Meeting of the Parliament

Meeting date: Wednesday, January 18, 2023

Official Report 1103KB pdf

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Green Freeports

The next item of business is a statement by John Swinney on the Scottish and United Kingdom Governments’ selection of green freeports. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.

17:11  

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

Now more than ever, we must use every tool at our disposal to maximise the opportunities that we have in Scotland’s different regions, and, in doing so, we must 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. That sits at the heart of our plans for Scotland’s future economy.

The announcement on green freeports that we made jointly with the UK Government last Friday should therefore be seen in the twin contexts of our national strategy for economic transformation, which was published last March, and the draft energy strategy and just transition plan, which was published last week. The economic strategy sets out our overarching vision for a transition to a stronger wellbeing economy that will build our future resilience to shocks—be they economic, social or environmental—and will 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, as well as how we will build world-beating clusters of manufacturing excellence in Scotland’s globally competitive high-technology sectors of the future.

In that global context, the energy strategy and just transition plan maps out the future of the energy sector and sets out an ambitious plan of action to realise that bright future. It includes actions for the Scottish Government, industry, regulators and—vitally—the UK Government. That is the backdrop for Scotland’s green freeports. When the Minister for Business, Trade, Tourism and Enterprise announced our co-operation with the UK Government on green freeports to the Parliament last February, he explained how we had negotiated a distinctively Scottish approach, building on 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, how it would support our journey to net zero, and how it would embed our fair work agenda at its heart.

The competition that 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; bring forward nearly £11 billion in private and public investment; deliver a significant enhancement of our offshore wind manufacturing capacity; advance alternative fuel production, including green hydrogen; and 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 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. Therefore, 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 that were published in the prospectus and using a common assessment framework.

The results of that assessment process were then subjected 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, Housing and Communities and the Secretary of State for Scotland, to consider the outcome and 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 who were involved in submitting the bids. It was a choice between five high-quality applications. However, 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 to set up robust governance structures, develop detailed business cases to unlock start-up funding and move 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.

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 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 in order to provide further transparency on the decision-making process. As I have said, the field was a strong one and there were some very promising proposals in each of the applications. I am conscious of the investment of time, resource and expertise behind each of the 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 that they are currently facing.

Therefore, 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, particularly through the regional economic partnerships, to discuss how targeted propositions could be developed in the context of the economic strategies that are in place and under development for the 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. Further, given the unique potential of the north-east in the field of carbon capture, utilisation and storage, 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 the Acorn project. That would be transformational for the region, and it would represent a critical step in Scotland’s journey to net zero.

Finally, I want to acknowledge and address some of the concerns that have previously been expressed by some members about freeports more generally. As my ministerial colleagues and I have said before in the chamber, we are well aware of the mixed views on, and the 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. Therefore, we have sought to address those issues in the approach that 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 the enabling of an 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 that. 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.

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

Finally, the green freeports will be required to adhere to the Organisation for Economic Co-operation and Development’s code of conduct for clean free trade zones, to comply with tough UK regulations to prevent money laundering, and to establish—and share with enforcement agencies—a register of all businesses that operate within the tax sites. The operators of any customs sites will require prior authorisation by His Majesty’s Revenue and Customs. All 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.

The announcement last Friday marked an important milestone. The creation of the 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, which will build on specific areas of sectoral strength and be able to compete on an equal footing with ports in the rest of the United Kingdom 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.

The cabinet secretary will now take questions on the issues that have been raised in his statement. I intend to allow around 20 minutes for questions, after which it will be time to move on to the next item of business. Members who wish to ask a question should press their request-to-speak buttons now.

I thank the cabinet secretary for advance sight of his statement.

I very much welcome the announcement last week that the Opportunity Cromarty Firth and Forth Ports bids were successful. They will be major boosts to their local and regional economies.

I was also pleased to see and meet the Prime Minister, Rishi Sunak, as he visited the Highlands ahead of the announcement. However, I admit to being a little disappointed that the Scottish Government’s welcome seemed to be a little muted, and that the First Minister, who was in the Highlands, was not able to join the Prime Minister at Cromarty Firth.

The announcement was—except by the usual suspects—widely accepted as good news, and it was a chance to highlight what can be achieved when the UK and Scottish Governments work positively together to deliver for our communities. The cabinet secretary highlighted in his statement that, working collaboratively with UK colleagues, both Governments were able to deliver a solution that met Scotland’s needs. That should be welcomed, and I suggest that the public and Scotland’s business sector will want to see more of it.

