PART I: Tasked and Finished – analysis of South Hams Council’s own report: the Freeport is a terrible deal

Map by @stanfontan

Editor’s note: paragraphs in this font are direct quotes from council documentation

It is fact that South Hams Council made no public consultation on the Plymouth & South Devon Freeport.

It is fact that a Task & Finish Group was set up to scrutinise the risks and benefits of the Freeport agreement- AFTER a partnership agreement had already been signed.

This Task & Finish Group’s report has recently been published and will be discussed on Thursday, 30 November by South Hams District Council Executive.  

I, for one, will be watching this discussion closely. Why? Because the Council’s own report reveals a poor picture of bad deals for residents, inconsistencies of detail and serious concerns over risks.

Above all, the report reveals the failure at the heart of turbocharged ‘trickle-down’ private-public ‘partnerships’. And we South Hams residents – we’re right in the thick of it, despite the fact we were never asked. The report doesn’t outline the moral, social or ethical failures of Freeports: its focus is the legal and economic risks.

Here’s my analysis of the Task & Finish (T&F) Group report:

  1. Fantasy economics

Let’s unpack this one a bit. In September 2022 the Council was presented with a document that stated:

The…Land at Langage is integral to the success of the Freeport. As set out in the Freeport [] Full Business Case, the Langage site including the CPO Land cannot be replicated anywhere else. A detailed triangulation of the Freeport rules and requirements against planning compliant land allocation was undertaken at the very start of the Freeport Bid. This showed that the inclusion of South Yard, Sherford and Langage were a) all required to hit minimum area thresholds and b) were the only allocated sites that were policy compliant and deliverable within the timeframes required.”

Now, barely a year later, the Task & Finish (T&F) report tells us a different story:

3.5 Borrowing was originally intended for the purchase of the Langage site…a decision was then made in March 2023 to reallocate the Langage funds to be used for either the same purpose or for the acquisition of land at Sherford instead.

I want to know – who decided to re-allocate these funds? And why – if the rationale behind the ‘policy compliant’ land was correct? If it wasn’t correct, was it misleading, misrepresented or knowingly false? Which is it?

The T&F report then outlines a series of statements that place Langage as being clearly ‘optional’.

6. ….the Langage purchase should be put on hold and be subject to a later approval by the Council if and when necessary 3.7 …investment in Langage, if needed. 3.8 ….it is important to clarify that there is no obligation nor approval in place for the Council to acquire both Sherford and Langage.

Wait! What? But in September 2022 the Council clearly stated this land was ‘integral’. What has changed? What is the actual plan here? And as if that wasn’t confusing enough, all the glowing long-term financial projections INCLUDE Langage in its assumptions. For example, in this same T&F report it shows projections such as:

And here too-

And here!

3.3 This investment will be recouped as a capital receipt through the sale of land (which is the intent at the current time), and in addition the PWLB loan will be repaid by business rates income from Langage and Sherford from the retained business rates fund.

It begs the question: so what do the projections look like WITHOUT Langage? You cannot have a projected outcome based on land that the council is not even sure it might buy. That’s just THEORETICAL – otherwise known as FANTASY ECONOMICS. We are owed an explanation.

  • The wheels have already come off

The confident assumptions and financial projections are already way out. The Freeport projections are far off course and delayed. And it’s all here in the T&F report:

3.17 If development is delayed and the tenant occupies the sites late, then the retained business rate income stream is delayed and net income would be reduced. Information provided to the T&F Group suggest that some aspects of the Freeport timescale, planned in January 2023, are already up to five months late by August 2023.

These delays have significant knock-on issues:

3.18 In these 18 months the net income in the first 5 years of operation has changed from net positive projection of £2m to a net deficit of £288,000. This cashflow impact is because of the delay in occupancy and due to the fact that business rate income from both Langage and Sherford has moved back approximately 2 years.

(Note – yet again – Langage is included in the projections here, whilst elsewhere in the T&F report it has not even been decided whether Langage land is ‘in’ or ‘out’.)

I would like to know, is this net loss mentioned above greater or the same as the possible cost and damages for South Hams for withdrawal from the Freeport agreement all together? The T&F report is clearly mulling this quietly to itself in subtext. Although, I note, it fails to ask the elephant in the room: how much do we have to pay to get out of this terrible Freeport ‘deal’?:

3.22 If, for any reason, the Freeport is wound up or its conditions varied by a future Government, the expected benefits and income might be lost. We recommend that the Monitoring Officer provides a report to the Executive on the strength of the legal agreements entered into by the Council and in particular those parts relating to the land assets and income stream.

