Clyde Green Freeport Bid Update
North Lanarkshire Council · 29 August 2022
Back to Enterprise, Growth and Fair Work Committee — 29 August 2022 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Some pages contain no extractable text. They may be blank, graphics or scanned pages. OCR has not been applied.
Page 1
North Lanarkshire Council Report Enterprise, Growth and Fair Work Committee Does this report require to be approved? ☐ Yes ☒ No Ref CGF/AC Date 29/08/22 Clyde Green Freeport Bid Update From Pamela Humphries, Head of Planning and Regeneration E-mail conrya@northlan.gov.uk Telephone Allan Conry, Enterprise Development Manager – 07583 058110 Executive Summary This report provides an update on a bid submission by Glasgow City Region (GCR) member authorities and private sector partners for green freeport status. This follows approval from the Enterprise and Growth Committee on 26th August 2021 that North Lanarkshire Council should participate in the preparation and submission of such a bid. A green freeport is defined as a large, zoned area within a defined boundary which includes a rail, sea and/or airport. It is anticipated that green freeport operators and businesses in the zone would benefit from a package of tax and customs incentives. It is also expected that they would adopt Fair Work First criteria, ensuring that employees are paid fairly, and be fully committed to achieving net zero emissions. There will be two green freeport bids selected in Scotland through a competitive bidding process. Officers from North Lanarkshire Council have worked with Glasgow City Region partner authorities, along with representatives from private sector businesses associated with some of the principal infrastructure facilities to form a green freeport bid in the GCR under the brand Clyde Green Freeport (CGF). Clyde Green Freeport is a tri-modal bid covering air, sea and rail that will double capacity to take products from across Scotland to the rest of the UK, Europe and beyond. Central to the bid is a decarbonisation plan which would accelerate the Scottish and UK Government’s net zero ambitions. Specifically, Clyde Green Freeport seeks to: • Create up to 30,000 new jobs (45,000 including construction jobs). • Attract £2.5 billion of capital investment. • Transform 600 hectares of vacant, derelict, and underdeveloped land. • Generate £18 billion uplift in GVA to 2034; and • Deliver an extensive decarbonisation plan to be net zero by 2040.
Page 2
1. Background 1.1 Based on the UK Government's Freeports Bidding Prospectus for England, a draft Applicant Prospectus for Scotland was published which set out the key elements where the Scottish Government adapted the Freeports model for England to fit with the Scottish context, applying Scottish Government priorities to create a ‘green port’ model. 1.2 The freeport concept has been in existence for some time around the world. There are an estimated 3,000 such designations worldwide. They tend to be located primarily at seaports and operate as secure custom zones where, although inside the country’s border, are subject to bespoke custom and tax arrangements aimed at bringing benefits to the competitiveness of the companies located there who import, manufacture, process and export goods. 1.3 Goods that move into and out of a country are normally subject to tariffs (duty) payable to that country. Goods that arrive into designated freeports are normally exempt from such tariffs. Although these locations often offer reductions in regulatory and administration burdens for businesses, they are designed to incentivise private investment in the locality and create jobs and other economic benefits for the adjacent local economies. If the goods are then moved elsewhere in the UK, they would be subject to the normal tariffs and therefore any such designation in Scotland needs to be specifically defined. 1.4 The UK Government consulted on the principle of establishing 10 new freeports across the UK in February 2020. At launch the UK Government set out a desire to have at least one freeport in Scotland. 1.5 At the March 2021 UK Budget, the UK Government announced 8 locations for new freeports in England. The designation of such zones is a devolved matter. The English locations selected from a total of 18 bids were: • East Midlands Airport • Felixstowe and Harwich • Humber region • Liverpool City Region • Plymouth • Solent • Thames • Teesside Recommendations It is recommended that the Committee consider the contents of this report and the submission of the Clyde Green Freeport bid. The Plan for North Lanarkshire Priority Improve economic opportunities and outcomes Ambition statement (3) Maximise the use of our marketable land and assets through improved development in business and industrial infrastructure
Page 3
1.6 The publication of the Scottish prospectus was delayed due to the Scottish elections in May 2021, as well as awaiting sign-off on elements from the UK Government. The final prospectus was published on 25th March 2022 and confirmed 2 Green Freeports would be awarded in Scotland following a competitive bidding process. 