Politics

Freeport will not be a silver bullet

Published

2 years ago

September 16, 2022

AT THE beginning of September, before political focus temporarily dimmed, the Welsh and UK Governments invited applications for Wales’s first freeport, which is planned to be up and running next year.
After years of wrangling, Welsh Ministers agreed to support freeport policies in Wales after the UK Government agreed delivering them would meet the Welsh Government’s demands for a “partnership of equals”.
Part of the agreement reached placed Wales on the same footing for starter funding after three years in which the UK Government refused to fund Wales to the same level as Scotland and England.
A Welsh freeport will be a special zone with the benefits of simplified customs procedures, relief on customs duties, tax benefits, and development flexibility.
Milford Haven Port Authority, which has already expressed interest in Freeport-status, to push the Haven’s claims to be the location of a Freeport in Wales.

WHAT IS A FREEPORT?

Freeports are a special area where normal tax and customs rules do not apply. These can be airports as well as maritime ports. At a Freeport, imports can enter with simplified customs documentation without paying tariffs.
Businesses operating inside designated areas in and around the port can manufacture goods using the imports and add value before exporting again without ever facing full tariffs or export procedures.
Suppose the goods move out of the Freeport into another part of the country. In that case, however, they must go through the full import process, including paying any tariffs.
The UK was previously home to several Freeports, including Liverpool, Southampton, and the Port of Tilbury.
The legislation governing them was not renewed in 2012 because – while the UK remained a member of the EU and in the EU customs area – the economic case for keeping them was lost.
The UK could have chosen to retain freeports; nothing in EU law prevented them. Ending them was a political choice made by the then-administration.
Despite the absence of freeports, England remains home to 24 free zones, which operate on the same principle: in the Tees Valley and Manchester.

THE BENEFITS FOR PEMBROKESHIRE

The Milford Haven Waterway, a busy energy industry hub, is also a sensitive marine environment.
Supporting a scheme which could potentially undermine the Haven Waterway’s environmental status while pursuing a green energy future will be a difficult balancing act.
Milford Haven Port Authority argues that locating a Freeport in Milford Haven makes sense due to the Haven Waterway’s status as a nationally strategic energy asset and a key trade hub for the British energy supply.
A Freeport, it claims, will be an essential vehicle to help safeguard the existing professional energy jobs and skillsets to utilise for low-carbon ambition while regenerating the economy.
The Port Authority says the port’s existing energy infrastructure presents the opportunity for large-scale hydrogen production and injection with minimal additional infrastructure requirements. Alongside strong wind, wave and tidal resources, deep water access has already accelerated an emerging renewable sector such as floating wind in the Celtic Sea.
The Authority claims that a Freeport could support supply chains from equipment manufacturing to system integration and power connectivity, helping companies develop bankable projects and lower energy costs for UK consumers.
The proximity to major shipping routes and the existence of LNG terminals mean the Haven Freeport could also support a cleaner global maritime sector.

NOT PLAIN SAILING

Although freeports could, theoretically, redress imbalances in the UK’s economy by encouraging economic activity in areas where the economy is weakest, a careful balance must be kept.
The use of government subsidies for freeports – whether through direct grants or tax breaks – potentially falls foul of the WTO rules upon which Westminster seems determined to trade.
While freeports are successful in stimulating investment and jobs in a range of locations worldwide, they are neither a “silver bullet” for all locations nor the only way of boosting the UK’s main global gateways.
Freeports are notorious globally for being used to evade tax, launder money, and ease the transportation of stolen or illicit goods.
Moreover, as the experience at the Teesside Freeport development shows, they can lack any form of accountability and create fewer and less widespread economic opportunities than hoped.
The financial scrutiny of the Teesside Freeport is not much more than zero, and a box-ticking exercise carried out without any forensic examination of where the money goes and how contracts are awarded.
Milford Haven Port Authority operates a trust port. There are no shareholders or owners, and, importantly, its Board has independence of action without independent oversight.
A freeport’s financial structure is, if anything, even more financially opaque.
As public money is being invested in a freeport, proper public scrutiny – not merely loose “oversight” or lip service -must be the minimum standard.
Moreover, a freeport could be a money pit and public funding magnet. Too big an opportunity and too large a political totem to allow to fail, even when its economics don’t add up, freeports could end up being propped up by public money while delivering less than promised on the tin.

THE COMPETITION

In all the positive publicity about a possible Freeport in Milford Haven, the Haven is not alone in wanting one.
Holyhead is Wales’s largest Irish Sea port. It is also in the key marginal constituency of Anglesey.
The stalled Wylfa development for nuclear power (part of the UK’s Government economic and energy strategy) is also on the island, and an already massive and expanding wind farm lies off its coast.
Holyhead links the North Wales corridor to England’s northwest and the Midlands. Transport infrastructure is already better to and from Anglesey than from Pembrokeshire to those destinations and will need less investment.
Cardiff Airport is another potential rival and one that could be especially attractive to the Welsh Government.
Since it bought a controlling stake in the Airport, the Welsh Government has propped it up with loans and grants.
Without Welsh Government support, the Airport would be insolvent.
The Welsh Government might be persuaded that making Cardiff Airport the first of Wales’s freeports would kill two birds with one stone.
It would attract more air and freight traffic to the site and decrease the Airport’s reliance on financial help from the Welsh Government.
As with Holyhead, the transport and infrastructure links from Cardiff Airport to other parts of the UK – in this case, the Midlands, the M4 corridor, and Bristol – are superior to those connecting Milford Haven with those regions.

