As a key part of the government’s levelling-up plans and focus on growth, the spring Budget announced a scaled-back version of the Liz Truss administration’s previous investment zones.
What are investment zones?
They are targeted areas (see below) which, to drive growth and innovation, will receive up to £80 million funding over five years. This funding can be used to support a range of initiatives including options to offer:
- specific tax incentives (potentially including full stamp duty land tax relief, complete business rates relief, first year 100% capital allowances relief, allowances to encourage building and relief on employer national insurance contributions) and specific regulatory rules.
- funding of up to £35m for a range of initiatives including to support skills, research and innovation, start-ups and infrastructure.
Investment zones will also be provided with support and guidance from central government on core policies including export support, planning and infrastructure. There will also be an option to retain business rate growth over an agreed baseline for 25 years.
The intention is to empower “bold and imaginative” partnerships – business clusters - between local governments and universities (and other research institutions). A cluster is expected to drive growth in at least one key sector – green industries, digital technologies, life sciences, creative industries, and advanced manufacturing.
As described by Universities UK, universities, being:
- innovation and enterprise factories
- engines of opportunity
- magnets for collaboration, partnership, and investment
- multipliers and value adders to every pound invested in them
and having significant land, facilities and academic know-how and expertise, they are central to the success of such zones.
Where will the investment zones be?
The following 8 areas were shortlisted in England:
- Greater Manchester
- Liverpool City Region
- North-east
- South Yorkshire
- Tees Valley
- West Midlands
- East Midlands
- West Yorkshire
There will also be at least one zone in each of Scotland, Wales and Northern Ireland.
Given the government’s aim to rebalance research, investment and development funding, notably all are outside of London, Cambridge, Oxford and the wider south- east.
The chosen regions are also home to a number of research-intensive universities.
Next steps
Full technical guidance on the submission of proposals will be published in due course. The proposal will need to be co-signed by both the relevant lead Mayoral Combined Local Authority (or Upper Tier Local Authority) and a relevant local research institution. All proposals are required to include a degree of match funding from both the private sector and the relevant research institution.
The relevant areas have been invited to begin discussions with the Department for Levelling Up, Housing and Communities and HM Treasury and to begin work with those departments on developing an investment zone proposal.
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