One month ago, three Extinction Rebellion protesters led by Deana ‘Violet’ Coco blocked the Westgate Bridge to deliver a desperate plea to all Australians. ‘Climate Breakdown has Begun.’ ‘Declare a Climate Emergency!’ they urged. Despite 1.15 degrees of warming confirmed in 2022 and the drastic effects of climate change currently affecting global communities, the Federal Continue reading »

This story was produced by The Hechinger Report, a nonprofit, nonpartisan news outlet focused on education.

Neriman Raim, a 16-year-old student in Cologne, Germany, thought that after finishing school she’d want to work in an office.

But two years ago, she did a two-week internship in an architect’s bureau, and it was tedious. Later, a placement working with kindergarteners led her to consider a career as a teacher — but not of kids this young. The next school year, she spent three weeks supervising older children as they did their homework.

Neriman now plans to become an educator working with grade-school children. After finishing school this summer, she’ll participate in a year-long placement to confirm that teaching is the right career for her before going to a technical college. Her internships offered a glimpse of what working life could look like, she said: “I could see what a day is like with kids.”

Neriman Raim, 16, thought she wanted to work in an office but changed her mind when a work placement at an architect’s bureau proved tedious. Credit: Patricia Kühfuss for The Hechinger Report

Neriman is taking part in Kein Abschluss ohne Anschluss (KAoA) — or “no graduation without connection” — a program that has been rolled out across the German state of North Rhine-Westphalia to help students better plan for their futures. Young people get support with resumes and job applications; in ninth grade, they participate in short internships with local businesses and have the option of doing a year-long, one-day-a week work placements in grade 10.

“You don’t learn about a job in school,” said Sonja Gryzik, who teaches English, math and career orientation at the school Neriman attends, Ursula Kuhr Schule. “You have to experience it.”

Germany and other Western European countries have long directed students into career paths at earlier ages than in the US, often placing kids onto university tracks or vocational education starting at age 10. Students in Germany can embark on apprenticeships directly after finishing general education at age 16 in grade 10, attending vocational schools that offer theoretical study, alongside practical training at a company. College-bound kids stay in school for three more years, ending with an entry exam for university.

Small class sizes at Ursula Kuhr Schule allow teachers to offer guidance and support. Credit: Patricia Kühfuss for The Hechinger Report

The apprenticeship system, which is credited with keeping youth unemployment low, has drawn strong interest in the US amid growing disenchantment with university education. Youth apprenticeships have begun to pop up in several US states, and career exposure programs are expanding. “Many of the best jobs our country has to offer don’t require a college education,” wrote workforce training advocate Ryan Craig in his recent book “Apprentice Nation: How the ‘Earn and Learn’ Alternative to Higher Education Will Create a Stronger and Fairer America.”

But in Germany, the hundreds-year-old vocational system has faced headwinds. There is longstanding criticism that low-income students and those from immigrant backgrounds are channeled into vocational fields and away from more academic ones. More recently, despite the high demand for workers in the trades, students and their parents are increasingly hesitant about vocational education. Germany’s labor market has become digitized, and young people are keeping their options open before settling on a career path. Meanwhile, the pandemic had an outsized impact on vocational training, forcing many programs to close for long periods. And recent immigrants may be unaware of voc-ed’s high standing.

All this has led more students to choose to attend university. Yet many drop out: According to recent data, up to 28 percent of students fail to complete a degree. The figure for students in humanities and natural sciences is even higher, up to 50 percent.

Students can test their horticultural skills in the school’s garden. Credit: Patricia Kühfuss for The Hechinger Report

This high failure rate, coupled with labor market needs, has led policymakers to tweak traditional vocational models to make them more flexible. Students in the academic track increasingly have access to both apprenticeships and university, and some students who complete vocational qualifications can still go on to attend a university, where options for combining practical experience with academic studies are growing.

The program Neriman participates in, KAoA, is part of a wave of efforts to engage all students, not just those bound for vocational programs, in workforce preparation. All ninth and 10th grade students in North Rhine-Westphalia must do a three-week-long practical internship. Those on a vocational track begin apprenticeships after completing 10th grade, while students hoping to go to university attend academic high school for three additional years. The program encourages students from all backgrounds to think about their futures in concrete terms, said Bernhard Meyer, a teacher at Ursula Kuhr who coordinates KAoA in 11 towns across the Northwestern region.

“We have every type of possibility,” Meyer said. “And there’s not only apprenticeship or university, there are some studies in between.”

At Ursula Kuhr Schule, students in the school’s woodworking lab build birdhouses and toy cars. A state-of-the-art kitchen lets students develop their culinary skills. An extensive garden, full of herbs, and boasting a hen house, offers an opportunity to test out horticultural skills.

Students take field trips to learn about different jobs. For example, on a trip to the airport they learn about positions such as flight attendant, fire service, security or aircraft mechanic. Employees from Ford, which has a plant in Cologne, visit the school to talk about their work with students and parents.

While university is free in Germany, students who study vocational fields can achieve financial security earlier on.

