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Scots Government unveils Freeport plans

[ January 22, 2021   //   ]

The Scottish government has published its own version of the UK Government’s freeports scheme, saying that it will press for high employment standards and green credentials.

At a virtual meeting of the Scottish Parliament on 21 January, Minister for International Trade Ivan McKee MSP said that the reputation of free ports across the world is mixed, with concerns over deregulation and the risks of criminality, tax evasion and reductions in workers’ rights. “That is not a model nor an approach that the Scottish Government will sign up to or allow here in Scotland,” he declared.

Having carefully considered the risks and carried out a survey of businesses, local authorities and others on ‘place-based economic development the Scottish Government, has developed a proposal “that adapts the published UK Government proposition to make it fit the Scottish context. We will take the UK Government’s free port model and apply Scotland’s values and priorities to it, so that it meets our ambition to deliver a net zero economy and uphold the highest standards of environmental protections and fair work practices, said McKee.

Scotland would “turn free ports into sustainable and fair green ports. We will not engage with any economic model or mechanism that allows for a race to the bottom. Instead, the Scottish green port model will be an exemplar, adopting best practice to help us to deliver our net zero and fair work principles alongside support for our regeneration and innovation ambitions.”

The right to operate in such a zone would come with responsibilities to uphold high standards, put into practice fair work principles and work towards net zero emissions.

Greenports would be designed to support new green technologies and fair work opportunities and to embed themselves in their local communities.

Conditions will include payment of the real living wage and the adoption of the Scottish business pledge by the operator of the zone and by all new businesses operating within the zone boundary that benefit from any governmental assistance through devolved or reserved tax incentives.

Applicants for operations in Greenports will be expected to demonstrate how they are contributing to Scotland’s just transition to net zero emissions and a low-carbon economy—for example, by meeting certain standards related to reductions in greenhouse gas emissions and waste and set out a robust and ambitious transition plan to achieve this.

As with the UK Government’s model, there will be a mixture of reserved and devolved tax benefits and other support, which might include non-domestic rates and land and buildings transaction tax reliefs, will be designed specifically for the Scottish green port model, taking into account the complementary reliefs that are on offer from the UK Government.

McKee added: “I am clear that we will not allow any free port to be created in Scotland that enables or allows potential tax evasion. I have raised that specific issue with the Chief Secretary to the Treasury. It will be essential that the UK Government plays its part by including firm legislation and measures to ensure good tax behaviours. More widely, our Governments will want to work together on compliance, governance and management of performance related to the operation of Scottish green ports and the business that is conducted within their boundaries.”

He said the Scottish Government’s next step would be to publish an application prospectus for potential bidders which would available this quarter.

The British Ports Assocation’s Scottish Ports Group welcomed the announcement, saying that it understood that the Greenports concept would be based on similar principles and mechanisms to Freeports.

However, questions do remain, it added: “We do not yet know all of the mechanisms that Greenports will include at this stage, nor how many sites will be established in Scotland.

“We encourage the Scottish Government to avoid significant divergence with UK Freeport mechanisms but welcome news at this stage that incentives and support offered to Scottish green ports will be a mixture of reserved and devolved tax benefits; including non-domestic rates and land and buildings transaction tax reliefs.”

Chair of the Scottish Ports Group, Stuart Cresswell, said: “Significant questions remain, notably regarding the number of sites that will be established as Greenports and the specific mechanisms that will be included here; which we look forward to receiving more detail on shortly. 

However, we are delighted by the Scottish Government’s acknowledgement of the role ports can play in supporting growth, strengthening the economy and providing high-wage, high-skill jobs, which the industry is ready to play their part in.”

BPA’s policy manager and economic analyst and lead on Freeports and Scottish policy, Phoebe Warneford-Thomson, added that the announcement “represents a real opportunity for Scottish ports and we are grateful to the Government for listening to the industry’s views on how to build a zoning-policy that creates conditions that allow ports and their local communities to flourish.

“We also welcome the Minister’s acknowledgement of the need to avoid significant delay behind the English process and that they aim to launch at a similar time to the UK Government’s Freeports.

“Though we eagerly await more detail on how the Government will proceed, the Scottish ports industry is ready to play its part in assisting with economic growth, and supporting a just transition to net-zero, and we hope the other devolved administrations are inspired by this decision.”

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