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Free and green – Holyrood and Westminster agree freeports deal for Scotland: updated

[ February 14, 2022   //   ]

The Scottish and UK Government have finally reached agreement on creating freeports north of the border and are to sign a partnership agreement to establish two ‘Green Freeports’.

It brings to an end a long drawn out process. The Scottish government had devised its own ‘Greenports’ scheme that would offer tax and customs reliefs to operators and their beneficiaries who adopt fair work practices and contribute to Scotland’s just energy transition to net zero.

The Scottish Government had complained that it was frustrated at the lack of cooperation from the UK Government which appeared to be unwilling to agree to its ambitions on fair work and net zero.

Under the deal, there will be a joint applicant prospectus, with Ministers and officials from both the Scottish and UK Government having an equal say throughout the assessment and selection process. Applicants will also required to contribute towards “a just transition to net-zero emissions by 2045, delivering net-zero benefits and creating new green jobs.”

They will also 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

Ministers said the scheme would 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.

UK Ministers are expected to provide up to £52 million in seed funding to help establish Green Freeports in Scotland which is in line with funding offered to Freeports across England.

The Scottish government’s economy secretary, Kate Forbes 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.”

Green Freeports would be integral to creating secure, sustainable and satisfying jobs that also help build a fairer, more prosperous economy for everyone, Kate Forbes added.

Secretary of state for the UK government, Michael Gove said:  “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.”

The UK Government will continue to use the term ‘Freeports’ for its programme in the rest of the country.

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

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

Stuart Wallace, chief operating officer at one of Scotland leading operators in the sector, Forth Ports, confirmed that the company would participate in the bidding process to become one of Green Freeport operators. He said; “A Firth of Forth Green Freeport will catalyse the decarbonisation of Scotland’s major industrial cluster, creating 50,000 new, high-quality jobs in renewable energy, manufacturing, sustainable fuels and construction.

“Building on our first-hand experience of freeports, we plan to create an ambitious set of programmes to harness the regeneration benefits of this economic policy.  The legacy of our green freeport will be the creation of large-scale green manufacturing industries with significant export potential and a sustainable fuel cluster, alongside major upgrades to infrastructure and skills development among young adults to ensure a Team Scotland approach as the UK transitions to a decarbonised future.”