Labour has accused the government of pushing forward with low-tax, low-regulation investment zones without any evidence they will boost the economy.
The flagship planning policy is one of the last scraps of Liz Truss’s mini-Budget left after new chancellor Jeremy Hunt reversed most of the prime minister’s tax-cutting measures.
Investment Zones have reportedly caused concern in the Treasury as they could end up costing billions of pounds in lost taxes due to business rates relief.
Nature campaigners are worried by the prospect of loosened environmental regulations in the zones, while reports have said other planning restrictions such as affordable housing figures and height restrictions could be lifted in the name of attracting investment.
Shadow communities secretary Lisa Nandy accused ministers of pushing ahead with the controversial measures without checking whether they will “work or not”.
During communities questions in the Commons, Ms Nandy pressed levelling up, housing and communities secretary Simon Clarke to share how bids for investment zones will create growth, describing the policy as the “only thing left of this bin fire of a budget”.
Ms Nandy added: “Can he tell us what assessment he has made of the amount of growth they will generate by the end of 2024? And will it be enough to offset the £26 billion he and his friends have just added to people’s mortgages?”
Mr Clarke said Labour’s understanding was “back to front” as bids to host investment zones were still being considered and no estimate of their success was yet available.
“Oh my word, he hasn’t done an assessment has he?” Ms Nandy responded: “This is literally the only policy they have got left, and he hasn’t checked whether it is going to work or not.”
She added: “The truth is, isn’t it, that the only thing that is growing under this government is the size of people’s mortgage payments?”
The communities secretary said: “I am afraid she is asking me to evaluate the impact of bids which we only received on Friday.
“We are proposing investment zones because they are need to drive jobs and growth and opportunity, and councils can recognise that even if sadly the Labour frontbench cannot.”
Mr Clarke also confirmed that “new money” had been made available to fund the investment zones, adding that more details will come in the chancellor’s fiscal statement on 31 October.
At least 38 upper tier local authorities and mayoral authorities were considering applying for investment zones in their areas ahead the deadline for applications on 14 October. More than a dozen have confirmed that they have applied.
Ms Truss refused to put a cap on the number of zones to allow despite warnings from Treasury officials that they could cost up to £12bn in lost taxes, according to the Financial Times.
