A great North Free Port will set the North Sailing post-Brexit

By David Harrison

Seeing people in Sunderland cheering as their ‘Leave’ vote was confirmed at last year’s EU referendum will live long in the memories of everyone who witnessed it. Those in the North East who voted for Brexit were derided by some as delusional, anti-establishment warriors who had been duped into sealing their own fate. It was argued that the result would be the catalyst for Nissan to unplug its Sunderland plant and head for mainland Europe.

But I take a different view. Brexit will be the making, not the breaking, of the North East, if we can take advantage of the unshackling from EU regulation. I have one wish for local authority leaders – their goal must be to secure Free Port status for the region in a post-Brexit, Global Britain.

Free Ports, or Free Trade Zones, as they are commonly known, are areas that sit within geographic boundaries but are not considered part of the country’s customs territory. That means manufacturers can import materials, and process and export them, without tariffs.

According to the Centre for Policy Studies*, there are approximately 3,500 Free Trade Zones worldwide, employing 66 million people across 135 countries.

The US has more than 250 Free Trade Zones, employing 420,000 people and handling US$750bn of merchandise.

How many Free Ports are there in the UK? The answer is zero. EU competition and state aid rules, in effect, prevent us from having Free Ports, despite Britain’s manufacturing, trading and maritime heritage. Brexit will set us free.

And where would benefit more than this region from the ability to set its own tax rules under a Free Port agreement? How many more Nissans could we attract to the region as well as online retail giants if we were able to roll out the red carpet ourselves. With our existing port infrastructure, the North East would benefit disproportionately and thousands of jobs could be created in a region still blighted by the UK’s highest unemployment rate.

Look at it another way. A few years ago, Amazon considered opening a huge operation on Tyneside in a move that would have brought almost 2,000 direct and scores more indirect jobs. Others would surely have followed. But we lost out. Amazon headed further north to Scotland, lured by £11m of public money on offer there.

The depressing failure of local elected leaders to agree a regional devolution deal last year cost the North East £1bn and a raft of new powers. It was symptomatic of the petty political infighting that holds us back. But it needn’t act as a drag on progress any longer. Council leaders in Newcastle, North Tyneside and Northumberland are working together and could do so around a Free Port structure. The same can be said for Tees Valley.

Prime Minister Theresa May has got her finger on the trigger of Article 50 and the drawn-out negotiation of our departure from the EU will soon begin. But what say will this region have? We need loud, experienced, business-minded voices making the strong case for powers to set our own tax rules with Free Port status. Time wasted with more infighting will mean new opportunities are lost and as we saw with Brexit, the public will not tolerate it.

Free Ports will be the wind in our sails and set the North East on a course to a bigger, more global

* http://www.cps.org.uk/files/reports/original/161114094336-TheFreePortsOpportunity.pdf

 

Business United PLC.....

By Jacqui Miller, Director, Miller International

If any of us stopped to think about why business matters, I'm sure we could list a whole plethora of reasons, but of course the most important of all is the health of the economy. When our economy is strong there are more jobs created, there is increased job security and the standard of living for most working people improves. In addition to this new opportunities are a plenty as companies invest in new markets and innovation, all in all it's good news for the U.K. What however is not so apparent is just how very important it is that we understand that working for the benefit of any business regardless of its size matters as very often when we unite and work together for the overall business 'ecosystem' not only are our own businesses beneficiaries of new opportunities but also those of our suppliers and indeed theirs as well. A holistic approach to thinking which sees us consider the objectives of our customers and suppliers is in my view where business of the future should be heading.

In fact as we consider all sorts of solutions that enable us to meet the challenges we will face from the fall out of Brexit as well as the issues facing the environment it will hopefully become an inevitability that business becomes less insular and selfish in its approach, ensuring that large corporations see assisting smaller business as part of their corporate responsibility to the overall business environment and the wider community from which businesses of all sizes seek employees.