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Businesses in Germany seem keen to participate in vocational training. Chambers of commerce and industry support company-school partnerships and help smaller businesses train their interns. Students are even represented in unions, said Julian Uehlecke, a representative of the youth wing of Germany’s largest trade union alliance.

The goal of apprenticeships is to offer training in the classroom and in the workplace. The system gives students “a pretty good chance of finding a well-paid stable job,” said Leonard Geyer, a researcher at the European Centre for Social Welfare Policy and Research.

Lukas Graf, head of the Swiss Observatory for Vocational Education and Training described the “basic principle” of Germany’s program as providing all-around training: “in the classroom, in the seminar room, and training in the workplace.”

Woodwork supplies at Ursula Kuhr Schule, a school in Cologne, Germany. Credit: Patricia Kühfuss for The Hechinger Report

Mile Glisic, a 15-year-old student at Ursula Kuhr Schule, is doing a long-term work placement at a hardware store and considering an apprenticeship in sales. Earning money while training for a career will help him understand financial planning, and prepare him for a future in which he has a house and family, he said. “I think it’s better because you start to learn what to do with your money when you’re younger,” said Mile.

While the KAoA program has rolled out across all 2,000 schools in this region of Germany, including those that focus on university preparation, Ursula Kuhr Schule prioritizes practical education. Students, more than half of whom come from minority backgrounds, begin career orientation when they are just 12 or 13.

Backers of vocational training say it supports social inclusion by giving young people training that allows them to secure well-paid, stable jobs. But, as in the United States, many argue it limits the prospects of students from marginalized backgrounds and reproduces generational inequalities. This is “a huge debate,” said Graf, of the Swiss Observatory.

To Graf, the value of either a university degree or practical study depends on the particular courses chosen. A university graduate in a field like philosophy, for example, might end up with fewer well-paid opportunities than someone with vocational education training, he said.

The pandemic deepened many parents’ ambivalence about vocational training. While university teaching continued through online platforms, on-the-job training came to a stop when companies had to shut down, said Hubert Ertl, vice president and director of research at Germany’s Federal Institute for Vocational Education and Training and professor of vocational education research at the University of Paderborn.

Parents have a big influence: Research by Ertl’s institute shows that when students express interest in a vocational program, their parents often talk them out of it and push them toward higher ed instead. “That’s often not doing the young people any favors,” he said.

His organization works with schools and parents to tackle preconceived ideas about vocational education. “We’ve started to engage with parents quite directly because parents often don’t know about the vocational programs at all, and they don’t know what opportunities they afford.”

Frank Rasche teaches woodwork and technical education at Ursula Kuhr Schule. Credit: Patricia Kühfuss for The Hechinger Report

Tim Becker, 20, is doing an IT apprenticeship after completing the university entry exam at his academically oriented high school in Cologne. At first, his parents, who worked for CocaCola, were uneasy. German parents usually want their children to go to university, “especially if they go to a gymnasium,” Becker wrote in an email, referring to academic high schools.

But in school, his career classes urged students to compare the benefits of university to a practical qualification. For Becker, who’d always loved computers, hands-on training beat out academic theory. “I am just not that guy that likes to sit all day in any lectures at some university,” he said. Some of his old classmates have already dropped out of college and are pursuing internships, he added.

Parents at Ursula Kuhr attend meetings, called “future conferences,” with their kids several times a year. Mile’s parents, who moved to Germany from Serbia when he was nine, have met his teachers frequently. “I know that they were very happy with it,” he said, referring to his career path. “They had some questions about it. But I think they’re thinking good about it because, I mean, it’s only doing good for us.”

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Neriman’s mother, who is a nanny, “loved the idea” that her daughter would teach in grade-school, Neriman said. The teachers and staff at Ursula Kuhr help students gain confidence about their futures, she said. “The teachers do everything for us — they don’t want anyone to finish school and have nothing.”

Other European countries are seeing similar labor market needs. Denmark, whose minister for education trained as a bricklayer, is facing a significant skills shortage in vocational fields, said Camilla Hutters, head of the National Center for Vocational Education, a Danish research organization.

Students are encouraged to think about their futures. “We always talk about different jobs that might be suitable for them,” said Sonja Gryzik, who teaches English, math and career orientation at Ursula Kuhr Schule. Credit: Patricia Kühfuss for The Hechinger Report

In the 1960s, practical and project-based learning was common in Danish schools, Hutters said. That changed in the 1990s, when Denmark scored poorly on international rankings like the Program for International Student Assessment. Now, economic needs are causing a swing back to vocational and career education.

Today, Danish students as young as six might visit a workplace or spend a week learning about a particular career, she said, and discussions are under way to further integrate practical learning in primary school. Danish leaders also want to improve collaboration with business across the education system, including at the university level, Hutters said, where an increasing number of courses are likely to involve working with a company. Political leaders are discussing reforms that would “improve practical learning in the whole system,” she said.

But a tension between on-the-job training and academia persists in Danish thinking, she added. Although policymakers want to expand the practical element across all levels of education, university still remains the goal for many students and their parents. “This is a little bit of a mixed tendency at the same time, right now in Denmark,” she said.

