I have, as usual, published a new video this morning in which I suggest that Rishi Sunak's very limited legacy will include the creation of freeports. They are, however, deeply dangerous places where the normal rule of law is suspended for the benefit of financial capital, usually at cost to the workers in the places and the communities that host them. As such, they undermine democracy. What could possibly go wrong?
The audio version of this video is here:
The transcript is:
Freeports are dangerous.
That, as an opening claim goes, is a big and bold one, because we have quite a lot of freeports in this country now, but they do nonetheless represent a significant threat to our well-being.
Why is that?
What is the problem with a freeport?
Look, let's describe what a freeport is.
A freeport is a place where regulation of the normal sort that applies within the country is suspended for the benefit of those who are running businesses in that location. So, almost invariably, therefore, free ports exist to provide benefits to companies, employers, and those who are undertaking trade. And they do so by suspending the normal rules of taxation, and sometimes on other matters, like environmental protections, or employee protections, or whatever else.
Now, why should we have parts of the country where we deliberately suspend normal laws? What is the benefit of that for everybody else?
And why should some people be subject to lower levels of protection during the course of their working life because they work in a freeport compared to what they would have if they worked outside the freeport?
And that's most especially true when no freeport has an advertised boundary. In fact, finding the border of a freeport is something that is incredibly difficult to do because these are, well, almost imaginary spaces. A few warehouses here, a warehouse or so there, ring-fenced inside a planning zone which is itself loosely described on a map, but which has no obvious border.
These freeports are figments of planner's imaginations. Planners of all sorts; tax planners, regulatory planners, those who wish to plan to abuse environmental protection, those who most definitely want to abuse the rights of employees. And the danger is that when you create these things, and now most especially, put them under the control of private sector companies who are tasked with administering the reduced regulation in these areas in a way that is, well, to their best interest, not to the best interest of society at large, you end up with something which is particularly pernicious that is ruled by corporations.
Rule by corporations is a form of fascism. That is exactly how Mussolini described it as, in effect.
So let's be clear. Whilst the free ports we have provide relatively limited exemptions from regulation at present, their very existence is a threat to the democratic control of this country by the government. And for that reason, they're deeply pernicious and as dangerous as tax havens have ever been to the effective control of democracy over the well-being of most people in this world.
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Not only are freeports dangerous, as usual, we should follow the money and see who benefits.
“An inquiry has found no evidence of “corruption or illegality” at the Teesworks site in the North East of England – but has raised concerns over “transparency and oversight.” https://tinyurl.com/rm7zfkrv
However, “private companies ended up owning 90% of the shares, even though hundreds of millions of taxpayer cash was pumped into the project”
This was after
“publicly-owned land on the Teesworks site [was] being sold off for £1 an acre,” https://tinyurl.com/3pxapp8a
“Several people have made allegations that the buy-out/take-over of the land involved corruption, stating that the land had been given away, below value and without being placed out to tender.” https://tinyurl.com/2yt8xx77
“In June 2023, the Tees Valley Mayor Ben Houchen was made a life peer by the outgoing PM and MP Boris Johnson”
Richard, thank you for highlighting this pernicious subject. I was talking recently to a Green Party councillor in Suffolk who told me that they can’t do anything to stop the SEZ in our area because the penalty for cancelling the contracts would bankrupt the Council.
If the Council could be penalised for cancelling the contracts, what made the Council agree to the contracts in the first place? SEZs are the government’s idea, so what role have councils played? Who’s actually responsible? I know the Tories want to get rid of councils, but how far down the line have we got?
Councils have been given no choice
A change of Council control. This is in Mid Suffolk. Formerly Tory controlled when contracts were signed but now Green controlled since last year.
Special zones like freeports come with significant deadweight cost. Why establish or expand a business just outside the boundary (however defined) when you could do it inside instead? To put it another way, how much of the activity inside the freeport is activity that would have happened anyway?
The operation of Freeports/SEZs represents the way the libertarian hard right believe the entire country should be run. There are 74 SEZs (special economic zones) in mainland Britain, covering a significant percentage of the land area. They appear to be areas within which freeports and similar activities can be established with minimal further legislation or oversight. These areas are so large they are effectively the default rather than special.
I regard it as essentially a con trick to be able to privatise the nation by stealth. The hard-right don’t need to change the laws in Westminster, they simply make the entire country a “special zone” in which national laws don’t apply.
Is there an approximate map of these 74 SEZ’s, Ideally with names of each?
I will try to follow find one later
I suggest looking at David Powell’s posts on Twitter X (@europeanpowell). He’s made a speciality of this subject and has posted references to a lot of information that’s otherwise hard to find.
This includes the SEZ experiment in Honduras, which apparently hasn’t gone too well!
