Investment Zones announced today by Chancellor Kwasi Kwarteng could be created in North and North East Lincolnshire.
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. North Lincolnshire and North-East Lincolnshire 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.
North Lincolnshire Council leader Rob Waltham said:: “This latest announcement is further evidence of government support for our existing plans. It should mean we can move at a greater pace to enable businesses to invest and grow to create more jobs and drive wages even higher here in North Lincolnshire. We have already had a great deal of government cash to back our plans and these proposals will further simplify the investment process for businesses. It will make areas of the county more attractive and will ensure speed of delivery.
“We will work with government to ensure we can take advantage of these plans for the people in North Lincolnshire, attracting additional investment, creating new jobs and supercharging wages.”
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 South Bank. 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..”
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 North Bank councils are also included on today’s list. 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. 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 South Bank council is 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.
Cllr Waltham said other tax-cutting moves announced today by Mr Kwarteng amounted to a significant boost for the local economy and would help people through the cost-of-living crisis. He added: “Along with the measure to create more jobs and increase wages, these plans will also put more money in people’s back pockets. Faced with the increased cost of living, these changes will ensure those people working on the steelworks and in factories across the area, along with nurses and teachers, will get some extra cash every month we know will be spent supporting local shops, pubs and restaurants.”
Cllr Philip Jackson, leader of North East Lincolnshire Council, said: “Along with our other bids in to the Levelling Up Fund, the potential benefits for North East Lincolnshire are huge, and would make our industrial sites even more attractive to investors.
“Thanks to the support from Government, we have already invested a huge amount in our business community, and have lots of businesses interested in what we have here. To have the tax benefits on a potential range of sites in North East Lincolnshire as well would be highly desirable for any investing business.
“We are looking forward to having productive discussions with Government in the coming weeks and months to try to secure that Investment Zone status and boost business growth and wages for local people.”
Cleethorpes MP Martin Vickers welcomed the Chancellor’s mini-budget: “I’m very supportive of many of the measures that are being proposed.” I think the one that is of particular relevance to my constituency and to the wider Lincolnshire area are the proposed investment zones.”
“I’m pleased that both North and North East Lincolnshire Councils have indicated their interest,” he added. “I think overall, it’s good news for the Grimsby and Cleethorpes area.”