Spring Budget 2023: Hunt unveils “refocused” Investment Zone programme and business rates deals for mayoral combined authorities
The Chancellor of the Exchequer, Jeremy Hunt, has unveiled in the Spring Budget 2023 a "refocused" Investment Zones programme that will see 12 areas handed £80m in support, and revealed plans to allow two Mayoral Combined Authorities to retain 100% of their business rates.
Delivering the Budget to the Commons today (15 March), Hunt said he wished to "boost mayors' financial autonomy" and announced the Greater Manchester and West Midlands Combined Authorities are set to agree on a deal with the Government that will allow them to retain 100% of their business rates.
Hunt announced that the 12 Investment Zones would be delivered across the UK, adding that each would have access to interventions worth £80m over five years, including tax reliefs and grant funding.
The zones will be angled towards driving the growth of at least one of five growth areas the Government has identified (green industries, digital technologies, life sciences, creative industries and advanced manufacturing).
The areas will be subject to a single five-year tax offer consisting of enhanced rates of Capital Allowance, Structures and Buildings Allowance, and relief from Stamp Duty Land Tax, Business Rates and Employer National Insurance Contributions.
However, the Treasury document detailing the Budget notes that councils that apply must set out how local partners will use the levers available to propel growth in the identified sectors, identify private sector match funding, and use the local planning system to support growth.
In addition, the document notes that the applications will be developed collaboratively by Mayoral Combined Authorities (MCAs) – working in partnership with local universities, councils and businesses – and central Government.
'Local partners' within eight pre-set areas will be invited to discuss hosting an Investment Zone with the Department for Levelling Up, Housing and Communities. The areas are:
- The proposed East Midlands Mayoral Combined County Authority
- Greater Manchester Mayoral Combined Authority
- Liverpool City Region Mayoral Combined Authority
- the proposed North East Mayoral Combined Authority
- South Yorkshire Mayoral Combined Authority
- Tees Valley Mayoral Combined Authority
- West Midlands Mayoral Combined Authority
- West Yorkshire Mayoral Combined Authority.
Proposals will be led by the relevant MCA.
Hunt's predecessor Kwasi Kwarteng first introduced the Investment Zone concept in his controversial 'mini-budget' delivered in September 2022. At the time, the Government said the zones would benefit from liberalised planning rules. Up to 38 local authorities applied to be selected for the scheme under the Truss Government.
The Spring Budget 2023 document produced by the Threasury says that the Government intends to expand the local retention of business rates to more areas in the next Parliament. In addition, the Government plans to conduct a consultation on transferring responsibilities for local economic development from local enterprise partnerships to local authorities from April 2024.
Hunt meanwhile announced plans for £161m in funding for regeneration projects, specifically in Mayoral Combined Authorities and the Greater London Authority.
Alongside the funding for MCAs, the Chancellor also announced a further £200m for 'high quality' local regeneration projects in England.
A third round of the Levelling Up Fund, which will amount to £1bn, was also confirmed.
In addition, £400m has been set aside for new 'Levelling Up Partnerships' to regenerate 20 places across England. These will help identify areas that could benefit from levelling up, according to the Government.
A second round of transport funding totalling £8.8 billion over the next five years has been announced. An extra £200m to help repair potholes was also confirmed.
The Spring Budget 2023 document reveals that the Government is set to launch further support to tackle 'nutrient neutrality' obligations issues that some local planning authorities and housing developers are tackling.
High levels of nutrient pollution in protected sites are stalling housing delivery across 74 local planning authorities, an issue that the Local Government Association recently warned is hindering the construction of an estimated 20,000 homes.
"DLUHC will shortly launch a call for evidence from Local Planning Authorities, backed by a commitment to provide funding for high quality, locally-led nutrient mitigation schemes," the Spring Budget 2023 document says.
Adam Carey