Surely ascertaining the strength of legal agreements should have been done prior to signing the Memorandum of Understanding in the first place? And how can the Council confidently assure Councillors and residents that ‘it is too expensive to leave the Freeport’ when the strength of the legal agreements is clearly unknown?

Have we been let down by our Council on some basic due diligence?

  • The Great ‘Green’ Illusion

Perhaps there’s a grim inevitability to this, but it seems the initial flashy claims of the Freeport being a ‘leader’ in the green economy is, well, bollocks. The T&F report recaps:

4.8 The Langage site includes the proposal to build a 10MW green hydrogen hub…The Freeport has an ambition to act as an exemplar to deliver net zero for the wider region significantly ahead of 2050, but there is no Advisory Board in the Freeport company tasked with making sure this goal is met.

This means the ‘green hydrogen’ centrepiece on which the ‘green economy’ vision of the Freeport was readily sold, may never actually happen. We know this particularly because we have now been told the Council may not even bother with buying Langage land in the first place!

And, worse, the T&F report lays bare the fact that we have no guarantees of any Net Zero, at all:

4.10 We recommend that the Council seeks to encourage the Freeport company to ensure that all construction at Sherford and Langage should explicitly consider net zero targets, an environmental impact assessment should be done, and mitigation should be carried out if needed.

How does this align with any concept of a ‘climate emergency’?

  • Legal agreements are weak and vulnerable to exploitation.

A frightening prospect is raised in the T&F report that the ‘Gateway policy’ (the supposedly protective criteria for choosing suitable businesses to ‘enter’ the highly favourable business zones) is not worth the paper it’s written on. It states:

9 The Council encourages the Freeport company to investigate the possibility of the Gateway policy being strengthened…to ensure that the land is only used for suitable purposes that are consistent with the Freeport principles.

And if you look elsewhere in the report, you can see why this might already be of concern:

4.3 … some organisations, which may not be compliant, are interested in acquiring the Sherford site.

The report paints a picture that outcomes are not within the Council’s control. In fact, no-one seems to know what ‘success’ might look like, with the T&F report recommending:

10. That the Council works with and/or encourages the Freeport company to develop clear outcomes and tangible delivery plans for the benefits to the environment, the green economy, skills, well-paid jobs, small business, and social outcomes in the South Hams area of the Freeport, through which progress can be monitored and evaluated so that these wider benefits can be realised. The T&F group see these wider benefits crucial to long-term legitimacy of the Freeport.

The fact that ‘long term legitimacy of the Freeport’ is even an issue at this point is of deep concern to me. After all, it’s a 25-year, multi-million-pound commitment – a huge amount of money without certainty of being ‘legitimate’.

And it’s clear that environment, economy, skills and well-paid jobs are far from having been secured by this Freeport ‘deal’- they are very much in the ‘encouraging’ stage. 

In fact, throughout the entirety of the T&F, there is a terrifying lack of leverage, accountability and legal enforcement of Net Zero and green/ environment issues. Our Council (which has underwritten the Freeport for millions with us residents as its backers) can only ‘encourage’ and does not even have an Advisory Board in place. The T&F report states:

11. That the Council works with and/or encourages the Freeport company to enhance the focus on net zero and the green economy…This objective should be supported through the establishment of a net zero Advisory Board to deliver this part of the mission.

The toothless language throughout the report speaks volumes: ‘seek’, ‘encourage’, ‘request’:

13. That the Council requests the Freeport company so that the plan can be reviewed by Audit and Governance and others. 15. That the Freeport company be encouraged to monitor the movement of businesses into the Freeport to ascertain any possible localised economic displacement…

It is important to note that ‘displacement’ is a huge issue. Economists have been warning of ‘displacement’ with Freeports all along: that businesses who were already in the region paying tax, simply relocate to the tax-break zone.

Surely, any agreement worth its salt would have nailed a legally binding obligation from the Freeport to monitor and block any economic displacement in the first place? I want to know. Who took their eye off the ball with displacement? 

