Enterprise zones struggle to boost jobs

The government had said the 24 zones, launched in 2011, would create 30,000 jobs by 2015. However, to date they have created just over 1,700. George Osborne, the chancellor, urged cabinet colleagues in February to speed development at the tax-friendly zones.

But the Leeds City Region, one of the largest local enterprise partnerships, blamed insufficient incentives for the zones and a lack of general business confidence as it downgraded its jobs forecast for its Aire Valley zone from about 700 by 2015 to 200. In its first year it has attracted just one business, Watershed Packaging, which is creating up to 40 manufacturing jobs.

Keith Wakefield, Labour leader of Leeds city council, told the Financial Times: “We have got the zone in the right place but we do not have the demand. We want to encourage advanced manufacturing, healthcare and the digital and creative sector.

“I still think there is more that the government has to do to persuade businesses to invest.”

The council has had to spend £2.5m on a new road to the 142 hectacre site, near the A1, and win money from the £2.6bn Regional Growth Fund so it could offer grants and loans to businesses. It has made a further bid for cash from the growth fund to help companies project manage the move.

A spokesman for Leeds Lep, a private sector-led economic development body, said the zones could fail to replicate the success of those of the 1980s because now they targeted companies moving in rather than the developers that could lure them in.

“The incentives are not a patch on what they were last time,” he said. “And the incentives are aimed at the end user. There is not very much for developers. We are talking to several companies but they need certainty.”
The zones offer companies up to £275,000 off business rates, simplified planning procedures and superfast broadband. Some also attract capital allowances or EU-backed grants because of local economic deprivation. Those that have prospered tend to have existing activity and buildings ready to move into.

Zones aiming at ambitious transformation, such as the Lancashire sites on land vacated by BAE Systems, the defence company, as well as Mersey Waters, the site in Liverpool, are only just receiving planning permission and development master plans and have no tenants, whatever their long-term potential.

Lord Haskins, the chairman of the Humber Lep, which has attracted Eon, the energy company, said its success depended on government policies to encourage offshore wind farms. “It is down to government whether or not most of the investment we are targeting takes place here or on the Continent.”

Other enterprise zones have fared better. Sheffield City Region, an advanced manufacturing park near Rotherham, has attracted 15 occupiers and created 228 jobs. In Birmingham, its city centre zone is confident about its aim for 5,000 jobs.

Tees Valley, 423ha across 12 sites in the region, has been “a real success”, says Stephen Catchpole, managing director of Tees Valley United, the Lep that runs it. He said it had created 177 jobs from eight occupiers and total capital investment of £322m, including private sector input.

“The difficulty now is not so much demand but our ability to build speculative development,” he said.

Mark Prisk, local growth minister, defended the progress of enterprise zones and pointed to extra money for the schemes announced in February. He said the zones were “creating new local jobs and stimulating business ventures” with 60,000 sq m of new commercial floor space and secured almost £160m of private sector investment.

“The government has now put a further £59m on the table to help enterprise zones complete key infrastructure projects that will turn ‘shovel ready’ sites into ‘job ready’ sites,” he said.

Vince Cable, business secretary, and other ministers are due to address Lep leaders at a Westminster event on Thursday, and are likely to urge greater efforts.

David Frost, chief executive of the Lep Network, organising the conference, said the government could regret the bold 30,000 job pledge. “It’s a big number.”