Back in Germany, Becker will finish his internship in September 2024 with expertise in IT services and network security. Throughout his training, he has earned money — and will get up to €1,260 (roughly $1,360) per month in his final year — which has meant he could avoid taking on part-time work as some of his college friends have done.  “You don’t need to sit all day in university and go to work in the evening to pay your bills,” he said.

And it suits him. He grew up surrounded by computers, tinkering alongside his dad, and that love of technology persisted through his teens. He likes working with his hands and doing, “something where I can learn practical things,” he said.

This story about German vocational training was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.

The post How Schools in Germany Are Preparing Students for Flexible Futures appeared first on Reasons to be Cheerful.

The serious allegations and revelations about Teesworks and the Teesside Freeport have sparked renewed attention to the dangers of freeports and other kinds of special economic zone (SEZ), as has recent Government confirmation that eight new investment zones will commence operation in the 2024-25 financial year, with a further five in prospect.

This attention is vitally important.

Although a recent Government-commissioned review of Teesworks did not find evidence to justify allegations of corruption or illegality, it did identify multiple defects in decision-making and transparency, as well as questioning whether it provides value for money.

Many commentators, including anti-corruption experts, consider that this review was insufficient in its powers and scope, and are dubious about its failure to identify corruption. Certainly, it is unlikely that this is the end of the matter as regards the Teesside freeport or others, and investigative journalism by Private Eye, especially, continues to undertake outstanding reporting of this unfolding story.

However, these important issues are being obscured by the swirl of errors, confusions, and hyperbole which has reappeared around UK freeports and ‘charter cities’ or ‘states within a state’ – particularly on social media but also crossing over into the traditional media.

Dispersing this fog is difficult because the claims made are convoluted, fragmented, hard to pin down, and difficult to disentangle from the occasional truth they contain. They would be easier to evaluate if they were based on published research reports about the actual operations or rules of UK SEZs but, tellingly, they are not.

Unpacking what is being said therefore requires a lengthy explanation but, with misinformation on this issue now spreading like wildfire, it is worthwhile both in the interests of accuracy and – crucially – to prevent the false or exaggerated claims being made, giving advocates of SEZs an easy way to discredit their critics.

There is also a more narrowly political issue. To the extent that Labour has no apparent plans to dissolve SEZs if it comes to power, it is being suggested that the party is ‘complicit’ in what is claimed these SEZs consist of. 

SEZs

Special economic zone is a generic term encompassing a wide variety of foreign trade zones, freeports, investment zones, industrial parks, export processing zones, enterprise zones, and even ‘charter cities’ (in this sense, the phrase ‘freeports and SEZs’ is a misnomer).

What all SEZs share is some form of derogation from the laws and regulations of the country within which they are located. But what that means, and the specific institutional and legal forms it takes, also varies considerably.

The actual or potential problems of SEZs around the world are well-established, including a lack of democratic accountability, tax evasion, money-laundering, and the erosion of environmental and labour standards, all the way through to grotesque breaches of human rights.

At the same time, one of the best-evidenced criticisms is that they are an ineffectual, and possibly counter-productive way of promoting economic activity, as they are more likely to draw existing activity to them – to the detriment of other areas – than to generate new activity.

With so many potential dangers and arguably so few benefits, it is entirely right and necessary that SEZs be subjected to very close scrutiny.  

In the UK, the derogations involved have predominantly meant tax exemptions of various sorts, including reduced or waived business rates and employer National Insurance contributions, investment support, and the relaxation of planning rules. Freeports, specifically, also suspend or simplify customs procedures and tariff payments until goods leave them.

It seems likely that some of the SEZs currently being developed in the UK will be given considerable rights to compulsorily purchase land and buildings as happened in the past with, for example, the London Docklands Development Corporation. The official intentions behind these SEZs have included boosting employment, economic growth, innovation, investment, and trade, and reducing regional inequalities, although their effectiveness in these respects is highly contested.

As this suggests, SEZs are not a new phenomenon in the UK, and can be traced back at least to the early 1980s, but they have come and gone, and changed name and detailed provisions over time. There have even been freeports in the past, although the last of these closed in 2012.

The variety of forms SEZs take also makes it hard to pin down the exact numbers involved, as does the fact that in the past few years the Government has made several proposals for different numbers of SEZs, some of which have been modified or abandoned, others of which are at different stages of creation.

As things stand, there are at least 60 enterprise zones still in operation across the UK which were created following the Coalition Government’s 2011 Budget. The current Government is creating at least 12 (perhaps 13) new freeports which are at various stages of development, and there are also the 13 new investment zones currently being created.

It is presumably adding all these together that leads to the figure of 86 frequently appearing on social media as the number of current and projected SEZs in the UK.

An aerial view of the Port of Felixstowe, Suffolk, part of 'Freeport East'. Photo: John Fielding/Wikimedia Commons

States Within a State?

The UK has, or will soon have, a mixture of SEZs. What it does not have, and there are no announced plans for it to have, are charter cities.