A fantastic example of what can be achieved by this approach is the recent ruling on the third runway at London's Heathrow airport, an idea first mooted some 13 years ago and given the long awaited green light by government (subject to a vote in parliament approx. 12 months from now). Businesses large and small the length and breadth of the U.K. came together in support of this much needed airport expansion. Like every project of this magnitude however it did of course have many who were opposed to the idea, environment and noise being the most verbalised opposing reasons. But my understanding from being a very active supporter of the third runway is that it is Heathrow's intention to set about this expansion placing the environment and noise control at the centre of its build programme through utilising the latest in technology and materials to reduce the impact of excessive noise and pollution throughout the construction phase and beyond. In other words they are aware of the challenges and are determined to overcome them in order to deliver an expanded Heathrow that will meet the environmental standards set by the G20 that should hopefully see the UK regain its number one position as the world’s largest global HUB. The impact for companies within and associated to the construction industry will be very significant during this exciting expansion phase creating over 4000-5000 jobs alone throughout the north east region. In a recent visit by the Government's Minister for transport Chris Grayling MP following the announcement of their decision on Heathrow to my own company Miller UK Limited our MD Mr Mike Askew explained why in his view investment in this and further infrastructure was vital for the U.K. economy he said " As a global brand we need easier access to all areas of the world that can benefit from our innovative product range. More aeroplanes flying to more destinations with less queues has to be a good thing. Not only is it easier for us to access export markets but we are sending a very clear message that as a country we are very much open for business. I'm hoping that this is the first in a line of much needed investment into national infrastructure that is in my view needed now if we are to remain one of the world’s leading economies.'

Graham Mason, Planning and Corporate Affairs Director of Newcastle International Airport added

'We are pleased that Government has agreed with the recommendations of the Airport Commission and decided in favour of expanding Heathrow. We will now continue the hard work with our colleagues in the business community to support Government to ensure that the third runway is built in order to maximise the overwhelming benefits to the north east region that this project will deliver. Currently we offer six BA flights to Heathrow per day connecting over 500,000 passengers. With an expanded Heathrow we can not only hope to safeguard this very necessary service for the business community of the north east but to expand upon it in the future offering a more flexible improved service to even more global destinations.'

Never in my opinion has it been more important for a Business United type approach than in a post Brexit world. Important not only for our region but for the national economy. Imagine if we were able to harness the talent, drive, determination and spirit of our people from all walks of business, industrial and service sectors both privately and publicly the length and breadth of our great land just how much could we add to U.K. PLC' s bottom line and to the future prosperity to Great Britain?

 

Newcastle & London Heathrow Airports and their significance to our region?

By Jacqui Miller, Director, Miller International

As I sat at a round table type discussion regarding the future issues surrounding our region's airport I was reminded of that age old adage 'you never miss the water until the well runs dry'.

On learning more of what keeps the top team awake at night which could if left unchecked certainly threaten the airports long term future survival, I felt compelled to share with all my readers just how Scottish Devo max is set to affect us as a region much more than any other throughout England and the wider UK and why it's imperative that we get behind and fully support a third runway at London's Heathrow airport, whatever the outcome of the EU referendum.

Increased services to more destinations from both a national and international perspective have been hard fought in order to deliver to our region an airport where it’s become normal for those of us that travel for either business, pleasure or both to be able to do so from our regional capital that is Newcastle's International Airport.  Indeed for some of the business travellers amongst us (I flew at least 2-3 times a month during my time as Miller International's Sales & Marketing Director) it's the difference between being able to access a new market or not. 

We never stop to consider as we go about our daily lives just how important an issue connectivity is in today's global business environment or just how much of an inconvenience it would be if we had to travel to another airport outside the area to be able to reach those places we were attempting to sell into or visit for that special 'me/family time'.

