Will freeports herald better co-operation?

AFTER protracted negotiations between the UK and Welsh governments the green light has be given to freeports in Wales.

The £26m funding commitment from the Westminster administration, mirroring what is being provided to eight already approved freeports in England, could see not just one, but a number of them in Wales – with flexibility for a multi-site approach so potentially covering the sea ports of south Wales and Cardiff Airport.

However, whatever the eventual number, freeports in themselves will not somehow magically transform the Welsh economy. Firms relocating into freeports, to take advantage of reduced duties, tax and red tape, still have to invest in things like skills and develop products that outperform competitors, if they are to be successful.

There are also those who argue that freeports only act in displacing economic activity from elsewhere. It also has to be remembered that the UK had a number of freeports before they were quietly wound up in 2012, due to their limited economic impact and, in part, concerns over potential fraud, tax evasion and money laundering.

Having initially been offered £8m, the Welsh Government was right to stick to its guns in getting a £26m contribution from the UK Government.

There was an element of political leverage here too: how would a Wales without a freeport sit in the UK Government’s levelling-up agenda?

But could this agreement herald a more collaborative partnership between the two administrations? For this to be achieved there needs a deeper understanding from more politicians at Westminster, and crucially special advisers and civil servants too, of the devolved settlement, rather than it being seen as some kind of minor irritant. Conversely Welsh Government ministers and civil servants need to maximise the considerable nondevolved economic support measures controlled from London. To achieve this requires greater openness.

There will be no direct involvement for the Welsh Government in the Shared Prosperity Fund – the successor to European Union structural funding. It sees this as an assault on devolution. However, it has to be pragmatic to ensure its economic impact is maximised.

As most of the required matchfunding for EU funding came from the Welsh Government, it can now be selective in backing Shared Prosperity Fund projects – especially those with a regional dimension, that can have the greatest economic impact, rather than a series of unconnected local pet projects.

On balance the Welsh economy will be better served by having a freeport offer, but as just one small piece in a wider suite of measures needed to improve the productivity and competitiveness of its economy.