JOHN Swinney has said the Scottish Government is willing to work with the Treasury on the new low tax, low regulation “investment zones” proposed by Kwasi Kwarteng.

The new initiative was announced as part of the Chancellor’s mini-budget as a way to help drive growth. 

The zones will be special areas where firms pay less tax and have fewer restrictions on building, with planning rules significantly curtailed. 

That could include ending restrictions on building heights and scrapping affordable housing obligations for developers.

Mr Kwarteng said the government was talking to 38 local authorities in England about the plans, but that he was keen to also speak to the devolved administrations in Scotland, Wales and Northern Ireland. 

The Chancellor told MPs: “We will liberalise planning rules in specified agreed sites, releasing land and accelerating development. And we will cut taxes. 

“For businesses in designated tax sites, for 10 years, there will be accelerated tax reliefs for structures and buildings and 100% tax relief on qualifying investments in plant and machinery. 

“On purchases of land and buildings for commercial or new residential development, there will be no stamp duty to pay whatsoever; on newly occupied business premises, there will be no business rates to pay whatsoever; and if a business hires a new employee in the tax site, on the first £50,000 they earn, the employer will pay no national insurance whatsoever. 

“That is an unprecedented set of tax incentives for business to invest, build and create jobs right across the country.”

“If we really want to level up, we have to unleash the power of the private sector,” he added. 

Mr Swinney - who is providing maternity cover for Finance Secretary Kate Forbes - said he and colleagues wanted to “have a close look at the investment zones being proposed by the Chancellor.” 

He added: “They have to be the right fit for Scotland. We will keep discussing these plans with the UK Government as we move forward.”

The two governments have worked together on freeports, which, like investment zones, have some tax and planning benefits.

There are currently five bidders after Scotland’s two sites, with a decision due to be made imminently. 

It is not known how these will interact with the investment zones. 

In their analysis, the Fraser of Allander Institute said the positive impact of investment zones was based “more on hope than on empirical evidence.”

They warned they could ultimately displace economic activity by attracting firms away from areas outside the zones. 

They said: “What is not yet clear is how the costs of investment zones in Scotland – in the form of reliefs on business rates and stamp duty (which are devolved) and NICs reliefs (which are not devolved) – will be distributed between the Scottish and UK governments. 

“The Treasury’s costing document does not seem to give an indication of the funding associated with the planned investment zones in England, so it is difficult to get a sense of the fiscal scale of these interventions at this stage.”