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Enterprise zones offer no ‘quick-fix’ to UK economic woes, experts warn

The property industry wants to see enterprise zones succeed but the incentives on offer may not be enough to spur development and help revive the UK’s stagnating economy, a panel of experts will warn today.

With latest figures from the Office of National Statistics (ONS) showing since the third quarter of 2010 Britain’s economy has broadly flat lined and unemployment jumped to its highest level since 1994, one of the key pro-growth tools the government is pinning its hopes on are the 22 enterprise zones.

While developers agree enterprise zones have the potential to act as a catalyst for economic growth, they are urging government to offer a menu of incentives that can be adapted for each area, and give greater clarity on how tax increment financing can be quickly introduced in the zones to help fund vital infrastructure.

Announced by Chancellor George Osborne as part of the 2011 Budget for Growth in March, the zones offer simplified planning rules, super-fast broadband and tax breaks for businesses. Government estimates they will boost local growth and create more than 30,000 new jobs by 2015.

Speaking ahead of the event⁽¹⁾ organised by the British Property Federation and hosted by Berwin Leighton Paisner, Michael Chambers, associate director of special projects at the BPF, said: “While investment in enterprise zones is welcome, the incentives on offer are not very exciting and appear aimed more at the occupier rather than the developer. Therefore they may not be enough to kick-start the speculative development needed to create the offices and industrial units within the zones for new businesses to occupy.

“Certainly they do not match the benefits available in the 80s and 90s, and as things stand it’s difficult to imagine that enterprise zones will meet the economic and job creation goals the government is seeking.

“We would urge government to devise a flexible set of incentives that can be tailored to the different needs and contexts of different zones.”

Andrew Yates, partner and head of regeneration at Berwin Leighton Paisner, said: “Having worked on Enterprise Zones projects in the 80s and 90s and seen their ability to kick-start development and attract investment, I’m sure the property industry will work hard to see them work.

 “However, it hopes government will learn the lessons from their 80s counterparts and ensure the incentives on offer this time around are sufficient and adapted to suit the current economic environment.  

“Of particular interest to the market is the inclusion of tax increment financing in the current enterprise zones proposals. We need as much clarity as possible about TIF and the other tax benefits.”

ENDs

Patrick Clift, Media and Public Affairs Manager, on 07834 439 505 or at pclift@bpf.org.uk

Paul Sweeney, Media Officer, on 07841 732 194 or at psweeney@bpf.org.uk

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