Two 'green freeports' to be established in Scotland

The Scottish and UK governments have agreed to establish two "green freeports" in Scotland.

The deal comes as Boris Johnson is expected to visit Scotland on Monday.

Freeports - special economic zones offering tax breaks and lower tariffs for businesses - are being promoted by the UK government as part of its "levelling-up" agenda.

A bidding process will begin in the spring and it is hoped the new sites will open in 2023.

Last year, the Scottish government said UK ministers risked undermining devolution if they set up the freeports in Scotland or Wales without the backing of devolved governments.

The prime minister said: "Freeports will help to accelerate our plan to level up communities across the whole of the United Kingdom.

"They have the power to be truly transformational by creating jobs and investment opportunities to enable people to reach their potential, and I am delighted that people across Scotland will reap the benefits that will come from having two new green freeports."

Scotland's Finance 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 and enshrines the Scottish government's commitment to achieving net zero and embedding fair work practices through public investment.

"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 green freeports will help us create new green jobs, deliver a just transition and support our economic transformation."

The UK government has committed funding of £52m to the project and bidders will have to pledge to reach net zero by 2045.

Ministers from both governments will have a say in the assessment and selection process for the bids.

The Scottish government and the Treasury will use their tax powers, including rates relief, to support the freeports.

Also called free trade zones, they are designated areas where the normal tax and tariff rules of the country in which they are based do not apply.

They allow goods to be imported, manufactured and re-exported without being subject to checks, paperwork, or import taxes, known as tariffs.

This means raw materials can be imported, then engineered into whole products for export.

Typically, companies operating in the zone pay lower taxes, such as reduced VAT and lower rates of employment tax.

But critics argue they simply defer the point when import tariffs are paid, which then still need to be paid at some stage.

Under the UK government's model, freeports are centred around at least one air, rail or sea port, but can extend up to 45km (28 miles) beyond.

The Scottish government said the term "green freeport" reflected its distinctive net-zero aspirations.

Levelling-Up Secretary Michael Gove said: "This is a truly exciting moment for Scotland, and I am delighted we will be working together with the Scottish government to set up two new green freeports.

"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."

Ian Murray, Labour's Shadow Scottish Secretary, said: "This agreement was delayed for months because the two governments disagreed over the name. As a result of their petty point-scoring, regions in England already have a head start.

"It's vital that the Scottish and UK governments put their differences aside, and we must ensure that workers' rights are protected within the zones, creating high-quality jobs and not undercutting others.

"If we are to achieve our net zero ambitions, we need to forget the arguments of the past and work together to build a greener and fairer future for everyone."

Liam Kerr, the Scottish Conservatives spokesman for net zero, energy and transport, said the announcement as "wonderful news" which would "help unlock the economic potential of our ports and kickstart our recovery from the pandemic".

"I'm pleased that the SNP government have finally got behind the scheme and worked with the UK government to deliver this golden opportunity for Scotland," he said.

Boris Johnson is expected to start his trip to Scotland with a visit to a manufacturing site in Scotland before heading to an oncology centre in north-west England.

He is not expected to meet Scottish Conservative leader Douglas Ross - who has called for him to stand down over parties held in Downing Street during lockdown. - despite Mr Johnson being invited to address the Scottish Conservative conference in Aberdeen next month.

Ahead of the visit, the SNP's Westminster leader Ian Blackford said it was "a walking advert for Scottish independence" and that Mr Johnson should use the visit to "apologise for the damage he has inflicted on Scotland and hand in his resignation".

Scottish Labour leader Anas Sarwar said: "If the Scottish Tories welcome him [Boris Johnson] back with open arms, it will confirm once and for all that they are a party devoid of any principles."

And Scottish Liberal Democrat leader Alex Cole-Hamilton said: "The prime minister should be making the shorter trip to the palace to offer the Queen his resignation. Every minute Boris Johnson remains prime minister is an insult to all those who lost a loved one, adhered to the rules, educated their children at home, went to work in care homes or applauded from the doorstep."