Business & Economy
Guest contributor: A fresh opportunity to unlock growth
May 12, 2023
Words by Rhiannon Bearne
Executive director – policy and representation at the North East England Chamber of Commerce
Promising to “catalyse high-potential, knowledge-intensive growth clusters”, Chancellor Jeremy Hunt used his recent Spring Budget to afford the region double investment zone status. Here, Rhiannon Bearne, North East England Chamber of Commerce executive director – policy and representation, assesses the plans’ potential.
Much was made of the resurrected investment zones programme in the Spring Budget.
Originally part of the short-lived Truss administration, the new announcement identified eight areas outside the South East and South West eligible for £80 million funding over five years, to drive ‘levelling-up’ and boost productivity.
Both the Tees Valley Mayoral Combined Authority and the new North East Mayoral Combined Authority were selected, in what was a very strong showing for the region.
The basic idea of an investment zone – a geographic area with enhanced funding, powers and freedoms to attract or accelerate high-growth business activity – is not new.
Consequently, there is an established body of work looking at the strengths and weaknesses of the model, not least the fact that similar zones in the past have often displaced economic activity within an area, rather than generating new GVA.
However, the new model does present a fresh opportunity to look at growth and innovation from a place-based perspective.
With this in mind, there are some strengths to the new programme.
A requirement for strong partnerships underpinning bids to involve mayoral combined authorities, relevant local authorities and universities is welcome, as is the need to evidence strong business engagement.
A commitment to plans being co-developed through an iterative process with the Government is also positive.
The focus on five priority sectors from digital and tech through to advanced manufacturing is good for the UK, but particularly good for the North East and its established strengths.
As the employer representative body leading the delivery of two local skills improvement plans for the combined authority areas, we were also pleased to see the employer voice featuring strongly in the programme.
There are, however, some limits; £80 million split between a mix of capital and revenue over a five-year timeframe is naturally constrained, especially when eligible tax reliefs are deducted from the total funding available.
The policy outline is clear that “stability and longevity of commitment are key to maximising investment”, whether Government or private sector, and that plans should therefore maximise “alignment and leverage of existing policy”.
However, this is easier said than done in an environment where policy change occurs with much greater frequency than the programme itself seems to envisage.
Will the new investment zones solve the UK’s productivity puzzle?
Not on their own.
But do they represent a step forward in helping local places level up?
By being built on strong partnerships and backed by strong institutions, there’s a real opportunity to unlock talent, entrepreneurship and innovation with a North East flair.
And, as the voice of business across the region, we look forward to being part of the conversation.