Date
16 Dec 2020Category
TaxThe UK’s inner urban areas have been disproportionately blighted by Covid-19 and need urgent tax-led support to encourage investment, renewal and recovery.
The UK’s Enterprise Zones (Enterprise Areas in Scotland) strategy currently focuses on a wide range of industry sectors and 64 locations across the UK and has been in place since 2012, but its relevance needs urgent review in the light of Covid-19.
With inner urban areas seeing a raft of business closures, collapse in commuting and a dramatic contraction in economic activity, regeneration policy encouraging private sector investment has a pivotal role to play in helping reverse the decline. A key part of the answer lies in realigning tax reliefs and investment incentives in favour of these struggling urban communities. The current Enterprise Zones/Areas policy may have had merit in 2012, but these policies have questionable relevance today for business owners and residents in deprived inner urban areas now starved of human activity.
In order to prevent long term economic and social damage, these inner-city communities need a stimulus package that will mainly attract private sector mixed-use development. History shows that tax incentives are key to regeneration and there is already an extensive package of incentives in place.
If Enterprise Zones/Areas policy is switched to the inner cities the array of generous tax incentives on offer could help to unlock their recovery and bring life back previously vibrant city communities and economies. A refocus of the incentives would complement the £1.5 bn committed to the Cities and City Regions deals which are currently primarily focused on infrastructure investment.
The key tax incentives currently available within Enterprise Zones/Areas extend to reliefs worth many hundreds of millions of pounds, and include:
Donald Boyd, who advises several SMEs in the construction sector, pointed out that refocusing on inner cities would provide vital work for many sectors currently tackling serious financial issues. “Construction is a major industry in the UK, employing over one million people, and it would gain from a tax-led stimulus of investment and regeneration. Housing, and service industries would also benefit. Unless we take action to support these sectors now, we run the risk of a vast number of companies being mothballed, or worse, shut down.”
Clearly adapting the existing Enterprise Zones/Areas policy and redirecting it solely towards inner urban areas would be a major undertaking. But these are exceptional times, and our policy makers should be encouraged to take bold steps to protect and preserve our vulnerable inner-city economies.
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