Achi news desk-
Free ports are nothing new. They existed in the UK until around 2012 and they still exist in a number of EU countries – so they are not incompatible with EU membership. They can take many forms depending on local circumstances and priorities, but the common feature is that they usually sit outside existing customs duty boundaries meaning that goods pay duty on leaving the port gates instead nor when they arrive from abroad. Although it is in a world with low and decreasing tariff barriers, the financial benefits are very few.
It is important to note that Greenports – contrary to some circulating misinformation – do not exist outside of existing national laws or regulations. All the employment laws and environmental protections that govern how a business operates outside the port also apply to it. Businesses operating with the port tax zones are eligible for some time-limited tax breaks, but tax relief for businesses to stimulate economic activity is nothing new, whether it’s the small business bonus or the tax breaks that available in Scotland’s sixteen existing enterprise areas – spread across the country from Irvine to Forres.
Contrary to other misinformation, the Greenport tax zones themselves are only a relatively small area, totaling at most 600 hectares each, or about two square miles. Claims that Scotland is splitting sovereignty over large parts of our country are utter nonsense.
So what is the point of Greenports, and what is hoped to be achieved by implementing them? It is important here to understand Scotland’s economic strategy – set out in the National Strategy for Economic Transformation – to build a high-wage, high-innovation economy focused on sectors where we have inherent advantages in terms of natural resources and skills – which is key among those that are renewable energy at sea.
Competing internationally on cost – ‘race to the bottom’ – is a smoke game, there is always someone ready to undercut you. Scotland’s competitive advantage is in our technology (some of the best universities in the world), our skilled workforce (the most educated population in Europe) and our natural resources, but we need to create the environment where we can make the most of the benefits of that.
One of the key objectives of Greenports is to secure a world leading position in the field of renewable energy by building clusters of manufacturing excellence that attract investment, technology and skills and give Scottish businesses the opportunity to grow to their potential as part of global supply chains – wide Businesses want to locate close to their customers and suppliers. It makes logistics and technology and skills transfer much easier, especially in a high investment and fast developing sector like renewable energy.
The negotiations with the UK Government which led to the creation of Greenports were difficult – stalling at several points until Westminster agreed to our ‘red lines’ – on Fair Work, Net Zero and equal funding for Scottish ports. The result is a model that is consistent with the demands of the SNP’s conference groups and trade unions, including requiring all businesses to pay at least the real living wage, and for local democratic involvement with local authorities to be key partners in the work of governing the ports. . Ensuring full regulatory compliance within the port is a critical, non-negotiable element of the Greenport model.
To be honest, it would have been easier to throw our toys out of the pram and refuse to be part of the process. That might have gained some short-term headlines but it would have harmed Scotland’s prospects of achieving our huge economic potential in renewable energy manufacturing over the coming decades. It was important to ensure that Scottish ports had the ability to compete on the same level as those just over the border. Not doing so would have made it too easy for global manufacturers, and Scottish supply chain businesses, to relocate to Teesside or Humberside rather than Cromarty or Forth.
Sumitomo’s decision to invest in a new £350m cable manufacturing plant in Cromarty Greenport is just one of many such investments underway that could easily have gone elsewhere.
What happens next is just as important. The Scottish Government needs to be at the forefront, not just issuing bland comments in response to press inquiries. He needs to directly address some of the incorrect misinformation that is circulating. But most importantly he needs to continue the robust approach to engagement with the UK Government which has delivered results so far.
Ensure that there is no reversal of commitments to ensure appropriate monitoring of activities within the ports. Auditing businesses within the ports to ensure compliance with net zero and fair work requirements including paying at least the real living wage, and not being afraid to withdraw devolved tax benefits where necessary in cases of non-compliance. And it needs to monitor any risk of displacement. For most businesses tackling all the costs of moving a site in order to get some limited tax breaks in the absence of any other strategic benefits – especially when the wage bill could also increase due to fair work requirements – there is It probably doesn’t make business sense, but if it starts to be a significant factor steps should be taken to address this.
Done right, Greenports can not only help power the building of a globally competitive renewable energy manufacturing sector in Scotland, aligned with a much-needed green industrial strategy, they can also be a model for how that conditionality in government aid can be leveraged to raise wages. and employment standards in the absence of employment law devolution. Done right Greenports can be a key element in a successful industrial strategy in Scotland.
Ivan McKee is an MSP and former Minister for Business, Trade, Tourism and Enterprise
