Kwasi Kwarteng to announce network of low-tax investment zones | Economic policy

Foreign Minister Kwasi Kwarteng is expected to announce the creation of a network of low-tax, low-regulation investment zones in an emergency budget on Friday.

Urban regulations will be relaxed in up to 12 places destined for this status, and taxes will be reduced to encourage investment.

The announcement, which is expected to take deregulation beyond the post-Brexit free ports set up by the Boris Johnson government, will be part of a package that will also see increased national insurance contributions scrapped, a planned increase in corporate tax and go green. Temporarily removed levies from fuel bills.

Although not formally billed as a budget, Kwarteng’s statement to MPs will dwarf most budgets in terms of its impact on public finances. Major tax changes tracked in advance are expected to cost the treasury at least £30bn a year.

Kwarteng wants to use the statement to show that the government is swiftly delivering on promises made by Liz Truss during her campaign for the Conservative leadership, when she said investment zones would be at the heart of her plan to boost growth. A formal budget is due later.

West Midlands, Thames Estuary, Tees Valley, West Yorkshire and Norfolk are among the places where zones can be located. According to the plans set out by Truss in the summer, in each area there will be a central region, where urban regulations and rules will be relaxed to promote industrial, commercial and residential development, and a periphery where urban regulations for accommodation will be streamlined.

According to a report, the Treasury is considering whether, in addition to offering lower taxes for businesses operating in the zones, it could also offer lower personal taxes for people who live or work there.

The policy is likely to focus on England in the first instance, although Truss wants to work with devolved governments to establish investment zones in Scotland, Wales and Northern Ireland as well.

During his leadership campaign, Truss also promised to reverse the increase in national insurance contributions implemented by the Johnson administration earlier this year. This tax cut, which will disproportionately benefit wealthy workers, was originally assumed not to go into effect until the start of the 2023-24 fiscal year, but there have been reports that it could go into effect as early as November.

MPs are due to resume normal business in the House of Commons on Thursday, and before Kwarteng delivers his statement, Jacob Rees-Mogg will announce details of how businesses will get help with their energy bills, and Thérèse Coffey, the Home Secretary Health is due to brief MPs on plans to tackle staffing delays and shortages in the NHS.

During the leadership contest, Truss said that tax cuts, energy bills and the NHS would be her three immediate priorities when she took office. But the Queen’s death has put all government activity on hold, meaning announcements must now be made quickly in a short period later this week before the party’s conference season begins.

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