park Ltd (LEPL). The majority of Phase 1b land will need to be acquired from its current owners before development can commence for that phase. Phase 2 includes approximately 40 acres of solar farm owned by LEPL, which is in discussion with Ofgem regarding potential to move the solar panels.
At Langage, the Freeport will bring forward private investment for a 10MW hydrogen plant which will be online by the end of 2025. This will align with the Government’s Hydrogen Strategy to underpin clean growth and low carbon transport for shipping and HGVs. The plant will utilise a live wire connection to the on-site solar farm and sleeved Power Purchase Agreements to ensure 100% green energy usage. LEPL is one of a handful of companies nationally able to deliver this type of plant, which mirrors a sister project in Manchester which is due to go live in 2023.
SHERFORD
Located on the opposite side of the A38 Expressway to the Langage site, the Employment Zone forms part of the employment allocation of the Sherford new community. Part of it will be developed as a tax and customs site with coterminous boundaries, providing integrated warehousing, storage and engineering space. This development is expected to
come forward in the first phase of developments, taking place between 2022 and 2025.
Babcock currently employs over 7,200 people locally and has strong links with supply chain companies, with opportunities for onshoring overseas clients. The Freeport represents a significant opportunity for them to expand operations in new economic areas through innovation and by developing an Integrated Logistics Hub at one of the tax sites as well as the redevelopment of redundant sites at South Yard.
It will be developed as a logistics hub with a coterminous tax and customs site boundary, providing integrated warehousing, storage and engineering space for a single marine/defence contractor (Babcock).
THE OUTPUTS
The Freeport proposal has the potential to transform the local and regional economy. Significant economic and employment modelling has been undertaken to support the development of the business case and working of various growth scenarios.
The anticipated outputs will be refined in the final business case but currently are:
3,584 direct jobs created with an average wage level of at least £13.92 per hour;
10% of jobs created to be filled by inactive claimants and registered unemployed;
3,000 m2 of skills infrastructure;
2,400 m2 of new innovation space;
137.9 hectares of land developed; 5 new businesses each year;
2-3 new foreign direct investments each year;
40 Business/Higher education collaborations annually from 2022;
£4m a year in private investment in research & development;
10 new products developed for market.
It is expected that the Freeport will deliver wider benefits such as an uplift in land value, labour supply, a skills uplift and the jobs/GVA arising from the construction of the Freeport.
Economic modelling estimates the total value of these and other benefits at £409.5 million over a 15-year timeframe.
FINANCING
The total investment in the Freeport is predicted to reach £314 million. This is made up of £25 million in Government seed capital grant with local public sector match funding of £29 million. For the South Yard site, Plymouth City Council is bidding for a further £10 million through levelling up grant income. It is anticipated that the total private sector investment levered will be close to £250 million.
At Langage, £33 million in public investment will be provided to support land assembly, site preparation and transport links, including a new cycle/pedestrian bridge over the A38 to serve both Sherford and Langage. This will leverage £118 million in private investment to build advanced manufacturing units and logistics facilities and a further £28 million to deliver a Green Hydrogen electrolyser plant.
At Sherford, £1 million in public and £5 million in private investment will support site preparation and transport links, private sector investment in off-site costs will be £3 million and a further £62 million will be invested in developing a state of the art logistics facilities
In South Yard, public investment of £17.3 million and a £10 million levelling up fund grant will deliver a new Innovation Centre and Mobility hub at Oceansgate. Princess Yachts will invest £21 million to deliver a new factory to build the next generation of superyachts, supported with £0.9 million of public investment, and Babcock will invest £6.5 million in new and upgraded infrastructure.
Associated British Ports will invest £5.7 million, supported with a £1.3 million public sector investment, in the developing new port infrastructure to ensure adequate additional capacity and to provide enhanced freight facilities.
Devon County Council will invest in the development of the spine road extension at Langage, cycle and pedestrian bridge, and road link from Langage to Sandy Road to enable access to the A38.
South Hams District Council will provide £4.625 million in funding towards the project, with Plymouth City Council £10.162 million. Devon County Council, at its Cabinet meeting last week, agreed to a £14.289 million investment. The funds be will borrowed and be repaid through the use of retained business rates.