2. Report 2.1 Following approval from North Lanarkshire Council’s Enterprise and Growth Committee on 26th August 2021, and following the publication of the Prospectus by the UK and Scottish Governments in March, officers from the Glasgow City Region (GCR) and key private sector partners at Glasgow Airport, Clydeport and Mossend International Railfreight Park worked together, with the support of Mott McDonald consultants, to prepare a Green Freeport bid. 2.2 The prospectus for bidders who wish to establish a Green Freeport in Scotland was published in partnership by the Scottish and UK Governments on the 25th March 2022. The co-designed Green Freeport model seeks to deliver on 4 main objectives, all of which need to be met by applicants: • Promote regeneration and high-quality job creation – the lead policy objective • Promote decarbonisation and a just transition to a net zero economy • Establish hubs for global trade and investment • Foster an innovative environment 2.3 In addition to the 4 main objectives, a key focus of the Green Freeport model is to stimulate a (net) growth in the number of jobs in the designated area. The Clyde Green Freeport proposal is seeking to create of up to 30,000 new jobs (plus 15,000 construction jobs) within GCR. 2.4 Bidders were also required to offer a clear sectoral focus to their offer and build on existing industrial clusters and to submit a clear and ambitious plan for decarbonisation alongside distinct evidence that the plans will result in additional investment and increased trade from existing companies or new ones moving into the area. 2.5 As outlined in the prospectus, bidders were required to include at least one customs site within their proposals and up to three tax sites. It should be noted that any financial incentives for the tax sites will only apply to new development and/or investment i.e., for sites that are currently undeveloped or where a building is refurbished or redeveloped as part of the plans. They do not apply to existing business properties that will remain unchanged. 2.6 Should green freeport status be achieved then a range of potential financial incentives can be made available to the designated tax sites, subject to agreement of details with HMRC, including: • Relief from Land and Building Transaction Tax for 5 years for qualifying investments; • Enhanced Structures and Buildings Allowance (SBA); • Enhanced Capital Allowances (ECA): for companies investing in qualifying new plant and machinery assets; • Employer National Insurance Contributions (NICS) relief for certain employees working in the tax site up to a maximum level of income; and • Non-Domestic Rates Relief of up to 100% relief (for 5 years) on certain properties and property improvements within designated tax sites.
Page 4
2.7 The specifics of any tax relief would be at the discretion of HMRC, and the individual companies concerned who apply for such benefits. There is also an intention to allow local authorities in which the tax sites are located to retain the business rates growth because of the new investment achieved (above an agreed baseline). This would enable local authorities and their partners to use such funds to invest in regeneration and infrastructure that will support further growth in the area or off-set any borrowing costs (where relevant) or to off-set any effect of displacement of local economic activity from disadvantaged areas. 2.8 Any designated customs site within a green freeport designation would be able to apply to have import duties on supplies suspended and elect to pay such duties on either imported goods or finished products (after being processed in the site). Any such arrangement would be subject to strict criteria applied by HMRC and be subject to having an authorised operator in place before such a designation applies. 2.9 The prospectus also indicated that up to £25m will be made available in funding to each successful green freeport designation. This funding comes with a requirement to be matched locally by private investment, local authority borrowing or other finance. Any such decisions on how to spend or match fund this seed funding would be subject to further Committee reports should the bid be successful. 2.10 Specific to North Lanarkshire, Mossend was included as a key site within the Clyde Green Freeport bid as it is home to a major rail freight hub and rail terminal. Appendix 1 outlines the proposed North Lanarkshire tax and customs sites within the Clyde Green Freeport bid that would see regeneration of 283 hectares of land through £17 million of investment, unlocked by tax benefits and, in the longer term, £300 million to develop the site and create the infrastructure needed. A new £44 million high capacity, decarbonised rail interchange would be developed with eight 775m rail sidings served by two electric gantry cranes, electric rail shunters, cross docking facilities and associated road and rail access infrastructure. In addition, there will be a net zero freight park consisting of 2.1 million square feet of manufacturing and logistics buildings and associated facilities. This would meet the increasing demand for exports for all of Scotland and support modal shift from road to rail, saving 225,000 tonnes of carbon annually. It would also create an opportunity for a manufacturing heavy vehicles hub, leading to £120 million of investment and over 500 jobs, as well as for the manufacturing, maintenance and operation of new innovative freight wagons, with an estimated £55 million of investment. 2.11 The formal bid was submitted on 20 June to the Scottish and UK governments by a partnership of Glasgow Airport, Peel Ports’ Clydeport, Mossend International Railfreight Park in North Lanarkshire and Glasgow City Region councils, including North Lanarkshire Council. The bid has already attracted support from many key businesses and organisations based or operating within Glasgow City Region including Caterpillar, Malcolm Group, SP Energy Networks, the Universities of Glasgow and Strathclyde, Morrison Construction and Loganair. 2.12 The Green Freeport Prospectus states that two winning bids will be announced in Summer 2022 and will then be invited to develop a more detailed business case. In total, there have been five bids submitted across Scotland. 2.13 In relation to ongoing governance, should the bid be successful a formal governance body will be put in place. The arrangements for this are still to be determined but it is anticipated this would include representatives from the three ports and corresponding local authority representation.
