Enterprise zones and fast-track planning for councils were a key part of last week’s Budget, saying ‘yes’ to development.Dermott Calpin reports

Chancellor George Osborne’s Budget may well have been fiscally neutral, but his ‘plan for growth’ set out specific measures on planning and economic development, which were aimed squarely at local government – and provoked very mixed reactions.

First among the chancellor’s targets was an attack on ‘cumbersome planning rules and bad regulations’, where he promised: ‘We will introduce a new presumption in favour of sustainable development, so that the default answer to development is, “yes”!

‘We will retain existing controls on greenbelt, but we will remove the nationally-imposed targets on the use of developed land, and we will allow certain class changes, introduce time limits on applications, and pilot, for the first time ever, auctions on planning permission on land,’ he added.

In response Gary Porter, chairman of the Local Government Association’s environment and housing board, said: ‘It is important that any changes made by the Government to the planning system give councils more flexibility, not less, and do not fly in the face of localism’ and, he cautioned: ‘This should not be a case of replacing one “one-size-fits-all” approach imposed by the Government with another.’

Richard Summers, president of the Royal Town Planning Institute, was more strident in his criticism, and said: ‘If sweeping changes announced to the planning system result in the default position being “yes” to development, then there is real danger that within a decade, we will end up with an England of tin sheds, Legoland housing and US-style shopping malls.

‘Where will the incentive be in the future for developers to address issues such as climate change, environmental protection, design quality and affordable housing, if they know that the Government has tied the hands of local councillors who will be required to nod through most development proposals. This could mean developers building what they like, where they like, and when they like. It’s a policy that finally buries genuine localism.’

The Campaign to Protect Rural England claimed the chancellor’s promise to protect the greenbelt was a mere figleaf for a more serious threat to the environment. Its director of policy, Neil Sinden, said: ‘The planning measures present a potentially-devastating threat to the countryside and are unlikely to boost long-term economic growth.

‘To suggest, as successive governments have done, that planning is a key impediment to growth is just wrong.

‘The planning system exists to prevent unsustainable, unwanted and environmentally-damaging development. The chancellor’s default “yes to development” threatens both the environment and sound planning. The proposed land auctions are hugely risky.’

None-too-surprisingly, the CBI took a more sanguine view of the proposals. Its director general, John Cridland, declared: ‘The promise of a faster planning system will provide relief to companies trying to take on staff and invest.’

This was a view supported by the New Local Government Network, whose director, Simon Parker, suggested: ‘It’s particularly encouraging to see the chancellor giving councils more incentives for economic growth. If implemented properly, and with sufficient community engagement, then liberalising planning laws and bringing in revenue from “land auctions” can help councils encourage development where it is desperately needed.’

The NLGN also endorsed the chancellor’s second major local initiative, with plans to fund 21 new enterprise zones based within 11 local enterprise partnerships (LEPs) led by Birmingham and Solihull, Sheffield, Leeds, Liverpool, London, Manchester, the Bristol area, the Black Country, Derby and Nottingham, Teesside and the North East.

‘We’re pleased that LEPs have been invited to play such an active role in setting up enterprise zones, and their involvement will be vital to stimulating growth. We’d like to see even more powers given to LEPs in making the new zones work, for example, in developing skills and infrastructure planning,’ said Mr Parker.

On an equally positive note, Mr Cridland added: ‘The new enterprise zones could provide positive incentives for local authorities to promote development, allowing the Government to carry out a real-time experiment on what actually works as a spur to economic activity.”

His views were echoed by the Federation of Small Business and at the British Chamber of Commerce, where director general, David Frost, insisted: ‘The chancellor’s announcement of 21 low-tax, low-regulation areas across England in the form of enterprise zones will boost our regional economies.

‘The role of LEPs in designating and running enterprise zones will ensure that local business leaders are at the heart of the new policy. Beyond upfront incentives, the reinvestment of business rates locally is critical to boosting regional growth.’

LGA chairman, Baroness Eaton, agreed, She said: ‘The ability to retain business rate growth inside the zones will be a welcome source of funds for councils in the local enterprise partnership area.

‘It is important that local authorities and local enterprise partnerships have the flexibility to decide how to reinvest these funds broadly in line with local economic priorities.’

Robert Murdoch, associate partner and head of rating at business consultancy, Drivers Jonas Deloitte, saw positive gains, and added: ‘Apart from encouraging the councils to develop these areas, it is also a carrot to entice them to ensure that all properties in the area which are liable for business rates pay them.

‘In recent years, because there has been no incentive for councils to ensure that every property liable to be rated is – this should help redress this.’

However, he also said the new wave of enterprise zones was unlikely to replicate the scale of urban regeneration that the original 1980s schemes managed to achieved through developments such as the Merry Hill Shopping Centre in Sheffield, the Metro Centre in Gateshead, and the Canary Wharf in London Docklands.

Both the Work Foundation and the Centre for Cities have published recent studies on enterprise zones, which highlight the relatively-high cost of creating jobs, and the danger that they simply displace jobs from other areas and attract firms which take advantage of short-term financial incentives rather than create new employment.

Ian Brinkley, director of socio-economic programmes at the Work Foundation, said bluntly: ‘Enterprise zones are not an effective way to rebalance regional growth. Much more will have to be done to avoid a two-nation recovery.’

While Cities chief executive, Alexandra Jones, added: ‘The fly in the ointment could be competition between LEPs, with businesses simply jumping from one city-region to another to benefit from the incentives on offer,

‘Only time will tell whether the changes introduced will alter the design of the zones sufficiently to deliver a more successful policy than that launched in the 1980s.’

It is a criticism echoed by RICS chief economist, Simon Rubinsohn, who said: ‘It is not clear how effective new enterprise zones will be in stimulating long-term, sustainable development beyond an initial boost. While the tax breaks and changes to planning restrictions may draw short-term investment into an area, they also have a number of downsides.

‘The total cost to the Government can be expensive, and there often needs to be other public investment in areas such as transport infrastructure. Enterprise zones also draw development from other nearby areas which do not receive benefits, in some cases, simply shifting local economic problems from one area to another.

‘While they may have helped some areas in the 1980s, enterprise zones are unlikely to have the same impact now.’

Local Government Information Unit chief executive, Andy Sawford, agreed that ‘incentives for businesses, such as rate relief and simplified planning rules, combined with incentives for councils to promote growth’, such as getting the proceeds from growth in business rates, could make a real difference.

But, he also wondered: ‘In the new era of localism, why is the Government picking winners by restricting these benefits to just a few favoured councils, rather than opening them up to all? For most councils, the big news was that there isn’t much news. The course of the next four years has been set, councils are dealing with huge budget reductions, and nothing changes that for most areas.’