  • There is clearly room for changing ‘this deal’ – we’re just not being told about it, how much it would cost, or what’s involved

It is clear to me from the T&F report that the deal ‘is not done’ – just look at the language used in this report which recommends:

16. That the Executive reviews the delegated powers and authority related to the Freeport and determines if any changes are needed.

(I also ask – if the Executive does not now review the delegated powers and authority and make necessary changes as above, including ensuring possible withdrawal, have they delivered on their duty of care to residents?)

The T&F report again suggests the possibility for change/ withdrawal/ partial withdrawal from the Freeport partnership:

3.15 We recommend that the Executive takes a close look at the current finance projections, as well as the worst-case scenario, to ensure that costs and financial risks are understood and acceptable to the Council.

So, if the recommendation is to make sure the risks are understood and acceptable to the council there is clearly the assumption that the council IS ABLE to decide that they are not acceptable – and do something about it. Over to you, South Hams.  

And try not to forget that each of these findings from the T&F group are RETROSPECTIVE. This is a report on failings found – AFTER the stable door has already been left open.

  • Are the drivers asleep at the wheel?

A major red flashing warning light blinks on the dashboard of this T&F report, but it seems no one until this point has actually cared to investigate what it could be:

5.1 In addition to the points noted above, the project raises a number of strategic, financial, operational and reputational risks for SHDC. …we believe there is no full risk analysis or management plan in place for the Council itself.

WHOAH!!! WAIT! WHAT??????? How can Councillors of any political persuasion seriously support something with no risk analysis or management plan in place for the Council itself?

And I worry about that word ‘believe’. How can the T&F group not know for sure? Is this what transparency looks like in the realm of the Freeport, with the T&F scrutiny panel itself in the dark? Could no-one have given them certainty?

I, for one, am deeply concerned.

The recommendations of the T&F Report

Amazingly, despite the lack of controls, weak policies, no Net Zero obligations, no risk analysis, a vanished green hydrogen plant and a cool couple of million pounds projected net loss in just 18 months, the T&F report ends on an optimistic note:

2.4 iii Although there are risks within the project there are also very grave risks from withdrawing at this stage, in reputational, legal and cost terms. The T&F Group believes that on balance the benefits of the Freeport outweigh the costs and risks involved, so long as these are understood and continue to be well managed.

I would like to point out that, based on the evidence in the T&F group’s own report, the words ‘well managed’ do not make any sense to me at all. And even the T&F report’s authors seem to forget their own cheery recommendation as they go on to list more risks not explored elsewhere:

i. Risk that a new Government changes the way the Freeport operates, or the way that retained business rates can be used.

ii. Risks that costs escalate, or that the projected income stream fails to meet its target so that income does not cover the loan repayments costs. This could be caused by a lack of tenants, delays in the developments or other factors beyond the control of the Council.

iii. Risk that land values decline after an SHDC purchase, Risk that land values decline after an SHDC purchase, leading to a reduced capital receipt.

iv. Risks that the operational or other costs increase.

v. Risk of land contamination or environmental or carbon impact from the works on the sites.

vi. Risk that there are fewer Freeport jobs created than projected, or that the jobs are lower paid, leading to reduced economic or social benefits for residents.

vii. Risk that firms from other parts of the South Hams relocate into the Freeport, displacing jobs and reducing the net benefit for the region. This may be particularly the case for small and medium sized companies.

Still, thank goodness this has all been ‘well managed’ so far. Nothing to worry about then; move on!

But the T&F report’s most ‘tone-deaf’ recommendation is this:

6.3 We recommend that the Council together with the Freeport company instigates a communication and engagement programme to publish information explaining the benefits of the Freeport to the local parish and the wider South Hams region, to inform public opinion and help answer any questions that might arise.

How can the Task and Finish group seriously be recommending better ‘Press & PR’ whilst items such as a full risk analysis or management plan are missing? The whole T&F report has highlighted substantial failings, inconsistencies and substantial risks, but the recommendation only mentions the need to bang on about the ‘benefits’. This is all eerily familiar.

And who will pay for this Press & PR to push the benefits? My guess – it’ll be us residents- again! 

Just to conclude:

Splits are appearing between the Green Party and the Liberal Democrats in South Hams. The Green Party are being challenged over the veracity of comments made in their literature recently about the risk of possible deviation from UK regulation in the Freeport.

Liberal Democrat Councillors should ensure they read the actual Freeport Bidding Prospectus, especially section 3.9.15 onwards where there is the explicit ‘loopholing’ of regulations and legislation.

