Industry and policymakers must collaborate to maximise the benefits of Investment Zones
Britain’s manufacturers are set to unlock tax and grant incentives if they embrace Investment Zones, established to drive enterprise growth, innovation and the creation of high-quality new jobs. A new report published today by Make UK and Barclays Corporate Banking, Investment Zones: Unlocking Growth in the UK, indicates that the sector backs the chancellor’s decision to extend the fiscal benefits of Investment Zones from five to ten years and say that it makes the scheme much more attractive for UK companies.
However, there is a strong case for further enhancing business awareness in Investment Zones with only two thirds of businesses currently aware of the policy and tax benefits, while a quarter of businesses remain unclear whether they meet the definition of advanced manufacturing – a key focus sector for the zones.
To ensure Investment Zones reach their full potential, policymakers should look to promote their incentives more widely – especially in areas where levelling up is a key focus. In particular, Government officials should target green and technology companies who may be unaware of what is on offer and the benefits they could reap.
Just over half (59%) of small businesses are aware of Investment Zones while 68% of medium companies know about them – compared to 85% of large firms. While there is still work to be done, this is an encouraging finding for the future of Investment Zones, as often smaller firms lack knowledge of government schemes, even those specifically set up to help them grow.
Amongst a raft of benefits, Investment Zones deliver Stamp Duty Land Tax relief, 100% Business Rates relief, Enhanced Capital Allowances, Accelerated Relief on Buildings and Structures, Zero Rate National Insurance Contributions and grants for Research and Innovation. The scheme also allows for grants to allow skills training, local infrastructure improvement, local enterprise and business support and can provide the funding to recruit a dedicated planning team for the zone.
Seven out of ten manufacturers reported that they would invest more in plant and machinery if they were in receipt of business rates relief. Half as many companies said they would increase investment in structures, as under normal circumstances increasing the value of the plant and machinery on site would inevitably raise the rateable value of the property.
Two in three companies say the extension to 10 years means the zones are a more attractive proposition while half of the sector say that relocation funding would increase participation in the scheme. Beyond Advanced Manufacturing, Digital and green industries are the next most favoured as appropriate sectors, with 68% suggesting digital while 59% say green companies are the best way forward.
Stephen Phipson, Make UK CEO, said: “To ensure maximum benefit for the sector, Investment Zones need to form part of an overarching long-term Industrial Strategy which is enshrined in statute so that it is not vulnerable to change with the political cycles. Government needs to continue to work with industry to find the best ways of making the manufacturing heartlands of the UK so even more good quality, highly paid jobs can be created through our vibrant sector.”
Lee Collinson, head of manufacturing, transport and logistics, Barclays Corporate Banking, said:“Investment Zones have the potential to support growth in both economic output and employment across the manufacturing sector. This growth can only be enhanced by raising awareness and ensuring that manufacturers understand the key benefits. Equally, as manufacturers are encouraged to explore the value Investment Zones can bring to their operations, policymakers also have a role to play to promote their benefits and ensure they are maximised.”