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Chancellor Jeremy Hunt has said all existing investment zone proposals will be dropped and the policy will be switched to benefit research 鈥榗lusters鈥�.

Delivering his autumn statement today, Hunt did not ditch the investment zone plan of his predecessor Kwasi Kwarteng entirely but made clear that all existing local authority bids for the programme - which included a number of major housing schemes - will not be taken forward.

He said he will keep the policy and focus it on 鈥渓everaging our research strengths鈥� in a small number of locations. 

The autumn statement document said: 鈥淭he government will use this [investment zones] programme to catalyse a limited number of the highest potential knowledge-intensive growth clusters, including through leveraging local research strengths.鈥�

Knowledge clusters are usually locally organised groups, based at universities, research institutions and firms, that drive innovation.

Hunt said that with his investment zones, research will be 鈥渃entred on universities in left behind areas to help build clusters for our new growth鈥�. 

The zones had originally been designed to speed up economic growth through streamlined planning rules and tax breaks, largely by promoting development.

Today鈥檚 autumn statement document does not, however, refer to planning or development in Investment Zones, and Ian Fletcher, director of policy (real estate) at the British Property Federation, said it was 鈥渇air to assume鈥� that the policy was now not about development. 

Treasury documents said the Department for Levelling Up, Housing and Communities will 鈥渨ork closely with mayors, devolved administrations, local authorities, businesses and other local partners to consider how best to identify and support these clusters, driving growth while maintaining high environmental standards.鈥� The first clusters would be announced 鈥渋n the coming months鈥�, it added.  

Existing expressions of interest will not be taken forward, the Treasury confirmed. 

Investment zones were a key policy for former prime minister Liz Truss, who wanted up to 200 across the country. The idea was they would have a simplified planning process, far-reaching tax incentives and lower regulations with the aim of stimulating or speeding up the development of residential and commercial sites. Major housing schemes put forward for investment zone status included the Otterpool Park Garden Town in Kent and the Tewkesbury Garden Village in Gloucestershire.

Businesses would have been encouraged to set up in the zones with low taxes, including holidays on business rates. The Treasury had calculated the zones could cost the public purse up to 拢12bn in lost tax revenues each year.