Belfast Telegraph

Scotland's enterprising ideas worth zoning in on

The concept of introducing enterprise zones is gaining momentum. But would they be of any benefit, asks Greg Lloyd

The essential feature of an enterprise zone is that it is a geographically defined area within which tax incentives, simpler planning procedures and other administrative relief is made available. Its purpose is to encourage existing businesses to expand and to attract new investment.

Support for these zones is coming from all quarters - Secretary of State Owen Paterson and the Bow Group, a Conservative think-tank, have long been supporters.

The Northern Ireland Chamber of Commerce says the zones should be introduced into areas with sustained levels of private-sector enterprise and employment, which are below the UK average.

In particular, the chamber suggests that enterprise zone status for parts of Belfast would serve to attract investment into the city which may not otherwise be forthcoming.

Northern Ireland's catch-up is driven, in part, by the Westminster Government's designations of zones across England.

Indeed, in the last Budget, it announced that it intends to create enterprise zones in Scotland and Wales and this has certainly whetted Northern Ireland's appetite.

The idea is not cut and dried, however, as there are concerns about the likely contribution to our local economy. And, while the Northern Ireland Affairs Committee in Westminster has explored the possibility, members did not fully support it.

Enterprise zones are not a new concept. In 1980, around 30 areas were designated across the UK - including a number here.

But what exactly did they achieve? The overall evidence is not conclusive. Research studies suggested there were some marginal positive impacts and benefits, but that the concept did not create the conditions required for sustainable growth.

Enterprise zones were essentially a land and property initiative at a time when good, high-quality accommodation was unavailable to business in localities that were under-performing.

More worryingly, the research revealed displacement of existing jobs from surrounding areas into designated enterprise zones.

Today, there are some marginal differences in the enterprise zone incentives provided when compared with the earlier model. The broad make-up, however, remains the same.

There is now a five-year exemption from business rates (up to £275,000), central and local government help to get applications through planning and access to high-speed broadband.

But there is one major difference between the enterprise zones of the 1980s and today.

Then, there was a real shortage of high-quality office and commercial space. The zones tried to address that by increasing the supply of available space.

Today, there is an over-supply, so why try to kick-start business by looking at the wrong target?

Enterprise areas focus on industrial sectors with potential and provide tax breaks (rates relief) and streamlined planning, high-speed broadband, international marketing assistance and skills support.

This applies to businesses in four sectors considered to have the greatest potential for growth and new jobs: life sciences, low-carbon, energy renewables and general manufacturing are the focus in Scotland.

The emphasis is on the sector and not the site. The approach there is brave in that it is highly-focused on identifying those sectors and firms with potential in their niche areas, which avoids the cruder and blunter approach of simply painting broad areas as eligible for support.

It appears the Scottish model offers a sophisticated understanding of the comparative strengths and weaknesses of its economy - and the Government is not afraid of selling a clear and co-ordinated strategy.

Moreover, it doesn't rest on a 'blaming' culture - like pointing to the crowding-out effects of planning. Rather, it integrates its affairs to a common purpose, namely Scotland plc. These are the real lessons for Northern Ireland.

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