What difference will the green freeport make?
What difference will the green freeport make?
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00:00 [Music]
00:12 The announcement of the free port in the Highlands late in 2023
00:16 created a real buzz around Inverness and the Cromarty Firth,
00:20 but it's a very complicated initiative and as such a lot of speculation and questions have arisen.
00:26 I'm Iain Forsyth of DP Digital Media and in this exclusive preview for Highland News and Media subscribers,
00:33 I'm going to be talking to Callum Macpherson, Chief Executive of the Inverness and Cromarty Firth Green Free Port.
00:40 And Callum's agreed to spend a little bit of time with us,
00:43 helping to demystify some of the questions that are out there.
00:48 So let's start with the really easy one, Callum. What is a Green Free Port?
00:53 So free ports or the Green Free Port as it's known in Scotland,
00:58 is a vehicle that's been created by the Scottish and UK governments,
01:02 really to try and drive investment into particular markets and sectors.
01:06 In our case, the sector that we're really focusing on is offshore wind.
01:11 And although we do have some life science aspect to what we're doing as well in the Inverness campus,
01:16 really the focus is green energy for us.
01:19 And what the actual free port does to do that is that when somebody comes to invest here,
01:24 either somebody from overseas, so international investment,
01:27 or indeed a business in the area looking to expand their operations and grow,
01:31 it offers them some tax incentives up front.
01:35 So if you, for example, build a new factory, you get land and building transaction tax relief,
01:40 you get various reliefs at the start. Not all your taxes, so people still pay PEY,
01:44 they still pay corporation tax, but it gives enough to try and incentivise people
01:49 to come here to the Highlands and invest in the area.
01:52 So that's really the mechanics of how the free port or the Green Free Port works.
01:57 And we've worked really hard to get one here and we're already seeing interest resulting from that.
02:03 There are other free ports around the UK, but specifically the one here is a Green Free Port.
02:08 Why that decision for it to be a Green Free Port?
02:11 So there are eight free ports in England and they focus on different markets and sectors as well.
02:17 But the Scottish Government, in discussion with the UK Government,
02:20 decided they wanted a real focus on the energy transition piece.
02:24 So we've got a huge opportunity in the North Sea with the growth of offshore wind,
02:29 and the ports and harbours are going to be a critical component in that overall journey.
02:34 So the Scottish Government, in discussion with the UK Government,
02:37 decided that we're going to have Green Free Ports in Scotland.
02:40 They focus on renewable energy, and not just offshore wind, but things like hydrogen as well.
02:46 So the Green Free Ports in Scotland have a real focus on the energy transition and offshore wind.
02:54 There are only two in Scotland if I'm correct?
02:57 Absolutely, yeah.
02:58 So we've been pretty lucky getting that status in this area.
03:01 What is it about this area that made it appealing to the Government to give it that status?
03:06 There's two aspects really, and one's a challenge and one's an opportunity.
03:11 If I may be speaking of the challenge first, part of the whole initiative, in fact,
03:16 the sponsoring department in the UK Government is the department for levelling up.
03:19 So whilst the Highlands is a fantastic place to live, and as a Highlander I thoroughly believe that,
03:25 we have a challenge in this area.
03:28 And the challenge is that over recent decades our working age population is declining.
03:32 We're losing our young people.
03:34 Now we're attracting other people to come here, and maybe to retire and things,
03:37 so our overall population is fairly level.
03:40 But in the last census results we lost 3.7% of our working age population,
03:45 and we just can't afford for that to continue.
03:48 So when they were considering where in Scotland the two Green Free Ports were going to be,
03:53 and there was a lot of competition for this,
03:56 we were able to demonstrate that there was a real need, not just in economic terms,
04:01 but in social terms as well, because we're also a region that's characterised by low pay.
04:05 So that was the sort of challenge that having the Free Port here would help the Scottish and UK Governments address.