MOVING MONEY

A substantial concern expressed in a report on the Freeport scheme presented to the County Council is the undeniable fact they often do not create jobs but move them from one area to another.
The economic displacement of employment and funding opportunities could pull jobs and investments from one community to another.
If a new freeport only moved jobs and capital from (say) Newport to either Milford Haven or Holyhead, the economic case for their creation becomes – at best – shaky.
That raises the question of whether freeports provide value for public money through direct investment or tax relief.
Freeports could also be used to erode the high standards the UK currently places on workers’ rights and the environment.
Granting freeport operators carte-blanche to do what they want within a designated development area: for example, by allowing shortcuts through planning and environmental law or through allowing employment practices prevented elsewhere, involves trade-offs with unions and planning authorities could find problematic.
While jobs are needed, it is reasonable to ask what jobs and at what cost.
The experience of Welsh Enterprise Zones suggests few new jobs at a massive cost per head.
At a time of enormous hardship, it’s easy to be gulled by the prospect of large sums of public money and the prospect of that money pulling in private investment.
Tax and tariffs apart, a cautious individual might wonder why, if freeports are such a sure-fire thing, they need so much public money.

Politics

Senedd ‘sidelined’ by Westminster water bill

Published

12 hours ago

January 22, 2025

Chris Haines, ICNN Senedd reporter

The Senedd signed off on proposed UK legislation to regulate the water industry despite concerns about the Welsh Parliament being “sidelined” by Westminster

Senedd members voted to consent to the UK water (special measures) bill, which aims to address governance issues and poor performance from water companies on pollution.

But Llŷr Gruffydd, who chairs the climate change committee, said the Senedd was “at the mercy” of the UK Government, with time for scrutiny curtailed.

Mr Gruffydd warned of a “huge” increase in Westminster legislation in devolved areas, saying: “I know ministers in the Welsh Government believe it is appropriate in many cases.

“It might be possible to defend their position if the system worked but it does not, which, in my opinion, undermines the position of the government.”

‘Sidelined’

The Plaid Cymru politician said Huw Irranca-Davies, the deputy first minister, is well aware of the shortcomings of a legislative consent process he is now using so enthusiastically.

He pointed out that Welsh Water operates a different ownership model to water companies in England, saying governance proposals must suit Wales’ circumstances.

Mr Gruffydd, who represents North Wales, said the funds generated by fines levied on companies should stay in Wales to improve services and infrastructure.

Labour’s Mike Hedges, chair of the legislation committee, warned the Senedd was being “sidelined” and the legislative consent motion was “at odds” with ministers’ aims.

He said the Welsh Government’s 2015 water strategy stated the objective was to align regulatory boundaries for water and sewage with the Wales-England border.

‘Piggybacking’

Mr Hedges told the Senedd: “Elected Members of the Senedd are being prevented from having a full say on legislation affecting rivers through their constituencies.

“While MPs in England will be able to table amendments to the bill on matters that affect Welsh rivers, Members of the Senedd are being denied that opportunity.

“Overall, the evidence provided by the Welsh Government to support this approach to using a UK Government bill to legislate for Wales has not been persuasive.”

Mr Hedges, who represents Swansea East, warned the case for piggybacking on a UK bill was weak, with decisions taken too quickly and potentially not fully thought through.

He described the process as an unsatisfactory and regrettable way of making law for Wales.

‘Chaotic’

Janet Finch-Saunders said the Conservatives would support the motion, with more accountability required in light of the “chaotic” response to the Conwy water crisis.

The Aberconwy Senedd member welcomed powers in the bill to restrict bonuses paid to executives where water companies fail to meet required standards.

Plaid Cymru’s Delyth Jewell agreed the bill could strengthen efforts to reduce water pollution, particularly by enhancing the powers of regulators such as Ofwat.

Her party colleague Adam Price derided an insistence that water is inherently a cross-border issue, pointing out that many rivers and tributaries cross European borders.

Mr Price urged Welsh ministers to grasp powers – set out in the St David’s Day agreement on devolution which led to the 2017 Wales Act – to give the Senedd full control over water.

‘Lasting change’

Mr Irranca-Davies, who is climate change secretary, stressed that what happens upstream in England affects what happens downstream in Wales, and vice versa.

He said: “That means in order to make real and lasting change we must work together,” pointing out that Ofwat and the Drinking Water Inspectorate cover Wales and England.

He explained the bill will strengthen the regulator’s powers to address water pollution, limit bonuses and allow Natural Resources Wales to recover costs from water companies.

The deputy first minister added: “It is absolutely right to ensure that implementation is done in the best way for Wales, some of the measures … are likely to proceed differently.”

