An investment zone that aims to drive business investment and create thousands of jobs will be set up in the North East with £80m of backing from the Government.
The region will be one of eight areas to host 12 investment zones set to be announced by Chancellor Jeremy Hunt in Wednesday’s Budget. A zone will also be established in the Tees Valley.
Former Prime Minister Liz Truss had initially hoped to set up around 100 zones with relaxed planning rules and lower tax regimes, but the Government has scaled back the plans.
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Leaders in the North East had last year hoped that investment zones around the Northumberland rail line and an “arc of energy innovation” including the banks of the Tyne, the Newcastle International Airport Business Park, Blyth Energy Central, and Lynefield Park in Lynemouth could create more than 20,000 jobs. It is not clear at this stage where the new North East innovation zone will be, with the Government saying that a deal will be agreed with the emerging North East mayoral authority by the end of this year.
Ministers said the zones were likely to now be clustered around research institutions like universities and focussed on creating jobs in key economic sectors that include technology, the creative industries, life sciences, advanced manufacturing and the green sector. Those sectors include some that have already been identified as target areas for growth by the North East LEP, and where the region has leading levels of expertise.
Government funding for each zone of £80m over five years will be available for tax relief but also to improve skills, provide specialist business support, improve the planning system, or for local infrastructure.
Mr Hunt said: “True levelling up must be about local wealth creation and local decision-making to unblock obstacles to regeneration. From unleashing opportunity through new Investment Zones, to a new approach to accelerating R&D in city regions, we are delivering on our key priority to supercharge growth across the country.”
Levelling Up Secretary Michael Gove said: “Levelling up means backing local growth across the UK, driving innovation to attract investment and putting power into the hands of local communities so they can reach their full potential. Our new investment zones and Levelling Up Partnerships will deliver more jobs, better services and more opportunities for local people.”
Eight places in England have been shortlisted to host Investment Zones, with the intention to agree plans with local politicians by the end of the year. Invest zones will be created in the North East, the Tees Valley, the East Midlands, Greater Manchester, the Liverpool city region, South Yorkshire, West Yorkshire and the West Midlands.
Reacting to the investment, Northern Powerhouse Partnership chief executive Henri Murison said: “This is a marked improvement on the investment zone policy, one which recognises the latent potential in these regions and gives devolved powers more ownership over their future destiny. While we’re looking forward to seeing more details on Wednesday, by avoiding a bidding-style competition and going straight to combined authorities, the Government has avoided repeating previous mistakes and I have every confidence that this will result in strong proposals being brought forward.
“The ability to retain the growth in business rates is fundamental for freeports and has been a key element of previous city deals. This enables the financing of investments to create economically successful ecosystems which otherwise would not be generating any tax – that is highly attractive to high value inward Investors as well as start-ups, including university spin outs.”
The North East was last year highlighted by two separate reports for its record of attracting inward investment from overseas companies. Figures from the Department for International Trade showed that inward investment to the North East created 5,843 new jobs, more than any other region outside London, despite being the smallest region in the UK.
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