Can a Free Port “level Up” the Welsh Island of Anglesey?

On the island of Anglesey, a rural constituency off the tip of North Wales, the Conservative Party’s flagship policy to “level up” the UK’s regional economy takes two forms.

The first is a £22.5 million program to make largely cosmetic improvements to the crumbling fabric of the port town of Holyhead. The second is a new free port that local government leaders believe can restore Anglesey’s fortunes after two decades of factory closures left the island employing an aging population in low-skilled jobs.

“We simply don’t have the jobs to feed our communities anymore,” said Dylan Williams, the chief executive of Anglesey Council, who hopes freeport status, granted to Holyhead in March 2023, will attract the investment needed to reverse the decline from Anglesey to stop.

The island’s economy has slowly de-industrialized over the last 25 years. The worst blow came in 2009 when the Anglesey aluminum works closed, followed six years later by the Wylfa nuclear power station, which had operated the smelters. The last major retail employer next to the port of Holyhead – a chicken processing factory – closed last March with the loss of 730 jobs.

“From a socio-economic perspective, Anglesey is running out of time,” said Williams, who says new jobs are vital to retaining young people and preserving the Welsh language on the island. “That’s why the freeport and rising are so important. We need something truly transformative to reverse the direction.”

What are free ports?

The Anglesey Freeport is one of twelve announced by the government since 2021, including eight in England and two each in Wales and Scotland.

The ports were touted as a “Brexit boost” by Boris Johnson during the 2019 election campaign and enjoy the personal support of Prime Minister Rishi Sunak, who wrote an article in 2016 entitled “The Free Ports Opportunity”..

Investors will receive a 10-year package with tax breaks for new buildings and machinery, simplified customs procedures and duty-free imports, as well as an exemption from social security contributions for new employees.

Each freeport is designed to have a specific focus. Humberside, for example, will focus on refining the rare earth metals used in the green energy industry, while Plymouth will focus on marine technology, including submarines and maritime drones.

Anglesey has focused its pitch on supplying its emerging green energy sector, which will have access to the national grid via the old connection to the now-defunct Wylfa power station.

It is still too early to assess the overall contribution of the Freeport Plan to the economy, as many programs are only just becoming fully operational.

In November 2023, the Department for Leveling Up, Housing and Communities (DLUHC) said that the freeports had so far generated £2.9 billion in investment and created 6,000 jobs – a fraction of the 82,600 jobs created by the eight English freeports combined over the course of the year had promised to achieve during their lifetime.

Economists are skeptical about the overall value of the systems. The Office for Budget Responsibility, Britain’s spending watchdog, warned in a 2021 assessment that their overall economic benefits were likely to be so small as to be “difficult to recognize even in retrospect.”

However, Michael Gove, the Leveling Up secretary responsible for implementing the strategy, told MPs in January that the OBR analysis missed the real point of the plan, which was to deliver an industrial strategy to revitalize the regions.

He said the ports were designed to create “the alchemy of economic growth” by bringing together the public and private sectors. “That’s the goal and intention behind it.”

How will Anglesey Freeport work?

Anglesey Freeport will be a joint venture between the local authority and Stena Line, the Swedish owner and operator of Holyhead Port, which is the main ferry route between the United Kingdom and Northern Ireland.

Traffic at the port has suffered a permanent decline due to Brexit and it is hoped that Holyhead, as a free port, can attract green investment and develop a new logistics center, said Ian Davies, head of UK ports at Stena.

The long-term aim, according to the port business plan, is to create between 3,500 and 13,000 new jobs by creating a hub for the solar and tidal energy industries already operating on Anglesey.

This includes a £30m tidal power project in Morlais, which will generate electricity from underwater turbines installed on a 35 square kilometer piece of specially designated seabed.

The first three power cables have already been installed, alongside a substation that will feed electricity into the grid via the connection originally installed for the old aluminum factory.

Ultimately, the goal is for the tidal and solar industries to be able to manufacture and service their products within the freeport zone, taking advantage of grid connection and port infrastructure.

“We see ourselves as enablers. We want to attract businesses with long-term plans, not just funding seekers, because we see this is the start of a journey to bring these high-quality manufacturing jobs back to Anglesey,” said Davies.

Is there a skilled workforce in Anglesey?

A key part of the program is the ability to provide a skilled workforce for the green industries within the zone and potentially for a new power station at Wylfa, which the government is building as part of a recently announced plan for a “nuclear revival”. Those hopes were boosted in March when Great British Nuclear, the government’s nuclear development arm, bought the Wylfa site.

For now, however, the focus is on developing Anglesey as an “energy island”, with or without a nuclear power station.

Anglesey’s further education college, Coleg Menai, has generous facilities, partly as a legacy of the old nuclear power station site. The university should serve as further bait for investors and ensure a supply of skilled workers when they move to the tax-free zones.

“It’s about offering the whole package – not just the engineers and graduates in the disciplines, but also the essential business, catering, hospitality, hair and beauty that would support a new green economy,” said Aled Jones-Griffith, the Rector of the university.

With more than a third of the workforce commuting from the island every day, Williams, the council’s chief executive, said the aim was to bring a wide range of jobs back to Anglesey. “If people leave, it should be because they want to, not because they have to,” he added.

Will the scheme work?

It will be a decade before it becomes clear whether Anglesey Freeport has achieved its original aims, but there are already signs the project is generating interest in the island.

A few miles from the college, M-SParc, an innovation cluster with 50 resident companies, is expanding to a second building, driven in part by interest in the free port.

“Some investors could come without the Freeport, but it would be slower,” said Pryderi ap Rhisiart, the managing director of M-SParc. “It is the tax relief for free ports that will make the difference. This is the clear feedback we have received from both UK and international companies.”

For those who have watched Anglesey’s inexorable decline over the last two decades, the freeport brings hope that a new chapter is finally beginning for the island.

John Idris Jones, chief executive of the Morlais tidal energy project, worked as an engineer at the nuclear power plant. His project will now integrate clean tidal energy into a grid connection built to power an old, dirty industry. “There is a pleasing circularity,” he said.

At the Cozy Corner Café in the island’s administrative center, Llangefni, where the 2 Sisters chicken processing plant closed a year ago, Anglesey’s green energy renaissance can’t come soon enough.

Aysh and Murat Tas, the cafe’s owners, watched their morning business fade as factory workers stopped showing up for breakfast.

“There are also just fewer young people in the city, so shops are closing,” Aysh added. “Summer is good with tourists, but you can’t live on just six months of good trade.”

At one of the cafe tables, a group of former teachers meeting for coffee said they had seen too many false dawns for Anglesey as repeated promises of renewal had come and gone.

They hope the free port will be different. “It’s a beautiful place, but you can’t live on beauty alone,” said Nia, one of the retired teachers. “The children need jobs. Something has to happen so they can find work.”