What is an investment zone and where will they be in the North West?
Chancellor Kwasi Kwarteng announced the creation of ‘investment zones’ in his announcement of the government’s mini-budget on Friday.
Located throughout the country, investment zones are meant to stimulate and accelerate economic growth through a streamlined planning process and variety of tax incentives.
The Department for Levelling Up, Communities and Housing is set to reveal more detail about investment zones later this autumn. But in the meantime, here is what we know.
What kind of tax benefits will an investment zone have?
According to The Growth Plan 2022, companies in investment zones will enjoy the following tax incentives over the course of 10 years:
- 100% business rates relief on newly opened premises and for select companies that expand in these zones. Councils will receive all of the business rates growth above a certain threshold for 25 years from companies in the investment zones
- 100% first year allowance on spending on plant and machinery assets
- Capability to reduce taxable profits by 20% of the cost of non-residential investment a year, with the idea that the companies can receive 100% relief of their cost investment during the course of five years
- No National Insurance contribution requirement for new employees in the investment zone that earn up to £50,270 a year
- No Stamp Duty Land Tax on land and buildings that are to be used for commercial purposes or for that sort of development
- No Stamp Duty Land Tax on land or buildings purchased for new residential projects
How are sites chosen to become investment zones?
The government will work with local authorities and mayoral combined authorities to come up with a list of investment zones. These areas will be selected based on their potential economic growth and capacity to bring forward land for development.
The government is talking with 38 authorities at the moment on the investment zone scheme. Each authority has the power to issue an ‘expression of interest’ for a site or, as the case may be, sites.
What are some sites being considered?
The Growth Plan 2022 teases the following North West locations as possible contenders for investment zone status:
- Blackpool Airport
- Blackpool Town Centre
- Ellesmere Port Industrial Area
- Sites in Barrow-in-Furness
- Workington and the Energy Coast
It is likely that Atom Valley, a Mayoral Development Zone in Greater Manchester, will also be a contender if put forward by the combined authority.
What local authorities is the government speaking with?
The government is speaking with the following North West authorities about investment zones:
- Blackpool Council
- Cheshire West and Chester Council
- Cumbria County Council
- Greater Manchester Combined Authority
- Lancashire County Council
- Liverpool City Region
How do councils feel about this?
Cheshire West and Chester Council is decidedly intrigued by the investment zone potential of Ellesmere Port. However, in a press release the council also said it would not support any proposals that “impact negatively on the rights of workers or the health and safety of the local community”.
CWAC Leader Cllr Louise Gittins said there were “still many details to work through” regarding investment zones.
“We look forward to further discussions with government officials to determine a model for an investment zone that meets the needs of our local economy and our vision of a greener, fairer, stronger borough,” she said.
“I see this as an opportunity to speed our transition to the low carbon economy, securing the investment we need to create more high-quality skilled jobs and support our ambitions for this area to benefit our communities for decades to come.”
Blackpool Council Leader Cllr Lynn Williams said the area was “pleased to be named on the government’s investment zones list”.
Williams continued: “We look forward to working with them to determine how these new zones can further accelerate the work that has already been achieved in Blackpool in boosting the economy and growing the number of quality jobs.”
Lancashire County Council welcomed the government’s investment zone opportunity.
Leader Clllr Phillippa Williamson said: “We are delighted that Lancashire has been included in the initial wave of investment zone discussions given the opportunities that it will bring to attract further investment, unlock development and economic activity boosting jobs and growth to our county through a targeted approach.
“There is massive potential across Lancashire and we are ready to move at pace using our existing development pipeline as well as new, ambitious opportunities including those aligned to the development of our historic new ‘Lancashire 2050’ strategy.
“In all, our current pipeline of major development and infrastructure projects has an estimated value of more than £20 billion and we are at an advanced stage of developing further strategic investment opportunities with a wide range of national and regional partners.”
Williamson highlighted the county’s four Enterprize Zones, in particular the Samlesbury Enterprise Zone, which is under the county council’s leadership.
