Investment Zones announced today by Chancellor Kwasi Kwarteng could be created in Hull and the East Riding.
Unveiling the proposal as part of a new Growth Plan for the UK, he said the zones would offer targeted and time-limited tax cuts for businesses and feature “liberalised” planning rules aimed at speeding up new housing and commercial development. “If we really want to level up, we have to unleash the power of the private sector,” he told MPs.
Mr Kwarting said the government had started discussions with 80 local authorities about establishing new zones. Hull City Council and East Riding Council are both included in the list of authorities published this morning. It’s understood both were first contacted about the idea by Treasury officials on Tuesday.
Hull City Council leader Councillor Mike Ross said: ““The council was approached within the last few days to see if it would want to be part of the government’s Investment Zone programme. Today’s announcement from the government notes that Hull is being considered for the scheme.
“While detail on this new policy remains unclear, we will continue to engage with the government over the coming weeks to get more clarity on exactly how these zones will work, how they might bring forward investment and improvements in the city for the benefit of our residents and businesses and, ultimately, whether we want to progress further. Only if we feel it is in the interests of the city will we go forward with the programme.”
As yet, details of how the zones will work are limited but early indications suggest they will offer an enhanced version of incentives which already apply in around 40 Enterprise Zones initially created across the Humber under the coalition government as well as in so-called tax zones within the area covered by the Humber Freeport.
Although yet to become fully operational after being delayed for more than 12 months because of funding issues, the Freeport’s two tax zones on the North Bank are in Hull and Goole. They are being set up with specific incentives aimed at attracting new businesses and to stimulate new investment, including accelerating capital allowances for new plant and machinery, relief from stamp duty and land taxes, relief from business rates and relief from employer’s National Insurance contributions for the first three years of being operational.
Today’s announcement by Mr Kwarteng echoes many of those ideas, including stamp duty relief, capital allowance relief, 100 per cent business rate relief on newly occupied and expanded premises and local authorities receiving 100 per cent of the business rates growth above an agreed baseloine for 25 years. His tweak to the rules around National Insurance will see a zero rate for employer contributions on new employee earnings up to £50,270 per year.
The biggest change could be around planning with the government now saying the need for planning applications for development in the designated zones will be “minimised” and if they are required, the process will be “radically streamlined”. In an accompanying briefing paper, the Treasury adds: “We will set out further detail on the liberalised planning offer for Investment Zones in due course..”
The changes could end up mirroring what already happens on port land where operators are not required to apply for planning permission if a new development is directly linked to shipping and trading operations. A recent example in Hull is the giant new concerte storage silo constructed at William Wright Dock which was built without first having to secure approval from Hull City Council.
It’s not yet clear whether the new Investment Zones will simply be incorporated into the remit of the Humber Freeport but it would make logical sense as the region’s four local councils are all represented on the new company’s board and the two South Bank councils are also among the 38 local authorities listed today by the Treasury. What is evident is that another selection process is about to start with Levelling Up Secretary Simon Clarke expected to to set out the criteria to become an Investment Zone and the process for designating sites within in over the next few weeks.
Agreement on where they will eventually be looks likely to be a shared responsibility between Mr Clarke’s department and local leaders, whether they be council or Freeport directors. If a devolution deal is finally struck soon for a combined Hull and East Riding authority, the dynamic could change again.
The government says mayoral combined authorities hosting investment zones will receive a single local growth fund settlement in the next spending review period. Although neither Hull or the East Riding are pushing for an elected mayor, a long-awaited devolution deal here would almost certainly pave the way for the similar single funding settlement for the area as a whole.
Realistically, all the existing Freeport tax sites and several of the larger Enterprise Zone sites would fit the bill to become an Investment Zone instead. Elsewhere, the western docklands site in Hull could also become a contender if new sites are put forward as an option.
Hull’s cabinet recently gave the go-ahead for a new masterplan to be drawn up for the area between Hull Marina and William Wright Dock, taking in the Smith & Nephew site and the English Street industrial estate, with a view to exploring long-term development options. The impending closure of the factory and the council’s shift in focus towards Abert Dock as a possible location for a cruise ship terminal are both driving the need for a review of land use policy there.