Agreement reached to establish green freeports in Scotland
A partnership agreement to establish two green freeports in Scotland has been agreed between Scottish and British ministers.
Following lively discussions over the past few months, the two governments have agreed:
- Establish a joint application prospectus, with Scottish and UK government ministers and officials having an equal voice throughout the assessment and selection process
- That applicants in Scotland are required to contribute to a just transition to net zero emissions by 2045, delivering net zero benefits and creating new green jobs
- That applicants in Scotland are required to explain how they will support high quality employment opportunities offering good wages and conditions, and how fair working practices will be embedded in the Freeport Green Zone
Ministers agreed that a joint offer set out in a prospectus offers the maximum benefit for the Scottish economy, as both governments will be able to offer tax relief and other incentives through a combination of delegated powers and reserved.
Following recent negotiations, UK ministers are expected to provide up to £52m in seed funding to help establish green freeports in Scotland, matching funding available to freeports across England.
Economy Secretary Kate Forbes said: “I am delighted that we have been able to reach agreement on a common approach which recognizes the distinct needs of the Scottish economy and enshrines the Scottish Government’s commitment to achieving the net zero and embed fair labor practices through public investment.
“The Scottish Government will have an equal say in all bids and will expect bidders to adhere to fair working practices, including payment of actual living wages.”
She continued: “Scotland has a rich history of innovative manufacturers and as we seek to seize the many opportunities to reach net zero, creating internationally competitive clusters of excellence will help us create new jobs. green, ensure a just transition and support our economic transformation.
“We can only unlock Scotland’s economic potential if we create secure, sustainable and satisfying jobs that also help build a fairer and more prosperous economy for all. This is my top priority and the establishment of green free ports will be an integral part of achieving this goal.
Commenting on the announcement, Paul Russell, Indirect Tax Director at RSM UK, said: “The green light for two new Green Freeports demonstrates the central role Scotland will play in delivering the UK Government’s leveling scheme. . This will be good news for many Scottish businesses and communities, as the projects will aim to unlock growth potential, high-skilled jobs and regeneration opportunities in two designated regions of Scotland.
“The tax incentives for Freeport businesses are clear with simplified customs arrangements, reduced VAT and reduced employment tax rates, but the important question of the overall benefits of UK Freeports remains. This is due to the provisions “no-drawback” inherent in most free trade agreements.
“These provisions prevent goods produced under duty suspension from qualifying for most free trade agreements that contain these clauses. As a result, goods produced in free ports will be subject to tariffs unlike goods produced outside these areas, which will put goods produced in a free port at a disadvantage when importing. This could result in the potential benefits of freeports being diluted for Scottish businesses exporting to key markets including Canada, Norway and Turkey.
He concluded: “However, the new benefits of Freeport status will undoubtedly encourage further investment and job growth. It is hoped that the new customs areas will encourage the expansion of research and development into green energy and decarbonisation, as well as boosting existing industrial sectors in Scotland.