04:12 The opportunity was to do with the growth in offshore wind,
04:16 and for a very long time having mountains and lots of wind and rain and long sea locks
04:22 where you couldn't build straight roads was an incumbent to the area.
04:27 Well actually now it's an asset.
04:29 So having deep sea locks where we can put some of this kit and have ports and yards with deep water,
04:35 and having it be one of the windiest places in the world is a real asset for a change.
04:40 So if you take the challenge of us retaining our population and creating good long term employment,
04:45 and you take the opportunity with offshore wind, the two align really well.
04:50 I've heard people saying it's a big deal for the area.
04:53 It might even have been you that said it, but I've certainly heard other people saying it.
04:56 Why is it a big deal?
04:58 I think, so as I mentioned before I'm from this part of the world,
05:02 we've seen in the past the population and the prosperity of the Highlands go up and down.
05:08 So if you go back to the 50s and 60s when the hydro schemes were being built,
05:12 we had 12,000 hydro workers in Scotland, of which somewhere between 8 to 10 were based basically in the Highlands and Islands and Argyll.
05:20 So at that point we saw a big spike in people coming to the area,
05:24 and for 15, 20 years there was a real programme of work and development in green energy.
05:29 But once that programme was done, it ended.
05:32 Although to this day we have a lot of people involved in the hydro schemes and things in this part of the world.
05:37 You then roll the clock forward to the 70s and 80s,
05:40 we had the boom of course with oil and gas infrastructure delivery.
05:44 But again, whilst the yards at Nigg and Ardus ear brought lots of work,
05:50 that kind of came and went, the big deal this time is that to deliver the offshore wind programme
05:57 and the licences that have been granted offshore, it's going to take 50, 60, 70 years.
06:02 And then once they're there, they're going to be upgraded and modernised and serviced.
06:06 So we have an opportunity, if we get this right, to become a European hub for offshore wind.
06:11 And this will really set the Highlands up as an area which has a long-term industry.
06:16 So it will be less boom and bust. And it's only when you've got a long-term prospect like that,
06:21 that you can retain the population, get better wages and improve the prospects of the area.
06:26 So this is a multi-generational game changer.
06:30 We're on the right way, but personally I feel we owe it to future generations to get this right.
06:37 And although there will be bumps in the road, if we get it right, it will make a huge difference for many years to come.
06:41 So effectively what you're saying is for this to be sustainable and not another boom and bust scenario,
06:47 we have to do it right. What does do it right look like?
06:52 Well, one of the things that's happened in the past is we've had energy booms and industrial booms in the past.
06:58 For example, when the hydro schemes came to the Highlands, we had quite a sharp increase in people who have come to the area.
07:03 They had very large work camps in places like Cannock, not far from here,
07:07 in which hundreds and hundreds of people were staying there.
07:09 But what happened was the population came, the construction work was done and then they all left again,
07:14 or a larger number of them left.
07:16 Similarly, when oil fabrication yards came to Ardousier and to Nigg,
07:21 there was 10,000, 12,000 people here.
07:24 And it was a really sharp start and also quite a sharp decline, which meant the area,
07:28 so I had to really work hard to build those up and come.
07:31 The work was fantastic, but it didn't maybe leave as long a legacy as we wanted.
07:36 What we really want this time is to get jobs and an industry that stays for a very long time.
07:42 So that means more than just marshalling and assembly, which is undoubtedly good work,
07:46 but we need to get manufacturing jobs here.
07:48 So jobs that will last and be an investment for the long term.
07:51 And that's why it was fantastic news that Sumitomo have announced they're going to come here
07:55 and invest £350 million in a facility here.
07:59 That's not a short term investment.
08:01 So getting it right for me and for those involved in the Freeport is around creating long term,
08:06 well paid jobs that really help sustain the community going forward.
08:11 So tell me a little bit more about the actual area it covers.
08:15 It's the Inverness and Cromarty Fulth Green Freeport.
