Chancellor Jeremy Hunt has unveiled new investment zones across the UK, which he labelled ’12 potential Canary Wharfs’ in his Budget speech.
They will be located in East Midlands, Manchester, Liverpool, the Northeast, South Yorkshire, Tees Valley, West Midlands and West Yorkshire, with each zone receiving £80m over five years. The devolved nations will also receive at least one investment zone each.
Jupiter Asset Management portfolio manager Richard Buxton said: “Measures to tackle low business investment and the large inactive workforce were at the heart of this Budget. 12 new investment zones had been well trailed, and consulting on greater regional financial autonomy, although the benefits of such moves are likely to be years in the making.”
The advantages of the zones include access to grant funding to improve infrastructure, as well as a range of tax breaks and relief.
David Kaye, CEO of Puma Investments, said: “The new local investment zones that were given the go-ahead today to drive business investment in key areas such as the tech sector and creative industries will help to level up the country. However, as often with the planning system, the devil will be in the detail and that remains to be set out.
“We hope sufficient thought will be given as to how this initiative will create conditions for meaningful investment right across the UK, and not prove to be a case of picking ‘winners’ at the expense of other regions.”
Good news for infrastructure investors
Welcoming the announcement, Fergus Laird, president of the Commercial Property Network and investment partner at Naylors Gavin Black, said: “In the Northeast, we have a shortage of good quality warehousing, distribution centres and factories, and so it is very pleasing to see the chancellor announce a new investment zone for the region. It will only serve to attract investment and jobs.
“One of the biggest issues facing the commercial property sector is the laborious planning system and a lack of financial incentives for new developments. However, investment zones have the potential to unlock real levelling up by making it quicker and easier for developments to get relevant permissions, alongside providing significant financial incentives in terms of preferable access to funding, zero-rated business rates and enhanced structures and buildings allowance.”
He added: “I am at MIPIM – an event for real estate investors – and investment zones are a hot topic of conversation with investors. The big test of their effectiveness will be the speed at which development begins. They have been on the agenda for a while now and we need to see action sooner rather than later if the UK is to compete with other countries which are also doing their utmost to attract investment. It would be a huge shame to waste this opportunity.”
The zones will also help to grow the tech sector in the North, according to Interactive Investor chief executive Richard Wilson.
He said: “We are encouraged to see today’s budget restate the government’s levelling up agenda, as we continue to invest in talent and technology in the North.
“As well as developing our Leeds office, we are one of many growing businesses who have made a firm commitment to Manchester, with its thriving fintech space. Over 400 of our staff are now based at our Manchester headquarters, and our headcount is rising in line with our significant ambition. We strongly welcome government support for the region as we attract and develop talent at pace. We were there long before the term ‘levelling up’ made it into the Conservative 2019 manifesto, and there is a lot to do.”
While the government seeks to boost investment outside of London, Roger Clarke, chief executive of real estate stock exchange IPSX, said the Budget does little to help retain listed companies in the capital.
He said: “None of the measures put forward adequately address the evident issues in the market that have seen London lose ground to New York in attracting and retaining listed companies. If the government is serious about supporting London’s capital markets performance then we must move towards implementing the sound proposals outlined in the Edinburgh reforms, including a reversal of the Mifid II policy which effectively decimated opportunities for small and mid-cap companies to access investors.
“Cutting the regulatory red tape involved, which hinders trading volumes and forces investors to focus on large-cap stocks, would make it more commercially viable for a far broader range of companies of all shapes and sizes to float, and ideally foster an environment where innovative firms choose to stay and grow in London, to the benefit of the wider investment ecosystem and economy.”