An Investment Zone may be coming to somewhere near you!

Derbyshire County Council is intending to submit proposals for Investment Zones in Derbyshire. We do not know where these are yet. We think that residents need to know a bit more about them before any final decision is made. An Investment Zone may have a very big impact on its locality and also on businesses elsewhere.

An Investment Zone is designed to fast-track development and then provide tax incentives to businesses located there that businesses elsewhere don't get. But Investment Zones can be used for housing development as well providing benefits to housing developers.

The Government briefing says that Investment Zones will offer "a variety of tax, regulatory innovations and flexibilities, and planning simplifications" within the site boundaries. These include faster and more streamlined planning consent to reduce "many … burdensome requirements" including:

• Removal of "burdensome EU requirements which .... do not necessarily protect the environment"
• "Focus developer contributions on essential infrastructure requirements"
• "Reduce … consultation with statutory bodies" (ie Highways, Flood Authority, etc)
• "Relax key national and local policy requirements"

WE THINK THIS PLANNING RELAXATION WILL RESULT IN ENVIRONMENTAL DEGRADATION AND REDUCE FURTHER THE CONTROL PEOPLE HAVE OVER THEIR IMMEDIATE ENVIRONMENT.

But we also think that the tax incentives will lead to a them and us business environment where businesses outside Investment Zones are subsidizing those inside Investment Zones. Businesses in Investment Zones will have 10-year tax incentives including the following that are under consideration:

• 100% business rate relief
• 100% capital allowance in the first year for qualifying plant and machinery expenditure
• Employer National Insurance contribution relief for employees earning up to £50,270 per year and working at the site for at least 60% or their time
• 100% stamp duty land tax relief including land purchased for residential development.

WE BELIEVE THESE SUBSIDIES ARE UNFAIR AND ANTICOMPETITIVE. For example, what happens to local shops if Amazon sets up in an Investment Zone? Does Amazon get even more advantage from 100% business rate and national insurance contribution relief, quite apart from capital allowances, stamp duty and the building allowance relief?

We are concerned that Investment Zones will just divert investment away from other locations and will do so in a manner that damages the environment and competing businesses outside such zones. But in practice, it is possible that businesses in Investment Zones will just pay higher rental charges because they are not paying their fair share to support government spending. So the outcome may be that the owners of property in Investment Zones achieve higher incomes. Is the Investment Zone policy therefore yet another way of favouring the property sector which is a major source of Conservative Party funds?

Arbitrary removal of regulation and arbitrary tax relief distort investment decision making leading to worse economic outcomes in the long run because investment takes place in the wrong place and for the wrong reasons.