UK and Scotland Agree to Two Freeports with Wales Expected to Follow

The UK and Scottish home rule governments reached an agreement on a plan to extend the freeport concept already in England to Scotland. After months of discussions, an agreement for the process to establish the first freeports in Scotland was announced today while the UK government reported that similar discussions are also in an advanced stage with the Welsh government.

Prime Minister Boris Johnson’s whose government has been pursuing the development of freeports as part of the post-Brexit trade development hailed the agreement with Scotland saying it would accelerate efforts to build a broader economic recovery. “The agreement with the Scottish Government builds on UK government’s ambitious long-term plan to spread opportunity more equally across the whole of the UK,” said Johnson.

The Scottish Government highlighted that the freeport concept is being tailored to reflect Scotland’s focus on job creation within the green economy. They agreed to establish a joint application process, with ministers and officials from both the Scottish and UK governments having an equal say throughout the assessment and selection process. Further, Scotland is adding requirements that the proposals must contribute towards the transition to net-zero emissions by 2045, creating net-zero benefits and new jobs linked to the green economy. Scotland has already been pursuing efforts to convert its ports from supporting the North Sea oil industry to being leaders in the development and support of offshore wind farms.

The agreement calls for two green freeports to be established in Scotland. The bidding process will open this spring, closing in summer, after which the bids will be assessed, and successful locations announced. The goal is to have the new sites operational by spring 2023.

Scotland also reported that as a result of the negotiations, UK Ministers are expected to provide up to $70 million in seed funding to help establish the green freeports in Scotland, which is in line with funding offered to freeports across England. 

Kate Forbes, a member of the Scottish Parliament and Economy Secretary said, “I am pleased we have been able to reach an agreement on a joint approach that recognizes the distinct needs of Scotland's economy and enshrines the Scottish Government’s commitment to achieving net-zero and embedding fair work practices through public investment.  The Scottish Government will have an equal say on all bids.”

The freeport approach was first developed by Margaret Thatcher’s Conservative Government in the 1980s, but renewed by the Johnson government in 2021. Freeports are special areas within the UK’s borders where different economic regulations apply. Freeports in England are centered around one or more air, rail, or seaport, with the partnerships that were approved in 2021 including many of England’s largest ports.

Scotland has committed to similar tax benefits and incentives for the development of the freeport operations. Any sea, air, or rail port can apply as part of a consortium with other businesses, the council, and other relevant public bodies. However, any consortium wishing to bid to establish a green freeport must guarantee that local communities will benefit from it, as well as delivering on ambitious targets for net-zero. 
The seaports across the country were quick to hail the announcement of the agreement. Aberdeen said it was confident that it will bolster the region’s offering to the offshore renewables sector, increase freight activity, high-end manufacturing, and the burgeoning cruise industry in the North East of Scotland. The Port of Cromarty Firth similarly responded positively saying it maximize local and Scotland-wide benefits from a pipeline of renewable energy projects and place the Highlands at the heart of the drive towards net-zero.

Johnson also reported that similar discussions with the Welsh government are making good progress toward an agreement. He is confident that an agreement will be reached to would see a new freeport delivered in Wales. Media reports are saying that the government in Northern Ireland is also working on a freeport proposal.