WHAT HAVE PEOPLE SAID
Keri Denton, head of service, economy enterprise and skills at Devon County Council, said the Plymouth and South Devon Freeport will enable the building back better in the wake of the pandemic. She added: “It will provide thousands of new jobs and training opportunities to underpin our recovery. It is designed to leverage our strengths, the thriving marine innovation sector and traditional defence links, as well as the emerging space sector.
“A net-zero strategy will ensure that this growth aligns with our climate change targets. Key employers for the area serve as anchor tenants and the Freeport enables them to pursue ambitious expansion plans towards creating these jobs across the Freeport sites. The Freeport unlocks much-needed employment land to create space for a new wave of advanced manufacturing and green energy firms to locate in the area and the tax and customs benefits will provide additional incentive to accelerate the rapid development of the sites.
“This is a chance to get significant investment, focusing on marine, advanced manufacturing, and defence. There are range of incentives for business, from business rate relief to customs. It would be investing in supply chains across the county. There is an ability to cover the borrowing and generate a surplus, and it would help the economic recovery and align with the levelling up agenda.”
Cllr John Hart, Devon County Council leader, said: “The proposals for the Freeport will unlock key sites for employment that have effectively stalled over the years. This will accelerate growth that simply may not be achieved without this project. Developing much-needed employment land will create space for advanced manufacturing and green energy firms to locate to the area, and the tax and customs benefits will provide additional incentive for the rapid development of the sites.”
Cllr Rufus Gilbert, Devon County Council’s Cabinet member for economic recovery, said: “I fully support this in all its aims and ambitions. This is an excellent boost and a big boost to Devon in many ways. These are new jobs being created and companies cannot jump over the fence and get there on the cheap.
“The Freeport will provide thousands of new jobs and training opportunities to underpin the recovery of our economy in the wake of the coronavirus pandemic. This project has the potential to regenerate and transform the local and regional economy, which will support the wider levelling up agenda and stimulate local skills, jobs and higher wages.
“Specialisms including maritime decarbonisation, smart port shipping and offshore renewable energy have been identified for the Freeport, offering the potential to increase productivity and develop links with digital and low carbon technologies.”
Cllr Phil Twiss, Devon County Council’s Cabinet member for finance, said: “I was born and brought up in the area of the Freeport. If I wanted a well-paid job, I either had work in the Dockyard or move away. It would have been nice to have had more of a choice.
“I genuinely see this as a once in a lifetime opportunity to create at least 3,500 high value jobs directly in Plymouth and Devon and the South Hams, and the spin-off benefits in the supply chain this brings. Devon County Council is making a significant investment in this – the risk is lower than it would ordinarily be. The thing that strikes me most of all about this is the partnership working. It is fabulous and I am really enthusiastic about this.”
Cllr Alan Connett, leader of the opposition Liberal Democrats group, said: “I welcome the investment. I know there is concern about the proposals but this identifies a significant investment for Devon and Devon jobs. We need to do it. It is good for Devon and jobs.”
Cllr Rob Hannaford, leader of the Labour group, said: “This could have meant a skill and jobs drain out of Devon and into Plymouth, but this embeds the Freeport in Plymouth into Devon. It is a great opportunity to invest and innovate and develop. I am pleased that defence is embedded in this. It strikes the right balance between Devon and Plymouth. Let us hope we move forward with success.”
Cllr Henry Gent, one of two Green councillors on the council, added: “A green hydrogen factory in South Devon by 2025 is almost out of this world.. We will need all the cheap renewable energy we can get.”
WHAT HAPPENS NEXT?
Plymouth City Council is expected to sign off on the full business case as lead accountable body under delegated arrangements on April 21. The following day, the full business case is submitted to the Department for Levelling Up, Homes and Communities.
By June 28, it is hoped the Department for Levelling Up, Homes and Communities will sign off the full business case and issue a memorandum to the Freeport governing body. On July 1, Plymouth and South Devon Freeport is due to be formally designated and a Section 31 grant letter issued to Plymouth City Council. Then the Freeport is operational and works commence on site.