Jeremy Hunt commits to 12 new ‘Canary Wharfs’

Speaking in the Commons today, Hunt said combined authorities would be invited to apply to become one of the dozen new Investment Zones.

As part of the deal, the Treasury would hand over £80 million in cash as well as tax relief, business retention rate, and skills training over a five-year period to each zone – equivalent to £960 million overall.

Hunt, who cited Canary Wharf and the redevelopment of Liverpool Docks as examples of mould-breaking regeneration schemes, said: ‘[These projects] transformed the lives of thousands of people. They showed what’s possible when entrepreneurs and government and local communities come together.’

In England, areas including the West Midlands, Greater Manchester and the Tees Valley will be asked to show exactly where and how they could use investment zone funding in partnership with local government and universities to boost ‘enterprise’ and ‘innovation’, Hunt said.

Four other zones will be chosen in Wales, Northern Ireland and Scotland. A competition to allocate them will be announced in due course.

British Property Federation chief executive officer Melanie Leech said Greater Manchester and the West Midlands were both areas which had understood ‘the critical importance of real estate to delivering better outcomes for communities’.

She commented: ‘Taken together with the chancellor’s announcement for 12 new Canary Wharf-inspired investment zones and further Levelling Up funding, towns and cities across the country will move towards a more strategic and targeted framework of interventions.’

However, questions were raised about the apparent exclusion of Cambridge as a home to one of the zones. Raoul Ruparel, director of Boston Consulting Group’s Center for Growth and a former adviser to the prime minister on Brexit, tweeted: ‘We’re targeting being a science superpower and/or a new Silicon Valley yet we ignore areas such as Cambridge for these sorts of projects. Bizarre. Not everything has to be seen through lens of red wall/levelling up alone.

A third Levelling Up round of £1 billion was also announced by Hunt, whose department only last month stripped some spending powers from Michael Gove’s Department for Levelling Up, Housing and Communities. Plans for that third round will be outlined later this year.

Further details announced in the budget include £400 million of funding for Levelling Up partnerships for projects in ’20 of England’s most in need’ areas. Some local authorities mentioned are those considered Red Wall seats and were part of previous Levelling Up rounds.

A further £200 million has been given out across England to local regeneration projects and £161 million to regeneration schemes in mayoral authorities and Greater London.

There were no changes to VAT on retrofitting however, which William Scoular, head of private client lending at Investec Real Estate, described as ‘discouraging’ given the government’s commitment to net zero by 2050.

‘The government has again failed to address the highly punitive VAT policy discouraging retrofitting’

‘Despite calls from the wider industry getting increasingly loud, it’s disappointing that another budget announcement has come and gone without the government addressing the highly punitive VAT policy that discourages retrofitting residential property over building new developments,’ he said.

‘The government’s net zero ambitions will not be met without existing real estate being modernized and this is unlikely to happen at the required volume while these financial barriers remain in place. Repurposing is already often more expensive than new developments, so the government should be trying to reduce those costs and make it more attractive, given the environmental benefits of the carbon savings associated with these projects.’

Another criticism of the budget came from Joshua Bond, founder and managing director at Bond Land, who said encouraging growth required changes to the planning system. The Levelling Up and Regeneration Bill, for example, continues to make its way through Parliament.

‘Investment zones are practically impossible without taking a sledgehammer to the planning system’

‘The budget speaks to growth, but any prospect of it and the investment zones the government has set out is practically impossible without taking a sledgehammer to the planning system,’ said Bond.

‘The broader needs of the nation on changes to regulations, which allow for more land to be made available and for what we build and deliver to flex to meet the requirements of a modern society.’