Charter cities are a particular, and intensely controversial, form of SEZ, generally found in economically developing countries, in which, typically, a private company or consortium takes over the laws and regulations of a territory within the ‘host country’.

The most famous, or infamous, examples are the now abandoned zones for employment and economic development in Honduras. The claim that UK freeports are, or will become, charter cities started floating around a couple of years ago, based mainly on some rambling essays, by an author using a false name, on a now deleted website.

At that time, and again now, a particular focus of concern was the size of areas denoted on then newly-published Government maps of freeport areas, showing them to extend for up to 45 square kilometres. The concern was reasonable, for the maps were poorly annotated and explained, and became all the more so when combined with the claim that these entire areas were set to become ‘charter cities’.

But that claim was based on a misunderstanding: in fact, as independent experts have explained, it denotes the area within which freeport facilities (customs and tax sites) must be located, not the area within which the derogations (such as tax breaks) apply, although there remain uncertainties, and therefore significant and genuine concerns, about the scope of changes to compulsory purchase and planning regulations.  

In recent weeks, there has been a resurgence of these and similar ideas, and even a X (formerly Twitter) community, which currently has more than 500 members, built around them. Though this latest upsurge does not always use the term ‘charter city’, it makes the same claims by talking of the UK SEZs being ‘states within a state’ or ‘countries within a country’ – with corporations able to set their own tax systems and laws, including environmental and employment laws, to the point where many rights are, or could be, suspended.

If anything, this latest version is even more alarming than before in claiming that all 86 UK SEZs (thus including the old enterprise zones) are such ‘states within a state’.

Flawed Logic and Motivated Reasoning

None of this was true when it was first claimed and none of it is true now.

What is certainly true is that there are free-market and libertarian think tanks which advocate for such developments. It is true that those think tanks, and many individuals within them, are influential with the Government.

It is true that, in 2010, one of them, the TaxPayers’ Alliance, circulated some notes championing charter cities in the UK. It is no doubt true that many Conservative MPs would agree. It is true that Jacob Rees-Mogg’s father wrote a book extolling the kind of libertarian dystopia associated with charter cities and their advocates. And it is true that Rishi Sunak, who is a longstanding advocate of freeports, was once taught by the Stanford economist Paul Romer who was the architect of the contemporary charter cities concept (whether this really means, as is invariably claimed as some kind of clinching evidence if true, that he was 'Sunak’s mentor’ seems improbable since Romer has “no recollection of ever interacting with him”).

But there are no ‘dots to be joined’ here. Whatever any of these individuals or organisations may want, as a matter of fact there is no legal basis in the UK, and no legislation in prospect, which would enable in name, or in effect, anything remotely like charter cities or ‘states within a state’ or ‘company towns’ or any of the similar claims which are circulating.

UK SEZs are part of the UK and remain entirely within the UK’s legal order, and there is no way that they could ‘become’ charter cities, or have their own legal order, without primary legislation (and, as will become clear later, without violating the UK’s trade deal with the EU).

This isn’t one of those issues where there are valid points on 'both sides’ of the debate. It is quite clear cut and beyond rational debate.

UK SEZs do not make their own laws and they do not have the power to set different employment or environmental regulations from the rest of the country.

Except in the most circuitous of ways, UK SEZs have nothing to do with the East India Company or with Hong Kong Freeports during the Opium Wars. Such comparisons make for good rhetoric but are based on the confusions arising from SEZ being a generic term which can be applied to multiple things.

The result has been to conflate all the different kinds of SEZs there are, or have ever been, or have ever been proposed, across different centuries and around the world, and to ascribe characteristics of any of them to current UK SEZs.

At its heart is a well-known logical fallacy along the lines of ‘a dog is an animal. An elephant is an animal. Therefore a dog is an elephant’. What then proceeds is the familiar practices of all ‘motivated reasoning’, which selects or twists evidence to fit assumptions, and mistakes absence of evidence for the presence of a hidden agenda. It soon becomes easy for perfectly well-intentioned people to become completely invested in ‘proving’ the fallacy to be true, and for social media echo chambers to amplify the message, and possibly make it even more inaccurate in the process.

In this particular case, it seems to have gained credence mainly among many who, confronted with similar logic and reasoning from Brexiters, would readily detect its deficiencies. If this case is different perhaps it is because, superficially, it looks like another of the well-founded critiques of Brexit.

Brexit and Freeports

Although most of the UK’s SEZs predate it, Brexit has given new impetus to concerns about them, not least because the Government proclaims the new freeports, specifically, to be a ‘Brexit benefit’ and trumpets the idea that this is because they will be free of EU rules that governed the previous UK freeports.

It is true that the EU has such rules and that these are more stringent than those of the World Trade Organisation, with which the UK has to comply. That the Government, in its desperation to show some value to Brexit, should make a great deal of this is not surprising.

What is more surprising is that critics of these new UK freeports should adopt a mirror-image form of the Government’s rhetoric, by inferring that this means that EU freeports, including those which the UK used to have, are not of concern because they are ‘tightly regulated’, whereas the new UK version will be completely different.

