Chancellor Kwasi Kwarteng is expected to announce on Friday the creation of a network of low-tax, low-regulation investment zones in an emergency budget.
Planning regulations will be relaxed in up to 12 places reserved for this status, and taxes will be reduced to encourage investment.
The announcement, which is expected to push deregulation further than the post-Brexit freeports put in place by Boris Johnson’s government, will be part of a package that will also see the scrapping of the EU contribution hike. National Insurance, a planned corporate tax increase dropped and green levies temporarily removed from fuel bills.
Although not officially presented as a budget, Kwarteng’s statement to MPs will eclipse most budgets in terms of its impact on public finances. Major pre-announced tax changes are expected to cost the Treasury at least £30billion a year.
Kwarteng wants to use the statement to show the government is quickly delivering on promises made by Liz Truss during her Conservative leadership campaign, when she said investment zones would be central to her plan to boost growth. A formal budget is due later.
The West Midlands, Thames Estuary, Tees Valley, West Yorkshire and Norfolk are among the places where zones can be set up. According to plans drawn up by Truss this summer, in each zone there will be a central region, where regulations and planning rules will be relaxed to encourage industrial, commercial and residential development, and a periphery where planning rules will be simplified for housing.
According to a report, the Treasury is considering whether, in addition to offering lower taxes to businesses operating in the zones, it could also offer lower personal taxes to people who live or work there.
The policy is likely to focus on England initially, although Truss wants to work with devolved governments to also create investment zones in Scotland, Wales and Northern Ireland.
During his leadership campaign, Truss also promised to roll back the National Insurance contribution hike implemented by the Johnson government earlier this year. Originally it was assumed that this tax cut, which will disproportionately benefit wealthy workers, would not come into effect until the start of the 2023-24 financial year, but reports have claimed that it could take effect from November.
Kwarteng’s measures will come after a frantic 72 hours of announcements. Jacob Rees-Mogg, the business secretary, will announce details on Wednesday of how businesses will get help with their energy bills, and Therese Coffey, the health secretary, is due to make a statement to MPs on Thursday on backlog and staffing plans. shortages in the NHS.
During the leadership race, Truss said tax cuts, energy bills and the NHS would be her three immediate priorities when she takes office. But the Queen’s death has put all government business on hold, meaning announcements are now due to be released in a brief period later this week before the start of the party’s conference season.