Policy paper

English Freeports selection decision-making note

Updated 8 April 2021

This was published under the 2019 to 2022 Johnson Conservative government

1. Purpose

The purpose of this document is to set out clearly the decision-making process for determining Freeport locations. It was followed by officials and ministers according to the process and rationale which were published in the Freeport prospectus.

For full details of that process and rationale, please refer to Chapter 5 of the Freeports bidding prospectus.

2. Pre-decision process summary

Pass/fail

Eighteen Freeport bids were received by the noon deadline on 5 February.

In the Pass/Fail stage, all bids received were initially assessed on their answers to the Essential Information in Section 5.5 of the Freeports bidding prospectus.

Four bids failed to sufficiently answer each of these questions to the specifications set out in the Prospectus - with all failing on at least 4 counts. Further details on where each of these 4 bidders failed and why is provided in Annex A.

Detailed assessment

The remaining 14 bids were then assessed on their answers to the Detailed Bid Information (section 5.6 of the Freeport prospectus), by officials with expertise in Trade and Investment, Innovation, Regeneration and Development, Business Cases and Private Sector Involvement, and Net Zero and Sustainability.

Each bidder’s submission under each question was assessed against criteria and awarded a score of ‘High’, ‘Medium’, or ‘Low.’ For Criteria A, B and C, officials assessment of the response provided (alongside the accompanying materials from pass fail) accounted for 100% of the bidder’s score for that criterion. For Criteria D and E, bidders were required to submit multiple documents, so a process to aggregate individual submission’s marks was required to establish a final score for those criterion.

A process of primary moderation was then undertaken, consisting of internal moderation within assessor teams and then final moderation sessions across all criteria. The Senior Responsible Officer for the Freeports programme from MHCLG chaired the formal moderation sessions to ensure consistency throughout.

Following moderation, officials identified two equally rational ways of drawing the line between ‘High’, ‘Medium’, and ‘Low’ for Criteria D and E. As both approaches had merit, and the approach for aggregation had not been published in the Prospectus or decided in advance by officials or ministers, officials decided it would be unfair to disqualify a bid from the appointable list on the basis of the approach chosen. Officials, therefore, took the decision to give bids the benefit of the doubt and included all bids that met the requirements of the appointable list on at least one approach, marking bids that scored ‘Low’ on one approach and ‘Medium’ on the other ‘Low/Medium’ and those that scored ‘Medium’ on one approach and ‘High’ on the other ‘Medium/High’.

The result of the moderation and this aggregation process was five ‘High’, ‘Medium’, and ‘Low’ scores for each bid, one against each of the criteria listed at 5.2.1 of the Prospectus.

Of the 14 bids, 13 were judged to have met the threshold detailed at 5.2.3 in the Freeport prospectus. The bid that failed scored a low on 4 out of 5 of the criteria. Detailed scoring of bids is available and this is detailed in Annex B.

A cross-government group of senior officials forming the Freeports Programme Board oversaw the process. As part of the agreed competition governance, they received information on the assessment process, the scoring of each bid (detailed at Annex B) and the rationale for the long-list of appointable candidates.

This group, having assured the process in its alignment with the Prospectus, approved the list of appointable candidates shown in Annex B to be submitted to Ministers for decision. This was accompanied by an information pack setting out the Outer Boundary maps of each bid and a summarised explanation by officials for its score against each criteria, as well as factual information selected by officials pertaining to minister’s additional rationale to ensure their decisions were fully informed.

Ministerial decision-making: Freeport locations

The Chancellor and the Secretary of State for Housing, Communities and Local Government, accompanied by Senior Civil Servants, met to discuss the appointable bids on the longlist.

Prior to decision-making, ministers made necessary declarations of interest. The Chancellor confirmed he had no direct conflicts, but noted that his constituency neighbours one bid (Teesside), and that he was born in Southampton (which is part of the Solent bid). MHCLG Secretary of State confirmed that he had no direct conflicts. His constituency neighbours the East Midlands bid. He is also the ministerial champion for the Midlands Engine.

In accordance with the Prospectus, ministers considered officials’ assessments of the bids and were free to factor into their decision-making the 7 additional considerations listed at 5.3.1 of the Freeport prospectus.

Ministers agreed that the top priority for additional considerations were:

• that bids should as much as possible, be spread across all the regions of England, to provide broad national coverage to maximise the benefits of the policy and help to further limit any potential harmful regional displacement
• that bids should have a strong focus on regeneration (lead policy objective); harnessing ideas and investment from the private sector to deliver jobs, sustainable economic growth and regeneration in the areas which need it most;
• that bids should have demonstrable strong levels of private sector involvement and investment
• to account for the changing regional economic trends in light of COVID-19 and the end of the transition period
• aligned with present and future government objectives – levelling-up and industrial strategy (in particular Net Zero ambitions and investments).

With these considerations in mind alongside the aggregated scores, ministers discussed the merits of each individual bid in the round.

