Embargoed: 00.01 Tuesday 14 November 2006

Many of Britain's deprived urban areas are still falling behind on business and job creation, according to the Centre for Cities at ippr. The warning comes during Enterprise Week (13-17 Nov) and while the Government is reviewing enterprise and business support policies.

Latest statistics show that the UK economy added another 25,000 new businesses last year. But the Centre for Cities says these encouraging figures mask the poor performance of urban areas, especially in northern England. Nationally, there are 306 VAT-registered enterprises per 10,000 population, but:

• Liverpool has 185 enterprises per 10,000
• Kingston upon Hull has 183 enterprises per 10,000
• St. Helens has 177 enterprises per 10,000
• Middlesbrough has 133 enterprises per 10,000
• South Tyneside has 128 enterprises per 10,000.

Every region and nation of the UK, except Northern Ireland, saw a decrease or no change in the total number of new businesses last year.

The Government spends around £8 billion a year on hundreds of different small business support programmes. The Centre for Cities argues that these programmes should be reduced and streamlined. The Centre for Cities recommends that the Government:

• prioritise enterprise investment in enterprises that create jobs, boost productivity and prioritise innovation
• focus on enterprise creation in or near deprived urban areas, especially in the north of England, to help meet the its 2001 manifesto pledge of full employment in every region

Dermot Finch, Director of the Centre for Cities, said:

“Since 1997, the Government has tried to deliver a universal service for every UK business, in every area and in almost every sector. It has been doing too much, with too little. It's Enterprise Week this week and the Government are reviewing its approach to promoting enterprise. It's time it did fewer things, better. Instead of trying to promote enterprise in every area, Government should target its resources at deprived urban areas that can take on more jobs and investment.”

Notes to Editors:

The Centre for Cities is an independent research unit that is taking a fresh look at how UK cities work, with a strong focus on the economic drivers behind urban growth and change.

The Centre is looking in depth at UK cities' economic performance, and at cities that have successfully improved, diversified, or expanded their enterprise base.

The Centre for Cities' ‘City Markets' report showed how Government attempts to boost business activity in deprived areas have so far had disappointing results. The report recommended a more targeted enterprise policy approach on deprived urban areas in the North East and North West.

The Treasury is currently reviewing business support and enterprise policy, as part of the Comprehensive Spending Review. Evaluation evidence shows that certain enterprise initiatives can make a difference:

• Recent work by Barclays Bank plc on the impact of Enterprise Agency assistance on new business banking customers displays very positive impacts on survival rates and turnover growth (www.nfea.com/content/news_views/trackingstudy.pdf).
• Similar evaluation evidence is evidence from Scottish Enterprise (www.scottish-enterprise.com/publications/bg_strategic_review_2006.doc).

Recent evidence from the 2005 London Annual Business Survey shows that most businesses prefer private sector sources of advice. Of the 80 per cent of enterprises that use external advice, only 16 per cent had used a public sector source of advice. But there is scope for better joint working between public and private sector. Some private sector corporations offer their staff the opportunity to work on a pro-bono basis with local small businesses; and other private sector organisations such as the Engineering Employers Federation deliver advice on behalf of Regional Development Agencies to manufacturing businesses.