TWO freeports will be set up in Scotland after an agreement between the Scottish and UK Governments was reached – but the Greens have said they will have “nothing to do with” the scheme.

It is the first major schism between the two parties since they entered into a co-operation agreement in August 2021, yet crucially freeports was one area listed as an “excluded matter” in the deal, alongside other policies such as aviation.

Freeports were at the centre of a row between the UK and Scottish Governments in September last year, but now a deal has been agreed, what does it mean for Scotland? And why has a row over “greenwashing” erupted?

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What have the Scottish and UK Governments announced?

On Monday, both governments announced two green freeports will be established in Scotland, with the bidding process for the sites to open in spring this year. The 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.

UK ministers are expected to provide up to £52 million in seed funding. Previously the UK had seven freeports between 1984 and 2012, but legislation allowing them lapsed. The Government is aiming to introduce 10 in total across the country.

Kate Forbes and Ross Greer take different stances on freeports

What was the previous freeports row between the UK and Scottish Governments about?

In September 2021, Scotland’s Trade Minister Ivan McKee (pictured above) announced plans to set up independent freeports rather than aligning with the model for other UK sites after accusing ministers of failing to provide guarantees about fair pay or net zero commitments.

McKee previously insisted the Scottish Government would not support the freeport scheme without the commitments in place.

McKee, alongside Welsh finance minister Rebecca Evans, said in July last year that the UK Government threatened undermining devolution if they moved forward with the scheme without the consent of devolved administrations, which they now have in Scotland.

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What is the difference between a freeport and a green freeport?

A freeport, as the UK Government defines it, is centred around one or more air, rail or seaport in England, but can extend up to 45km beyond the port. The area will have measures including tax relief for businesses such as from stamp duty and employer national insurance contributions for additional employees, and custom duty reliefs.

In Scotland, the hubs will instead called green freeports – which the Scottish Government say is to reflect their “distinctive net-zero aspirations”.

Applicants for the scheme in Scotland will be required to contribute towards a just transition to net-zero emissions by 2045, create new green jobs and deliver net-zero benefits. They will also be required to set out how they will support high-quality jobs, salaries and conditions.

Kate Forbes and Ross Greer take different stances on freeports

What has the SNP said?

Finance Secretary Kate Forbes welcomed that the two governments have agreed on a “joint approach” that recognises Scotland’s “distinct needs”. She said that the Scottish Government will have an “equal say” in the bidding process and applicants will be expected to adhere to fair work practices including paying the Real Living Wage.

She added: “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 internationally competitive clusters of excellence will help us create new green jobs, deliver a just transition and support our economic transformation.”

The greenport proposals were also an SNP manifesto pledge ahead of the May 2021 Holyrood elections.

Kate Forbes and Ross Greer take different stances on freeports

What have the Scottish Greens said?

Shadow finance spokesperson Ross Greer (pictured) has been critical of the plans which he dubbed “greenwashing” and said there is nothing “genuinely green” about the hubs.

Greer told the BBC that previous freeports have not delivered on promised jobs and said they are an effective way to “throw public money at multinational companies who are already doing their best to avoid tax".

He added that previous hubs set up by the UK only delivered a quarter of the jobs promised at “huge public expense”.

Greer said: “Most of what they did was just move jobs around the country from other areas into these freeports, so they actually created more regional inequality. And internationally, freeports are associated with crime, money-laundering, smuggling, low-wages.”

Greer added that firms will be “encouraged” to stick to fair work conditions but will not be legally required to.

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What are the risks with free ports?

The European Parliamentary Research Service released a 48-page report in 2018 which set out the issues surrounding money laundering and tax evasion and avoidance connected with free ports.

The paper also notes that the hubs can act as semi or fully permanent storage for high value items such as art, precious stones, antiques, gold and wine collections. There are a number of free ports, such as Luxembourg, Geneva, Singapore, and Delaware, which specifically cater to storing “investment art”.

Financial Crime Consultant Michael Harris, of LexisNexis® Risk Solutions, previously warned that there is a risk of bringing criminal activity into the UK via the “back door”.

Kate Forbes and Ross Greer take different stances on freeports

What has the UK Government said?

The hub announcement was made as Boris Johnson made a visit to Scotland. Levelling Up Secretary Michael Gove (pictured above) said the hubs will “inject billions” into local communities and create jobs.

Meanwhile, Scotland Office minister Iain Stewart hit back at Greer’s claims and said the UK Government is pursuing a “new freeport module” this time around.

He said: “What I would suggest the Greens do is look around the world at some of the very successful free ports, such as the Daegu-Gyeongbuk in South Korea, which is a real focus of fourth-generation industrial strategy 4.0, high-end, hi-tech jobs – and that’s what we’re looking to create here in the UK.”