THE UK Government is to press ahead with its plan to establish a low-tax freeport in Scotland despite vehement opposition from SNP ministers, who say the move "does not respect devolution".

The move follows months of wrangling over alleged Scottish Government “window-dressing” which would have seen the sites called green ports instead.

Scottish and UK Governments officials are due to discuss the situation tomorrow, and a formal announcement expected next week.

A UK Government source claimed the SNP was “playing silly beggars” and confecting a fight so that it could “slag off” Westminster and the freeport model.

However the Labour government in Wales has also voiced concern about the freeport plan.

Centred around docks, airports or railway hubs, freeports are designed to encourage economic growth by exempting goods arriving in them from tax and customs charges.

Businesses based in and around the freeports can then use this lower-cost material to manufacture goods and export them again without ever paying the full tariffs.

The freeport zones can be up to 45km across. 

Chancellor Rishi Sunak is a firm believer in freeports, however critics say they merely displace economic activity from elsewhere, rather than adding to it. 

The SNP have also warned the global freeports model has been “tarnished” by association with crime, smuggling, poor pay and working conditions, and tax dodging.

After the UK Government proposed funding eight freeports in England and one each in Wales and Scotland, SNP ministers demanded the right to add extra conditions.

Trade minister Ivan McKee said any freeports in Scotland had to be “green ports”, with all operators inside them required to adopt fair work practices - including union recognition, a ban on zero-hour contracts, and payment of the real living wage - and contribute to Scotland’s just energy transition to net zero carbon emissions.

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In a letter to Scottish Secretary Alister Jack earlier this month, he said: “This by its nature makes the Scottish offer substantially different from that being rolled out across England. 

“You will be aware that these elements are non-negotiable and the Scottish Government will not be party to any offer that does not include these elements."

He added: "We cannot sign up to a UK policy which does not respect devolution, undermines the Scottish economy and fails to provide equivalent funding to what is on offer for ports in England."

The UK Government has now rejected the green port idea after a Treasury analysis concluded the changes proposed by the SNP were “entirely cosmetic”.

It means the UK Government will now invite bids from would-be freeports on its own, rather than working alongside the Scottish Government. 

Aberdeen, the Port of Cromarty Firth and Dundee have expressed interest in the scheme.

However the SNP boycott means the Scottish freeport will have fewer perks than freeports in England.

The creation of all UK freeports will be funded by the Treasury, which will then subsidise them with tax breaks, potentially including zero employer national insurance contributions.

The Scottish Government would also have been able to waive land and buildings transaction tax on factories and offices within the freeport, but that now looks unlikely.

The Scottish Governnent would also have been able to put up seed money for a second freeport, with the Treasury covering tax breaks, but again this now looks unlikely.

A UK Government source said: “We want to work with the Scottish Government to deliver Freeports in Scotland and the huge economic benefits they bring.

“But it is still not clear if they fully support the freeports initiative.

“If the Scottish Government choose not to work with us, the UK Government will press ahead and invite bids [from locations wanting to be freeports].

“However there would be consequences if the Scottish Government walked away.

“The chance of delivering two freeports, rather than one, would be greatly reduced and of course the Scottish Freeport would start life missing some of the benefits enjoyed by freeports in England.

“The Scottish Government would have to explain why they are playing politics with this and not backing Scotland’s economic recovery.”

The eight English freeports have already been named - East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teeside.

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UK ministers hope to name a Scottish location by the end of the year. 

A Scottish Government spokesperson said: "The Scottish Government remains committed to working in partnership with the UK Government, however we cannot sign up to a UK policy which does not respect devolution, undermines the Scottish economy and fails to provide equivalent funding to what is on offer for ports in England.

"We need the UK Government to work with us to ensure their proposals best meet the needs of business and communities in Scotland. Should the UK Government move forward with a proposal that does not include a commitment on fair work and net zero, the Scottish Government will not support this initiative.

“Our fair work and net zero conditions are not simply rhetoric but crucial to developing a model that is fit for the 21st century and can garner support across Scotland.

"We will challenge any attempts by the UK Government to impose their model in Scotland by legislating in devolved areas, which would be a breach of the spirit of the Devolution settlement and we strongly encourage the UK Government to work with us to ensure we can deliver green ports in Scotland.”