Forget the hype – freeports are basically ‘Different approach here in Scotland to English horror stories’
STHE National’s series on Green freeports this week is important precisely because of the risks that they pose. I have been involved in tax justice campaigning for more than 20 years now, which is about as long as anyone on the planet has been. In that time, I have become increasingly aware of how dangerous the deeply cynical proposals made by right-wing politicians for the creation of entities like freeports really are.
The narratives that the proponents of such things use is always alluring. They are, however, always based on the idea that freedom from regulation and taxation is the foundation for prosperity. This is total nonsense.
It is not chance that the most taxed and regulated countries in the world are all also the most prosperous, but that is always the case, most especially if we take the more obvious tax havens like Luxembourg, Ireland, the Netherlands, and the Cayman Islands out of consideration.
It is also very obviously true, on the basis of even the most superficial observation, that those countries with low levels of taxation and regulation are almost always
COTLAND’S green freeports take a “different approach” to freeports in England, an SNP MP has said.
Douglas Chapman, who represents Dunfermline and West Fife – which includes Rosyth, one of the sites included within the Forth Green Freeport – told The National, however, that he can “fully appreciate” people’s concerns.
“As a member of the Business and Trade Committee at Westminster, I’ve heard some horror stories on freeports in England,” he said. “So credit is due to former Scottish Government ministers Kate Forbes and Ivan McKee.
“They stuck in their heels against immense pressure from the UK Government – who wanted us to adopt its freeport model warts and all – in order to protect employees and the environment and stop job associated with high levels of crime, low levels of income for the population as a whole, unstable government, and corruption.
Regulation and the taxation that supports it are necessary. Without them, world trade competes without rules, and mayhem results. A sporting analogy helps here. As we all know, every sport is dependent upon rules and regulations. Sporting competition only exists because there are umpires, referees, and others to monitor compliance with those rules.
Markets are the same. They, too, require regulation but the whole logic of freeports is to pretend otherwise. They try to create artificial advantages for one team over all others, as if your favourite team could always play with 12 on the pitch when opponents were restricted to 11. Rigging the rules does not help competition. It destroys it.
That is bad enough, but in practice, freeports are even more insidious than that. As those who promote them know, there is a very particular practical problem with them. In the academic field of political economy in which I work we call that a boundary issue. If you look at the map of where Scotland’s freeports displacement with Scotland’s unique greenport approach.”
Inverness and Cromarty Firth Green Freeport and Forth Green Freeport were announced as Scotland’s two last year through the scheme agreed by the Scottish and UK governments – which offers special tax incentives and lower tariffs around ports, with the aim of stimulating economic growth.
The first freeports in the UK opened in the 1980s under Margaret Thatcher. It was only in 2012 that the Tory-led government decided not to renew their licences.
Post-Brexit, Rishi Sunak pushed freeports again with the argument that without governance by the EU, the UK has more freedom over the flexibilities and concessions it can offer.
Scotland’s green freeports are different from UK freeports in that they have a particular focus on contributing to the Scottish Government’s net are located, you will see that they cover remarkably large areas. You will also note that there are no natural boundaries around these territories. So, the obvious question arises, which is how do we know what happens within a freeport, and what happens elsewhere?
When what happens in a freeport is favoured, with the rules heavily biased in their favour, this question matters. For example, is a company employee who works at two locations in the course of their work (which is easy enough to do), with one in a freeport, and the other not, subject to the tax exemptions that the freeport provides to their employer, or not? Who decides? And who monitors the decision-making on this issue, or a free-for-all result?
In reality, if freeport problems were all as simple as that, we might find solutions for the problems that they create. However, by definition freeports exist to facilitate trade, and trade means flows of goods and services. At present there are relatively few advantages for locating these in a freeport, but you can be sure that it is the intention to change this. When I took part in freeport zero and fair work agenda. However there are concerns – including from SNP trade unionists – that the Scottish Government doesn’t have the legal authority to fully guarantee these safeguards and ambitions for the freeports.
English freeports, meanwhile, have been under pressure, and particularly Teeside Freeport, the largest in the UK, which was the subject of a damning review in January.
While the report dismissed allegations of cronyism and corruption due to a lack of evidence, it said taxpayers are not being guaranteed value for money or transparency.
The freeport has also been accused of environmental destruction during its construction due to the dumping of waste.
Chapman conceded that freeports “as a model have well-documented issues” but added Scotland’s green freeports take a “different approach consultations with HM Treasury and questioned what they might eventually be used for, I was told to presume that if I could imagine something being done in a freeport then one day that might happen. I base my comments on that suggestion.
In that case, politicians desperate for growth at any price will, almost inevitably, succumb to the voices in their ears, whispered by highly paid lobbyists, to eventually allow concessions relating to trade, tariffs, VAT and other issues within freeports. When that happens the problem with freeports will snowball.
In particular, how will we know where the boundary of that freeport is, and whether the right amount of tax has been paid in the right place, at the right rate, and at the right time? This will be especially the case if regulation of this issue has been outsourced to the free market promoter of the freeport itself, which would be unsurprising when HM Revenue and Customs has almost no offices in Scotland now. The opportunities for abuse will expand many times over, and I am quite sure that this is the intention of those who and tone to the way they want to operate on land they already own”.
He added: “Most importantly, there are local voices on the governance board, and at the Rosyth greenport there will be a trade union representative on the board too, while all decisions will be taken with unanimous support of all the partners, which include three local authorities.”
The SNP MP said that in an “ideal world”, Scotland’s ports wouldn’t have been privatised by the Tory government in the 1990s and would instead be owned and managed publicly “with the communities they serve”.
“The difficult issue in Scotland is that we don’t have our own maritime
strategy to follow, so when non-strategic ideas come along, we need to decide whether we are going to go for it or not, regardless of the fit,” he said.
“As an SNP MP, I’m not going to watch the English ports get government subsidies from the Treasury to the disadvantage of Scottish ports.
“I’ve also watched the 158 hectares at Rosyth lie dormant as a developable brownfield site for the last 20 years at such a strategic site.
“We need to break that cycle and in the absence of a strategy, in the face of doing nothing, the greenport is an opportunity to build an economy based on growth and prosperity for all.”