Battle over Enterprise Zones looms
Posted on 08/02/11
A cross border battle is looming over a new generation of Enterprise Zones (EZs) which are expected to be launched in the latest bid to revive the economy. A clamour for EZ status, which provides big breaks on tax and business rates, has emerged in Scotland. Moray is among the first to call for a designated EZ following the closure of RAF Kinloss.
Enterprise Zones were first introduced in the early 1980s and the coalition government is tipped to announce a new generation in the Budget in March. Scottish politicians are keen to adopt the same approach to boost deprived areas that have suffered in the downturn.
But post-devolution Scotland is likely to face a fight with other UK areas as the number of new EZs will be strictly limited by the Treasury.
Although planning and rates levels are governed by the Scottish Government, the tax element of new EZs will be retained by Westminster. Nor is it likely Westminster will allow new Scottish EZs to vary devolved incentives beyond that available elsewhere in the UK.
"It is a real tightrope for both sides" said Eric Forgie, Chief Executive of James Barr.
"I am concerned there is a perception that the scale and development that came about from the first raft of EZs could quickly be emulated this time around, given that we are working in very different circumstances globally and politically in the devolved situation. It all comes back to how you get this tax balance right, so you can make yourself more attractive than the next location down the road. "I don't know how much scope the Scottish Government really has to play that ball against the UK government. The coalition is not going to let that happen to the detriment of the rest of the country".
EZs were initially established by the Conservative administration led by Margaret Thatcher. They were masterminded by Michael, now Lord, Heseltine and were mainly established on failed industrial sites. They offered relaxed planning controls, a ten-year exemption from business rates and tax breaks on construction costs and on personal investments.
Scotland had five EZs, the last of which was in North Lanarkshire, home to the sprawling Maxim Office Park, which has struggled to attract tenants. Last week, Elliot Robertson, the chief executive of North East house builder Robertson Homes, called for the establishment of an EZ at RAF Kinloss.
A Scottish Government spokesman said it was involved in using economic development tools, such as tax incremental financing and the Scottish Futures Trust, but that it was "open to innovative ways of stimulating local economic growth and regeneration, including areas such as Moray".
Article By Erikka Askeland
Senior Business Writer
Scotland on Sunday
For more information, please contact Eric Forgie