After much delay, the UK and Scottish governments have confirmed the locations of the two new Green Freeports.

Proposals from Inverness and Cromarty Firth in the Highlands, and the Forth, taking in Grangemouth, Leith and Rosyth, triumphed over rival bids from the North East, Orkney, and the Clyde. 

READ MORE: Inverness and Forth green freeport bids approved by ministers

Eight have already been established in England, with the first in Teeside operating since November 2021. 

They were championed by Boris Johnson in his first speech as prime minister as one of the benefits of Brexit. 

Rishi Sunak has long been a supporter. The winner was supposed to be announced in the middle of last year. A decision was made months ago.

But then the Tory leadership contest happened, followed by the disastrous mini-budget, and the big reveal was delayed.

What is a freeport? 

Essentially, it’s an area where the normal rules on tax and customs don’t apply. They're duty-free, outside the customs territory. 

In an example given in a recent Scottish Parliament information centre briefing, the UK normally applies a tariff of €172 per tonne on non-EU wheat flour. 

In a UK freeport, wheat flour could enter freely and leave freely. The owner of the flour would only have to pay tariffs when entering the rest of the UK.

Effectively, firms based inside the freeports can use imports for manufacturing.

So, sticking with our flour example, a baker based in the freeport can go ahead and make a cake without having to worry duty.

It becomes significantly cheaper to make things when you don’t have to pay import or export duties on your raw materials.  

The freeports up and running in England also offer tax relief, such as enhanced capital allowances, relief from stamp duty and employer national insurance contributions for additional employees. 

They also receive business rates retention and incentives on planning, regeneration, innovation and trade and investment support. 

It’s also convenient for asset parking, essentially putting your stuff in a warehouse for some time.  

The UK has done this before. Seven freeports operated at various points between the 1980s and early 2010s, including Prestwick Airport.

What exactly is a Green Freeport? 

The Scottish Government were initially sceptical towards freeports. It was only in February last year, long after the English freeports had been announced, that a deal was reached between the two administrations. 

There needed to be an agreement as both governments have to surrender some power, and be prepared to lose some money. 

While customs are reserved to the Treasury, business rates and land tax are devolved to Edinburgh. 

Planning, as well as checks on animal, food and plant products are the Scottish Government’s responsibility. 

The big difference between a freeport and a green freeport is that the winning bids needed to show that they were committed to reaching net-zero, and will offer high-quality employment paying at least the real living wage. 

Are the Greens happy?

No. Not at all.  “They are a failed and dated Tory gimmick which hands public cash over to multinational corporations,” Ross Greer said shortly after the announcement. 

They believe they don’t create jobs, but move jobs. They say they are associated with crime, money-laundering, and smuggling.

They also have questions about the environmental impact. 

There has been a huge row in recent months over a crustacean die-off near the site of the Tees freeport.  

Thousands of dead crabs began washing up dead off Teesside and North Yorkshire's beaches in October 2021. Many local fishermen believe industrial toxins released during the dredging of the River Tees for the freeport is to blame.

However, there was never going to be harmony between the SNP and their partners in government here. Freeports are one of the "excluded" items in the Bute House Agreement.

Why did the winning bids win?

The Forth Green Freeport promised to act as a “catalyst for the re-industrialisation of Scotland, creating economic development for the whole of the country.”

They said they could create 50,000 jobs and find £6bn worth of investment. They said they will generate £4.2bn in additional Gross Value Added in their first five years. 

They will have a focus on “renewables manufacturing, alternative fuels, carbon capture utilisation and storage and shipbuilding, as well as the development of a new creative hub.” 

The Inverness and Cromarty Firth Green Freeport promised to "maximise the local benefits from a pipeline of renewable energy projects which will create business opportunities and employment, attract inward investment, research and development, and position the Highlands at the heart of the country’s commitment to becoming a net-zero economy."

They said they will create 25,000 jobs and generate £4.8bn in investment for the area, with a “focus on floating offshore wind, nuclear and hydrogen that will drive a transition to net zero by 2045.” 


 

What happens now?

The two winning bids will now be granted up to £26m in funding over the next few years, primarily to address infrastructure gaps.