02Other benefits of enterprise zones
While the stated goal of enterprise zones was job creation, the ability of LEPs to borrow against future business rates increases to invest in property, public realm and infrastructure has been of benefit to some areas. As Box 5 shows, this has been the case in Birmingham city centre enterprise zone in particular, with the LEP reporting that over £100 million has been borrowed to fund infrastructure improvements in the zone.
Figure 5: Wider benefits of enterprise zones in action
Birmingham city centre
The Birmingham city centre enterprise zone had the third highest job creation of all the 2012 zones (2,680 jobs). But the enterprise zone has been used not only to create jobs but as part of the city’s Big City Plan to improve infrastructure and the commercial property offer in the city centre. By prudentially borrowing against the future growth of business rates, so far £109 million of capital expenditure has been raised to fund redevelopment. This has given the council the possibility to conduct public-realm work, such as the Ladywell Walk and extending the metro.
Science Vale Oxfordshire
Science Vale Oxfordshire had the fifth highest job growth over this period and the highest growth in high-skilled exporters.
The LEP associates this success with two factors. Firstly, the zone is well connected with good transport links to Oxford, Heathrow and London and this means businesses that decide to locate in this area have access to a wider pool of skilled workers. Secondly, the enterprise zone is building on the existing success of the area. Milton Park and Harwell in particular already had a high concentration of knowledge-intensive businesses. This raises questions as to whether the growth would have occurred without enterprise zone status.
The LEP views enterprise zone status as delivering two main benefits. Firstly, the ability to borrow against future business growth revenue has enabled the LEP to invest in improving transport links such as the A34. Secondly, they see the awarding of the enterprise zone as raising the profile of the area to international investors.
That said, the ability to use tax increment financing (TIF) to forward fund investment does not require an enterprise zone. This policy could be granted to a LEP or local authority without the need for enterprise zone status. This is something that the Government should consider rolling out to more LEPs based on the outcome of the use of this tool within the enterprise zones.