This is a rather starry-eyed view of EU freeports which, like other SEZs, have themselves been criticised for fostering corruption, tax evasion and criminality. That is clearly not an argument for UK freeports, but it does demonstrate that for critics to draw a sharp distinction between ‘tightly regulated’ EU freeports and post-Brexit UK freeports is misleading.

That, in turn, should give pause for thought to those who believe that post-Brexit freeports are set to be deeply malign – whereas their pre-Brexit version was, if not benign, then at least no worse than merely ineffective.

Freeports and State Aid

In reality, as these critics rightly identify, the principal way that post-Brexit freeports differ, or may differ, from those allowed by the EU, relates to state aid, which is indeed tightly controlled in the EU version. However, it is bizarre that they should focus on this issue, given that their wider critique comes primarily from a broadly left-wing viewpoint.

Are they suggesting that state aid is automatically a bad thing? After all, a standard criticism made of the EU by the left, including ‘Lexiters’, is that its restrictions on state aid mark it out as a neoliberal organisation. Why, then, would anyone on the left argue that the UK making more extensive use of state aid than the EU allows should be seen as a problem?

Conversely, if UK’s post-Brexit freeports are, as these critics insist, a playground for ‘anarcho-capitalism’ and the most extreme forms of neoliberalism and libertarianism, that can hardly be squared with the criticism that they are ramping up the provision of state aid.

This criticism is not just ideologically incoherent, it also misses or obscures two crucial points.

The first is that, in fact, post-Brexit UK freeports, and the UK generally, are not able to operate independently of EU state aid rules. It is true that the UK no longer has to obtain advance approval from the European Commission for things such as freeport tax breaks, but it is bound by the state aid provisions within the 'level playing field’ commitments of the Trade and Cooperation Agreement with the EU.

Indeed, there have already been concerns raised by the EU that UK freeport tax incentives (which is what is specifically at issue, though subsidised asset sales could become another) may violate those provisions. Whether they do so, and if they do what action the EU takes, remain to be seen, but it demonstrates the falsity of the claim that UK freeports can simply ignore EU state aid rules, and of the claim that UK freeports are constrained solely by WTO rules.

What is even more important is what this criticism obscures. The EU may object to freeport state aid because it gives the UK competitive advantage. Right-wing neoliberals may object to it because it distorts market competition. But the real concern should be whether freeport tax incentives and highly subsidised asset sales are in fact a cover for cronyism and corruption.

It is this possibility, rather than some idea that ‘state aid’ is inherently wrong, or that EU state aid rules are inherently virtuous, which lies at the heart of the accusations which have already been made about Teesside Freeport and which, very likely, will emerge about others in the future.

Finally, it has been suggested that, to the extent that UK Freeports do not comply with EU Freeport regulations, their existence is a bar to the UK re-joining the EU. This is not true. In the course of any accession process, UK SEZs would simply have to be amended over an agreed period of time to comply with EU rules, as has happened with the SEZs of many accession countries, such as Poland, in the past.

Since freeport derogations are time-limited, this would not likely give rise to contractual disputes. Even if it did, suggestions that this would lead to the UK facing legal claims in a ‘secretive court’ under an ‘investor-state dispute settlement’ (ISDS) mechanism are puzzling. ISDS features in some international trade and investment agreements and has had relevance to some charter city contracts, so this suggestion is likely to just be based on the underlying confusion of freeports and charter cities, since it is a mystery what agreement or associated ISDS mechanism might give rise to such legal claims in relation to UK freeports.

Retained EU Law

The other, quite different, Brexit issue which is being mentioned in relation to SEZs is that of EU law and regulation – especially that relating to employment and environmental standards. Specifically, it is claimed that the Government has axed huge swathes of what was Retained EU Law (REUL), with more to follow.

It is a strange shift in logic because, even if it was true, it would be true for the UK (or in some cases only Great Britain) as a whole, whereas the ‘state within a state’ claim is that SEZs have different laws and even different legal systems from the rest of the country.

But, in any case, it is also misleading.

It is true that Boris Johnson, Liz Truss and, at one time, Sunak, all promised to shred the majority of Retained EU Law. How deeply this would have bitten into employment and environmental protections will probably never be known, as we don’t know which things would have escaped the shredder. But the fact is that, much to the outrage of Conservative deregulatory Brexiters, Sunak was forced – for pragmatic rather than principled reasons – to substantially water-down what became the Retained EU Law (Revocation and Reform) Act of 2023. The bulk of what is now called ‘assimilated law’ has been kept.

It is true that one thing which hasn’t been assimilated is the Retained EU law relating to port service regulations, and some of the freeport critics have lighted on this as being significant – but mistakenly so. It has been axed because UK ports are mostly not state-owned, which is nothing to do with Brexit, and the regulations are only relevant to freeports, specifically, to the extent that they might have contradicted some of the tax breaks being offered. However, the decision to create those tax breaks had already been taken, so the Act changed nothing in that respect.

Crucially, the Act has allowed almost no changes to employment rights, and most EU case law has been written into UK legislation. With regards to environmental regulations, the concerns about the extent of what would be scrapped under the original proposals have not eventuated, although there have been losses, especially of air pollution laws, and to the extent there is divergence from EU rules it is mainly passive (not following EU changes) rather than through actively scrapping existing rules.

