Budget 2023: Jeremy Hunt to create 12 new low-tax ‘investment zones’ across UK

Jeremy Hunt is set to announce a dozen new low-tax “investment zones” across Britain at this week’s Budget in a bid to boost growth and help “level up” areas outside of London.

The chancellor is expected to reveal 12 zones clustered around universities – radically scaling back a scheme introduced by the former prime minister Liz Truss which saw hundreds of councils bid against each other.

The Treasury said each zone would get £80m of support over five years – including generous tax incentives to attract businesses to left-behind parts of the country.

The zones will be clustered around universities and research centres and will be focused on driving growth in key sectors – technology, creative industries, life sciences, manufacturing and the green sector.

Eight mayoralty areas in England – East Midlands, Greater Manchester, Liverpool City, North East, South Yorkshire, Tees Valley, West Midlands and West Yorkshire – have been shortlisted to host investment zones.

Rishi Sunak’s government is working with devolved administrations to establish the final four locations in Scotland, Wales and Northern Ireland.

The chancellor is also set to announce £100m of investment in research and development projects in Glasgow, Greater Manchester and the West Midlands, as well providing more funding for levelling up partnerships across England.

Saying he wanted to “supercharge growth” across the country, Mr Hunt said: “True levelling up must be about local wealth creation and local decision-making to unblock obstacles to regeneration.”

Hundreds of councils are thought to have spent £12.5m on bids to be part of a wider, low-tax, low-regulation investment zone scheme scrapped after Ms Truss was kicked out of No 10 in the autumn.

Some 626 bids were submitted in England, with councils estimated to have spent an average of £20,000 to £30,000. Labour said they had been “forced to waste millions of pounds” on a “Hunger Games-style approach”.

Henri Murison, chief executive of the Northern Powerhouse Partnership, said Mr Hunt’s scheme appeared to be a “marked improvement” on the previous Truss-era policy.

The influential figure said that by avoiding “a bidding-style competition and going straight to combined authorities, the government has avoided repeating previous mistakes”.

The move to boost “budding industries” comes after the government was forced to step in to facilitate the sale of the UK arm of the collapsed Silicon Valley Bank to HSBC to prevent dozens of tech companies being “wiped out”.

Sir Keir Starmer has challenged the chancellor to get the UK “off this path of managed decline” ahead of Wednesday’s Budget.

The Labour leader urged Mr Hunt to match his party’s ambition to secure the highest sustained growth in the G7 group of advanced economies.

Criticising the stalling economy under the Tory government, Labour pointed to data showing there are 3,000 fewer high-growth businesses in the UK than there were five years ago.

Sir Keir said: “This week the government has a real opportunity to show they have the ambition and competence to govern. Either they show some proper leadership and get our country off this path of managed decline or stand aside for an incoming Labour government.”