TWO freeports will be set up in Scotland after an agreement between the Scottish and UK Governments was reached – but the Greens have previously said they will have “nothing to do with” the scheme.
Inverness and Cromarty Firth Green Freeport and Forth Green Freeport have been selected as the first projects in Scotland.
Speaking after the announcement, deputy first minister John Swinney said: “Scotland has a rich history of innovation, trade and manufacturing and as we look to seize the many opportunities achieving net zero offers, the creation of these internationally competitive clusters of excellence will help us to create new green jobs, deliver a just transition and support our economic transformation.”
It is the first major schism between the SNP and Greens since they entered into a co-operation agreement in August 2021, yet crucially freeports was one area listed as an “excluded matter” in the deal, alongside other policies such as aviation.
Now a deal has been agreed, what does it mean for Scotland? And why has a row over “greenwashing” erupted?
What was the previous freeports row between the UK and Scottish Governments about?
In September 2021, Scotland’s Trade Minister Ivan McKee (pictured above) announced plans to set up independent freeports rather than aligning with the model for other UK sites after accusing ministers of failing to provide guarantees about fair pay or net zero commitments.
McKee previously insisted the Scottish Government would not support the freeport scheme without the commitments in place.
McKee, alongside Welsh finance minister Rebecca Evans, said in July 2021 that the UK Government threatened undermining devolution if they moved forward with the scheme without the consent of devolved administrations, which they now have in Scotland.
What is the difference between a freeport and a green freeport?
A freeport, as the UK Government defines it, is centred around one or more air, rail or seaport in England, but can extend up to 45km beyond the port. The area will have measures including tax relief for businesses such as from stamp duty and employer national insurance contributions for additional employees, and custom duty reliefs.
In Scotland, the hubs will instead called green freeports – which the Scottish Government say is to reflect their “distinctive net-zero aspirations”.
Applicants for the scheme in Scotland will be required to contribute towards a just transition to net-zero emissions by 2045, create new green jobs and deliver net-zero benefits. They will also be required to set out how they will support high-quality jobs, salaries and conditions.
What have the SNP said?
After the initial news that Scotland would gain freeports, Finance Secretary Kate Forbes welcomed that the two governments have agreed on a “joint approach” that recognises the nation's “distinct needs”. She said that the Scottish Government will have an “equal say” in the bidding process and applicants will be expected to adhere to fair work practices including paying the Real Living Wage.
She added: “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.”
The greenport proposals were also an SNP manifesto pledge ahead of the May 2021 Holyrood elections.
What have the Scottish Greens said?
Shadow finance spokesperson Ross Greer (pictured) has been critical of the plans which he dubbed “greenwashing” and said there is nothing “genuinely green” about the hubs.
Greer told the BBC that previous freeports have not delivered on promised jobs and said they are an effective way to “throw public money at multinational companies who are already doing their best to avoid tax".
He added that previous hubs set up by the UK only delivered a quarter of the jobs promised at “huge public expense”.
Greer said: “Most of what they did was just move jobs around the country from other areas into these freeports, so they actually created more regional inequality. And internationally, freeports are associated with crime, money-laundering, smuggling, low-wages.”
Greer added that firms will be “encouraged” to stick to fair work conditions but will not be legally required to.
What are the risks with free ports?
The European Parliamentary Research Service released a 48-page report in 2018 which set out the issues surrounding money laundering and tax evasion and avoidance connected with free ports.
The paper also notes that the hubs can act as semi or fully permanent storage for high value items such as art, precious stones, antiques, gold and wine collections. There are a number of free ports, such as Luxembourg, Geneva, Singapore, and Delaware, which specifically cater to storing “investment art”.
Financial Crime Consultant Michael Harris, of LexisNexis® Risk Solutions, previously warned that there is a risk of bringing criminal activity into the UK via the “back door”.
What has the UK Government said?
The announcement was made as Rishi Sunak made a visit to Scotland.
Levelling Up Secretary Michael Gove (pictured above) said: “Scotland has areas of outstanding opportunity but there are also places that can benefit from more investment to truly level up communities that have been overlooked.
“This is a shared challenge faced by us all across the UK, which is why I’m delighted the UK and Scottish governments have collaborated to deliver two Green Freeports in Scotland, which will undoubtedly be transformative for future generations.
“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.”