08:18 Does that mean it's all of that area?
08:21 So the process by which the tax sites and the Freeport area are designated is quite a complicated one.
08:28 But just to be more specific, the areas which have recently, through statute, been designated as tax sites,
08:34 so that's the ones that attract the tax benefits, are Port of Nigg and some of the land surrounding that,
08:40 Port of Cromarty Fulth, Highland Deephaven, which is near Alness,
08:45 and then you come round the coast, it includes Port of Inverness and some of the campus
08:50 and some of the land near the Longman, and then lastly over to Port of Ardeseer.
08:55 So there's very specific sites which are included within the tax sites.
08:59 There's a bigger area which is designated as the Freeport area,
09:03 which in the future we may decide to have custom sites, but they're not on the cards right now.
09:08 But that's the kind of wider area which we think will benefit from this work.
09:12 So you talk about tax sites there, I'm sure when the announcement was made,
09:16 I, like many other people with businesses in the Highlands, thought,
09:19 "Oh great, we're not going to have to pay as much tax."
09:22 That's probably not the case. So how do businesses here actually benefit from this
09:27 if it's only restricted to those really tight areas?
09:30 The areas which actually attract the tax benefits are really defined.
09:34 We should also say that they still pay most of their taxes,
09:38 it's just certain things aimed at inward investment or expansion that the tax reliefs apply to.
09:44 So for example, if you're an existing business in the tax sites,
09:48 you still pay your normal non-domestic rates and things like that.
09:51 But really for businesses that are out with those areas, the real way to benefit from this,
09:56 and the way in which we're working hard to make the benefit,
09:59 is by the growth in industry which is going to happen.
10:02 And of course, all these businesses require supply chain and really want the supply chain nearby.
10:07 So the benefit to the area, outwith the immediate tax sites,
10:11 is going to be the huge growth in industry that's happening over the next 10, 20 years,
10:15 primarily in offshore renewables.
10:18 We obviously want to encourage and work with those who are coming to the area
10:21 to use local supply chain, local contractors, local service providers.
10:25 So that's the real drive that we see bringing benefit to the areas just outwith the tax sites.
10:31 So at a practical level, what do you feel you're able to do
10:35 to try and make that investment be spent, at least in some part, with local businesses?
10:42 So we've had a few events, both in Easter Ross and also around Inverness,
10:48 around supply chain awareness raising days.
10:50 I'm really pleased to say every single time we've run one of those events,
10:53 they've been sold out, they've been full house.
10:56 So it's really about allowing business owners to take some forward looking,
11:00 some sort of foresight as to what it is that's coming and what the opportunities might be.
11:05 So that's one thing we have to do.
11:07 When people come to this area to invest,
11:09 we are strongly advising them to use local supply chain and make sure they do so.
11:14 So those are the kind of mechanisms we're using to try and allow the local supply chain.
11:19 And people who are coming in to invest who want a local supply chain to be married up
11:24 and just try and provide some visibility as to what's coming.
11:28 So we've not really touched on who the other organisations are
11:32 that are involved in the Freeport Initiative.
11:35 Tell us a little bit about that.
11:37 So when this journey started four years ago,
11:40 it was mainly driven by the ports and harbours,
11:43 in particular Port of Inverness, Port of Cromery Firth and Port of Nigg,
11:47 who at that point realised there was a huge opportunity going forward.
11:51 And at that point they put a call out to others who might wish to support
11:55 and help drive the bidding process as it was at the time.
11:58 I'm really pleased to say that to this day we've got 30 organisations locally.
12:03 Maybe start with those in the public sector if I may.
12:06 Highland Council and Highlands and Islands Enterprise and Skills Development Scotland
12:11 and agencies like that have been absolutely fantastic in helping us get to where we are.
12:15 The University of the Highlands and Islands is a core partner as well.