Imagine if you will the long term impact therefore of the SNP's plans to half APD (Air Passenger Duty) as a first step toward potentially abolishing it all together.  Effectively this duty is currently levied on all passengers across the UK (currently including all Scottish airports) and raises approximately £3.8 billion for the Exchequer. In their attempts to prove to the Scottish people that as a governing party they are capable of delivering a sustainable thriving economy for the country the SNP have decided using the powers granted to them following the Devo Max agreement (which the previous Collation Government agreed to prior to the Scottish referendum) that they will slash this Air Passenger Duty by 50%. This bold move will immediately make their regional airports a lot more attractive to fly into/out of than any of those located over the border in England who at this time are still tied to the entire cost of APD. Of course this will impact all of England's airports, right?  Well yes it does in respect of the cost of reduced APD and their inability to compete on this but geographically its impact on our airport in Newcastle (approx. 98 miles only from Edinburgh) with England's next closest regional international airport of Leeds Bradford located approx. 222 miles away (clearly a lot less financially attractive to commuters from this area) it could prove catastrophic longer term as more and more passengers are tempted to choose a Scottish airport as their alternative to Newcastle.  Why would they do so, well put simply when travelling say as a group of 4 the savings on APD could equate to anywhere between £13-£26 up to £94 - £194 per passenger travelling (depending on final destination) and in some instances even more. The Government have recognised this threat to England's airports and indeed the Prime Minister conceded in the House of Commons in June of 2015 that this issue will cause unfair tax competition from our neighbours across the border. He said that the North East will be unfairly impacted and that a reduction to APD for Newcastle's airport was a 'positive suggestion' and he promised that the government would 'do what's necessary' to ensure that England's regional airports succeed. However we must ensure that government deliver on that promise, we cannot simply sit back and accept that we are just another one of England's regional airports and that the subsidy or solution government come up with to tackle this difficult issue will satisfy our region. Our airport must be treat as a 'special' case as if we are not then our region and all of our people will be effected by this completely unfair and unjust situation through absolutely no fault of our own. Indeed you only need to look at the now practically extinct Tees Valley Airport to understand the positive impact that air connectivity brings.  It will be our regions airport that is most affected and as a result those hard earned international routes that took decades to attract as we rebuilt industry throughout the North East would be threatened, (think of Nissan, Komatsu and more recently Hitachi all responsible for thousands of direct and indirect jobs in the region and all wholly owned Japanese firms that require easy connectivity to reach their investment within our area).

It will be our region that will see less job creation and indeed a reduction in new employment longer term as more companies decide to invest in Scotland instead of the North East because of their cheaper air travel and greater international connectivity. This is not a trivial matter and our regions elected politicians need to be fully alert to the impact on us all and ensure that under no circumstance can they allow this untenable outcome to become a reality.  

LHR (London Heathrow Airport) have openly recognised this huge threat to the BA route that flies 5 times daily to and from London carrying over 500,000 passengers and connecting a huge 50% onto other global destinations. To their credit LHR have gone some way to try and protect this service by reducing their charges as of January 1st 2017 by £10 per passenger, a move encouraged by the'National Connectivity Task Force' in their attempts to protect these critical regional hubs. 

Then of course there's the other very important issue of a third runway at LHR. Why is this so important to Newcastle and our wider region you may think? Well it's all about the economic impact that this third runway would deliver to not just Heathrow but to all of England's regions including our own through the way in which they intend to manage the entire development.

The carefully compiled team that London's Heathrow Airport have assembled to work on this project have been keen to consider the impact not just to the South East but to the wider UK in their attempt to get national support and in so doing offer opportunities for business up and down the country to bid for the hundreds of millions of contracts for the huge variety of materials and services that will be required to deliver on this project.  In terms of direct benefit to the North East if a third runway were to go ahead then it is estimated that this project would generate a staggering £4 Billion in terms of economic benefits and up to 5,100 new skilled jobs as a direct result from the construction phase of the project alone.

It is also no coincidence that UK businesses trade up to 20 times more with countries that have direct daily UK connections and it's why improving our connectivity across the World is of monumental importance to the future prosperity of our region and our nation whether we vote 'Brexit' or not.

We have always been an island trading nation and proudly still boast some world class firms in all types of industries and sectors producing world class products and services that most countries across the globe want to be able to access and benefit from. It is therefore imperative that we have a strong 'Hub' airport that allows companies to promote themselves on the world stage and by doing so take advantage of these opportunities in an ever changing world. For example if Mexico and Indonesia's current growth rate continues then they are both set to be larger than France by 2030. As Heathrow is the UK's only Hub airport then it stands to reason that it is only London's Heathrow that can deliver the services we need fast enough to be able to compete globally at the pace we need to. It is only one of six airports from around the world that has more than 50 long haul routes and with the new capacity afforded by the delivery of a third runway then this would allow a further 40 additional long hauldestinations.  Imagine the opportunities this would provide our businesses?

 A considerable help in driving direct investment and tourism to Britain whilst at the same time opening up many new and exciting overseas markets for British exporters to explore and sell to. As a nation we have been debating a third runway since the late 70's, early 80's and in that time some of our main export competition have built not one but two extra runways to ensure that they as a country can deliver on a vision that puts exporting, inward investment and global connectivity right at the heart of its country’s expansion.

Given the above facts my question to our government is this, what are we waiting for?