By Graham Clews
23 March 2011
Chancellor George Osborne has announced the creation of 21 new enterprise zones, in a Budget that he promised would spark growth and support business.
Local authorities would be able to keep all business rate growth in these zones for at least 25 years in return for ‘radically reduced planning restrictions’, Osborne said in his Budget speech to the House of Commons this afternoon.
The chancellor said businesses operating in the zones will get up to 100% discount on rates, and the possibility of using enhanced capital allowances in zones focused on manufacturing.
One zone will be around the Royal Docks in east London and a further ten in major English cities. The exact locations of these ten will be announced tomorrow and the final 10 will be announced in the summer.
The planning system will also be overhauled, Osborne announced, saying that councils now spend 13% more than five years ago on processing planning applications, even though the number of applications has fallen.
Under the changes, all planning bodies will have to prioritise growth and jobs; there will be a new presumption in favour of sustainable development; and the government will retain control of greenbelt land but remove national targets on previously developed land.
A number of measures will be introduced to reduce tax avoidance and evasion, which Osborne estimated would raise around £1bn a year, amounting to £4bn over the lifetime of the Parliament.
There will be an extra £220m investment in regional railways, the £85m Ordsall Chord scheme linking Victoria and Piccadilly stations in Manchester will go ahead, and Osborne announced that an extra £100m would be made available to councils to mend potholes.
Outlining the statistical background for the Budget, Osborne said the Office for Budget Responsibility’s growth forecast for this year has been revised down to 1.7%.
The OBR, Osborne said, attributed this to a weak final quarter in 2010 due to the snow, higher-than-expected inflation and an increase in world commodity prices.
The OBR forecast for real growth in gross domestic product next year is 2.5%, followed by 2.9% in 2013, 2.9% in 2014 and 2.8% in 2015.
OBR inflation forecasts are between 4% and 5% for most of this year, falling to 2.5% next year, and then to 2% in two years’ time.
The chancellor said government borrowing would be £146bn this year, £122bn next year, £101bn the year after that, £70bn in 2013/14, £46bn in 2014/15, and £29bn by 2915/16.
In other announcements:
> Osborne accepted Lord Hutton’s recommendations on public sector pensions as the basis for consultation with unions, and said there must be ‘no cherry picking’ on either side.
> The government is to double the number of technical universities to 24, increase the number of places on a government work experience scheme to 100,000, and fund 40,000 new apprenticeships.
> National Insurance and income tax could merge, with a consultation that ‘will take a number of years to complete’.
> Corporation tax will be cut by 2% this year and fall by 1% in each of the next three years, down to 23% by the end of the Parliament.
CIPFA chief executive Steve Freer said the Budget focused on enterprise and economic growth to reduce the deficit, but he said it remained to be seen whether growth in the private sector would compensate for public sector cuts.
‘In practice we are likely to see recovery proceeding at significantly different speeds in different parts of the country,’ he said.
Labour leader Ed Miliband, responding to the chancellor’s speech, said it was a missed opportunity to change course on ‘cutting too far and too fast’.
