Hunt, the Autumn Statement and the rebirth of investment zones

For a short period during chancellor Jeremy Hunt’s Autumn Statement speech, it seemed that investment zones had survived the cull of former prime minister Liz Truss’s ill-fated growth policies. But the small print revealed otherwise – and any hard work from parties interested in the original proposals looks to have been wasted effort. Hunt said the government will “change our approach to investment zones”, adding that the initiative “will now focus on leveraging our research strengths, to help build clusters for our new growth industries”. The British Property Federation’s boss, Melanie Leech, counted this as a win. “The government rightly remains committed to levelling up and to delivering the homes we need across the country, and we are pleased to see the retention of investment zones,” she said. But the text of the Autumn Statement – not Hunt’s speech, but the document published by the Treasury simultaneously – makes clear that the original investment zone proposition has been all but abandoned. Wasted effort After Truss confirmed plans for her vision of investment zones – areas in which regulation, planning rules and taxes seen to stymie growth would be swept away – some 41 local authorities submitted bids for more than 200 zones, ranging from town centres and former industrial heartlands to farming communities fallen on tough times. But the Treasury’s document says the government will “refocus” the programme, adding: “The existing expressions of interest will therefore not be taken forward. The government is grateful to local authorities for their work to develop proposals.” To quote one person closely involved with a bid: “Well, that was a colossal waste of time, wasn’t it?” “Many will feel disappointed by their scrapping,” said JLL’s head of office agency for the UK’s regions, Jeff Pearey. “Investment zones may not have delivered what was suggested in the ‘mini-Budget’, but they were an idea of some promise and at least worthy of exploration.”   Others are more angry than disappointed. “Investment zones were a great idea,” said Alistair Watson, real estate partner at Taylor Wessing. “They should have been tested. Local planning authorities that need investment showed great energy, turnaround time and commitment to that process.” And others are less upset. “Details on the initial expression of interest call were sketchy,” said Capital & Centric co-founder Tim Heatley. “Many expected them to be ditched entirely on the bonfire of other items from the Growth Plan.” “Investment zones as they were previously conceived were uncosted and unlikely to have boosted growth in a sustainable way,” said Jessica Bowles, director of strategy at Bruntwood. New vision Bowles is more interested in the new creation that bears the name “investment zones” – the university-focused scheme that Hunt has pledged to deliver. The Autumn Statement document offered some idea of the direction of travel: “The government will use this programme to catalyse a limited number of the highest-potential knowledge-intensive growth clusters, including through leveraging local research strengths. “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, with the first clusters to be announced in the coming months.” All of which is good news for the BPF and its own proposals for Town Centre Investment Zones, which are more closely aligned with Michael Gove’s vision of levelling up than the original investment zones proposals. In response to Hunt’s statement, Leech added: “The BPF has been working with a number of local authorities to develop a model for Town Centre Investment Zones, and we look forward to sharing our work and building on it with the government.” Under the new vision, investment zones’ focus on “research” and “knowledge-intensive” industries means they are likely to be a fillip for science parks and lab space and tied closely to R&D. Jen Siebrits, CBRE Advisory Services’ head of UK research, said: “The chancellor has increased the research and development budget by £20bn as part of a package to help the UK become a ‘science superpower’. “The shift of focus of investment zones will reassure many that wider levelling up funding is set to continue and will match previous levels, along with a new commitment to create knowledge-intensive growth clusters.” Little wonder that this new incarnation appeals to Bowles. Bruntwood, through its SciTech arm, develops exactly the sort of asset that Hunt seems keen to be encouraging. “The idea of replacing [Truss’s investment zones] with something focused on the research strengths of universities and knowledge-intensive growth clusters is potentially very exciting,” Bowles said, “particularly if it is aligned with the chancellor’s pledge to help turn world-class ideas into world-class companies.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Photo: Cambridge Science Park © Scott Brownrigg