Reinvigorate Enterprise Zones

May 1, 2019

Could a Government concept, made popular in the 1980s, be reintroduced to stimulate employment growth and boost the economic vitality of the North East?

The North East, the only UK region to have had a regular, positive, trade balance in recent years, is still viewed as a region with the weakest economy. This judgement is made in part by the number of Enterprise Zones (EZ), which were introduced in the 1980s to boost regional economic activity.

As the national economy changed so did industry and commerce. What was required was a means of stimulating the creation, and growth thereafter, of alternative businesses. This had to be a supportive, simple and incentivised process – enter the Enterprise Zone (EZ).

The original EZ concept lasted 10 years and offered support for businesses by a way of 100 per cent tax allowances for expenditure on property construction and improvement, exemption from business rates, easy navigation of planning procedures, and so on.

At the time EZs were successful in delivering jobs. Critics argued that EZs merely attracted businesses already active either in the area or from elsewhere. Further, the benefits of the EZ financial package went to the developer and not the local area. There were other criticisms too. At Developing Consensus, we believe that EZs achieved their objectives to varying degrees and that a return to the older type of EZ model would stimulate employment growth and boost the economic vitality of the regions by enabling entrepreneurs to obtain funding and take risks.

The whole ‘enterprise’ process is revenue and tax generating from the initial design stage, through materials and construction to delivery and occupation by businesses and their supply chains that are job creating and revenue generating be it corporation tax, employment tax or stamp duty.

A strategy to reinvigorate EZs will be needed to assist urban areas by encouraging businesses to establish themselves, expand and contribute to the local economy through jobs and spending power and to the national economy through taxation.

The new ‘zones’ would have to stand up to economic scrutiny and demonstrate that Government support will be productive. Rather than being cumbersome, they need to have fast-acting frameworks, from planning through to construction, to ensure opportunities are taken to the benefit of the local community and the wider national economy.

Part of the package must include skills training and support for employees generally to raise quality levels within the local labour market. Whether or not ‘zones’ have tiered status with, for example, research and development (R&D) being a top priority compared with a supply-chain warehouse operation is open to debate.

Essentially the existing EZ structure enabled funding to be obtained from the tax-based market and did not require an army of civil servants to approve the schemes once the criteria had been met. The availability of speculatively developed premises for inward investing companies or expanding local companies is essential. They will not wait for two years while sites are found.

Developing Consensus
Author: Gavin Black of Gavin
Black & Partners. Other working group members at Developing Consensus are Chris Dobson (Dobson Marketing), Angus White (Naylors) and Mark Thompson (Ryder Architecture)
www.developingconsensus.com

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