One of the key indicators of how well this government is dealing with the economic challenge of eliminating the huge structural deficit is how much growth the country can muster. Over the last three quarters growth has all but dried up as the twin effects of the Euro-zone crisis and the US economy’s international credit downgrade takes its toll. Faced with the politically damaging prospect of their economic strategy being blown off course, David Cameron and George Osborne have ramped up their ‘dash for growth’ agenda.
One of the government’s key aims is to stimulate local growth with the huge incentives offered through Enterprise Zones. The first tranche of 10 Zones were created last year, though these focused on the big cities. These areas are benefiting from simplified planning rules, tax breaks for local businesses and access to new super-fast broadband internet access. This new tranche of 11 Zones will, the government hope, create over 30,000 new jobs by specialising each Zone on an area of technology. The hope is that the expertise created by these new technological areas will stimulate an economic benefit which will, in turn, create more jobs.
Redwood Consulting is active in an area granted Enterprise Zone status, and the celebrations by those who have been leading that bid to the government went on all night when they were told the news. But for every celebration of a success there are surely a number of concerned councils that have not been granted EZ status. Indeed, those areas immediately adjacent to a new EZ could very well see their High Streets and business parks suffer as prospective investors look towards the more favourable conditions in the Zones.
Anything that can create 30,000 new jobs must be a good initiative. In the 1980s and 1990s the previous Conservative Government created several similar enterprise areas. These had mixed success, with some being successful (Canary Wharf being the obvious example), and others less so. In Hartlepool the EZ initially worked, but when the 10 year funding expired the jobs soon went with them. Today Hartlepool’s unemployment rate is twice the national average.
Will these Zones succeed? How will they compliment the localism agenda of the Coalition government? How can they be made to work for investors and property developers?