IT’S UNCLEAR WHAT WILL become of Brexit, and I’ll resist the temptation to speculate on the outcome. However, for the final Source Direct of 2020, I am fulfilling a reader request and considering a dystopian project arising from the Brexiteer faction, the Free Ports scheme announced by the UK Treasury last year. What are Free Ports and what are their implications for Scotland?
Free Ports are the ultimate free market regional development tool. George Kerevan aptly called them “neoliberalism on steroids”. They are zones designated as tax free by the government, geographically in the country, but effectively outside its authority for tax purposes.
The theory is those regions will gain jobs and revenues as companies move in to take advantage of tax and red tape-free opportunities. Free Ports are not a new thing; indeed, there are 82 of them already in the EU, an institution hardly averse to neoliberal development. However, a no deal scenario could allow the UK to engage in even more aggressive competition, aggravating the “race to the bottom” that Free Ports always imply.
The project has been central to a certain brand of neo-Thatcherite Conservatism. It was a core idea in the notorious 2012 book, Britannia Unchained, authored by a range of now famous names: Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore and Elizabeth Truss. Contrary to what many imagine, that book is not really about the EU at all. Indeed, most of its complaints centre on Britain: “The British are among the worst idlers in the world.” To put an end to all this dawdling, prescriptions include imitating the competitive policies of East Asian “tiger economies”, including tax free enterprise zones with lax regulation.
But social democratic Scotland is having none of this, right? Well, in fact, it’s complicated. The SNP membership expressed firm opposition at their recent conference. In rather more ambivalent terms, the Scottish Government has made its opposition known, although Sturgeon’s rationalisation was effectively that Free Ports were no “substitute for being a full member of the single market”, raising questions about what happens when that option has been withdrawn. Pressure is rising for a U-turn, with talk of a Scottish Free Port “within months”.
And various regions of Scotland are contemplating Free Port bids. That has included SNP-controlled Dundee, with a bid backed by the local authority and led by the city’s port owner, Forth Ports, itself owned by Canada’s biggest pension fund. This month Council leader John Alexander, head of the SNP administration, confirmed that party conference opposition to the plans would not affect them progressing further.
Nobody, of course, denies the predicament. Despite recent successes, Dundee still suffers from a hangover of excessive unemployment and limited opportunities. Council leaders will feel inclined to take whatever opportunities emerge: as Alexander himself said, “My overriding focus is ensuring that Dundee is never bypassed or late to the discussion.” Neoliberalism destroyed regional economies like Dundee. Yet there is still a temptation to resort to more of the same: slash and slash and slash. As Thatcher herself said, “there is no alternative”.
However, the downsides are stark. Aside from encouraging sweat shops conditions and degrading the environment, Free Ports are havens for organised crime. As many have pointed out, given Dundee’s well-publicised drug addiction problems, the biggest beneficiaries of a low regulation regime may well be the city’s dealers.
They are also premised on misunderstandings about contemporary trade. They are most effective in ultra-low wage economies like China, for the production of labour intensive, bargain bin products, so long as you’re not squeamish about sweat shops, the environment and all the rest. They are less effective in attracting the high value good and service production needed to support serious jobs in advanced economies.
If we are leaving the EU’s regulatory orbit, we should instead consider some more advanced rule-breaking. The tragic, unnecessary collapse of Burntisland Fabrications (BiFab) in nearby Fife meant Scotland missed an opportunity to engage in truly meaningful economic development, centred on the fast-growing green energy economy. The ruin of a firm once employing 1,400 people stemmed, according to the official story, from the Scottish Government’s meek surrender to the EU’s (abysmal) State Aid laws.
I’ll leave the last word to Kerevan: “Why not abolish all tax and regulation? The answer is obvious. Without taxes there is no infrastructure or training to run the economy, never mind an NHS. And without regulation, we would still be sending children up chimneys… Surely our vision for an independent Scotland is bolder and better than creating another Tortuga.”