Glasgow and north east chosen for investment zones

Glasgow and the north east of Scotland will be supported by up to £80m of investment each in a new scheme to drive economic growth.

The investment zones, a key part of the UK government's levelling up strategy, are the first to be announced outside England.

The UK government said the investment zones would be focused around research institutions such as universities.

It is hoped they will drive growth in areas such as technology.

The money will be spent on targeted investments, tax reliefs and other incentives over five years following a joint selection process by the Scottish and UK governments.

Scottish ministers said they had tailored the agreement to ensure it aligned with its net-zero ambitions.

UK government Levelling Up Secretary Michael Gove said: "This is a historic milestone as we widen the opportunity and ambition of the investment zone programme to grow the economy across the whole of the United Kingdom."

Mr Gove said he was "very appreciative of the constructive approach" taken by First Minister Humza Yousaf and Deputy First Minister Shona Robison during talks about the new investment zones.

He added: "We all have shared ambition to work together to see all parts of Scotland thrive and this agreement builds on our successful rollout of green freeports in Scotland earlier this year."

The Scottish government's Wellbeing Economy Secretary Neil Gray said: "This is a milestone in the delivery of investment zones in a way that enhances Scotland's economy while aligning with our distinctive priorities.

"Scotland already has a strong track record in innovation and research and the investment zones can build on these strengths."

The investment zones follow the announcement earlier this year that freeports will be established in the Cromarty Firth and the Firth of Forth.

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: "This is excellent news for Scotland and a substantial investment for the north east and Glasgow regions.

"These investment zones will help galvanise the key sectors in these regions to innovate, attract investment and create high-quality jobs."

Investment Zones are part of a jigsaw of targeted support intended to back business growth in cities, regions and sector clusters. Some are to help areas that have been left behind. Some are for areas with most potential to grow, often with universities as a dynamo.

City and region growth deals were originally targeted at areas most in need of help, and an incentive to English regions to accept devolved powers. They have come to blanket the whole of Scotland, as a vehicle for UK and Scottish government joint funding and a way of forcing councils to work together.

Both Aberdeen and Glasgow city regions have big economic strengths and big economic challenges. Both were unsuccessful bidders for Green Freeport status. That went to the Cromarty Firth with Inverness and to several port areas around the Firth of Forth, including Leith.

That grew out of the Boris Johnson era of UK government, seeking to "level up" regional economies, mainly in England, and to boost exports in the wake of Brexit with tariff-free zones.

The Scottish government was sceptical, highlighting the international experience of freeports as being the location for many low-wage jobs, and evidence they do little more than displace economic activity from another part of the country.

After a dispute over the model to be used, the UK and Scottish governments agreed to link two Scottish freeports with the net zero transition, so unlike England, they were branded "green". The two east coast zones, selected for their strong potential to supply offshore wind power, are yet to see much sign of benefits, while the precise tax breaks are worked out.

Investment Zones came out of the brief Liz Truss era, when her notorious mini-budget last September included an announcement there would be hundreds, and they would typically be clustered around universities.

The UK Treasury, fearing a huge loss of tax revenue, saw that plan reduced to 12 zones after Jeremy Hunt became chancellor, eight of them already allocated to English mayoral regions in the north and Midlands. Wales and Northern Ireland are yet to get one. A lot of detail on how they work is yet to be worked through.