The chancellor Jeremy Hunt has confirmed plans for 12 low-tax “investment zones” across the UK in a scaled-back version of a policy originally announced by former prime minister Liz Truss last year.
Eight places in England outside the south-east have been earmarked for new areas with specific tax and regulatory rules to drive growth, while four others will be created in Scotland, Wales and Northern Ireland.
The zones will aim to create new business clusters, focused around universities and research institutions in “priority” sectors of digital and tech, life sciences, advanced manufacturing, green and creative industries.
Each will receive £80mn of “flexible” support from the government over five years, split between tax incentives and investment such as in skills and infrastructure aimed at attracting companies.
The announcement represents a significant scaling back of the original proposals unveiled by Truss in the autumn, however, which could have created hundreds of such zones.
Hunt likened them to “12 new Canary Wharfs”, a reference to the regeneration of London’s Docklands under the Conservative government of the 1980s.
In England the proposed zones will be in Liverpool, Greater Manchester, South Yorkshire, West Yorkshire, Tees Valley and the West Midlands, all of which already have directly elected mayors, as well as the new East Midlands and North East mayoralties, which are due to be created next year.
The government said its approach aligned with its “levelling up” commitment to rebalance R&D spending outside the south-east. The zones are expected to create partnerships between local leaders and universities or research institutions.
The tax incentives applied to the zones include full stamp duty land tax relief, 100 per cent business rates relief, 100 per cent first-year capital allowance, increased structures and buildings allowance and relief on employer national insurance contributions.
The latter would reduce employer tax contributions for employees spending 60 per cent of their time working at the site, on earnings up to £25,000 a year.
Under the previous proposals, ministers had hinted at planning freedoms and exemption from some environmental standards. However, the latest policy paper on the zones said the government was “not imposing a top-down solution” where planning is concerned.
Whitehall would advise local authorities on how to “strengthen and align” their approach, it added, potentially with a view to creating local development orders, existing mechanisms used to accelerate planning processes.
“Investment zones will operate within current regulatory frameworks and be expected to maintain high environmental standards,” it said.
Dr Annette Bramley, director of the N8 partnership of northern research universities, said the support was welcome, “particularly the recognition of the importance of universities across the north of England in unlocking the potential of key future sectors for our economy and achieving net zero”.
Hunt said the zones would mean “more control for local communities over their economic destiny” and were announced alongside beefed-up devolution deals for Greater Manchester and the West Midlands.
Professor Simon Collinson, deputy pro-vice-chancellor of the University of Birmingham, said the zone was “very good news” for the West Midlands, but would need to overcome hurdles, including the need to “leverage” the new funds “to attract private sector investment”.