The UK is to announce five new freeports and a new investment zone in next week's budget as part of a bid to boost economic growth.
Prime Minister Sir Keir Starmer said it was part of a plan to create thousands of jobs and increase trade in the UK.
Speaking to the BBC, Sir Keir said freeports – low-tax zones – were “working well”, despite criticism that they do not increase overall employment numbers.
But he added that “they could work better” with greater involvement from local businesses and politicians.
Sir Keir acknowledged freeports were a policy introduced by the Conservatives, but said he “did not want to take the ideological view that just because they were introduced by the last government, we would withdraw.”
However, he added that some improvements were needed, including “better structures and greater involvement of local authorities”.
Freeports are areas near shipping ports or airports where imported goods are exempt from taxes called tariffs which are normally paid to the UK government.
Businesses in these areas also pay lower national insurance – another tax – on new hires, and lower property taxes.
The idea is that they stimulate economic activity such as trade, investment and job creation.
Freeport manufacturers only pay customs duty on finished products that leave the site to go elsewhere in the UK.
And imported goods can be re-exported abroad without UK taxes being paid.
They are located around the ports of Inverness, Forth, Teeside, Humber, Liverpool, Anglesey, Milford Haven, Plymouth, Solent, Thames, Felixstowe and Harwich.
There is also a freeport near East Midlands Airport which covers parts of Leicester, Derby and Nottingham.
Critics, however, have suggested they are simply moving economic activity or jobs from one part of the country to another, rather than creating new opportunities or roles.
Sir Keir said “that’s why we would do well to make some changes to freeports to make sure they operate autonomously”.
He said Labor wanted to see growth plans “for every area, every place” drawn up by mayors, local authorities and local businesses, “so that freeports alone are not the only source of jobs and investments in a given area. .
He also said a new investment zone in the East Midlands, which would aim to boost high-tech green industry, was “really important”.
There are already two investment zones in the UK, which apply to specific local areas and offer businesses financial incentives.
“These areas are attracting investment, and they are measured in tens of thousands of well-paid jobs, so this is very good news,” Sir Keir said.
He added that economic growth is the “number one mission of this government.”
However, the watchdog which scrutinizes government finances, the Office for Budgetary Responsibility, predicted in 2021 that tax breaks in English freeports would cost the UK government £50m a year.
Historical evidence suggests that their “primary effect” would be to shift economic activity from one place to another, he said.
Internationally, freeports have also been linked to organized crime, money laundering, smuggling and low wages, the Scottish Greens argued in 2023.
But according to the government, the UK's freeports have attracted £2.9bn of investment and created around 6,000 jobs.