However, as an Orcadian, I am obviously disappointed that my islands’ bid, which I also backed, was not successful. Can the cabinet secretary give a bit more detail, including potential actions and timescales, on how—as he mentioned in his statement—the Scottish Government will ensure that the projects that missed out this time are able to take advantage of the new opportunities that the green freeports offer, or to explore and exploit new opportunities?

In relation to the winning bids, can the cabinet secretary tell me how the Scottish Government will ensure that local and regional infrastructure is adequate to meet the opportunities that the freeports should deliver? For example, in relation to the Cromarty Firth bid, how will the Government ensure that the Scottish National Party’s commitment to dual the A9 is completed in full, as promised, and that the dualling of the A96 is not kicked even further into the long grass?

Finally, will the Scottish Government commit to continue engagement with the UK Government on similar joint projects and ensure that both Scotland’s Governments work together to improve economic opportunities and growth?

Although the First Minister changed her diary in order to meet the Prime Minister the evening before the announcement, she was not at Cromarty Firth because she was involved in some of the work to manage and address the pressures in the national health service. Those pre-arranged commitments on the Friday morning included discussions to avoid industrial action in the national health service. I am sure that Mr Halcro Johnston will be as pleased as I am that this Government—unlike the United Kingdom Government—has successfully avoided that. The First Minister changed her arrangements to make it possible to meet the Prime Minister, which I am sure that he welcomed.

Obviously, I empathise with the bids that were unsuccessful. Mr Halcro Johnston asked me specifically about the Orkney bid. The Minister for Business, Trade, Tourism and Enterprise will be in Orkney tomorrow and Friday to sign the islands growth deal, which Orkney will benefit from. Some elements of the proposal are emerging in relation to Scapa Flow, which contains some interesting possibilities for further development, and we will continue our dialogue with Orkney Islands Council in that respect.

I am very confident that the local and regional infrastructure will be available to support the winning bids, and Mr Halcro Johnston will be aware of the Government’s continued commitments on the A9 and the A96.

Finally, I will reflect on Mr Halcro Johnston’s point about the Scottish and UK Governments working together. There were some interesting lessons in the process, which was a process of joint decision making. There was equal involvement, and we both had to agree. It was not a case of one Government—the UK Government—setting out its will over the will of the Scottish Government. It was about joint decision making. Perhaps the Conservative Government in London could reflect on the importance of that approach in how we take such matters forward in the future.

I thank the Deputy First Minister for advance sight of his statement.

The eventual agreement between the UK and Scottish Governments on freeports is a drop in the ocean when it comes to what is needed to stimulate Scotland’s flagging economy. There was no commitment from the Deputy First Minister of new Government resources for the ports that missed out on freeport status, such as the Clyde green freeport bid, which was from a community that was already reeling from more devastating news on jobs in recent days.

There was no guarantee that freeports will not lead to the dilution of workers’ rights. Does the agreement between the UK and Scottish Governments mean that every worker in a freeport will be guaranteed the same rights as every other worker in other workplaces? Does the agreement guarantee that trade unions will be able to access and organise workers who are operating in freeports to bargain with employers over pay and terms and conditions?

Unfortunately, it is characteristic of Mr Smyth’s approach to most of these things that there is not much of a welcome from him for anything. I say to him that—

Answer the question.

I am not sure that the running commentary helps the discussion of such matters.

The two Governments have set out the approach taken to making a difficult set of decisions about very strong bids. I sympathise with those who have been unsuccessful and, as I said in my statement, the Governments will engage with the unsuccessful bidders to identify how we can take forward some of those strong propositions.

In relation to Mr Smyth’s comments about the position of workers, in my statement, I went to great lengths to address the fact that the construct of green freeports in Scotland was deliberately designed to protect workers’ rights. That was an essential prerequisite to the Scottish Government’s participation in the exercise. We were not prepared to participate on the basis that was proposed by the UK Government for the English freeports. We did not think that protections were in place for workers’ rights, which were successfully negotiated as part of the process.

I am confident that those rights can be assured, but as I said in my statement, I also give Parliament the assurance that governance will be in place, there will be accountability and we will be able to monitor how the agreements and commitments are fulfilled by the delivery of green freeport status.

I am conscious of the number of members who wish to ask questions, so we will need to have fairly succinct questions and answers.