That’s not to deny that there is plenty to be concerned about in this, including substantial uncertainty about how assimilated law will operate, and plenty more that could be written. But it has nothing to do with SEZs specifically.

Deregulation

Of course, it is always perfectly possible that this Government, or a future one, might remove some or all employment rights, environmental protections (and literally anything else). That could come from future UK legislation which might, in turn, annul some or even all assimilated law or, most concerningly of all, from individual ministers using statutory instruments, rather than legislation, to do so.

Nevertheless, as things stand there has been no significant, and certainly no wholesale, regulatory change in these areas.

In any case, as with the state aid issue, the UK would be constrained by the level playing field provisions of the Trade and Cooperation Agreement, which contain non-regression clauses relating to employment and environmental protections.

More generally, detailed academic research on post-Brexit regulatory divergence of any sort shows that is has been relatively limited and that, again much to the anger of Conservative deregulatory Brexiters, “non-divergence is the new consensus in British politics”. To reiterate, while this could change, doing so would affect the whole country, not just SEZs. So if a government was minded to make such a change, why would it want to confine it to SEZs? And, even if it did, that would still not make SEZs ‘states within a state’, setting their own law: it would be a political decision by the government, and enacted by national law, just like any other.

The understandable concern that the Government will pursue a strategy of deregulation stands in its own right – but it doesn’t need some bizarre theory behind it about the creation of charter cities.

In fact, the Government has explicitly stated that “there is no deregulatory agenda in freeports”, including in relation to workers’ rights and environmental standards. Of course, it may be misleading. If so, that could be demonstrated by pointing to evidence that there has been such deregulation, or that the legal apparatus has been created to make it possible. Yet, there was nothing in the freeport bidding process which made any reference at all to bidders acquiring the ability to make their own laws, or to set their own taxes, or to establish their own labour and environmental standards (in fact, the regulatory constraints enumerated would make many free-marketers weep). Even more importantly, there has been no law passed or ‘charter’ granted which would allow them to.

If that isn’t enough, consider that the first of these freeports became operational in 2022, but there are no examples of corporate-created law being in place, or of a different set of employment rights or environmental regulations being in force, within them.

The same goes for the 60 enterprise zones which, we are told, are among the 86 SEZ ‘states within a state’. They have had many years of operation, including three years since the Brexit transition period ended and EU law ceased to be binding, to create such corporate legal or regulatory systems. Yet here, too, there are no examples of this having happened.

Evidence and Expertise

The fact that so many exaggerated or inaccurate claims about UK SEZs are gaining traction is a testament to the Government’s failure to communicate its policy and, no doubt, to the lack of trust that many people have in its intentions.

But, even if the Government’s communication was perfect, it would not be able to disguise the genuine and serious criticisms of its SEZs which exist: their questionable economic value, their questionable value for money, their capacity to lead to corruption and criminality, their lack of transparency and accountability, and their capacity to dilute or over-ride local planning controls.

It is not necessary to deny these criticisms, and it is certainly not necessary to defend UK SEZs, including freeports, in order to challenge the wilder accusations that are being made about them. Indeed, challenging those accusations is an important part of ensuring that the real criticisms are not drowned out or discounted.

Similarly, to the extent that many of the accusations are associated with criticising Brexit, they detract from all the many real criticisms of Brexit. It becomes all too easy to dismiss these real criticisms as ‘Brexit Derangement Syndrome’ simply by pointing to such unfounded assertions.

That is especially unfortunate since, whereas Brexiters have been notoriously disdainful of experts and evidence, those opposed to Brexit have tended to be more careful to rely on them. Yet it is notable that these charter city or ‘states within a state’ claims about UK SEZs are not based on any professional research and are not coming from reputable academic experts in a relevant subject or established journalists.

It seems highly unlikely that such experts, many of whom are themselves highly critical of Brexit, are suddenly coy about endorsing what would, if true, be a major and damning critique of it.

The more obvious, and correct, conclusion is that, on the basis of the available evidence, they know it is not true.

Late last year, New York City made headlines when it all but banned Airbnbs and other short-term rentals within city limits. Since the pandemic, Airbnb had overtaken an estimated 39,000 rental units, hollowing out neighborhoods and causing already-high rents to grow even higher.

“You would see tourists on the streets in neighborhoods where there weren’t any hotels,” recalls New York-based artist and activist Murray Cox. The sound of rolling suitcases could be heard at all hours. Once tight-knit communities began to feel lifeless. When Cox ran the numbers on his own neighborhood — Bed-Stuy in Brooklyn — he found about 1,000 listings. Cox also heard horror stories from other parts of the city. “People would move into a building and then find that the building was full of tourists day in and day out,” he says. “In some cases, they would be so uncomfortable they’d feel forced to leave.”  