12:18 And then we've had businesses large and small who've come in behind us,
12:22 everything from local advisory services through to some of the offshore developers
12:26 who could see that having the region become a main powerhouse of manufacturing
12:31 would really help the drive to offshore renewables.
12:34 But then we've also, and probably core to it has been, local asset owners,
12:38 for example the ports, Highland Deep Havens owners,
12:42 and laterally I'm pleased to say Port of Ardeseer who joined as well.
12:46 So it's kind of quite a broad group of public and private sector people
12:50 who've really helped drive it to where we've got today.
12:52 And on our board we still have representation across that mix
12:55 of public and private people involved.
12:58 Again we've talked about the type of investment that's likely to come to the area.
13:03 What types of jobs do you see that leading to for us here?
13:09 Well it's a really good question because the kind of jobs that I get asked about
13:14 all the time are welders and pipe fitters and rope access people.
13:18 And of course that is going to be a real part of it, a big part of it.
13:21 But actually if we're talking, and we are talking about over the next 10, 20 years
13:27 10,000 more jobs coming here, there's a huge range of opportunities
13:32 So for example a lot of those involved at the moment in developing the offshore wind industry
13:38 and indeed some of the other areas of green energy that we're looking at
13:41 it's around environmental impact assessments, it's legal advice, it's accountancy advice,
13:46 it's graphic design, it's multimedia, it's a full range of services.
13:51 So if you think about any industry, it needs everything.
13:54 And then of course once you go around the immediate jobs that are created
13:58 then outside that of course we need more people involved in childcare,
14:03 in building work, in construction phases.
14:07 So there really is a really broad range of opportunities that are coming from this.
14:11 But one thing I will say about the jobs, and it's probably one of the myths we absolutely have to bust,
14:17 is core to this is about long term fairway paid work.
14:21 So all those who've had tax sites status placed upon their property
14:27 everybody has signed up to the Fair Work First principles that the Scottish Government created.
14:31 So it is absolutely about the living wage, it's absolutely about no zero hour contracts.
14:37 It's really critical to what we do because in the Highlands we're an area that has experienced quite low wages in the past
14:43 so fundamental to this is about long term varied well paid work.
14:48 It would be remiss of me not to pick up on the 10,000 jobs
14:52 because that I think is a figure that everybody who's heard anything about the Freeport will have heard that number.
14:58 Tell us a wee bit about how that figure was arrived at.
15:02 It wasn't just plucked out of thin air I'm assuming?
15:04 No, I mean as I mentioned this process has had a lot of really close due diligence
15:10 both from the local authority at Highland Council level
15:14 through to the Scottish Government and through to the UK Government.
15:17 Initially three or four years ago when this was conceived the number was quite a bit higher actually as to what was anticipated.
15:22 So we went through a process of speaking to every land owner
15:26 looking at their future projects, the potential investment in the facilities.
15:30 We spent months really analysing the opportunity, the supply chain opportunities
15:35 the construction phases and what would likely to be required
15:38 and we arrived at the figure of for the Highland area 10,250 jobs
15:43 and then a further 6,000 jobs in the wider Scottish and UK economy.
15:47 So we're confident that that's a really robust figure, well researched
15:52 and remember we're talking about over the next 10, 20 years.
15:55 We're not saying there's 10,000 people coming tomorrow.
15:58 We do believe there'll be hundreds and hundreds coming soon and they're already starting.
16:02 So we have thought very carefully about that number
16:07 and those numbers are just for what's happening in and around the tax sites.
16:12 There'll be more outwith the area but we've been careful to only attribute that to what we think we're influencing.
16:18 So all of that sounds really encouraging but with everything there's always a flip side isn't there?
16:23 We're already looking at hospitals under pressure, schools under pressure, housing under pressure.
16:28 How is the area going to cope with that additional strain of new people moving in?
16:34 So this is an area which particularly our partners in say for example Highland Council have a real focus on
16:40 because they're at the front end of delivering a lot of these services.
