Enterprise Zones will not create the jobs we need
Date: 28/02/2011Research from Centre for Cities shows that a new approach to area-based growth is required
Enterprise Zones of the 80s did not create enough jobs and were too costly for the public purse to be effective for the 2010s, research from a leading cities think tank shows today. The report, ‘What Would Maggie Do?,’ shows that the Enterprise Zones of the 80s should be revised if the coalition plans to include them in the March Budget. The latest report by the Centre suggests that Local Growth Zones, which would provide a menu of policy options which can be matched to the needs of the local economy, would present better opportunities for real economic growth and job creation in the 21st century.
1980s Enterprise Zones had mixed results, with examples of where they had a long-lasting effect on the local economy, such as in Canary Wharf, not commonplace. The incentives used to encourage business growth and relocation - business rate relief or capital-based spending and allowances – also weighed heavily on public finances. The cost per additional job created in the Zones was £17,000 per job over a ten year period. This is equivalent to £26,000 in today’s market.
The report also shows that the long term impact of the Zones in the 80s was primarily on the physical regeneration of the local urban environment. This is less of a challenge today. What is needed now is private sector jobs growth rather than a focus on large-scale projects geared towards revitalising derelict areas.
Alexandra Jones, Chief Executive for Centre for Cities said:
“It is vital that the Coalition learns the lessons of the 80s. Our evidence shows that 1980s style Enterprise Zones did not deliver jobs or skills development on the scale that is needed today. A new approach to area-based growth is required.”
So what should the government do instead? Centre for Cities report advises that private sector jobs growth requires employment growth incentives. Local Growth Zones would be a good alternative.
What would Local Growth Zones look like? Local Growth Zones would provide a menu of policy options to encourage and support jobs and economic growth. The area might choose one or all of the options below, depending on the needs of the local economy. These incentives are targeted towards meeting the challenges we face today in employment growth, skills creation and firm expansion - only rewarding companies for the additional jobs and skills they create. The menu would include:
|
Policy option |
Why? |
|
Rapid Planning Zones |
To ensure that the planning system prioritises growth. |
|
Access to corporation tax uplift
|
Some areas could be provided with access to tax as a reward for accepting different measures. |
|
National Insurance Contribution (NICs) rebates for additionaljobs created |
Business orientated tax subsidies for every additional job created. |
|
Tax incentive for skills support |
To incentivise greater skills training in firms, we suggest offering tax rebates on in-house and external training of new and existing staff. |
|
Priority processing of applications to the Business Growth Fund |
Speedier access for businesses to the government’s new bank-backed fund for businesses. |
|
Creating a Single Point of Contact |
Having a single person responsible for the administrative management of the zone will help businesses to cut through bureaucracy. |
Who could bid?
Both deprived areas and growth areas should be able to bid to become a Local Growth Zone. In deprived areas the focus might be on skills, while in buoyant areas there might be more of a focus on ensuring the planning system doesn’t restrict growth.
Alexandra Jones, said:
“Local Growth Zones are a promising alternative to Enterprise Zones. They recognise that delivering real economic growth through jobs and skills creation cannot be achieved using a centralised approach. What is right for one local economy will not work in another area. We would encourage the Coalition to consider Local Growth Zones as an alternative to 1980s style Enterprise Zones as part of the forthcoming budget announcement.”
Centre for Cities report, What would Maggie do? Why the Government’s policy on Enterprise Zones needs to be radically different to the failed policy of the 1980s, is available to download at www.centreforcities.org/enterprisezones
For all press enquiries and interview requests please contact Claire Maugham on 020 7803 4315 /c.maugham@centreforcities.org
Ends.
Notes to editors
The Centre for Cities is an independent, non-partisan research and policy institute. Committed to helping Britain's cities improve their economic performance, the Centre produces practical research and policy advice for city leaders, Whitehall and employers.
The Centre for Cities is very grateful for the support of SNR Denton and CB Richard Ellis for this independent report. Except where otherwise indicated, all views expressed are those of the Centre for Cities and do not necessarily reflect those of SNR Denton or CB Richard Ellis.
The Work Foundation has also produced a report on Enterprise Zones. For more information please contact Nasreen Memon on 0207 976 3507 / 07825 527 036 / nmemon@theworkfoundation.com
