Investment zones can work – but only if we follow the success of Thatcher’s model
3 min read
As a Member of Parliament during Margaret Thatcher’s premiership, listening to the new Chancellor’s mini-Budget I was struck by how many of the new announcements were, in fact, not new.
Large tax cuts, a reduction in stamp duty, curbing the power of unions and promises of deregulation.
One “new” announcement, the establishment of investment zones in various locations around the country, where planning regulations will be relaxed and taxes will be cut to incentivise investment, is a revival of Thatcher’s development corporations.
A key issue is that planning authority remains in local government hands – but in hands that will be tied
When I was a PPS in the Department of the Environment in the late 1980s my boss, (now Sir) David Trippier, was the minister who deployed our plan establishing development corporations in a large number of locations throughout the country aimed at encouraging the enhancement and investment needed in particularly deprived areas.
Given that development corporations succeeded beyond our expectations – just look at Canary Wharf, the regeneration of London’s Docklands and the Royal Albert Dock in Liverpool – the government must understand how and why they worked.
Development corporations uniquely held delegated planning powers which enabled them to move quickly and decisively in getting improvements in place and the ratio between public and private investment in those areas was notable. In Sheffield, for instance, the government put up £100m, the European Union gave over £7m and private investors supported the scheme with over £600m.
But the key to their success was the planning powers being in the hands of the development corporations – not the local authorities. Naturally, councils were reluctant to lose influence and control, but ultimately the speed of the changes under a different regime convinced them and the government sensibly ensured a strong local authority representation.
I was disappointed when planning powers for these areas were returned to local government and inevitably the delays and regulatory complications then ensued.
The many initiatives by later governments designed to lift regional economies – enterprise zones, freeports, urban and rural development grants from the EU and economic programmes with acronyms that I cannot remember – have missed the freeing up of decision making, good leadership and enough encouragement for new investment.
Development corporations were largely appreciated and went out of their way to involve local communities in the decisions that they took to ensure they had support. A key to this success was the right leadership.
For example, the Leeds development corporation chair, Peter Hartley, was well chosen. He was a businessman who understood the need to involve and communicate.
So, will this latest proposal of investment zones work? It sounds interesting but it does not seem to be fully thought through. A key issue is that the planning authority remains in local government hands – but in hands that will be tied.
In a period of great economic pressure, the hope for a huge new private investment programme will of course need more than just encouragement. Investors need to know that not only will they be able to get a good return on their investments, but that bureaucracy and regulations will be relaxed.
To proceed with the investment zone proposals the government must ensure that the right people are given leading roles in the deployment of resources and the encouragement of potential investors. This must not become another “jobs for the boys” situation.
These new investment zones must not only be carefully selected but the support of communities affected must also be obtained.
Personally, I still think our model for development corporation was the right one for that time but also for now. If the Prime Minister and Chancellor are trying to repeat the past, they must also learn from it.
Lord Kirkhope, Conservative peer.
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