‘Dismay’ over breakdown of freeport talks
Tax-friendly freeports are planned across the UK
A failure by the Holyrood and Westminster governments to reach a joint agreement on setting up two tax-friendly freeports in Scotland will be greeted with dismay, says a business leader.
UK ministers have refused to implement special conditions for green ports in Scotland that include commitments to fair work conditions and net-zero ambitions, according to Scottish Business Minister Ivan McKee.
The UK government insists that such conditions would be implemented under existing employment and environmental legislation.
The breakdown in talks means the Scottish Government will now go-it-alone to progress plans to develop its own green port model.
Under the UK government’s proposals, two Scottish freeports would be granted tax relief of up to £120m over five years, with capital allowances, employers’ national insurance contributions and customs benefits exempt from tax.
However, Scottish Secretary Alister Jack has stated that if Scotland were to develop its greenport plan alone, the Scottish Government would only have enough funding for one site and tax rules would leave it at a competitive disadvantage.
Aberdeen and Peterhead, Cairnryan, Forth Ports and the Port of Cromarty Firth are among nine expressions of interest in setting up a free (green) port, announced in July.
Liz Cameron, chief executive of the Scottish Chambers of Commerce, described the “lack of cooperation” between the governments as “an incredibly disappointing development”.
Liz Cameron: dismay (pic: Terry Murden)
She added: “It is highly regrettable that a shared agreement on the design and implementation of a freeports model for Scotland could not be reached between the Scottish and UK Governments. This situation should have been avoided and many businesses will view the lack of cooperation and partnership with dismay.
“The UK Government’s decision to move forward on its own, whilst disappointing, will be welcomed by many ports who have invested significant time and money in anticipation for bidding for the status.
“We need to receive details urgently of how businesses can bid and what the next steps are. We cannot afford any further delays especially when Scotland is already behind other parts of the UK, impacting on our ability to attract global investment.
“We also understand the Scottish Government intends to pursue its Green Ports model. Business will need the detail of how this will operate and will urgently need confirmation from both governments that investment incentives will be mirrored across the UK to prevent competitive disadvantage for Scottish businesses.”
In a statement earlier today, Mr McKee said: “I have been clear that any model implemented in Scotland must include a firm commitment to conditionality around fair work and net-zero.
“These are central tenets of Scotland’s future economy and principles we cannot compromise on.
“The UK Government’s offer does not reflect this, provide fair set-up funding, or indeed recognise the vital role the real living wage plays in secure pay and employment contracts.
“It is difficult to comprehend why UK Ministers would seek to dilute a strong commitment to fair work, including payment of the real living wage, when seeking to implement their freeport policy in Scotland.
“With just weeks to go before COP26, the UK Government should be working with us to help deliver a net-zero economy given both the Scottish and UK Government have statutory targets to meet on reducing our carbon emissions.
“The Scottish Government therefore has no option but to take forward plans to further develop our green port model which meet the specific needs of Scotland’s economy.”
However, the UK government blamed the Green party for influencing the shift in Scottish government policy. A UK Government source said: “We had been working very hard with the Scottish Government on bringing two freeports to Scotland, with the Treasury picking up the ongoing costs, but this decision has put that in jeopardy.
“We cannot understand why they would use the red herring of net zero to derail this when all the bids in England emphasised their green credentials.
“But then we know Patrick Harvie [Scottish Greens co-convener] has denounced the idea, so it would appear that the Scottish Greens are now heavily influencing economic policy in a way that is detrimental to Scotland’s economic recovery.
“Much more would have been delivered by working together, but we remain committed to this and we will press on and deliver at least one Freeport for Scotland.”