Investment zones to be quietly killed by Autumn Statement
The chancellor is set to kick Liz Truss’s flagship investment zones initiative into the long grass next week, despite hundreds of applications.
It is understood that there is a split within government over how far to pursue the plans. “There is some merit, but there is also the question of cost,” said one source.
With swingeing cuts expected in the 17 November Autumn Statement to fill the government’s £50bn fiscal hole, the idea of additional spending is not being looked at favourably by the Treasury.
The chancellor is set to kick Liz Truss’s flagship investment zones initiative into the long grass next week, despite hundreds of applications.
It is understood that there is a split within government over how far to pursue the plans. “There is some merit, but there is also the question of cost,” said one source.
With swingeing cuts expected in the 17 November Autumn Statement to fill the government’s £50bn fiscal hole, the idea of additional spending is not being looked at favourably by the Treasury.
Treasury figures estimated that the zones could cost up to £12bn each year in lost revenue.
But many will be disappointed if the scheme is abandoned. Authorities were given until 14 October to formally submit areas to be considered as investment zones. A total of 41 authorities submitted proposals, with most submitting multiple sites. Plymouth City Council submitted a total of 17, while Cornwall submitted 16.
The British Property Federation has advocated for a pilot scheme to test whether the regulation- and tax-light zones can improve growth.
However, levelling up secretary Michael Gove is understood to be sidelining the plans in favour of his own priorities, with the plans now “under review”.
Sources added that the government had been briefing about the demise of the policy in an attempt to see if there was an overwhelming appetite for them. While they do seem popular among the business community, it is understood the policy made little impact on ordinary voters.
The zones were intended to be the “shock troops of economic growth”, with relaxed planning and rules and sweeping tax exemptions. Under the original plans business rates and stamp duty would be lowered, with any income ring-fenced for the local area.
Under the Truss administration there was to be no limit to the number of zones that would be permitted, although the Treasury was understood to be keen to introduce a cap.
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