The performance of investment zones and freeports in England

The publication of detailed sub-national statistics on regional public investment would facilitate meaningful analysis, scrutiny and discussion of regional inequality by Parliament, civil society and the public. The publication of such statistics would allow Parliament to compare the investment in freeports and investment zones with other investments in the economy.

The economic impacts and benefit-to-cost ratio of freeports and investment zones will be difficult to estimate. However, the approach taken by Government will still provide some information on the programme impact on various outcomes. It will allow sharing of best practice between freeports, and provide lessons learned for future policy implementation. Such attention to detail on monitoring and evaluation should also be applied to investment zones.

The Government must publish the eventual evaluation reports of freeports and investment zones and, where possible, the data used, including detailed local data. In the meantime, the dashboards being created to monitor freeports should be published, with commercially sensitive information redacted, if required.

To improve transparency and to facilitate accurate cost-benefit analyses of freeports and investment zones, the Government must publish quantitative assessments of the impact of freeports and investment zones on employment, investment and trade alongside the Freeports Annual Report (see paragraph 54). Those assessments should include a clear explanation of their underpinning methodologies and assumptions. To meet best practice, this would be in the form of an individual Impact Assessment for all (a) freeports and (b) investment zones separately. This echoes the recommendation made by the International Trade Committee in 2021.

Freeports and investment zones are examples of active, place-based industrial policy by Government, which account for approximately 0.2% of spending on economic affairs. They may attract additional investment and jobs to the areas in which they are located. The critical factors determining success will be long-term political commitment, delivery co-ordination between central and local government and the extent to which workers and firms are prepared to relocate to areas where clusters are developing.

Given the relatively small scale of public investment and the long-term time horizon of potential gains, freeports and investment zones need long-term political commitment by central Government. Cancelling those policies would create policy uncertainty and instability with knock-on impacts on investment confidence.

Six challenges must be addressed to allow freeports and investment zones to achieve their full potential: (a) prioritised access to energy; (b) extended planning freedoms; (c) access to enhanced skills; (d) improved customs arrangements; (e) connection to wider government economic security policies, including the potential of relocation incentives for smaller firms; (f) and, above all, improved governance.

All parts of England should have a tier of government between local and national government, such as Metro Mayors. Devolution should continue to be rolled out with regions given new powers to drive growth and to champion their areas.

All freeports and investment zones should be linked to a single regional leader, such as a Metro Mayor, who should be held accountable for regeneration projects and link national and local government. Ministers should consider how best to include Metro Mayors on the new Ministerial Investment Group created as a result of the Harrington Review.

The Government must enhance scrutiny and audit of mayoral combined authorities. Improvements could include making additional funding provided to combined authorities conditional on high attendance and engagement with scrutiny meetings or piloting local audit account committees.

In line with the Nolan principle of openness, the Government must (a) publish and (b) require adherence to guidelines on communications and transparency by freeports and investment zones. Those guidelines should ensure that regular updates on the progress of freeports and of investment zones are available to the public. Such updates should include the publication of key documents, such as MOUs and business cases, redacting commercially sensitive information where required.

The Department for Levelling Up, Housing and Communities must ensure that the Freeports Annual Report 2023 is published forthwith to allow Parliament and the public to judge the progress made on the freeports agenda. It must commit to publishing a similar annual report describing progress on investment zones, when investment zones are operational.