U.K.’s Business-Friendly Zones May Restrict Growth, Property Lobby Says
The U.K. government’s efforts to give local councils more power over planning contradict its intention to create business-friendly zones and will jeopardize development, the head of British Property Federation said.
“The two don’t strike me as entirely compatible,” BPF Chief Executive Officer Liz Peace said in an interview in Cannes, France. “You have a local community that’s supposed to be able to determine what it wants, but you create an enterprise zone where business could do what it likes.”
Local authorities were given greater say in approving new developments after the coalition government scrapped regional homebuilding targets last year. A proposal made last week will allow businesses in so-called “enterprise zones” to sidestep local planning controls, helping them expand.
Prime Minister David Cameron is encouraging businesses to boost hiring as his government of Conservatives and Liberal Democrats cuts thousands of state jobs to slash the country’s record budget deficit. Chancellor of the Exchequer George Osborne will unveil the plan for enterprise zones when he presents the budget on March 23.
“They will be centers for new businesses and new jobs where taxes will be even lower and more restrictions on growth removed,” Osborne said in a March 5 speech.
Peace says she doesn’t oppose the idea of more local decision-making as long as there’s a proper system in place that people involved can understand.
“My worry is that it will take time to implement and so the next few years might be quite slow in development terms,” Peace said.
Councils, which are facing budget cuts of 4.4 percent on average, are being offered incentives to approve more housing plans. They include the New Home Bonus which will match council- tax payments for new homes in their districts for six years. Though almost 1 billion pounds ($1.61 billion) has been allocated for the bonus, it may hinder development, Peace said.
“I suspect the Treasury is actually quite nervous and that they are deeply worried that this localism agenda, despite all the incentives, will actually lead to no growth, or less growth,” she said.
To contact the reporters on this story: {Chris Spillane} in London at cspillane3@bloomberg.net; Tim Barwell in London at tbarwell@bloomberg.net.
To contact the editor responsible for this story: Ross Larsen at rlarsen2@bloomberg.net.
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