SCOTLAND LOSING INVESTMENT TO ENGLISH FREEPORTS

At least three industrial investments have been lost to Scotland because ministers did not agree to a UK government tax policy, it has been claimed.

Conservative mayor of Tees Valley, Ben Houchen, said companies abandoned plans to locate in Scotland as the two governments did not reach a freeports deal.

These enterprise zones offer a number of savings to businesses including tax breaks on investment.

Speaking on The Sunday Show on BBC Radio Scotland, Mr Houchen said he believed Scotland was “missing a trick”.

He said: “We have attracted investors who were originally looking at Scotland when some areas in Scotland were looking at freeport status, and when they decided not to move forward with the current UK freeport policy (they) have actually abandoned Scotland.

“At least three investors who are, in the next six months, publicly going to announce in Teesside, would have gone to Scotland.

The fundamental issue is the cost of capital, and the lower barrier for investment in Teesside as a result of the freeport was the reason that they have moved away from Scotland as the place to invest.

As well as tax breaks on investment, freeports offer waivers on business rates and National Insurance Contributions, lower land transactions tax and fast-track planning, as well as tariff-free imports of materials and export of manufactured goods.

They are a flagship policy of the UK government’s strategy for “levelling up” poorer parts of England after leaving the European Union. 

Eight areas have been designated freeports, with Teesside one of the earliest to open, in October.

The Scottish government was willing to go along with the UK policy, on condition that it was called a “greenport” and focused only on low-carbon industry, while having a guarantee that jobs in the zones would be on at least the real living wage. 

That is higher than the statutory minimum wage.

In July, the Scottish government named nine areas that were being considered for greenport status: Shetland, Orkney, Aberdeen with Peterhead, Montrose, Dundee, a consortium of ports and industrial sites around the Firth of Forth, a similar consortium in the Glasgow City Region, and Cairnryan near Stranraer. 

That was before the breakdown in talks on the plans between UK and Scottish ministers. 

Since then, in October, both sides said they were preparing separate plans for low-tax enterprise zones.

The Scottish government, along with local councils, controls business rates, land and buildings transaction tax, transport, planning and skills training.