THE FREEPORT RUSE EXPOSED!

by Professor Alf Baird, a briefing paper prepared on behalf of Salvo/Liberation.

EVALUATION OF GREEN FREEPORTS IN SCOTLAND

Professor Alf Baird

Freeports are a Tory Policy

Scots should remember that Freeports are a Tory Party initiative in the UK. The policy is being imposed on Scotland without public support here. Organisations facilitating the Freeport policy in Scotland, including the SNP Scottish Government and Local Authorities, are therefore supporting and enabling a Tory policy. Yet this is not something the Scottish people voted for, need or want.

The Freeport Concept in the UK

Globally, Freeports tend to be limited to container freight transhipment operations. This is where freight is brought into a port area, stored there, then processed, packaged etc before being re-exported. Freight going through the Freeport is therefore not normally intended for the domestic market, it is for export to third countries.

The Freeport concept now applying to the UK does not follow this established international model or practice. UK ports do not function as ‘transhipment’ facilities in Europe, they primarily serve only the UK import/export market.

This means the UK Freeport model is simply extending tax and Customs advantages to businesses that are or will be active mainly in serving the domestic UK market.

Port governance in the UK

Major seaports in the UK are mostly either privately owned or run as ‘trust’ ports. Port privatization was another Tory policy imposed on Scotland during the 1990s without the support or even the consent of Scots; Scotland then was a Tory Free Zone. Trust ports are an earlier English model of ‘corporatization’ of public assets likewise imposed by Westminster on Scots without their support or consent.

The ‘indigenous’ model of port governance in Scotland was that ports were owned by their communities and run by the Burgh’s, with surpluses going into Common Good Funds and investment in new port infrastructure. This meant there was local control over port infrastructure, trade and the economy which prevented profiteering.

The common approach internationally today also remains public ownership and governance of major seaports, known as ‘the Latin model’ of port governance. Only the UK under Tory rule has sought to privatise ports by selling them off or ‘corporatizing’ them into so-called ‘trust’ ports. The main criticism of both these corporate port ‘models’ is the lack of local representation and the focus on profit and interception of economic rents by private interests through exploitation of local and regional port monopolies.

Green Freeports

The Tory Freeport policy has been very slightly adapted in Scotland through the addition of the word ‘Green’ by the Scottish Government, in an effort to make the ideology more palatable to Scots. This reflects the fact the ports selected – Forth (incl Tay) and Cromarty – are also to serve the local maritime supply chain needs of massive new offshore wind energy installations currently being developed.

This further demonstrates that the UK Freeport initiative is not about normal transhipment trade development or serving the logistics needs of third countries, it is about something quite different. The beneficiaries of Green Freeport status are expected to be primarily commercial entities that are already participating in, or will be involved in the installation, maintenance and power generation of offshore wind energy.

The rather obvious question here is, because the offshore wind energy schemes in Scotland were already going ahead, why is Freeport status deemed necessary? These offshore energy schemes were never dependent on Freeport status in ports, they were always going to proceed. Another factor to consider is that Freeports have not needed to be created at ports elsewhere in Europe which are heavily involved in developing nearby offshore wind energy facilities (e.g. Esbjerg, Eemshaven, Rostock, Gdansk etc).

Governance

Local Authorities have a very limited role in Freeports located in their areas. The Freeports will be run by a stand-alone corporate enterprise, a company limited by guarantee. LA’s may have just one member on a 12-person Freeport company board, which implies very limited influence. Around £1 million UK government support is expected to be provided to help establish Freeport companies. The Freeport company may also access £25 million seed capital Government funding to help develop sites. Given the normally high cost of new port infrastructures the amount of government investment appears relatively insignificant.

LA’s will not receive non-domestic rate income from Freeport sites which benefit from 100% non-domestic rate relief for eligible businesses for 5 years. LA’s are to retain 100% of uplift in non-domestic rates revenues for 25 years – which supposedly offers a ‘potential’ income stream enabling LA’s to borrow to invest in infrastructure, skills and other associated programmes, albeit subject to risk. However, NDR growth only comes from the build out and delivery of Green Freeport sites. The funding available that can be reinvested is therefore dependent on the ability of Freeports to be developed and the pace of delivery, all of which remains uncertain. 

Questionable local benefits

Offshore energy equipment supply chains are mostly located outside Scotland and to a large extent also outside the UK. The equipment and materials used in setting up offshore wind energy installations is therefore mostly imported. The heavy-lift marine contractors installing the equipment and materials are largely international and brought in from outside Scotland. Ongoing maintenance contracts, which involve relatively few jobs, may or may not involve local enterprises. As noted, offshore energy installations are already going ahead and are not dependent on Freeport status. Overall employment impacts of ‘Green Freeports’ therefore appear very limited.

The immense expected value of the energy produced and exported in future decades, which would happen anyway without Freeports, will largely be a matter for the companies contracted to provide it. Communities have no real input in that, neither do LA’s, whist income for the Scottish Government from leases was very limited and much less than would be expected elsewhere.

Despite having secured Freeport status for their areas, the LA’s concerned do not yet fully understand what this actually means, how it will be delivered, or what the benefits may be. Any major benefits for communities therefore remain obscure, but appear limited overall, and it remains uncertain what Green Freeports will deliver in the short, medium and longer term. 

Tax Havens?

We have heard of offshore tax havens, which are countries offering low or no corporate taxes. Freeports in the UK, are clearly not about freight transhipment, which is the main purpose of Freeports internationally. Freeports in the UK are therefore something else, and will essentially offer an opportunity for multinational firms to avoid paying taxes. 

Green Freeports in Scotland are not about generating trade in goods. As offshore energy installation supply chains remain largely dependent on imported goods (now avoiding Customs duty in a ‘Freeport’), this means they are unlikely to generate much in the way of economic growth for local communities, or nationally in Scotland. 

The main ‘product’ generated from offshore wind facilities will be renewable energy of immense value over many decades. However, the value of this resource will also bypass communities in Scotland, including now the profits made by the energy businesses involved as they will not pay tax within a Freeport.

Consequently, it is difficult to see Green Freeports as anything other than a new form of Tory Tax Haven being imposed on Scotland with the aim being for multinational companies to more fully exploit Scotland’s resources and people. This follows on from the earlier Tory privatization and corporatization of Scotland’s major seaports (and most other public utilities), removing these strategic national and public assets from community ownership, without the consent or support of the people. 

The UK Freeports policy demonstrates that the Scottish people are merely rendered bystanders in the ongoing plunder of their nation’s resources and wealth, which is aided and facilitated by national and local government in Scotland.

MY COMMENTS

The content of this paper are hugely important. These Freeport’s will not enrich Scotland they will perpetuate control of large, important areas of Scotland to non Scottish control with any wealth and profit being swiftly removed with little or no benefit for the local communities. They also provide legal loopholes where a wide variety of legislation can be ignored. This includes laws which protect workers rights, which prevent fracking for instance. They are designed to further asset strip our country, made easier by rules that protect the asset stripper. It speeds up the process of robbing Scotland in front of eyes which raises the question WHAT THE HELL IS THE SNP GOVERNMENT DOING SUPPORTING THIS? Are they mad?
So much for the holiday, it lasted a day but this was too important to ignore.

I am, as always

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