SCOTTISH and UK ministers have had “constructive” discussions on bringing low regulation, low tax investment zones to Scotland, the deputy First Minister has told MSPs. 

However, John Swinney admitted that he still had concerns that they would not lead to the “real new growth” for the economy promised by Kwasi Kwarteng in his mini-budget. 

The zones are special areas where firms pay less tax and have fewer restrictions on building - both commercial and residential - with planning rules significantly curtailed. 

Mr Kwarteng told the Commons that the initiative would encourage businesses 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. 

Over the weekend, local authorities in England were invited to express an interest in becoming one of the first investment zones. 

Controversially, some of the planning liberalisation promised by the UK Government would see developers allowed to build in national parks, areas of outstanding natural beauty, sites of special scientific interest, and green belt land.


In their initial analysis of the mini-budget, 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. 

Giving evidence to Holyrood’s finance and public administration committee, the Deputy First Minister said he had spoken to Simon Clarke, the Secretary of State for Levelling Up and  “agreed to explore what those zones might look like” in Scotland

“I suppose, the critical question, do they actually generate real new growth or are they essentially providing for displacement because if they are only providing for displacement and there's an erosion of the tax value, then the growth estimates that the United Kingdom Government are putting out will not be realised as a consequence. 

“So, I think there's some very sensitive judgments we've got to make about that but we are engaging in that discussion constructively with the United Kingdom Government.”

While National Insurance is reserved, many of the other tax and planning issues are devolved. 

Mr Swinney told the committee: “I think the UK government basically would like to see this idea rolled out across the whole of the United Kingdom. 

“They can provide essentially a foundation for it in the National Insurance contribution concessions that are made, but some of the detailed specific provisions that are in the English guidance document which I've had a look at, are essentially in devolved issues and there mostly around some planning and environmental considerations and a variety of other questions.“

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.