Page 5
3. Measures of success 3.1 Should bid be successful, the key measures of success across GCR will be: • The creation of up to 30,000 new jobs (45,000 including construction jobs). • The attraction of £2.5 billion of capital investment. • The transformation of c.600 hectares of vacant, derelict, and underdeveloped land. • The generation of £18 billion uplift in GVA to 2034; and • The delivery of an extensive decarbonisation plan to be net zero by 2040. 4. Supporting documentation 4.1 Appendix 1 outlines the proposed customs and tax sites within North Lanarkshire. 4.2 A website for the bid has been created and can be viewed at: www.ClydeGreenFreeport.co.uk Pamela Humphries Head of Planning and Regeneration
Page 6
5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☒ No ☒ If Yes, please provide a brief summary of the impact? • An Equalities Impact Assessment and Fairer Scotland Duty screening has been completed by the partners as part of the bidding process in-line with legislation and included in the Clyde Green Freeport bid. • Fair work practices are mandatory to all operator and businesses based within the designated Green Freeport tax and customs zones. In addition, bidders were required to propose additional innovative measures they would introduce to support the Scottish Government's Fair Work priorities. If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? There are no financial implications arising from the bidding process at this time other than officer time. If the bid is successful and how any subsequent business case for the Green Freeport is then developed, any financial implications arising, or decisions on future investment decisions within North Lanarkshire, will be subject to separate Committee reports at the appropriate time. The bid included match funding of £2.1m from the council’s City Deal Programme for the contribution towards the Orchard farm roundabout which will enable access to the business and industrial sites. The potential financial benefits to the council include the ability to bid for up to £25m of seed funding which is available to each successful green/freeport area. This funding comes with a requirement to be matched locally by private investment, local authority borrowing or other finance. Any such decisions on how to spend or match fund this seed funding would be subject to further Committee reports should the bid be successful. There is also an intention to allow local authorities in which the tax sites are located to retain the business rates growth because of the new investment achieved (above an agreed baseline). This would allow local authorities and their partners to use such funds to invest in regeneration and infrastructure that will support further growth in the area or off-set any borrowing costs (where relevant) or to off-set any effect of displacement of local economic activity from disadvantaged areas.
Page 7
5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? Any legislative impact would relate to the legal status of any Green Freeport area in North Lanarkshire, should the bid be successful. The future Governance arrangements, and the council’s role therein, would be carefully considered as part of any future Business case development 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact?
Page 8
There would be no anticipated negative environmental impacts of a Green Freeport given the key objective is that the sites would contribute to be operationally net zero. Furthermore, it is anticipated that the proposed modal shift from road to rail will have significant positive environmental impacts including the saving of 225,000 tonnes of carbon annually. 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? A joint communications strategy has been put in place between GCR, the 3 councils and the 3 private sector partners. This has been promoting the positive impacts of the bid including the benefits to North Lanarkshire. A dedicated website: Clyde Green Freeport | Scotland's Global Freight Gateway and supporting social media channels (Facebook, Twitter, Instagram and LinkedIn) have been put in place alongside a YouTube promotional video. 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? There are no significant risk implications arising from this report. Should the Clyde Green Freeport bid be successful a full risk impact analysis would be undertaken.
Page 9
No embedded text on this page.