Scottish and UK Government Selection of Green Freeports: Ministerial statement

Presiding Officer

Scotland is living through unprecedented and difficult economic times. Our households, businesses and communities are all facing continuing challenges arising from the combined shocks of Brexit, the COVID-19 pandemic and its aftermath, the war in Ukraine and its impacts both on our economy and our energy security, and the acute cost of living crisis confronting us all. 

Now more than ever, we must use every tool at our disposal to ensure that we maximise all the opportunities we have in Scotland’s different regions; and in doing so, to support the regeneration of disadvantaged communities, promote the creation of high-quality jobs, advance our Fair Work agenda and accelerate Scotland’s just transition to net zero. This sits at the heart of our plans for Scotland’s future economy. 

The announcement of Green Freeports that we made jointly with the United Kingdom Government last Friday should therefore be seen in the twin context of our National Strategy for Economic Transformation (NSET), published last March, and the draft Energy Strategy and Just Transition Plan (ESJTP), which was published just last week.  

NSET sets out our overarching vision for a transition to a stronger, wellbeing economy that will build our future resilience to future shocks – be they economic, social or environmental – and support Scotland’s people to thrive and prosper. It describes how a wellbeing economy will drive a green recovery that will meet our climate and nature targets while ensuring that the transition to a net zero future will be a just one; and how we will build world-leading clusters of manufacturing excellence in Scotland’s globally competitive, high technology sectors of the future. 

Within that global context, the ESJTP maps out the future of the energy sector, and sets out an ambitious plan of action to realise that bright future – actions for the Scottish Government, for industry, for regulators and, vitally, for the United Kingdom Government.

This is the backdrop for Scotland’s Green Freeports. 

When the Minister for Business, Trade, Enterprise and Tourism announced our co-operation with the UK Government on Green Freeports to Parliament last February, he explained how we had negotiated a distinctively Scottish approach, bringing our own Green Ports model to modify the English Freeports to suit Scotland’s needs and priorities.  In particular, he emphasised how the approach would give top priority to regeneration and high-quality job creation; would support our journey to net zero; and would embed our Fair Work agenda at its very heart.

The competition we launched jointly last March, on the basis of a detailed prospectus, embodied that approach; and the outcome of the competition amply justified it.  Taken together, the two winning bids from the Firth of Forth and Inverness and Cromarty Firth aspire to create some 75,000 new, high-skilled, well-paid jobs; to bring forward nearly £11 billion in private and public investment; to deliver a significant enhancement of our offshore wind manufacturing capacity; to advance alternative fuel  production, including green hydrogen; and to promote innovation and trade across multiple sectors.   

I will speak in a moment about the next steps in this process. But first it is important that I set out the assessment and selection process.  We were very clear from the outset that the process needed to be rigorous, fair and transparent. It also had to be a balanced one, in which both the Scottish and United Kingdom Governments had an equal say. 

So the applications were assessed in parallel by Scottish and UK Government officials, looking at all the different aspects of the bids against the policy and delivery criteria published in the prospectus, using a common assessment framework. The results of that assessment process were then subject to independent moderation by senior officials from both governments, and validated by a joint Programme Board, before an information pack was submitted jointly to Scottish and UK Ministers with the assessment outcome and a list of the appointable bids. 

I then held several discussions with the Secretary of State for Levelling Up and the Secretary of State for Scotland to consider the outcome and to decide on the two winners.

The decision was not an easy one.  It was a very strong field, and I express our thanks to all those involved in submitting the bids.  It was a choice between five high quality applications.  But on the basis of the joint assessment, which was thorough and robust, UK and Scottish Ministers were agreed that the Firth of Forth and the Inverness and Cromarty Firth bids were the strongest ones. 

Officials from the Scottish and UK Governments will now work closely and at pace with representatives of the two winning consortia in setting up robust governance structures, developing detailed business cases to unlock start-up funding, and moving towards delivery on the ground. We hope that the two Green Freeports will be operational before the end of this year. Ministers will keep Parliament informed of progress. 

Presiding Officer, while acknowledging the success of the two ambitious bids from Inverness and Cromarty and the Firth of Forth, which could be genuinely transformational, I would like to say just a few words about the unsuccessful bidders.  Officials from both governments have written to each of the unsuccessful bidders offering feedback – and we will publish more information on the process in due course to provide further transparency on the decision-making process. 

But as I have said, the field was a very strong one; and there were some very promising proposals within each of the applications that were submitted. I am conscious of the investment of time, resource and expertise behind each of bids. And beyond that, I am acutely aware both of the economic opportunities across the different regions covered by the applications, and of the challenges they are currently facing.  

So officials from both governments stand ready to work with each of the unsuccessful bidders to consider whether and how it might be possible to build on aspects of their plans, outside the Green Freeports programme, to deliver jobs and growth in their regions.

They will engage with the local authorities and their partners in the North East, Clyde and Orkney - in particular through the Regional Economic Partnerships -  to discuss how targeted propositions could be developed in the context of the economic strategies in place and under development for each of these regions. And they will review whether specific sectoral elements of the bidders’ plans could be progressed through other relevant cross-government programmes, taking a “Team Scotland” approach.  For example, they will look for opportunities to build on the themes and actions in each of the relevant Growth Deals. And for the North East, given its unique potential in the field of Carbon Capture Utilisation and Storage (CCUS), we continue to press the UK Government, as we have for some time, to set out a timeline for Track 2 of the CCUS process that will ensure swift delivery of the Scottish Cluster, including ACORN.  This would be transformational for the region, and would represent a critical step in Scotland’s journey to net zero.    

Finally, Presiding Officer, I want to acknowledge and address some of the concerns that have previously been expressed by members about freeports more generally.  As my Ministerial colleagues and I have said before in this chamber, we are well aware of the mixed views and reputation of some freeports elsewhere in the world. We understand the critical importance of protecting workers’ conditions and rights.  We understand worries about potential displacement of economic activity from elsewhere.  And we understand concerns about deregulation and potential illicit activity. So we have sought to address them in the approach we have negotiated with the UK Government.

First, we required bidders to commit to the principles of Fair Work, including payment of the Real Living Wage and effective workers’ voice, and to outline how they proposed to embed them across the Green Freeports.  Both of the winning bidders offered firm commitments on this.  We will pursue those commitments with them in more detail, as we move from initial decisions to the business case phase, and onwards to funding and delivery; and we will hold them to their commitments as we monitor progress on the ground. 

Second, we will require the successful bidders to develop and report on their plans to monitor, mitigate and report on any potential displacement of economic activity.   

And finally, the Green Freeports will be required to adhere to the OECD Code of Conduct for Clean Free Trade Zones; to comply with tough UK regulations preventing money-laundering; and to establish, and share with enforcement agencies, a register of all businesses operating within the tax sites.  The operators of any customs sites will require prior authorisation by HM Revenue and Customs. And all of the activities of the Green Freeports will be subject to close monitoring and evaluation.     

So I am confident that the significant economic potential of the two Green Freeports will be accompanied by high standards of governance, transparency and enforcement. 

Presiding Officer, the announcement last Friday marked an important milestone. Creation of these two Green Freeports will support businesses to create large numbers of good green jobs; will promote growth and regeneration; and will make a significant contribution to our transition to net zero. They will help us to create internationally competitive clusters of manufacturing excellence, building on specific areas of sectoral strength and able to compete on an equal footing with ports in the rest of the UK and internationally. Over time, they should yield real and lasting benefits to Scotland’s local, regional and national economies. 

The hard work to deliver on that promise starts now: but I am very optimistic about the potential.