New York City’s crackdown on Airbnbs is part of a growing trend. Credit: Matthew Rutledge / Flickr

So, in September of 2023, New York City decided to do something about it. A series of bold requirements capped the total number of short-term rentals (STRs) and limited guests to just two at a time. They required STR operators to be primary homeowners — and to be present in the home while hosting. The city also promised to enforce those requirements, a move that would wipe out nearly 90 percent of active listings at the time.

Though it may sound revolutionary, New York’s crackdown isn’t the first of its kind. In fact, it’s part of a growing trend — one largely spearheaded by much smaller towns. Over the last decade, communities from Irvine, California, to Durango, Colorado, have implemented clever regulations, taxes and zoning policies to hobble the STR market — or, in some cases, eliminate it altogether. As the success stories pile up, a growing body of research points to the dramatic positive impacts of policies like these, including lower rents, more equitable housing markets and the promise of a sustainable tourism economy. 

When Airbnb was founded more than a decade ago, it was heralded as the harbinger of a new sharing economy. In theory, home-sharing platforms — including Airbnb, Couchsurfing, VRBO, FlipKey and Homestay — would put underutilized bedrooms to use, matching budget-conscious travelers with locals in need of a little extra cash. The system would funnel tourism dollars into small towns in a more equitable way. It seemed like a win-win. But within a few years, one clear loser emerged: communities. 

“It didn’t take very long for people to realize the sharing economy was basically a scam,” explains Cox, who later went on to found data-sharing platform Inside Airbnb. “People weren’t using that car that was sitting in the driveway to drive Uber. And people weren’t just renting out a sofa or a spare bedroom.” Instead, people saw an economic opportunity they could invest in. And they started buying whole homes to rent out on Airbnb. 

In many cases, speculators and investment companies were buying multiple homes expressly for short-term rental use. According to Cox, about two-thirds of Airbnb rentals in the US are in a property portfolio, which means the host owns and rents more than one property. And the top one percent of operators have more than 300,000 Airbnb listings among them — a stat that points to huge conglomerates gobbling up the market.  

In September of 2023, New York City enacted bold requirements that capped the total number of short-term rentals and limited guests to just two at a time. Credit: RightFramePhotoVideo / Shutterstock

These days, Airbnb isn’t just a way to share underutilized bedrooms; it’s big business.

Right now, about 90 percent of Airbnbs in Bozeman, Montana, and Nashville, Tennessee — both popular vacation spots — are whole homes. Both Bozeman and Nashville are also relatively small towns with exploding local populations and limited housing stock. That means that every home set aside for a year-round STR listing is a home unavailable to local residents struggling to find — and afford — housing. In extreme cases, the STR explosion has forced longtime locals to move away. The so-called “Airbnb Effect” can hollow out once-vibrant communities. 

This effect is most visible in popular vacation hot spots. In Hawaii, for example, out-of-towners have bought up so many homes that few are left for Native Hawaiians.  

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“On Maui alone, 52 percent of homes are sold to nonresidents, and 60 percent of condos and apartments have gone to investors and second homeowners,” writes Stanford researcher Noah Jordan Magbual in a recent report. “The once indigenous population of the Hawaiian archipelago are now outcasts in their own home.” 

The Airbnb Effect also impacts bigger urban areas. In 2015, one study found that STRs had sucked at least 10 percent of New York’s available housing off the market. Another New York study showed that this reduction in supply led to rent increases of up to hundreds of dollars per year. In Barcelona, the effect is even more severe, with rents rising by seven percent and housing costs rising by up to 17 percent in popular neighborhoods. 

For some cities, the proliferation of STRs has become more than just an economic issue; it’s existential. That’s especially true in New Orleans, the longtime home of Jeffrey Goodman, an urban planner and consultant who specializes in STRs. 

Credit: Mr. Nixter

Tourists are drawn to New Orleans for culture: art, food, music and more. But the city is becoming less and less affordable for the people who make those things possible.

“We were one of the earlier cities to experience the growth in short-term rentals,” Goodman says. “And we’re in a unique place because so much of what we sell is culture. It’s art. It’s food. But the people who make the art and cook the food and play the trumpets have a hard time living here.” So, if the locals who make New Orleans special are forced to move away, what’s left? 

“There are a lot of cities asking themselves this question,” says Goodman. “Are we a city anymore or are we just Disneyland?” 

According to Goodman, the Airbnb Effect is stronger in small communities, like mountain towns or beach towns, which tend to have limited housing stock, high home prices and little flexibility to adapt to fluctuations in housing availability. That may be why small towns were among the first to fight back. 

In 2014, Durango — a town of 20,000 in southwestern Colorado — passed a series of regulations to combat what one local newspaper called “The Airbnb Apocalypse.” The town, an adventure epicenter for mountain bikers, climbers, skiers and other outdoor sports enthusiasts, isn’t just a tourist magnet. It’s also home to Fort Lewis College, a premiere university for Native American students and Colorado locals. That was an experience Durango was anxious to protect. 

Durango’s 2014 regulations banned STRs outright in student neighborhoods. They also limited STRs to two percent of the housing stock elsewhere. 