16:44 It's really been understood from the word go that when we, and I believe we will,
16:50 bring this industry to this area and it grows, that there will be pressures and pinch points in certain parts of the service economy.
16:57 So it's a bit of a chicken and egg because once you bring more people here and more people have say partners
17:02 then there'll be more people available to work in healthcare and doctors and things.
17:07 But as part of the whole free port mechanism, and this has been carefully constructed by the UK and Scottish governments,
17:14 the non-domestic rate holiday that's going to be enjoyed by some of the new infrastructure,
17:19 that's not lost to this area and that's another method like the bust.
17:23 Some of these tax breaks, for example the non-domestic rate relief, that's not lost to our area.
17:28 It's actually given back to our area by the Scottish Government in terms of non-domestic rates
17:33 and is retained here to help improve just the kind of infrastructure you've just asked about.
17:38 And then over the next 20 years, after the five year period that holiday if you like is over,
17:43 then we get to retain it in our area.
17:45 So it's going to be hundreds of millions potentially directed towards improving critical infrastructure like road access, utilities,
17:54 but also maybe childcare facilities and attracting key workers to our area and helping with key worker accommodation.
18:02 So we are looking at the bigger picture.
18:04 And does that include housing and accommodation for people because that's an area that's under pressure too?
18:10 Absolutely. We're aware that just in our immediate area there's a waiting list of around 5,000-6,000 people on the housing list already.
18:18 It's probably one of the top three or four things that I think we really have to work on as a region,
18:24 as a partnership with everybody to try and address.
18:27 It's the reason why a lot of our people, young people, leave the area.
18:30 Because they can't get on the housing ladder, they can't afford starter units.
18:33 And as a region we don't have, maybe compared to say larger cities,
18:38 we don't really have many smaller accommodations like flats and that kind of thing.
18:42 So it's an area in which we're working really closely with, again with Highland Council, with all our public sector partners,
18:48 and also with the private sector.
18:50 We've met all the house builders and others involved in this.
18:53 And trying to find ways to get ready for the wave that's coming.
18:56 We could sit back and wait for the demand to get stronger, which would then inform build.
19:01 But as I said earlier, we want to try and be on the front foot this time.
19:04 We want to try and get that accelerated.
19:06 So we recognise we're going to have to do something about housing in the area.
19:10 Not just more three and four bedroom houses, but flats, key worker accommodation,
19:15 and just somewhere to accommodate people.
19:17 Now there will be spikes of people coming here, especially during the construction phase.
19:21 So there will be temporary accommodation units.
19:23 What we want to try and do as many as possible is keep those people here going forward.
19:28 So it's a big area we have to work on here.
19:30 It does sound like a challenge.
19:32 I mean, I think we've talked about the area, we've talked about the partners and the organisations involved.
19:37 Tell us a wee bit about how all of that is actually run.
19:40 What's the kind of governance around it all?
19:43 Well, all the free ports and the green free ports have different structures.
19:48 So sometimes we get compared to maybe the way something's been done,
19:51 not just elsewhere in the UK, but abroad.
19:53 What I can say is, and as you might expect,
19:56 bearing in mind that we're a public-private partnership,
19:58 with oversight from the Scottish and UK government,
20:01 the governance around this is really robust.
20:04 So the Inverness and Cromarty Firth Greenport Company is a company limited by guarantee.
20:10 It's not for profit.
20:12 We have no shareholding, so we can't distribute profit anywhere.
20:16 Any surplus we generate is used to run the company going forward
20:19 to reduce our reliance on public funds.
20:22 So we have a, in governance terms, we have a really important aspect,
20:26 which is we have an accountable body, which in our case is Highland Council.
20:30 So whilst there's a free port board on which the Highland Council
20:34 and University of the Highlands and Islands and others sit,
20:36 we have a partnership arrangement with the Highland Council
20:40 to provide overall governance.