Yes, it is couched in the doublespeak and rationalisation of libertarian big-bollocks economics. But no, the Green Party are not wrong in calling out these concerns. There is indeed capacity for sidestepping the norms of legislation and it is written clearly for all those who take the time to look.

Perhaps instead of attacking the Green Party, the Liberal Democrats should ensure they read not only the Council’s own devastating Task and Finish report (or my analysis, of course), but also the small print of the ‘contractual arrangements’ made on their residents’ behalf.

I note that the first part of the Bidding Prospectus’ relevant section has been used many times to ‘reassure’ anyone raising questions, including with the Liberal Democrats themselves. However, it’s a little concerning that the subsequent key information was left out. Why has there not been full transparency?

Here is the relevant section on UK regulations from the Freeport Bidding Prospectus in its entirety:

29 iii. Freeport regulatory innovation: The government remains committed to ensuring its Freeport model maintains the UK’s high standards with respect to security, safety, workers’ rights, data protection, biosecurity and the environment, while ensuring fair and open competition between businesses.

However, the government recognises that regulation in some cases can be challenging to navigate for innovative firms as they develop, test and apply new ideas and technologies in some sectors. Therefore, the government will commit funding to facilitate direct engagement between Freeports and relevant regulators through a “Freeport Regulation Engagement Network” (FREN). FRENs will:

a. Enable an early engagement process between innovative businesses and regulators

b. Support businesses on regulatory issues, minimising bureaucracy and uncertainty

c. Generate ideas to engage businesses and regulators on areas of potential opportunity

d. Identify opportunities for regulatory flexibility and new regulatory sandboxes

In outlining their innovation ambitions, bidders should:

a. Come forward with proposals that will support innovation and innovative industries.

Submissions are particularly encouraged that relate to port operations, customs procedures or the testing of green technologies

b. Outline how they would look to take advantage of the Freeports Regulation Engagement Network to support these proposals; for example, how they would benefit from an early engagement process with specific regulators

c. Provide contact details for their Freeport Regulators Engagement Network coordinator

d. Outline initial proposals for the testing of new technologies in their Freeports under FREN supervision

e. Outline which specific barriers may limit their ability to test new technologies in their Freeport, now or in the future. These barriers may be specific regulation, processes or otherwise

f. Outline where they see opportunities for, and how they would look to take advantage of, any regulatory flexibilities or regulatory sandboxes, now or in the future, to minimise these barriers

The phrase ‘regulatory sandbox’ should raise the hairs on both Liberal Democrats’ and Green Party necks, hopefully bringing all parties together in the need to consider carefully all the implications this ‘regulatory sandboxing’ might bring now, or ‘in the future’.

The Lib Dems should know that when safeguarding unique natural spaces such as Dartmoor or the River Dart, there can be no room for vagueness or ‘hoping for the best’. Turbo-charged free market economics will bulldoze straight through it. If the Lib Dems are happy to let ‘regulatory sandboxes’ rip, they might find their recent strong and appreciated stance on local river pollution is – ultimately – meaningless.

It’s time to get real for all of us on the Freeport.

It’s time to start reading the small print and asking demanding questions.

And it’s time for Lib Dems and Greens to pull together on this, because it is all simply far too important.

South Hams – small and clearly considered the ‘menial partner’ – holds more sway in this Freeport than the flimsy legal agreements referenced in the T&F report give credit. Both Sherford and Langage involve South Hams land. The southern tip of Dartmoor is within South Hams. And if South Hams were to remove itself from the Freeport, the justification for the regulation busting 75 km Dartmoor encircling boundary, and even the compliance and legitimacy of the Freeport itself, would be gone. There is scope here for heroes – but they have to stand up and be counted. Heroes don’t call for ‘better Press & PR’.

And if, after an internal report such as this one from the Task & Finish group, Lib Dem-led South Hams Council still maintains the Freeport is ‘tickety-boo’, then my next article may be one which I never thought I’d write:

Will it be the Lib Dems who sell out Dartmoor?

Call to action: 

Democracy relies on the public (us) demanding transparency and accountability from our elected representatives. Use this tool to find out who your elected local, South Hams, Devon County or Plymouth Councillor is. Email them and ask your questions based on what you have read. Do they really understand the issues involved? Are they prepared to fully back the Plymouth & South Devon Freeport?

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