New dispute

Green freeports deal prompts Green Party backlash

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Freeports offer tax benefits

Ministers will invite operators to lodge bids for two green freeports in Scotland from next month after the UK and Scottish governments resolved their long-running dispute over the terms for setting up the tax-beneficial zones.

A prospectus and joint assessment process is expected to be published in March with winning bids announced over the summer.

A partnership agreement announced today follows reports last month that Scottish and UK Ministers had settled a number of issues, including Scottish Government insistence on operators paying the living wage.

Instead, applicants will be required to set out how they will support high-quality employment opportunities that “offer good salaries and conditions”, and how fair work practices will be embedded in the green freeport area.

The agreement means that Ministers and officials from both the Scottish and UK Government will have an equal say throughout the assessment and selection process.

Our report last month

Applicants in Scotland will be required to contribute towards a just transition to net-zero emissions by 2045, delivering net-zero benefits and creating new green jobs.

Ministers have agreed that a joint offer set out in a prospectus offers the maximum benefits for the Scottish economy as both governments will be able to deliver tax reliefs and other incentives through a combination of devolved and reserved powers.

UK Ministers are expected to provide up to £52 million in seed funding – double the previous offer – to help establish green freeports in Scotland which is in line with funding offered to freeports across England which are already in operation.

It was reported that Scotland has lost at least three industrial investments because of the SNP’s insistence on a different policy to the UK’s plan for freeports.

The SNP’s Green Party partners will not support the deal, with Ross Greer, the party’s spokesman on finance, stating that the promises made on freeports amount to “greenwashing” with fewer jobs created than promised.

“The Scottish Greens won’t have anything to do with these so-called green freeports,” he said. “To be clear this is just greenwashing. There is nothing genuinely green about them.

“They are really an effective way to give tax relief and throw public money at multinational companies who are already doing their best to avoid taxes. The last time the UK had freeports they only created a quarter of the jobs they promised.”

Aberdeen and Peterhead, Cairnryan, Forth Ports and the Port of Cromarty Firth were among nine expressions of interest in setting up a green freeport, announced in July last year, but talks with the UK Government broke down in September and Scottish minister Ivan McKee has been preparing the government’s own plans for low tax enterprise zones.

Freeports offer tax breaks on investments, waivers on business rates and national insurance contributions as well as lower land transactions tax. Goods entering the freeport are exempt from tariffs normally paid to the government so long as they are used for items that are to be exported rather than moved to another part of the UK.

Economy Secretary Kate Forbes, who is believed to have played a key role in finalising the terms of the agreement, said: “I am pleased we have been able to reach an agreement on a joint approach that recognises the distinct needs of Scotland’s economy and enshrines the Scottish Government’s commitment to achieving net-zero and embedding fair work practices through public investment.  

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“The Scottish Government will have an equal say on all bids, and will expect bidders to adhere to fair work practices including payment of the real living wage.”

Westminster Secretary of State Michael Gove said: “This is a truly exciting moment for Scotland, and I am delighted we will be working together with the Scottish Government to set up two new green freeports.

“Green Freeports help inject billions into the local economy, while levelling-up by creating jobs for local people, and opportunities for people all over the UK to flourish.  

“By collaborating using opportunities like Green Freeports we can work to level-up the whole of the UK and bring benefits and opportunities to communities that need it most.” 

Newsletter

The term ‘green freeports’ reflects the Scottish Government’s distinctive net zero aspirations. The UK Government will continue to use the term ‘freeports’ for its programme in the rest of the UK.

The Scottish Government will support the significant tax reliefs that will be made available to green freeports through devolved tax levers, including rates relief. HMRC will also support via reserved levers including enhanced tax allowances, Employer National Insurance relief and customs duty reliefs.

The green freeport model in Scotland adapts the UK Government’s freeport model to fit the distinct needs and interests of the Scottish Economy. This will help deliver a net-zero economy and a Fair Work First approach, while supporting innovation, trade and inclusive growth. 

Ian Murray, Labour’s Shadow Scottish Secretary, said: “This agreement was delayed for months because the two governments disagreed over the name.

“As a result of their petty point-scoring, regions in England already have a head start.

“It’s vital that the Scottish and UK governments put their differences aside, and we must ensure that workers’ rights are protected within the zones, creating high quality jobs and not undercutting others.”

“If we are to achieve our net zero ambitions, we need to forget the arguments of the past and work together to build a greener and fairer future for everyone.”



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