Budget’s ‘game-changing investment zones mark major boost for North East’

The Chancellor’s first task in November was to bring financial stability to the market; his Budget now targets growth, writes Kevan Carrick, of JK Property Consultants LLP.

There wasn’t a lot of substance in the Budget for the property market in the North East; the changes appear macro in nature.

For example, the interventions to extend responsibility for transport and housing in the West Midlands and Manchester have created greater devolution to create city states.

The North East is well behind the curve in this context.

More directly,  I am delighted our region is to be the recipient of two of the 12 investment zones, in the Tees Valley Mayoral Combined Authority and North of Tyne Mayoral Combined Authority.

These game-changing zones are to ‘supercharge’ growth in hi-tech industries, and each will be linked to a university to stimulate regional growth and drive job creation.

The Government says the scheme, backed by £80 million investment over five years in each of the new high-growth zones, is designed to accelerate research and development in the UK’s most budding industries.

They will be focused on one of a series of key sectors – technology, creative industries, life sciences, advanced manufacturing and the green sector.

 

 

These new style investment zones can be spread over up to three sites with a total area of 600 hectares and must demonstrate how plans will support the transition to net-zero.

The combined authorities will be able to choose how to distribute cash grants and tax reliefs to businesses on the site or sites.

Local government will also be able to negotiate retention of business rates growth for up to 25 years in selected sites within the investment zones.

The zones will have access to a single five-year tax offer matching that available to freeports consisting of enhanced rates of capital allowance, structures and buildings allowance, and relief from stamp duty, business rates and employer National Insurance contributions.

It is estimated this will be worth £45 million, leaving £35 million available to spend on interventions to support business development.

Places that do not opt to make use of the maximum tax incentives can exchange the value for a greater amount of spend.

Proposals must also “demonstrate how they support the UK’s legal commitments to cut greenhouse gas emissions to net-zero by 2050 and achievement of the new legally binding environmental targets and be resilient to the effects of climate change.”

These are the more direct matters to affect property.

There is much more that will encourage investment in sustainability and business growth.

These interventions require business to participate, which, on success, will drive demand for property.

As a region, we are reaching a much-needed devolution proposal that will cover the whole of the region.

The success of this devolution requires a full partnership among local governance, business and academia.

The success at West Midlands and Manchester, now embarked with the next phase of devolution on city state management, is pointing the way to how this region can strive to achieve fresh growth and employment.

 

Kevan Carrick advised on the first wave of what were termed enterprise zones in the North East and recently advised on two proposed zones and development corporation proposals. He advised the Secretary of State for the Environment on the formation of the Tyne & Wear Development Corporation in 1986, and went on to advise on the delivery of major regeneration and development schemes