Chancellor George Osborne has outlined plans to devolve further powers to local authorities, including the ability to keep all the revenue raised by business rates as well as a number of new enterprise zones offering favourable tax reliefs for inward investment
Osborne said the move to encourage metropolitan areas to have elected mayors in return for new powers including greater control of the local economy, will continue. He also announced the creation of 26 enterprise zones, 15 of which will be in rural areas ‘from Carlisle to Dorset’.
The Treasury says the creation of the 26 new enterprise zones, including the expansion of eight zones on the current programme, will spread enterprise zone benefits to 108 sites across the country.
Osborne pledged to double the size of the enterprise zones programme in the Northern Powerhouse, creating seven new Zones, meaning that over a third of all new enterprise zones announced in the spending review are in the North, while extending a further two enterprise zones. In the Midlands, the Curzon Street enterprise zone is being extended to support the HS2 grwoth strategy. There is to be new enterprise zone in Stoke/Staffordshire Ceramics Valley and the extension of the existing enterprise zone at Infinity Park Derby.
The government will create new enterprise zones in the Heart of the South West, Dorset Green and will extend existing enterprise zones in Bristol (Bristol Temple Quarter and Somer Valley) and Cornwall/Isles of Scilly (Aerohub+).
There will be four new enterprise zones in Newhaven, Aylesbury Vale, Didcot Growth Accelerator and Enterprise M3, and the North Kent Innovation Zone will be extended. Additionally, four new Enterprise Zones will be created in Cambridgeshire, Hertfordshire, Luton and across Great Anglia (Norfolk and Suffolk) while the existing Great Yarmouth & Lowestoft enterprise zone will be extended.
In addition, local councils who agree to an elected mayor will be able to keep all the revenue raised through business rates by the end of this Parliament. Councils will also be given powers to cut rates in order to attract businesses, provide the funds raised are used for specific infrastructure projects agreed with the local business community.
As a result of this, the local authority government grant will be phased out.
Commenting on increased local devolution measures, Shiv Mahalingham, transfer pricing economist at Duff & Phelps, said: ‘We are finding that regional specific incentives based on location and surcharges based on activity are making UK-UK transfer pricing a real issue for some industries and the relocation of services to reginal entities may have a tax cost or tax benefit.’
