Blog post by Catherine Howe, Chief Executive, Public-i
With the announcement of the second wave of enterprise zones (you can read about it here). I have been reading up on what they hope to achieve. To be honest – and having looked at various think tank pieces, news stories and also listened to an excellent File on Four programme. I am still a little confused given that the evidence of the last time we tried this (during the 1980s) they had mixed success.
According to a 1987 government evaluation, only 13,000 of the 63,300 jobs created in Enterprise Zones were new jobs, with the remainder displaced from other local areas. There is also evidence that indicates around 25% of new jobs in Enterprise Zones were displaced from within the same town (Source: Work Foundation). I was also reading opinion from SERC and other places which concurs. Have I missed the balancing evidence or is a case of robbing Peter to pay Paul?
I am also slightly uneasy – and this is really speaking as someone who runs a business that would fit into the ‘creative industries / software’ category here – that you get the best results by creating these zones. I think there is a strong case for looking at smaller incubator style approaches that are run more like shared workspaces. I am watching the new Innovation Warehouse, which has been created in partnership with the City of London with a lot of interest. Larger parks and the space to build are needed by manufacturing – it’s an odd assumption to think they are appropriate for knowledge based businesses as well.
However the idea of tax relief, fast broadband and support around planning offered by an enterprise zone is very appealing. In fact tax relief of over £250,000 over 5 years would make me consider moving the business – but only within the area I am already located in. And this seems to be the rub – the enterprise zones seem to be an approach that works for areas who already have a growing business community. The fact that they are de-linked from regeneration – in spite of the rhetoric which talks about deprived areas there is no necessary connection to regeneration.
How will enterprise zones help areas that are a position of multiple deprivations which don’t have the small businesses and entrepreneurs who will move into the enterprise zone? I realise that they are only part of the picture and that the LEPs should be addressing these other issues – but the enterprise zones are currently where a lot of funding is being concentrated and as a result it’s not unreasonable to expect them to have a reasonable chance of success.
The elephant in the room continues to be the differential in starting capacity between different parts of the country. Enterprise zones may be a good solution to accelerate growth but possibly not for areas who are struggling with basic skills, educational outcomes and lack of infrastructure.