Tourists ride the Durango & Silverton Narrow Gauge Railroad along the Animas River. Credit: Woody Hibbard / Flickr

“In doing this, the city made it clear that preserving student housing took precedence over any money they were going to get from tourism,” says Goodman. 

Today, city planning officials say the program has been a huge success. 

“Durango led the way in creating effective guardrails to protect the community from being overrun with STRs,” says Scott Shine, director of Durango’s Community Development Department. Today, he says, STRs make up just 1.4 percent of the city’s total housing stock. They just aren’t really an issue anymore.

A year later, Santa Monica — an affluent California beach town of 90,000 — passed its own ordinances, banning STRs offering stays of less than 30 days for an entire home. The city also extended its 14-percent hotel tax to STR operators and made it illegal to operate them without a valid business license. According to one estimate, the ordinance has since dropped the city’s number of Airbnb listings by 61 percent, potentially returning more than 1,000 homes to the long-term rental or purchasing markets. 

Many of these novel STR policies look great on paper, but the truth is that they’re hard to enforce. Few cities have spent more time thinking about this issue than San Francisco. 

San Francisco-based housing activist Dale Carlson first heard about the Airbnb Effect back in 2014, when the city was undergoing a major housing affordability crisis. When he learned that nearly five percent of the city’s limited housing stock was devoted to Airbnbs, he decided to get involved. 

Carlson helped bring together a coalition of tenants, hotels and property rights groups. By 2015, they’d successfully lobbied for a city ordinance that required hosts to register their STRs, have a business license and pay hotel taxes. But it wasn’t enough. 

Credit: Dale Cruse / Flickr

Cities across American watched as San Francisco enacted its platform-accountability policies. Now, some of those cities have enacted policies of their own.

“We still ended up with 15,000 or 16,000 listings,” Carlson says. So, his group asked voters to get behind an entirely new concept: the principle of platform accountability. 

“The idea is that [the rental platform] can list and or rent anything it wants, but it can only collect a booking fee on the stuff that’s legal,” Carlson explains. If passed, the ballot measure would put the onus on Airbnb — not the city — to police unregistered and therefore illegal listings. Airbnb fought the initiative, and it fought hard. 

“We were defeated in the ballot. Airbnb spent close to $10 million—they outspent us 20 to 1,” Carlson says. But despite the heavy spending, Airbnb barely eked out the win. “So many people had told us, ‘You’re never going to beat them because they’re too big and powerful,’” Carlson says. “But suddenly they didn’t look so powerful. And we didn’t seem so vulnerable.” 

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Carlson’s coalition reworked the initiative and tried again. The next time, the ballot measure passed. Within a few months, Carlson says, Airbnb listings in the city had dropped by about 90 percent. Cities across America were watching. Others, like Boston and New York, ultimately adopted platform-accountability policies of their own. 

Another important aspect of San Francisco’s policy is that hosts can only use their primary residences as STRs. According to Carlson, that’s dramatically limited speculative purchasing. 

“All the folks who were buying up units or renting units and then subletting them on Airbnb — that’s all gone,” he says. 

A few years later, Irvine, California, enacted an even more severe policy — with more dramatic results. In 2018, the city banned all short-term rentals under 30 days and hired a fintech firm to track down and report scofflaw hosts. This ban more than halved the number of Airbnb properties. Eight years on, rents in the city have dropped by up to three percent, according to a recent study. That saves tenants about $114 per month on average. 

The city of Irvine banned all short-term rentals under 30 days, cutting the number of Airbnb properties down by more than half. Credit: Matt Gush / Shutterstock

Choosing the right STR regulations can be very location-dependent, says Goodman, the city planning consultant. Some towns might need a combination of ordinances, while complete bans might work better in others. But according to Michael Seiler, the College of William and Mary researcher who led the Irvine study, we now have strong evidence that limiting STRs can indeed reduce rents. And, he says, it’s likely that Irvine’s solution could be successfully applied in other towns.

“If I was another policy maker in a sister city, I would say let’s at least try it,” he says. “Because we’ve shown that it does work here.”

New York hasn’t been the only city to act in recent years. In 2023, Bozeman passed regulations forcing STR platforms to ask for operators’ permit numbers. The policy makes it difficult for bad actors to list their homes illegally, and makes it easy for the city to double-check that listings are appropriately registered and legally operating. Bozeman also mandated that STRs be primary residences — not second homes purchased as rental properties. 

There may also be some market solutions around the corner. A cadre of startups are taking up Airbnb’s original mission and reworking it into a more holistic, community-friendly approach. New platforms like Trusted Housesitters and ReFlat are making it easier to find mutually beneficial housing swaps, while millennials are bringing time-shares back into vogue in Colorado ski towns. 

In the future, these regulatory and entrepreneurial solutions could work together to give travelers affordable lodging options — without sacrificing the needs of local communities. 

“A lot of people will say Airbnb is here to stay, but New York City shows you that’s not necessarily the case. When they decided to enforce their housing laws, it was really effective,” says Cox. “New York City’s approach is a good model to show that we can be as restrictive as we want. It’s up to us.”

The post The Towns Outsmarting Airbnb appeared first on Reasons to be Cheerful.