Autumn statement: Investment zone bids will not be taken forward

Chancellor Jeremy Hunt has said all existing investment zone proposals will be dropped and the policy will be ‘refocused’ to benefit research ‘clusters’.

Delivering his Autumn Statement today Hunt did not ditch the investment zone plan of his predecessor Liz Truss entirely, but made clear that all existing local authority bids for the programme - which included a number of major housing schemes - will not be taken forward.

Hunt said he will keep the policy and focus it on “leveraging our research strengths” in a small number of locations. 

The Autumn Statement document said: “The government will use this [investment zones] programme to catalyse a limited number of the highest potential knowledge-intensive growth clusters, including through leveraging local research strengths.”

Knowledge clusters are usually locally organised groups, based at universities, research institutions and firms, that drive innovation. Hunt said that with his investment zones research will be “centred on universities in left behind areas to help build clusters for our new growth”. 

The zones had originally been designed to speed up economic growth through streamlined planning rules and tax breaks, largely by promoting development. Today’s Autumn Statement document does not, however, refer to planning or development in Investment Zones, and Ian Fletcher, director of policy (real estate) at the British Property Federation, said it was “fair to assume” that the policy was now not about development. 

Treasury documents said the Department for Levelling Up, Housing and Communities will “work closely with mayors, devolved administrations, local authorities, businesses and other local partners to consider how best to identify and support these clusters, driving growth while maintaining high environmental standards.” The first clusters would be announced “in the coming months”, it said.  

Existing expressions of interest will not be taken forward, the Treasury confirmed. Bids opened last month for upper-tier local authorities to express interest in hosting zones, which were announced in September’s ‘mini-budget’. 

Investment zones were a key policy for Truss, who wanted up to 200 across the country. The idea was they would have a simplified planning process, far-reaching tax incentives and lower regulations with the aim of stimulating or speeding up the development of residential and commercial sites. Major housing schemes put forward for investment zone status included the Otterpool Park Garden Town in Kent and the Tewkesbury Garden Village in Gloucestershire.

Businesses would have been encouraged to set up in the zones with low taxes, including holidays on business rates. The Treasury had calculated the zones could cost the public purse up to £12bn in lost tax revenues each year. 

Andrew Matthews, partner at accountancy MHA, ahead of the statement yesterday, said yesterday scrapping Truss’ plans for investment zones would be “an error”. 

“Rolling back Liz Truss’s proposed 200 investment zones across the UK would be harmful to boosting regional economic growth and local regeneration. Scrapping these zones would also have a knock on effect on the wider economy.”