Free Port plan for Scots city should be shunned ... and this is why

DEAR John,

I for one have been admiring of the seriousness and passion with which you have set about leading the SNP administration in Dundee Council, and the effort you have put into creating jobs in the city. I am aware of the tremendous handicaps your administration faces, especially the swingeing cuts to Dundee’s municipal budget.

That said, I am dismayed that you may be thinking of supporting the bid that Forth Ports Ltd are making to the Tory Government in London, to make Dundee the site of one of 10 new so-called Free Ports (FPs) announced by the UK Treasury last year.

As I will explain, the FP project is a Trojan horse for slashing taxes, reducing environmental protection and workers’ rights, limiting planning rules and – ultimately – stealing jobs from other parts of the UK and Europe. The FP idea is nothing more than neoliberalism on steroids and Dundee should have nothing to do with it.

First, a word about Forth Ports Ltd. Bizarrely, this company is owned by one of Canada’s biggest pension managers, which also controls a string of major European airports and airliner-leasing companies – which means, post-Covid, it is desperate for cash flow.

Forth Ports itself is chaired by the ubiquitous Lord Smith of Kelvin, he of the post-referendum Smith Commission. These days, Forth Ports is as much a property developer as a dock management firm. The company’s revenues in 2019 were £239 million, on which it made a whacking operating profit of £90m, or 38%. Why is Forth Ports so interested in the Free Ports scheme? Answer: the less regulation and tax, the more profit. Of course, Charles Hammond, chief executive of Forth Ports, pretends it is all about attracting inward investment and regenerating the Dundee economy. And I do note that the

pre-Covid unemployment rate in Dundee was running at 5.5% compared to a Scottish average of 3.7%. I can see the need to be pragmatic about creating jobs. But in this case Dundee is being sold a very large pig in a neoliberal poke.

In the first place, Forth Ports has a more advanced proposal for a Free Port at its Tilbury facility near London. It is unlikely that the Treasury will grant Forth Ports two Free Port franchises, so why spend money on two bids?

One suspects that Lord Smith is too cute an operator to bung in

a Free Port application only in England, lest he get flack for ignoring Scotland. Smith likes to play an insider’s game north of the Border. So: the Dundee proposal is either a bluff or Smith and Hammond cynically are hedging their bets. John, please beware you don’t get sucked in.

But suppose Dundee was successful in winning Free Port status. What exactly does the Tory Government think FPs will achieve? Free Ports (located near existing ports or airports) will be considered legally outside the UK for customs purposes. Which means goods and raw materials can enter and exit the port without red tape or tariffs.

It also means that companies creating manufacturing plants inside the zone will operate under looser tax, planning and labour laws than in the UK proper. In essence, Free Ports will be pirate enclaves. Welcome to Dundee as a modern version of Tortuga, the 17th century pirate port in Hispaniola.

Whose bright idea was this? Answer: Chancellor Sunak himself. Back in 2016, when he was a newbie MP and trying to get noticed, Sunak published a report on Free Ports for the right-wing Centre for Policy Studies. A former hedge fund manager, Sunak was anxious to display his pro-Brexit, neoliberal credentials. Now Chancellor, it was only a matter of time before he ensured his Free Port ideas became reality.

Sunak got his inspiration from China, where the local version of Free Ports helped transform a backward peasant economy into a capitalist, exporting super power. According to Sunak: “Local property taxes, corporate income taxes and employment taxes were all lowered, as well as customs duties, in order to attract Foreign Direct Investment … [FPs] account for 20% of China’s GDP, 30 million jobs and around half of all FDI”. What’s not to like? Actually, a lot.

The Chinese Free Port model was a disaster for the environment, and we are all frying as a result. Chinese Free Ports are also the global centre for smuggling counterfeit goods. Most of the new jobs were filled by herding millions of young female peasants off the land in central China and decanting them into dreary dormitories in the coastal Free Ports.

Meanwhile, millions of existing American industrial workers were thrown on the scrapheap as their employers transferred production to the Chinese Free Ports. As a result, we got Trump. This is the true hocus pocus with Free Ports: they only shift jobs geographically – they don’t create new ones. John: that will also be true in Dundee.

Companies move production from high tax areas to the low tax zones. Why wouldn’t they? The Tory model of Free Ports is designed specifically to steal jobs from the EU.

BUT that will only bring European retaliation and the loss of Scottish and UK jobs elsewhere. At the same time, by pitting coastal ports against urban manufacturing zones, the Tories will use Free Ports to discipline the workforce everywhere and make local authorities compete through lower council tax. It will be a race to the bottom for everyone, including Dundee.

Which raises the obvious question of where Free Ports fit in with independence. Would an indy Scottish Government honour the neoliberal nonsense of Dundee (or any other Scottish port) being free of customs and normal environmental and labour regulation?

I certainly hope not. In which case, assuming independence comes in the short term, pursuing a Dundee Free Port is a waste of space.

What is the alternative? The SNP Government has already set up an embryo Scottish National Investment Bank to raise capital investment levels and create jobs. Unfortunately, the resources of the SNIB are as yet too small to do the job effectively.

But there are a host of ways of boosting the bank’s financial resources rather than trying to tempt foreign investment through the dubious blandishments of a Free Port. For instance, rather than flog off to private investors some £3bn of public green assets (which, outrageously, the SNP Government is proposing to do), they should be transferred to the SNIB. That would give the bank a huge portfolio against which to borrow.

John, you are quoted as saying: “The Free Port initiative is a really interesting idea and it has potential benefits more broadly for the city …” But think through the logic of your argument. If lower taxes and deregulation are what create jobs, why not extend these benefits to the whole of Scotland?

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.

John, please think again. Surely our vision for an independent Scotland is bolder and better than creating another Tortuga.