With a view to regional spread, in each case where there were two or more appointable bids in a region, Ministers considered all, in each case preferring the bid with the higher scoring assessment against their priority criteria (Regeneration and Private Sector Involvement). In the case of the North East England and Teesside bids the bids were comparable on these two criteria. However, the Teesside bid’s stronger alignment with government policy (in particular the Net Zero agenda and the Prime Minister’s recently published 10 Point Plan), resulted in a decision to select that as the Freeport bid within the region.

Ministerial decision-making: Number of Freeports

The government’s manifesto (and the Freeports consultation) proposed creating up to 10 Freeports across the UK, with at least one in each of Scotland, Wales, and Northern Ireland. However, in the consultation response, reflecting on the evidence received, government declared itself open to designating a limited number of additional Freeports if sufficient exceptional proposals were presented, rather than applying a firm cap of 10.

Ministers judged that the quality of the bids received were of a high enough standard to warrant the consideration of creating further Freeports in England. To remain consistent with their policy rationale of prioritising bids with High regeneration and Private Sector Involvement, and ensuring a strong geographic spread of one Freeport in each English region (excluding the West Midlands, from which no bid was received), ministers elected to choose an 8th English Freeport.

The government have always been clear that the number of Freeports must ultimately be limited to control costs and maximise agglomeration benefits. The Chancellor judged that there was insufficient justification for creating additional Freeports beyond an 8th in England at this time, given wider fiscal pressures on the government as a result of the COVID-19 pandemic.

Annex A: Bids that failed the initial pass/fail assessment

Furthereast

Reason for failing:

• No up-to-date letter was provided demonstrating the full support of all relevant local authorities (requested at Question 1.7)
• No port was included in the proposal (required at 3.1.8)
• Insufficient explanation was given in the answer submitted of how the minimum standard of security and infrastructure required in customs and tax sites will be met (Question 1.12)
• Insufficient explanation was given in the answer submitted of how the tax sites’ locations will mitigate displacement of local economic activity from deprived areas (Question 1.14)

Heathrow Airport Associated Freeport

Reason for failing:

• No maps were submitted (Question 1.3)
• No confirmation was given that plans have been communicated to landowners impacted by the proposed tax sites (Question 1.5)
• No up-to-date letter was provided demonstrating the full support of all relevant local authorities (requested at Question 1.7)
• No rationale for outer boundary was submitted (Question 1.10)
• No rationale for the customs sites was submitted (Question 1.11)
• Insufficient explanation was given of how the minimum standard of security and infrastructure required in customs and tax sites will be met (Question 1.12)
• Insufficient economic rationale was provided for the tax sites (Question 1.13)
• Insufficient explanation was given of how the tax sites’ locations mitigate displacement of local economic activity from deprived areas (Question 1.14)

MEND Freeports

Reason for failing:

• No maps were submitted (Question 1.3)
• No up-to-date letter was provided demonstrating the full support of all relevant local authorities (requested at Question 1.7)
• No letter of support was provided from customs site operator(s) (Question 1.6)
• No rationale for outer boundary was submitted (Question 1.10)
• No rationale for the customs sites was submitted (Question 1.11)
• Insufficient explanation was given of how the minimum standard of security and infrastructure required in customs and tax sites will be met (Question 1.12)
• Insufficient economic rationale was provided for the tax sites (Question 1.13)
• Insufficient explanation was given of how the tax sites’ locations mitigate displacement of local economic activity from deprived areas (Question 1.14)

Royal Ramsgate and Manston Freeport

Reason for failing:

• No letter of support was provided from customs site operator(s) (Question 1.6)
• No up-to-date letter was provided demonstrating the full support of all relevant local authorities (requested at Question 1.7)
• Insufficient explanation was given of how the minimum standard of security and infrastructure required in customs and tax sites will be met (Question 1.12)
• Insufficient economic rationale was provided for the tax sites (Question 1.13)
• Insufficient explanation was given of how the tax sites’ locations mitigate displacement of local economic activity from deprived areas (Question 1.14)

Annex B: Bid scoring (alphabetical)

Freeport	Criterion A: Trade and Investment	Criterion B: Regeneration	Criterion C: Innovation	Criterion D: Deliverability of Proposals at Pace	Criterion E: Private Sector Involvement
Bournemouth Christchurch & Poole City Region Smart Freeport	Low	Medium	High	Medium	Medium
East Midlands Freeport	Low	Medium	Medium	Low/Medium*	High
Freeport East	High	Medium	Medium	Medium	Medium
Gatwick Freeport**	Low	Low	Medium	Low	Low
Heart of the UK Freeport Cumbria	High	Medium	Medium	Low/Medium*	Medium
Humber Freeport	High	High	High	High	High
Liverpool City Region Freeport	High	High	Low	Medium	High
North East England Freeport	Medium	High	High	Medium/High*	Medium
Plymouth and South Devon Freezone	Medium	High	Medium	Medium	Medium
Solent Freeport	Medium	Medium	Medium	Low	High
Teesside Freeport	Medium	High	High	Medium	Medium
Thames Freeport	High	High	High	Medium	High
The Great Western Freeport	Medium	Medium	Medium	Medium	Medium/High*
The South Yorkshire Freeport	Medium	High	High	Medium	Medium

*See explanation in main document.
**This bid did not make the appointable list but has been included in the scoring table as it passed the initial pass/fail assessment.