Lancashire County Council is one of the 38 local authorities in discussion with the government about its new “Investment Zones” – but as yet, there is very little information on just how these might work, or when they will launch.
The government claims its new Investment Zones will drive growth and unlock housing across the UK by “lowering taxes and liberalising planning frameworks” to “encourage rapid development and business investment”.
It has made similar claims about its Freeport program, which is supported by local MP David Morris, although this is still in its infancy, claims about that contested by critics last year.
In a brief Factsheet following the Chancellor’s announced “Growth Plan” in Parliament yesterday, the government revealed it was in discussions with 38 local authorities, including Lancashire County Council, to establish investment zones in England.
Investment Zones: Claimed Benefits
The government claims areas hosting Investment Zones will benefit from time-limited tax benefits, accelerated development, and wider support for local growth.
Businesses in designated areas in investment zones will benefit from 100% business rates relief on newly occupied and expanded premises. Local authorities hosting Investment Zones will receive 100% of the business rates growth above an agreed baseline in designated sites for 25 years.
In addition, businesses will receive full stamp duty land tax relief on land bought for commercial or residential development and a zero rate for Employer National Insurance contributions on new employee earnings up to £50,270 per year. To incentivise investment there will be a 100% first year enhanced capital allowance relief for plant and machinery used within designated sites and accelerated Enhanced Structures and Buildings Allowance relief of 20% per year.
Locals may well be alarmed that the new Investment Zones will include “designated development sites” with reduced planning permission oversight, which, it’s claimed, will release more land for housing and commercial development, and to support accelerated development.
“The need for planning applications will be minimised and where planning applications remain necessary, they will be radically streamlined,” the government has said. “Development sites may be co-located with, or separate to, tax sites, depending on what makes most sense for the local economy.”
“The Investment Zones tax offer will be carefully designed to encourage investment and new economic activity, supporting growth and jobs.
“In addition to the tax offer, planning flexibilities will remove a significant barrier to economic growth, and together tax and planning flexibilities will enable businesses to benefit from the positive effects of co-locating (also known as “agglomeration effects”).
Rollout timetable vague
Simon Clark, the Secretary of State for the Department for Levelling Up, Housing and Communities, who is MP for Middlesbrough South and East Cleveland, will shortly set out the selection criteria to become an Investment Zone, and the process for designating sites within it.
“We have written to local leaders in every part of England to invite them to begin discussions with government to agree Investment Zone(s) in that area. The areas announced today are the areas keen to be involved now, with more to come,” the government said yesterday. “We intend to work with the devolved administrations and other local partners to deliver Investment Zones across all parts of the UK as quickly as possible.”
Quite what the government means by “as quickly as possible” is unclear. In its statement, the government pointed to its Freeports programme, claiming it has already shown how targeted tax reliefs and support can bring together the public and private sector to begin to transform areas in need of levelling up.
But if the Freeport roll out is a gauge for the delivery of the new Investment Zones, we could be kept waiting for their introduction. Morecambe and Lunesdale Conservative MP David Morris has been campaigning for Heysham to become a Freeport for years, even meeting Liz Truss in 2019, then Secretary of State for International Trade and President of the Board of Trade, to discuss the proposal.
Despite his long-held hopes the area will secure Freeport status, there seems little movement toward that goal in the public arena, and their has been vocal criticism of the scheme, although this has been challenged by those involved in its development.
Web Links
INVESTMENT ZONES
• HM Government: Chancellor announces new Growth Plan with biggest package of tax cuts in generations
• HM Treasury: The Growth Plan 2022: Investment Zones factsheet| Published 23 September 2022
FREEPORTS
• Freeports – Government information and guidance on Freeports operating within England
• David Morris: Prime Minister’s deal means Freeport for Heysham
“The Prime Minister’s Brexit deal means that the port in Heysham could be upgraded to a Freeport when we leave the European Union,” Morris claimed in 2019
• The Guardian: Free ports – or sleaze ports? Rishi Sunak’s dream of tax-free zones about to become reality |4th February 2021
• The Observer: Low taxes and levelling up: the great freeport experiment comes to Teesside | 13th November 2021
The Tories set great store by the special economic zone, but will it create thousands of jobs, or just be the economic damp squib experts predict?
• The Observer: ‘We just want the truth’: British coastal towns fight for answers over mystery sealife deaths | 3rd September 2022
Question mark over freeport in Tees Valley after ecological disaster puts communities in the north east of England at loggerheads with the government