20:42 So if, for example, we were to start using our funds
20:45 or doing anything that was completely inappropriate
20:47 and wasn't aligned to the way in which an organisation like us should run,
20:52 especially with public funds, then they've got the right to veto that.
20:56 So some people say there's no governance,
20:59 some people say they can please themselves.
21:01 That's absolutely not the case.
21:03 We've got more layers of governance than I've seen in almost any other organisation
21:08 I've ever been involved in.
21:09 I suppose one of the things that people must be interested in,
21:12 certainly I'm very curious about the kind of time frame
21:15 that we're looking at for this.
21:17 We've talked about the number of jobs.
21:18 Is that all going to happen in the next six months
21:20 or is it a bit longer than that?
21:22 That's understandable because we've had to talk about the scale,
21:25 partly to help secure the bid for this area,
21:29 but this isn't going to happen overnight.
21:31 Some of the work that's already started, for example,
21:34 in the Sumitomo factory that was happening at Port Ravard of Sear,
21:37 it's going to take a good two or three years to actually get into position.
21:41 So we're not talking about 10,000 jobs landing tomorrow.
21:45 We're talking about over the next 10 years being the majority,
21:49 but actually over the next 20 years for a lot of these long-term jobs
21:52 to come into place as the supply chain
21:55 and as the requirements for industry evolve.
21:58 So we've got an opportunity here to get ready for this in this area.
22:03 I would anticipate in the next five years there being 4,000 or 5,000 jobs,
22:08 maybe even more, but as I say, they're not going to come overnight.
22:12 And we have an opportunity to train up people
22:15 and to get the area ready for these opportunities coming.
22:19 Well, we've covered quite a lot of ground, Callum.
22:22 That's been great, and hopefully it has answered a lot of questions for people.
22:26 But I'd just like to finish.
22:28 You're a lot further away from retirement than me, quite considerably.
22:32 But let's fast forward 10, 15, 20 years even,
22:36 and the point where you decide, yeah, it's time for me to finally sit down
22:39 and put my feet up.
22:41 What does this area look like if the Freeport has done what you want it to do?
22:46 The main thing for me--
22:48 and I know people are motivated by different things.
22:53 But for me, the fact is that when I grew up, for example, in Drummond Rocket,
22:59 I knew that at that point me and many of my classmates,
23:02 especially those who maybe wanted to go on and do different things in careers,
23:05 had little or no option.
23:07 We had to leave.
23:09 So what I'd really like in the future is a situation where maybe a lot of our young folk
23:13 who decide to leave can, because at the end of the day, a lot of young people will.
23:17 You want to see the world, you want to travel, and that's perfectly fine.
23:20 But you want to be in a situation where if you want to stay at home,
23:23 you don't have a limit on what your career options can be.
23:26 So we would want this area to-- instead of being one of the lowest-paid areas
23:29 of the UK, we'd want to be, at the very least, keeping up with the average wages
23:34 in the rest of the area.
23:36 So I'd really-- if we get to the stage where I'm putting my slippers on,
23:40 I'd be really happy if we can get to a situation where we have people
23:44 in really good employment, we have pockets of deprivation in this area
23:51 that really shouldn't be there.
23:53 So again, it would be lovely to see a situation where the benefits of this
23:57 actually go into all those areas where we do have maybe more
24:00 of the deprivation indicators.
24:02 But for me, if we can get to the situation where the Highlands
24:05 is a really strong contributor, not just to local or Scottish or UK economy,
24:11 but a real powerhouse in European terms, in terms of industry,
24:15 and I know that people who want to live here can, then that'd be success.
24:20 Okay, well, thanks very much, and we'll make a deal that when we get
24:24 to the stage where you put your slippers on, you can pop around
24:26 to my retirement home and tell me how it's all going, eh?
24:29 - It's a deal. - Thanks, Calum.
24:30 Thank you.
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