OPINION: “There is nothing ‘new’ about Investment Zones”

Written by Paul Clement

Amidst a shambolic governmental series of ‘fiscal events’ which have now resulted in almost all of Liz Truss’ economic policies being binned, there is at least one ‘new’ policy that appears to have survived amidst the wreckage.

Despite the turmoil and U-turns, Investment Zones (IZ’s) seem to have survived (so far!) and might yet became a cornerstone in the new PM’s future strategy. Mayoral and upper tier authorities have already been encouraged to express an interest in becoming one of the 24 ‘new’ zones which promise low-tax, low-regulation environments.

However, lest we forget that the idea is not actually ‘new’ at all. Previously called Enterprise Zones, (EZ’s), they were one of the Thatcher government’s early interventions and featured again amongst New Labour’s regional programme and amidst the coalition’s localism agenda. They are another example of this country’s series of experimental approaches to economic development which dates back decades. So, the government needs to learn the lessons from the past and understand why they have continued as an experiment rather than becoming embedded in the way in which we do things.

Perhaps even more so than before, this time they have been rushed in with little preparation or consultation, leaving applicants with only 2-weeks in which to apply. That rush felt more like a knee-jerk (intended headline-grabbing) policy rather than a strategically thought-through part of any national programme for growth – mind you, that was the case with most of Truss’ agenda! Each time they have been introduced previously, EZ’s have ended up being criticised for merely moving economic activity around (e.g., a business relocating to a lower tax regime rather than a new firm starting-up), failing to create the new jobs promised and leaving behind higher-tax, declining areas beyond.

But this time there is a new fear, a much more important factor amongst voters now than before. That is the environment and the fear that vast new economic areas may be built at the expense of areas that ought to be preserved. This element is best explained by the other major criticism of the EZ’s of the past – that they by-pass local communities, develop despite local democracy, and ride rough-shod over planning and other associated restraints.

IZ’s are no more ‘new’ than is Liz Truss’ ‘new’ government. As she has spectacularly demonstrated, growth is important, but it comes with significant consequences. Let’s hope that, this time, the policy develops with more caution and with real attention to local needs.