Growing up in Alness, I got to see at first hand the perfect illustration of the just transition that is the port of Cromarty Firth. From rigs to turbines, I am sure that its clear commitment to supporting green energy and providing quality jobs for Ross-shire and the inner Moray Firth played a part in the success of its bid last week. However, many of my constituents are still worried about the agreements that the Scottish Government secured on fair work and environmental protections and how those will be monitored and ensured.

Will the Deputy First Minister expand on where accountability lies in such matters and reassure the people of the Highlands that the green freeport will deliver without harming the area or workers’ rights?

I will try to reassure Emma Roddick on both those points on environmental protection and workers’ rights.

The Scottish Government would not sign up to arrangements that would dilute any of the existing commitments. Indeed, from a wider policy perspective, some of our concerns about the United Kingdom Government’s Retained EU Law (Revocation and Reform) Bill reflect our concerns that those very rights for workers or controls on environmental protection might be diminished.

We have a governance structure to put in place. Those are essential commitments at the heart of green freeport status, so we will ensure that mandatory arrangements are taken forward through the successful propositions.

I very much welcome the statement and the cabinet secretary’s upbeat remarks, particularly those in the last paragraph of the statement. It is good to hear his comments about joint working.

Can I assume that the cabinet secretary does not agree with Ross Greer’s view? Last Friday, Ross Greer said:

“There is nothing green about so-called green freeports. They are a failed and dated Tory gimmick which hands public cash over to multinational corporations”

and

“will only benefit the super-rich and the big corporations who have pushed hardest for them.”

I think that that quote perhaps illustrates why the concept of green freeports is an excluded area in the Bute house agreement, which allows Mr Greer and me to respectfully take slightly different views on that question, if I can put it as delicately as that.

It is much better if I allow Mr Greer to speak for himself rather than speak on his behalf.

I very much congratulate the Cromarty and Forth green freeport bids on their success, but I am very disappointed that the north-east bid, where my constituency is located, was not successful.

In addition to the update that he provided in his statement, will the Deputy First Minister give a reassurance that the Scottish Government will ensure that the north-east receives the long-term support that is required to help achieve the Government’s net zero and just transition targets, and that it will further help to maximise the opportunities that have been granted to the north-east to secure it as a future global energy hub?

I quite understand the disappointment that Audrey Nicoll is expressing on behalf of her constituents. I will reassure her in two respects.

First, the Scottish and United Kingdom Governments are taking a number of measures to support the north-east, whether that is the £500 million 10-year north-east of Scotland and Moray just transition plan, or the work that the UK Government is progressing on the—I think that this is the correct term—net zero zone that Sir Ian Wood is progressing. Those represent existing commitments.

Secondly, the First Minister and I have used every available opportunity to impress on United Kingdom ministers at the most senior level the importance of the Acorn project, which is crucial for carbon capture and storage in the north-east.

That project is uniquely placed to advance carbon capture technology. We have pressed that argument, the UK Government has heard our strong views on the importance of making early progress on that development, and I am optimistic that that will be the case.

On a number of occasions in this statement, John Swinney has expressed his sympathy and empathy towards the unsuccessful bids. When I speak to Scottish renewables firms, they are clear that we need to upgrade not just two of our ports but our port infrastructure up and down Scotland if we are to make good on the 17 ScotWind projects and the 10GW of energy that they will produce. Surely, he should have produced today an investment plan and a strategy for all our ports, not a rebadging of a pretty dubious Conservative proposal on freeports.

The Labour Party is really excelling itself in its lack of cheerfulness today. I do not know what is in the water. Any cheerfulness has certainly not reached Mr Smyth or Mr Johnson.

The Government has made a statement today to transparently explain a decision-making process that we have been involved in with the United Kingdom Government.

In addition to that, the Scottish Government is investing in a variety of propositions around the country, whether that is the Aberdeen city region deal, the Tay cities deal, the islands growth deal that I mentioned, the Ayrshire growth deal or the Glasgow and Clyde valley city deal. All those include elements that will address exactly the issue that Mr Johnson has raised.

Those are 10, 15 and sometimes 20-year sustained policy commitments that are in addition to the investment that the Government is making in the country’s infrastructure. We are determined to make sure that we realise the benefits of renewable energy production, which is Scotland’s great opportunity in the years to come.

I was pleased to hear the news of the success of the Cromarty and Firth of Forth green freeport bids. I am hopeful that the latter brings economic benefits to my constituency of Falkirk East.