Samlesbury Enterprise Zone is “rapidly developing as a high-quality base and home to world-class businesses in cutting-edge innovation, technology and advanced manufacturing,” Williamson said.
She continued: “Samlesbury has also been identified as the preferred location for the National Cyber Force, which gives Lancashire a once in a generation opportunity to become the most data-aware and data-mature economy in the UK which will bring huge opportunities to our people and businesses.
“We are very much looking forward to working with government on the development of investment zones and to the benefit it will bring Lancashire,” Williamson concluded.
Cumbria County Council was also optimistic about investment zones, with Leader Cllr Stewart Young saying: “I look forward to learning more about this initiative and showcasing to Government the many opportunities we have in Cumbria to assist them in their ambitious plans.”
The leaders of the two Cumbria-area shadow authorities also weighed in on the investment zones, since these are likely to be implemented after they replace the county council in April 2023.
Cumberland Shadow Authority Leader Cllr Mark Fryer said: “This announcement allows Cumberland to further its reputation as a great place to do business and for us to support the delivery of our new council plan, in particular, understanding how investment zones can develop opportunities for local businesses and inward investors to create quality jobs for residents.”
Westmorland and Furness Shadow Authority Leader Cllr Jonathan Brook was enthusiastic about the prospect of an investment zone.
“This is positive news and anything that will help us to drive economic growth and increase opportunities in our area is to be welcomed,” Brook said.
“The new Westmorland and Furness Council is developing priorities to ensure the new authority will be a great place to work and to live, and we have already identified areas around creating a sustainable economy, growing the workforce and creating better access to jobs among our ambitions.
“Anything that helps to support that work will be very beneficial and we look forward to learning more about the investment zone proposals from government.’’
What do investment zones mean for freeports?
From The Growth Plan 2022: “The government remains committed to the progress of the freeports programme. The government will work with local partners involved in current and prospective Freeports to consider whether and how the investment zones offer can help to support their objectives, as part of the wider process for identifying investment zones. This will ensure that both programmes complement one another.”
This change of dir ration by the new government is looking good – really positive
By Stuart wood
Whilst I do not necessarily agree with these low-tax zones being a thing, my opinion if the government are to pursue this strategy and make it successful would be that the following areas in the North West should become them: Wallasey & Birkenhead as a joint authority, Carlisle, Warrington, Salford & Crewe.
By Verticality
All good news for Ellesmere port, but what about Winsford, Northwich, Middlewhich and Crewe?
Do the Government even Know we exist??
By Anonymous
In essence Freeports and Low Tax Investment Zones will be able to offer the same tax incentives : Port Operators will in effect have responsibilities over 45 km from port of Entry eg Liverpool North West and then the winning Investment Zones will have responsibility for their areas which will “ complement “ each other, In effect doesn’t this mean that Freeport Free Trade Zones have at a stroke expanded their spheres of influence not only in the North West but also in the other English Freeport zones without any parliamentary or other debate?
Tony Houghton Solicitor
By Tony Houghton
Such schemes are shown to increase investment, but deter investment outside the boundary. These zones should include our declining Town Centres to boost growth where infrastructure and services already exist. The 1990s inner-city zones in Castlefield, Holbeck, London Docklands drove urban growth and laid the foundation for great communities. The sprawling low-density 1980s style business parks shouldn’t be relied on alone.
By Town Centres
This scheme should be used to attract inward investment to the satellite towns of the major cities within the UK. Therefore the above suggestion of Wallasey & Birkenhead JA, Salford and Warrington seems sensible. With this investment, hopefully then we really will see the makings of a ‘Northern Powerhouse’.
By Powerhouse
We’re still under subsidy regulations under agreements with EU. How is any of this compatible with the De minimis agreed subsidies to business? Rate relief for 10 years would surely overshoot any existing allowances.
By Sceptic
What are criteria for investment zones. Ideally they should be located in areas of deprivation.
By TJL
Leave our green belt alone
By Brenda Robertson