Osborne hopes to kick-start economy with enterprise zones

Many argue that the jobs created are simply displaced from other areas, and that costs outweigh the benefits

Chancellor George Osborne is hoping to kick-start the economy and create businesses and more jobs with a series of new "enterprise zones", announced yesterday.

Click HERE to view graphic (94k jpg)

The enterprise zones will offer tax breaks, relaxed planning regulations and high-speed broadband in an effort to attract start-up companies, and have been described by Mr Osborne as a "critical part" of the government's growth strategy.

But many have questioned the effectiveness of the policy, pursued by both Margaret Thatcher and John Major throughout the 80s and 90s, arguing that jobs created are simply displaced from other areas, and that the cost of setting up the zones outweighs the economic benefits.

Months before an official announcement of the enterprise zones, two think tanks urged the government to reconsider the policy.

A report by Centre for Cities released in February called for "a new approach to area-based growth," suggesting that the scheme used in the 1980s by Thatcher was ineffective.

"The enterprise zones of the 80s did not create enough jobs and were too costly for the public purse to be effective today," the report said.

It added: "The incentives used to encourage business growth and relocation – business rate relief or capital-based spending and allowances – also weighed heavily on public finances."

Supporters of Mr Osborne's strategy point to the success of the Isle of Dogs in the London Docklands – now Canary Wharf – which itself began as an enterprise zone. But another think tank says this example is misleading.

A report from the Work Foundation, also released in February, said that when the Docklands enterprise zone expired there were just 7,000 people working in Canary Wharf, compared with 90,000 today.

Andrew Sissons, a researcher at the foundation, told the Today programme that the zones were merely an "expensive way of moving jobs around the country."

The foundation's report claimed that the zones typically provided only a three-year boost to an area before it slipped back into depression, and that four out of five jobs created were displaced jobs from areas outside the enterprise zone.

This was the case in Dudley, according to John Rider, chairman of the Institute of Directors in the West Midlands, when it became one of the first waves of enterprise zones under Margaret Thatcher in the early 1980s.

A former steelworks site was transformed into a huge retail park with the help of the scheme, but not without a cost.

"I think the concept is reasonable but the reality was that they displaced people's jobs over the boundaries into the enterprise zones," Mr Rider said.

An Eighties revival

The original urban enterprise zones were the work of town planner Professor Peter Hall in the 1970s. He proposed setting up small sectors that allowed for "shamelessly free enterprise" as a "last-ditch solution" to turn around disadvantaged areas, and the first zones were established in 1981 under Margaret Thatcher.

Over the next 15 years, 38 were created across the country, with the most famous being London's Docklands. There, the success of turning what had been derelict wasteland into a modern financial hub might be considered to form the perfect inspiration for one of the nearby Royal Docks, which has been designated as one of the new zones.

While some would argue it would have been hard to encourage such a massive redevelopment without tax incentives, a report from the Work Foundation think tank has downplayed the impact of the project in encouraging investment in the Docklands, saying that when the zone expired, only 7,000 people were working there, as opposed to the 90,000 today when no such relief exists.

Another of the old zones was set up in Dudley in the West Midlands, leading to the creation of the Merry Hill shopping centre. There, however, some people argue that it merely led to jobs moving into the zone from other places, rather than creating new jobs.

Rob Hastings

Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

E-Commerce Developer

£45000 - £60000 per annum + competitive: Progressive Recruitment: Exciting opp...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice