Danger of Investment Zones failing to deliver due to ‘short termism’

The Government’s lack of an overarching, long-term industrial strategy, risks squandering the impact Investment Zones could have on the economy and jobs, it has been claimed.

Accountancy professional services group, RSM, says more needs to be done for the scheme to deliver for businesses.

Both the Liverpool City Region and Greater Manchester have been chosen to host Investment Zones.

But an RSM survey, in partnership with Make UK, showed that only 15% of manufacturers would consider moving to an Investment Zone, and a quarter (25%) of manufacturers do not believe they generate growth – they just move activity from one area to another.

More than two-thirds (68%) thought that infrastructure has deteriorated over the past 10 years, meaning that if action isn’t taken, the problem may deteriorate further.

In the North West, approximately £1.1bn is expected to be invested in the Greater Manchester Investment Zone, following the recent Autumn Statement announcement, specially for advanced manufacturing, materials and local partners, and creating around 32,000 jobs in the next 10 years.

This follows the Liverpool City Region investment zone announcement in July, which outlined £320m in investment to support the creation of 4,000 jobs and bolster the region’s world-leading reputation in life sciences.

Although these isolated policies will be a boost for industry, and indeed the North of England for levelling up, the Government is still lacking an overarching, long term industrial strategy which brings them all together, says RSM.

Ahead of the 2024 Spring Budget, the RSM says the Government should consider taking a more holistic approach, like the US, to unlock growth, innovation, talent retention and greater certainty for investment.

Kevin Duffy, regional managing partner and Chris Alderman, specialist in manufacturing for RSM in the North West, say the current Investment Zone framework lacks the ambition required to generate real growth.

They say the framework is too complex, with 12 zones across the UK and the actual tax incentives varying by site. The current state of regional transport infrastructure markedly reduces the benefit of any particular site, as many don’t have the necessary transport links to attract the best talent.

RSM argues that Investment Zones could prove to be a strategic catalyst for growth, but only if they fulfil the following criteria:

• A focus for the long-term, creating a stable environment for investment.
• Considering all aspects of the economy, including infrastructure, skills and labour.
• Must be easy to understand and accessible.