In the Deputy First Minister’s statement, he recognised concerns that they could, however, have an economic displacement effect, reducing the actual impact of Government investment. Can he furnish us with more details as to how that specific concern has been taken into account in the design of Scotland’s green freeports?

First, I very much understand the concerns that Michelle Thomson puts to me. The risk of displacement is one of the fundamental issues with the green freeport concept. We will be putting measures into the governance and reporting framework to ensure that there is transparency in relation to those questions so that we can effectively scrutinise the effect of green freeports. We will also ensure that we have the necessary steps available to us to ensure that any displacement of activity is addressed as part of the process of monitoring the effectiveness of the concept.

There is nothing green about freeports. Many are tax havens. The European Union found that they attract money laundering, smuggling and other criminal activities. The last time the UK tried them, it only increased regional inequality. Although there are lots of warm words about fair work and net zero, I cannot yet see any hard legal requirements binding these freeports to the grand promises that they have made.

I acknowledge that the Government has tried to address the concerns that the Scottish Greens have. However, will the Scottish Government act to remove freeport status from either operator if it breaks the commitments that it has made on workers’ rights and environmental protection?

Yes, the Government will act in that fashion. We are serious about the points that have been advanced. I will try hard over the period ahead to persuade Mr Greer of the merits of the steps that we are taking, but I assure him that we will act to protect the commitments that have been built into the green freeport concept.

As Audrey Nicoll has already set out, we need to ensure that the north-east is not disadvantaged by this decision, particularly because, as everyone who has spoken about the north-east has stated, it should be at the heart of the just transition and remain the energy capital of a net zero Scotland.

Therefore I am pleased to hear the Deputy First Minister commit to working with the unsuccessful bidders. I am pretty sure that quite a lot in the bid does not need green freeport status in order to progress. Can he provide any information about when that engagement will begin and what form it might take?

That engagement will start very soon. As I indicated in my answer to Audrey Nicoll, we have used the engagement and dialogue around the decision-making process for green freeports to advance the arguments and the case for the Acorn project, for example.

That engagement will start soon and it will include those who have been involved in the bid in the north-east. We will work to ensure that as much of the bid as can be taken forward sustainably is taken forward.

I warmly welcome the introduction of the freeport in the Forth estuary. On behalf of my colleagues in the far north, I congratulate the Cromarty Firth on the decision on that bid.

The cabinet secretary is right to reference in his remarks the concerns that people have about the displacement of economic activity from around and about freeports into freeports, and the loss of tax revenue and work opportunities from the areas that have lost out. I was gratified to hear him give some consideration to that in his remarks, but would he consider coming back to Parliament, perhaps in a year’s time or a year after the introduction of the freeports, to talk about the impact on economic activity in surrounding areas?

I think that that is an entirely reasonable request. Ministers would be happy to do so.

Obviously, I was disappointed that the north-east bid was not successful. It highlights, however, that connectivity between Aberdeen and Inverness is more vital than ever. The dualling of the A96 is now key. Can I ask the Deputy First Minister whether the commitment to dual the A96 by 2030 will be met?

Mr Lumsden should be familiar with the contents of the Bute house agreement, which set out the Government’s approach to the A96 dualling project. In that agreement, we set out specific commitments and the process of evaluation of the wider issues in relation to the routes. Those commitments have not changed from the Bute house agreement.

Does the Deputy First Minister recognise the economic disparity that already exists between the north and east of Scotland and the south-west of Scotland, and does he think that this announcement might exacerbate that divide? Does the Scottish Government see any merit in exploring the potential of developing the port infrastructure in Ayrshire to boost economic activity there, particularly looking towards Ireland and the European Union via Dublin port?

Obviously, I am very familiar with the economic challenges that are faced in Mr Coffey’s constituency and in Ayrshire more widely. Those challenges are the reason why the Government has been so engaged in, for example, the Ayrshire growth deal, and why huge amounts of time and energy were spent on securing the Mangata Networks investment at Prestwick airport. That is a huge strategic development, albeit that it is not in Mr Coffey’s constituency but in his neighbour Siobhian Brown’s constituency of Ayr. I recognise the economic disparities, which is why we concentrate on that investment.

On the development of connectivity to Ireland from Ayrshire ports, obviously ministers would be happy to engage with Mr Coffey and his colleagues from Ayrshire to see what can be done to advance that agenda.

That concludes this item of business. There will be a brief pause before we move on to the next item of business.