Plymouth includes most of Dartmoor. There is a Manchester Ship Canal one. A chunk of Anglesey. Most are quite extensive. A warning about there was posted just before COVID by two on Twitter which was poo poohed by several sources including Labour. There is a Tory connection via Tufton St to the American Charter City ideal, and in this country a main man is S. Singham. There are official government maps I believe.
https://www.gov.uk/government/collections/maps-of-investment-zones-and-investment-zone-tax-sites From my reading I gather border security is to be left to the corporate owners, meaning, I suspect, there simply won’t be any. On the subject of bankrupting councils, govt could, if it wished, create specific funds in the Ways & Means Account (as it could for a lot of things) to cover relevant council expenses. I doubt it will though. It seems more likely the intent is to smash the existing authority structure with a view to replacing it with a corporate version. Say goodbye parks, playgrounds, indeed to everything maintained or supplied by the local councils.
Thanks, Bill
I already follow @europeanpowell and am worried that nobody else in my online world seems to post the same sort of stuff. I’d have expected all my local election candidates to be jumping up and down about the constitutional and existential threats we are being threatened with by this sordid government.
I agree with you
But, we held an academic event on this at Sheffield this week and there are really very few people looking at this stuff.
He took over after @BakerStHerald vanished along with his very informative site.
Apparently the quote that links Mussolini’s fascism with corporatism is fabricated.
“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power”
http://www.publiceye.org/fascist/corporatism.html
The Fascist conception of the State is all-embracing; outside of it no human or spiritual values can exist, much less have value. Thus understood, Fascism is totalitarian, and the Fascist State–a synthesis and a unit inclusive of all values–interprets, develops, and potentiates the whole life of a people. (p. 14)
Fascism is definitely and absolutely opposed to the doctrines of liberalism, both in the political and economic sphere. (p. 32)
The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporate, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organised in their respective associations, circulate within the State. (p. 41).
Benito Mussolini, 1935, The Doctrine of Fascism,
The corporate State considers that private enterprise in the sphere of production is the most effective and useful instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production.
State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved. This intervention may take the form of control, assistance or direct management. (pp. 135-136)
Benito Mussolini, 1935, Fascism: Doctrine and Institutions,
All these suggest that Mussolini wanted total control of the corporate sector in the service of his totalitarian state, rather than to free the corporate sector from all regulation.
However, the Nuremberg trials included a number of prominent German businessmen, but the theory that German corporations underpinned the rise of Nazism has been disproved.
But, here and now in the 21stC, the corporate sector has effectively captured the state in many industrial economies, and we seem to live more in a plutocracy than democracy. (as is the EU)
Anyone asking who is bankrolling the SKS Labour project will come up with some very uncomfortable answers.
I certainly would not bet that Labour will abolish ‘freeports’ as they ought.
Having private enterprises function within strict boundaries, determined by the state, for the good of everyone sounds a lot like social democracy.
Making the boundaries such that the rich benefit sounds like new liberalism.
I seem to remember the latter was promised to businessmen who supported Hitler and later Pinochet. They both renaged.
In response to an earlier post: https://www.gov.uk/government/publications/maps-of-uk-freeports
Last updated 17 May 2024
We already have one company Reform UK Ltd putting up candidates for election. Suppose a company like say, Hutchinson Ports started putting up candidates for election? Perhaps they might start with the local elections, put up enough candidates to seize control of the local council? Would we really imagine they had the best interests of the local people at heart. Perhaps, at the moment, people wouldn’t be foolish enough to elect candidates so obviously standing only for their employers interests but could the implementation of Freeports be leading toward the same thing?
We need some actual examples of what has happened since the Suffolk or Felixstowe FreePort was established.
Richard, please provide an example of where a freeport has retreated on the extent of employment rights? Or is this merely scaremongering for a lack of guarantee on the legislation that can be bypassed?
https://www.unitetheunion.org/news-events/news/2023/january/unite-demands-workers-rights-guarantees-over-freeports
Richard, the press release is not evidence. It is based on opinion – “The trade union believes that there is currently minimal legal powers for the Scottish Government to enforce the Real Living Wage in the zones or to enable access for trade unions to collectively bargain on behalf of the workers.”
I’d be grateful if you can point me to where in the article it talks about accusations or examples of the freeport rolling back on workers’ rights?
The article is merely a challenge on the provisions and lack of clarity on freeport agreements. Do you agree?
My question therefore still stands – HAVE there been any instances where a freeport has retreated on the extent of employment rights?
I note the press release is dated 2023, are there any further developments since this was published? I’d be interested for you to share the response by the Scottish Govt and any further subsantive evidence to support your point.
As yet, they’re minimal, but these things are new
I will however cite you what the Treasury told me about freeports during the consultation. Their suggestion was that if I could imagine it possible to do something in them it might well happen.
And around the world the evidence of freeport abuse of labour is massive.
So, it will happen. It is intended to happen. That is what the design is for. How can you claim otherwise? What is your evidence of protections?
If the example of the Chinese Special Economic Zones is anything to go by, parts of the Freeports will become the private fiefdoms of international corporations, where what little rights workers have are more honoured in the breach than in the observance.
Do we really need to wait until nets are erected outside factories to stop workers committing suicide by throwing themselves off the roof before becoming aware of the dangers?
[…] By Richard Murphy, part-time Professor of Accounting Practice at Sheffield University Management School, director of the Corporate Accountability Network, member of Finance for the Future LLP, and director of Tax Research LLP. Originally published at Fund the Future. […]