The Senedd voted 37-0 in favour of the legislative consent motion, with 10 Plaid Cymru members abstaining, following the debate on January 21.

News

Calls for ban on lying in Senedd by end of the year

Published

2 days ago

January 21, 2025

Tom Sinclair

A LOCAL politician has called on the Welsh Government to ban politicians from lying in the Senedd.

Speaking in the Senedd on Tuesday, Mid and West Wales MS Jane Dodds MS called on the First Minister Eluned Morgan to confirm that legislation on political deception will be passed this year.

Last summer, Jane Dodds MS voted in favour of a motion which would make it an offence for a Senedd member, or a candidate for election to the Senedd, to wilfully or with intent to mislead make or publish a statement that is known to be false or deceptive.

The Welsh Government has previously committed towards making lying in Welsh politics an offence.

According to data from the Veracity Index, in 2024 only 9% of the public trusted politicians to tell the truth-the lowest score in forty years.

The Welsh Liberal Democrats have backed plans to ban lying in the Senedd, as part of their pledge to clean up Welsh politics.

Commenting on the need to restore trust back into Welsh politics, Mid and West Wales MS Jane Dodds said that “we need to counter the rise of misinformation and its damaging consequences.”

We need to look no further than the event of last summer, where misinformation spread by elected officials led to riots that left lasting damages on countless communities.

Mistruths and lying can and have had a devastating impact on the lives of millions of people, which is why we must act now.

We can no longer tolerate the hijacking of our political system by mistruths and deception, We have return power back to voters.

The stakes have never been higher and the Welsh Government cannot afford to sit by and watch as public trust in our democratic institutions continues to erode away. “

News

Ex-FM declares interest amid calls for crackdown on political donations

Published

2 days ago

January 21, 2025

Chris Haines, ICNN Senedd reporter

VAUGHAN GETHING declared an interest as the Senedd’s petitions committee discussed calls for a crackdown on donations to politicians.

The former first minister made the declaration as the committee considered a petition calling for stricter rules to limit gifts, donations and payments received by Senedd members

Mr Gething, who broke no rules, stood down in August amid controversy around a £200,000 donation to his Welsh Labour leadership campaign from a convicted polluter.

During the declaration of interest section of Monday’s meeting, he said: “I don’t think I have a declaration of interest but the petitioner, I think, is talking about me in part of it.”

In her 343-name petition, Lyn Eynon wrote: “There has been wide public concern over large donations given to a prominent Member of the Senedd. Lessons must be learnt from this.

“Wales must preserve and enhance its reputation for transparency and integrity.

“All MSs have a duty to ensure that no conflict arises, or appears to arise, between their public duties and their private interests.”

Senedd members agreed to keep the petition open while the standards committee concludes its inquiry into the registration and declaration of interests.

Mr Gething wrote to the standards committee in May, acknowledging concerns and calling for a review of the rules on donations made to Senedd members.

The standards committee – which is now chaired by Hannah Blythyn, who was sacked by Mr Gething amid claims of leaking – is expected to continue this work in the summer term.

Mr Gething also drew the committee’s attention to a petition on Covid-19 vaccine side effects, pointing out he was health minister at the start of the vaccination programme.

While the petition met the 10,000-name threshold to be considered for a Senedd debate, committee members agreed to close the petition submitted by Alison Butler.

Rhys ab Owen, an independent member of the petitions committee, pointed out that module four of the UK Covid inquiry will consider and make recommendations on vaccines.

He said: “I don’t think it’s appropriate for us to have any debate in the Senedd, bearing in mind only a quarter of those who signed the petition were based in Wales.”

Mr Gething said he will be giving written evidence to module four of the Covid inquiry but he was unsure whether he will be called to appear in person.

Committee members also closed a 443-name petition, submitted by Jasmin McNally, calling on the Welsh Government to scrap its “racist and ridiculous” anti-racist Wales plan.

Mr Gething pointed out that the plan was endorsed by all parties in the Senedd.

“The petitioner’s entitled to have a different point of view,” he said. “But we’re not going to change government policy or the view of the Senedd on this.

“I disagree in strong terms with the emotive and offensive language used by the petitioner but that’s what happens in a democracy.

“I don’t believe there is more action the committee can take. We simply have a disagreement of views and if she wants people who agree with her, the ballot box is the way to do it.”

During the meeting on January 20, Senedd members discussed a 271-signature petition, calling for meat-free Mondays in every school in Wales.

Manon Thompson, the teenage petitioner, wrote that meat-free Mondays – as adopted by Cardiff council – would reduce carbon footprints and save the lives of animals.

The committee thanked the young campaigner, agreeing to close the petition with Welsh ministers expected to hold a consultation on healthy eating in the spring.

Members also noted a letter from the European Broadcasting Union (EBU), dashing petitioners’ hopes of S4C pulling together a bid for Wales to compete in Eurovision.

Bakel Walden, from the EBU, wrote: “As the BBC continues to participate, and remains the rights holder in the United Kingdom, this means an entry from the individual nations of the UK is therefore not possible at the Eurovision Song Contest.”