Delivering green ports

Trade Minister Ivan McKee has called on the UK Government to ensure green ports have access to the same level of set-up funding as freeports in England.

The green port model will adapt the UK government’s freeport proposals, offering a package of tax and customs reliefs. Operators and beneficiaries will be required to commit to adopting Fair Work First criteria and contribute to Scotland’s just transition to net zero.

In a letter to the Chief Secretary to the Treasury Steve Barclay, Mr McKee also called for two green ports focused on fair and sustainable economic development to be established in Scotland.

Mr McKee said:

“I want to ensure that green ports – embedded within their communities – build on Scotland’s reputation as a dynamic, outward facing nation and become exemplars of inclusive growth, wellbeing and sustainability.

“Businesses in Scotland firmly believe that green ports should be supported with access to the same level of seed funding offered to freeports in England, and I agree.

“It is important the UK Government supports the development of these ports equitably across the UK, not least to demonstrate commitment to the economic development model we have agreed and are pursuing here in Scotland.

“With Scotland’s land mass comprising one third of the entire British mainland, it would be fair and proportionate to accommodate the establishment of two green ports in Scotland.

“I have met a range of stakeholders and note their shared commitment to the importance of ensuring green ports fit within the Scottish context and of the need for there to be more than one.”

Background

The full text of the letter reads:

Dear Steve

Further to our constructive discussion on 16 February I am writing to you to confirm the Scottish Government’s position on green ports in Scotland.

Since the UK Government published its proposed model of freeports, and launched its bidding process for designating freeports in England, as you are aware, we have been working in Scotland to develop a sustainable, fair, green ports model which meets Scotland’s distinct needs and interests.

I welcome that we are agreed on the importance of establishing an approach in Scotland that is fit for purpose. The Scottish green port model achieves that, with its focus on sustainable, inclusive growth, fair work, and a just transition to net zero emissions, which I know is also a key objective of the UK Government, alongside the core objectives of the UK Government freeport policy around regeneration, innovation and trade.

I have met a range of stakeholders recently, across the public and private sectors, including a cross-party group of MSPs, and was pleased to note their shared commitment to the importance of ensuring that green ports fit within the Scottish context and the need for there to be more than one in Scotland. With Scotland’s land mass comprising one third of the entire GB mainland, and long coastline, my proposal to you to accommodate the establishment of two green ports in Scotland is, I believe, both fair and proportionate.

I have been clear from the outset, as I am sure you have, that I will not allow any designation to be created in Scotland that enables or allows potential tax evasion, illicit activities or does not live up to our high standards and values. There must also be appropriate sanctions in place to enforce the rules that will be set out in our applicant prospectus, including the conditions on net zero and fair work. More broadly it is also important that the regulatory standards remain high across both reserved and devolved matters in respect of green ports.

To support this there must be sufficient resourcing, including HMRC and customs staff, made available to manage enforcement effectively within Scotland. I would be grateful for reassurance on your commitment on these points too.

It is also important that we have a shared governance and decision making process. I therefore expect the assessment of Scottish applications and subsequent award of green port status to be made jointly, with the Scottish and UK governments on an equal footing. I understand officials are currently working jointly on the detail of this, based on that principle, and look forward to the detailed process being shared in due course.

We also touched on seed funding for newly designated green ports during our discussion. The Freeports bidding prospectus for England notes that those applicants successful in taking forward bids in England will have the opportunity to access a share of up to £175 million of seed capital funding. With around seven freeport designations proposed for England this equates to up to £25 million of seed funding per freeport being made available. From our discussions with industry stakeholders, there is a clear expectation that the seed funding and wider support offered by the UK Government for freeports in England will also be made available for green ports in Scotland.

The Scottish Government firmly believes that green ports in Scotland should be supported with access to the same level of seed funding offered to freeports in England. Businesses in Scotland have recognised that the allocation of Barnett consequentials from the £175 million allocation for England falls substantially short of a fair and comparable offer for green ports in Scotland. It is important that the UK Government supports the development of these ports equitably across the UK, not least to demonstrate commitment to the economic development model we have agreed and are pursuing here in Scotland. I know this is an issue that MPs on the House of Commons International trade Committee also pressed you on recently.

To meet the expectations of Scottish businesses I seek your agreement to a non-Barnett allocation from the UK Government of additional capital funding to ensure Scottish green ports benefit from the same level of funding as English freeports. It would be helpful to agree this point without delay in order to ensure clarity prior to the UK Budget on 3 March and to enable us to publish the applicant prospectus for Scotland timeously.

I want to ensure that green ports, embedded within their communities, build on Scotland’s reputation as a dynamic, outward facing nation, and help grow our exports and establish our position as a leading destination for inward investment in the key sectors identified in our inward investment plan, Shaping Scotland’s Economy. I want to see Scotland’s green ports become exemplars of the core principles in Scotland’s Vision for Trade of inclusive growth, wellbeing, sustainability, net zero emissions and good governance. They should build on our existing actions to grow regional and local economies through the incentives and assistance we provide to encourage cluster-building through our Enterprise Area network. I look forward to an early reply from you on these matters.

Best regards,

IVAN McKEE