Enterprise zones tax break bids expected after delay

An aerospace enterprise zone is being created at St Athan, in the Vale of Glamorgan

Bids to offer tax breaks for businesses in enterprise zones have been delayed by negotiations between the Welsh and UK governments.

A form of tax cuts will be available in a zone on Deeside, but the Treasury says it has not had proposals from the Welsh government about other zones.

The Welsh government said it was ready to submit bids after the Treasury clarified its position last week.

But a Conservative MP accused ministers in Cardiff of a lack of action.

Seven enterprise zones are being established in Wales, each intended to nurture specific industries.

Chancellor George Osborne announced in March that enhanced capital allowances will be offered at a manufacturing zone in Deeside.

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The allowances cut the tax bills of businesses which invest in plant and machinery.

The Welsh government has been asked to come forward with proposals about which other zones should benefit from allowances.

But in a letter to Vale of Glamorgan MP Alun Cairns on 11 October, Chief Treasury Secretary Danny Alexander said no further representations had arrived from Cardiff.

Bids were on hold while the Welsh government sought clarification from the Treasury about what other forms of help, such as grants, can be offered to businesses.

Business Minister Edwina Hart has said UK government restrictions mean companies can only be offered enhanced capital allowances or grants, not both.

A Welsh government spokesman said: "It is disappointing that this letter to Alun Cairns MP gives the impression that the Welsh government has simply not responded to the opportunity to agree Enhance Capital Allowances (ECAs) for other sites - this is not the case.

"Our position has always been clear. As the minister for business, enterprise, technology and science explained to assembly members in July, we would not submit further proposals until Treasury clarified its intention to prevent any other aid to companies claiming ECAs.

"These restrictions would significantly reduce the attractiveness of ECAs and have a disproportionate effect in Wales, where we have enterprise zones in assisted areas."

He added: "The minister wrote to Treasury in May and August on this matter. We received some clarification from Treasury at the end of last week and the minister has since responded.

"Officials will now be submitting proposals for other sites in line with the clarification received from Treasury."

A Treasury spokesman said it expected to see proposals from the Welsh government soon after recent correspondence between both sides.

An aerospace zone based around Cardiff airport and St Athan is being established in Mr Cairns' constituency.

The Tory MP said: "It is hard to believe that the Welsh government have done nothing about gaining this tax advantage for Welsh employers.

"It is obvious that the Treasury are keen to extend this benefit to businesses operating in Wales but can only do so when Edwina Hart explains exactly what she wants to do."