UK Special Economic Zones (SEZs) and Freeports are a scam

Does the public deserve the next 10 years of corporations not paying their fair share of taxes in deregulated zones of exception?

UK Special Economic Zones (SEZs) and Freeports are a scam, free zones are designated areas within a host country, they operate under secondary legislation with relaxed laws and by extension relaxed enforcement of laws, they also allow tax breaks and State aid (public money) to the tune of billions for businesses setting up in the zones, these benefits are key components of deregulation. Secondary legislation means far less Parliamentary and public scrutiny over changes to laws, this is a golden ticket for companies to set up shop in any one of the 86 free zones currently being installed across England, Scotland, and Wales. UK free zones tax breaks are set at 10 years, they are licensed for a quarter of a century.

The difference between the new SEZs and Freeports in the EU and the UK is that free zones in the EU are strictly regulated to prevent governments of member states from giving State aid to companies solely to make profits, this distorts the Single Market by creating an unlevel playing field.

Brexit has unleashed massive deregulation in the form of Jacob-Rees Mogg’s Retained EU Law Bill, on 31st December 2023, 600 EU/UK laws were revoked overnight with 1000s more for the chop by 2026. The 3 main areas targeted were employment rights, food safety, and environmental protections. The Lawyers Employment Association, Client Earth and the Food Standards Agency have all sent letters of concern to the UK Government about REUL.

Will Labour continue with the Tories REUL Bill which is in essence a mass deregulation policy?

Most people do not know what a Special Economic Zone is, the same goes for Freeports, I’m sure that if the public were properly informed about SEZs, and their colonialist histories, this Tory initiative would not have gotten off the ground. The troubling thing is Labour MPs, Mayors, councillors, Lords, and Baronesses were board members of Sunak and Truss’s SEZs/Freeports consortia, Liverpool Metro Mayor Steve Rotheram signed off on the ‘Sensor City SEZ and Freeport, Manchester Metro Mayor Andy Burnham signed off on the Manchester SEZ, and former FM of Wales Mark Drakeford signed off on 8 SEZs and 2 Freeports, present at the signing was Shanker Singham known as the brains behind Brexit.

Each SEZ receives £160 million in State aid x 74 = £11 billion 840 million

Each Freeports receives £25 million x £12 = 300 million

Sunak’s flagship Brexit Freeport/SEZ in Teesside has so far received £560 million in taxpayers money.

6 days into office Rachel Reeves refused permission for the NAO to investigate England’s 48 SEZs and 8 Freeports despite a House of Commons report into England’s 56 free zones, the report cited a lack of transparency, ignoring the Nolan principles, and questions over value for taxpayers money. The HoC report focussed on Teesside, but we can pretty much predict that the privatisation model for Teesside which is split 90/10 in favour of the private sector will repeat across all 86 of the UK’s SEZs and Freeports.

The UK Govt’s website lists all the SEZs and Freeports currently being set up, it also includes notes on why these zones failed under Thatcher, it was essentially due to the UK being in the EU and coming up against the EU’s laws and regulations that prevent companies from making profits without contributing anything back to local infrastructure, this is why SEZs are regulated in the EU.

There is no evidence that deregulated SEZs and Freeports improve the economy, in fact it costs more money to maintain them in the long term which again means taxpayers foot the bill for this and the inevitable clean-up costs, once companies have made their profits and moved on. Job displacement is a common feature of SEZs, where people will leave one run-down area seeking jobs in the zones, causing those regions to fall into further ruin.

Compulsory Purchase Orders apply to business, agricultural, and residential properties. Birmingham which is host to 6 SEZs and whose council is technically bankrupt is now in a situation where 6,000 people could have their homes torn down as part of a £2.2bn project in which 1,266 council houses and 567 properties belonging to private homeowners could be repossessed in a mass compulsory purchase order for the area. CPOs are the gateway for corporations and private equity to move in for the kill as councils collapse, they will ‘rescue’ regions from the failures of the state and big government.

All 12 UK Freeports are housed in much larger SEZs that range in size from 38 to 75km in diameter. @stanfonatn has several maps of these zones. https://x.com/stanfontan/status/1730157561209332108

SEZs and Freeports use their complexity as a camouflage to deflect attention away from the inherent dangers they pose to communities and citizens entrapped within them.

The domestic workforce question comes back after the EU exodus of workers due to Brexit. Companies in SEZs are trusted to ‘self-regulate’, well we all saw how this plays out with the Post Office scandals and the Water company's sewage dumping.

References

Crack Up Capitalism by Quinn Slobodian

Silent Coup - How Corporations Overthrew Democracy by Matt Kennard and Claire Provost

Adventure Capitalism by Raymond Craib

Freeports Gazette by Bylines Cymru

https://bylines.cymru/wp-content/uploads/2023/05/Gazette-Freeports.pdf

Catherine Barnard did a video about REUL and she was astonished that so many laws and protections were being sunsetted post-Brexit

Private Eye for their reporting on Teesside SEZ/Freeport