Economic zones from the age of Thatcher to makea comeback in UK cities

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The Independent Online

Ed Miliband may think of the Chancellor as "Norman Lamont with an iPod", but Mr Osborne's announcement yesterday of new enterprise zones had more in common with the interventionist Lord Heseltine than the fiscally conservative former Tory chancellor.

Mr Osborne's embracing of enterprise zones marks the revival of a policy begun during another time of austerity – the dark days of 1981 when the Thatcher government faced riots in Britain's cities over its hardline economic policies. Mr Heseltine – humble Michael back then – launched the zones as part of his urban regeneration work as environment secretary and they were part of Conservative policies into the 1990s.

The idea is simple. Take a run-down area and offer tax incentives for companies to move there while relaxing planning laws so new buildings can be built quickly. Public funds for clearing derelict land and improving transport are also part of the mix.

Yesterday the Chancellor promised businesses 100 per cent discounts on rates, superfast broadband and the ability to use more generous capital allowances in zones with a strong focus on manufacturing.

In addition, local authorities hosting the zones will keep all business rate growth for at least 25 years to spend on development in return for relaxed planning.

London's Canary Wharf is the best-known and most successful enterprise zone. Despite its ups and downs, the project has turned desolate docklands into a thriving centre for financial services, shopping and leisure.

But other zones outside the South East have been seen as failuresbecause they targeted areas in long-term decline and created jobs that sucked in employment from other places until incentives ran out.

Richard Grass, head of public sector at Colliers International, the commercial real estate broker, said: "Confirmation of the reintroduction ofenterprise zones is a welcome sign that the coalition is focusing on growth as well as reducing public expenditure, although £100m will be spread fairly thin across 21 different zones over four years.

"To have any lasting impact these incentives need to be focused on areas with high growth potential and which can deliver near term employment rather than just shiny new buildings on derelict land."

In reviving Lord Heseltine's flagship policy, Mr Osborne is donning some one-nation clothes while doling out cuts that recall the harsher aspects of the Thatcher era.