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UK & Scottish Governments Announce Deal on Freeports

The UK and Scottish Governments have announced a joint deal which will see the establishment of 2 Freeports in Scotland.

Kirkwall Harbour and Marina

The two Freeports in Scotland will have as part of the deal a requirement to ‘contribute towards a just transition to net-zero emissions by 2045, delivering net-zero benefits and creating new green jobs’ – to be known as Green Freeports.

Despite the ‘Green’ description, the Scottish Green Party which is in government with the SNP will oppose the establishment of these Freeports in Scotland.

Scottish Green MSP Ross Greer has described the deal as a ‘tax dodgers’ charter.

He said:

“The cooperation agreement we struck last summer lists freeports as an ‘excluded matter’. This means we agree to disagree with the SNP – and are free to do so publicly.

“A little rhetorical greenwashing won’t change the reality of these freeports. They are yet another way of handing tax breaks and public money to rich corporations, despite no evidence that it will create economic prosperity or protect the planet.

“The Scottish Greens will have nothing to do with this corporate giveaway.

“Instead of working with the Tories, we’d urge our SNP colleagues to collaborate with those of us who want to build an economy which serves, rather than exploits, people and planet.

“They certainly know where to find us and our door is always open.

“In the meantime, we’ll continue to do as our members instructed us to do when they approved the cooperation agreement; work constructively to build on our significant achievements to date and oppose policies that we fundamentally disagree with.”

According to the SNP side of the Scottish Government this new deal with the Tory UK Government will offer :

‘ 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.’

Kate Forbes, Economy Secretary in the Scottish Government 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.  

“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.

“Scotland has a rich history of innovative manufacturers and so as we look to grasp the many opportunities of achieving net-zero, the establishment of internationally competitive clusters of excellence will help us create new green jobs, deliver a just transition and support our economic transformation.

“We can only seize Scotland’s economic potential if we create secure, sustainable and satisfying jobs that also help build a fairer, more prosperous economy for everyone. That is my absolute priority and establishing Green Freeports will be integral to achieving this.”

Recently the controversial granting of applications for off shore windfarms in Scottish waters by Crown Estate Scotland raised a fraction of the potential finance it was hoped it would. Winners & Losers: Scotland Leases Out Its Seas

The Orkney News has previously reported on the issue of (Green) Freeports. Orkney Islands Council and other organisations with vested interests in the establishment of a port with little financial regulations has lobbied for several years for Orkney to have Green Freeport status. Could Orkney Be A Green Port?

Commenting on the Scottish/UK Government Freeport deal, Steve Sankey of the Orkney Greens said:

“A Freeport would be wholly inappropriate for Scapa Flow (for all the reasons mentioned by Ross Greer MSP), and I’m satisfied that the current draft National Planning Framework 4 will contain the necessary policy framework for Orkney to provide a meaningful contribution to Scotland’s commitment to climate change and net zero.

“I’d like to think that in Orkney’s case eg through OIC Harbours’ Masterplan supporting renewable generation, and the replacement of all internal ferries with renewable fuels, we can achieve net zero in Orkney far earlier than national targets (2045), and hopefully by 2030.”

Establishing Freeports was one of the top priorities of the Brexit campaign.

The European Union actually has what it terms ‘Free Zones’.

‘Free zones’ are enclosed areas within the customs territory of the Union where non-Union goods can be introduced free of import duty, other charges (i.e. taxes) and commercial policy measures.

Such goods may, following the period in the free zones, be released for free circulation (subject to payment of import duty and other charges), or be placed under another special procedure (e.g. inward processing, temporary admission or end-use procedures – under the conditions laid down for these procedures) or re-exported.

Union goods may also be entered into or stored, moved, used, processed or consumed in free zones. Such goods may afterwards be exported or brought into other parts of the customs territory of the Union.

Free Zones

Countries in the EU with ‘Free Zones’:

Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovenia, Spain.

Countries in the EU who do not have ‘Free Zones’:

Austria, Belgium, Finland, Ireland, The Netherlands, Slovakia, Sweden.

The EU is tightening up its regulations on tax evasion, the use of shell companies and to increase transparency on financial transactions. Clamping down on tax evasion was a major driving force behind the campaign in the UK to leave the EU.

The EU’s Free Zones are not the same as the Freeport model being established in Scotland and the UK.

The UK Freeports will:

  • include a comprehensive package of measures, comprising tax reliefs, customs, business rates retention, planning, regeneration, innovation and trade and investment support.
  • a range of tax incentives, such as enhanced capital allowances, relief from stamp duty and employer national insurance contributions for additional employees.
  • allowing imports to enter the Freeport custom sites with simplified customs documentation and delay paying tariffs.

On the deal with the Scottish Government the UK 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.” 

UK Ministers are expected to contribute up to £52 million in seed funding to establish the 2 Green Freeports in Scotland. The Scottish Government will support significant tax reliefs 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.

Fiona Grahame

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