Leading article: Stimulation good, intervention bad

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The Government's second tranche of Enterprise Zones looked like a half-decent answer to yesterday's gloomy statistics showing unemployment at 2.5 million and rising at its fastest rate since the recession. Sadly, the case is unconvincing.

Superficially, Enterprise Zones have much to recommend them. It is hard to argue against tax breaks, super-fast broadband and less regulation. The scheme is designed to help rebalance the economy – from banking to industry, from north to south, from the public to the private sector. And it could create 30,000 jobs by 2015, the Government says.

The problem is that it is unclear how the latest incarnation of Enterprise Zones will be more successful than its predecessor. A similar scheme in the 1980s was an expensive flop, costing £23,000 per job created and sucking four out of five of them from elsewhere.

Eric Pickles, the Communities Secretary, is at pains to stress he has learned lessons from the past. But specifying the industry, as well as the location, looks like an attempt to pick winners. And there are dangers in skewing the market – creating rings of economic desolation surrounding the zones, for example.

One of the sites unveiled yesterday, at Sandwich in Kent, should be a warning in itself. The facilities were originally built by Pfizer with a £10m slug of public money. After the subsidies ended, the company had no qualms about walking away. There is little to suggest the latest scheme will have more lasting consequences.

Ultimately, the biggest concern from yesterday's jobless data is the rise in youth unemployment. With one in five youngsters now unable to find work, the disconnection in the labour market is widening. The issue is not just about creating the jobs, it is about creating the workforce to fill them.

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