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Orkney Fails In Bid For Freeport Status

The Scottish and UK Governments are congratulating themselves on the creation of two Freeports in Scotland. Sold to the public as ‘Green’ports, two zones will be created in Inverness and Cromarty Firth, and Firth of Forth.

Current UK Prime Minister Rishi Sunak said: 

Working together delivers results – and I am absolutely delighted that the First Minister and I can announce the delivery of our shared ambition for people in Scotland today with not one but two excellent Green Freeport areas.  

“In extending the benefits of freeports to Scotland, we are unleashing the potential of the Firth of Forth and Inverness and Cromarty Firth – backing the delivery of thousands of high-quality green jobs for future generations, as we continue to make gains on our commitments to transition to net zero.”

The developments will go ahead quickly and expect to be functioning by the end of this year.

  • The Forth Green Freeport aims to drive a transition to net zero by 2045 through attracting up to £6bn worth of investment and creating 50,000 jobs, generating £4.2bn in additional Gross Value Added in the first 5 years. The Green Freeport will have a focus on renewables manufacturing, alternative fuels, carbon capture utilisation and storage and shipbuilding, as well as the development of a new creative hub. The site includes the ports at Grangemouth, Rosyth and Leith, Edinburgh Airport, and a site at Burntisland. 
  • The Inverness and Cromarty Firth Green Freeport aims to create 25,000 jobs and generate £4.8bn in investment for the area, with a focus on floating offshore wind, nuclear and hydrogen that will drive a transition to net zero by 2045. An expansion of the Inverness Campus and Powerhouse is also planned, along with proposals to deliver innovation and skills support. The site includes the Ports of Inverness, Cromarty Firth and Nigg and Inverness Airport.   

Freeports are special areas within the UK’s borders where different economic regulations apply. 

Eligible businesses will have access to a suite of tax reliefs including Business Rates, Stamp Duty Land Tax (SDLT), Employer National Insurance Contributions (NICs), Enhanced Structures and Building Allowance and Enhanced Capital Allowances designed to incentivise new investment within the boundaries of Freeport ‘tax sites’.

UK Government

Freeports are able to attract outside investment by offering lucrative deals which other areas cannot do. It means the Freeports have a significant weakening effect on areas not within their sphere. Around the world Freeports are known for being tax havens, for laundering money and for ignoring workers rights.

The Scottish Government believes it can safeguard workers rights in the 2 Freeports allocated to Scotland. The Scottish Government claims that the Freeports in Scotland have to commit to their Fair Work First criteria, including payment of the real Living Wage. Only time will tell if that actually is what happens.

Orkney Islands Council had been very keen on becoming a Freeport, pinning many of its future developments on being successful in its bid. Now with the designation going elsewhere concern is growing about the potential damaging effect this could have for the islands.

Orkney’s councillors lobbied hard to gain the favour of UK Government Ministers, even to the extent of inviting Prime Minister Boris Johnson on an official visit to ‘sell’ the islands as a place for future investment. This move was met by unprecedented protests by islanders coming as it did as more news was emerging about Johnson’s champagne fuelled parties during lockdown as people died from Covid.

Commenting on Orkney not getting Freeport status, Constituency MSP, LibDem Liam McArthur said:

“It’s probably no great surprise that Orkney has not been selected as one of two Scottish Green Freeports. If the UK and Scottish Governments are to avoid this process simply resulting in the displacement of activity, however, Ministers will need to give serious and urgent consideration as to what measures can also be put in place to support ports that were unsuccessful.

“In that respect, Orkney has marshalled a compelling case for the contribution our islands can make on a national and international level in terms of green innovation. I would hope both governments will recognise and support the delivery of that potential through measures that meet our island needs and circumstances. That is certainly an argument I will be making to Ministers.”

It’s hard to see how the effect on any area outwith the two designated Freeports will be anything other than negative when the whole point to becoming a Freeport is that it gives it an unfair advantage over places which are not, through all the financial incentives Freeport status offers.

Levelling Up Secretary in the UK Government Michael Gove said:   

“Inverness and Cromarty Firth and the Firth of Forth are fantastic areas for these new Green Freeports to set up, ensuring the benefits are felt right across Scotland. This will help to create exciting new jobs, boost business and encourage investment in the local areas and beyond.” 

And Deputy First Minister of Scotland, John Swinney stated:

“A rigorous joint selection process has been followed. The successful applicants showed a strong determination to embed fair work practices, including payment of the Real Living Wage, and to enshrine net zero initiatives in their work. 

“We look forward to working closely with them to ensure they deliver maximum positive impact and become operational as soon as possible.

“We will also work with the unsuccessful bidders to consider how they can build on the plans set out in their bids to deliver jobs and growth in their regions outside the Green Freeports programme. “

The Scottish Greens who are in government with the SNP have the issue of Freeports excluded from their collaboration with the SNP. The Scottish Greens finance spokesperson, Ross Greer MSP said:

“There is nothing green about so-called green freeports. They are a failed and dated Tory gimmick which hands public cash over to multinational corporations. They offer big tax breaks to businesses while driving down terms and conditions for workers and risking significant damage to the environment.

“Where Freeports have been attempted they have only made regional inequality worse by moving jobs around the country, rather than creating new ones. Internationally, they have been consistently associated with crime, money-laundering, smuggling and low wages while driving down environmental standards.

“Under the deal struck for Scottish freeports there are no hard requirements for the companies to meet climate targets or implement fair work practices. Warm words don’t protect people and the environment from greedy corporations, legal obligations do. In this case there is plenty of the former and nowhere near enough of the latter.

“Freeports will only benefit the super-rich and the big corporations who have pushed hardest for them. Local people and communities certainly won’t see the benefit if precedent from across the world is anything to go by.”

It is a strange arrangement the Greens have with the SNP where they are in government – and yet they are not. Their objections to Freeports will make no difference to this deal between the UK and Scottish governments.

The devil is always in the details and the statement from the Scottish Government only says that there should be a ‘strong determination’ to have Fair Work Practices.

 In the precarious economic climate the UK is now in having left the largest free trade market in the world, how will the areas like Orkney fare in this Brave New World of Tax reliefs for the chosen few ? And how strongly determined will developers and investors be to adhere to Fair Work Practices?

Image credit Bell

In England Freeports have already been allocated

1. East Midlands Airport

2. Felixstowe & Harwich including the Port of Felixstowe and Harwich International Port

3. Humber including parts of Port of Immingham

4. Liverpool City Region including the Port of Liverpool

5. Plymouth & South Devon including the Port of Plymouth

6. Solent including the ports of Southampton, Portsmouth and Portsmouth International Port

7. Thames including the ports at London Gateway and Tilbury

8. Teesside including Teesside International Airport, the Port of Middlesbrough and the Port of Hartlepool

Fiona Grahame