Enterprise Zones – what are they and will they help?

Wednesday, August 17, 2011 11:47

Enterprise ZoneEnterprise Zones are the latest government incentive to get businesses growing. Within the Enterprise Zone you can get superfast broadband, lower rates & taxes, and low levels of regulation & planning controls.

That can only be a good thing – right? A great encouragement for younger companies who may otherwise struggle to reach critical mass.

Maybe, however there is considerable criticism of this approach also. Firstly it’s not new. Maggie Thatcher tried exactly this in the 1980’s. They provided a boost at the time that wasn’t able to be sustained.

Critics argue that all the Enterprise Zones do is to displace jobs from one area to another, with up to 80% of the jobs they create taken from other places.

Also that they are expensive, with estimates ranging from £23,000 to £50,000 per job created.

Having said that, if you are looking to expand your business (the zones will be most useful for businesses that have been going for two or three years, and are looking to expand and inhabit their first business premises), is there a benefit to doing so in a Enterprise Zone rather than elsewhere?

Probably yes. One of the main benefits that the zones will offer is a business rate discount worth up to £275,000, or enhanced capital allowances for plant and machinery where there is a strong focus on manufacturing, over a five year period. That coupled with the other advantages of infrastructure and support can make it attractive.

So where are these Zones? They are not all in areas needing regeneration, another criticism, but are areas with the most potential for growth and those which could attract inward investment from abroad. The government has announced the following areas will get an Enterprise Zone:

Bristol;
Liverpool;
Birmingham;
the Black Country;
the Tees Valley;
the West of England;
the North East;
London;
Manchester;
Derby;
Nottingham;
Humber Estuary Renewable Energy Super Cluster;
Daresbury Science Campus in Warrington;
Newquay AeroHub in Cornwall;
The Solent Enterprise Zone at Daedalus Airfield in Gosport;
MIRA Technology Park in Hinckley, Leicestershire;
Rotherwas Enterprise Zone in Hereford;
Discovery Park in Sandwich, Kent, and Enterprise West Essex in Harlow;
Science Vale UK in Oxfordshire;
Northampton Waterside;
Alconbury Airfield, near Huntingdon in Cambridgeshire;
Great Yarmouth in Norfolk, and Lowestoft in Suffolk.

Interestingly, it is difficult to then get further detail on each and how to apply to be in one. These are being managed by each Local Enterprise Partnership (LEP), so the first step is to contact one of these. You don’t have to already be working or living in the area, if you are prepared to move your business there.

Resources that may help:

Map of the Local Enterprise Partnerships (LEP).

Contact details for the Local Enterprise Partnerships (LEP).

 

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7 Responses to “Enterprise Zones – what are they and will they help?”

  1. Willie Gorman says:

    August 18th, 2011 at 10:45 am

    Enterprise zones are fine and welcome, but they need to think a little further and tie in contacts with potential investors and finance houses. Also they need to fill the EZs with many new business ventures, relocating existing businesses isn’t what EZs are about.

    I have been trying to get funding for my Commercialisation Centre for IP for years now, I’d love to move into anywhere, let alone an EZ. We currently have around 80 new product concepts, all of which can support the creation of new businesses. Samples- a product designed to stop unmanned and unbarriered railway crossing crashes. A product designed to protect people from terrorist bombings at airports etc. A new mobile phone “app”. Many more. With a little funding we can fill a few EZs and start the local economy, but we need the funding!!

    Lots of ideas are useless, lots of empty new buildings are costly, money sitting in low interest accounts is a waste of opportunity. Put them together and you create wealth!!

  2. Darren says:

    August 19th, 2011 at 6:42 am

    I agree that funding is needed over costly development schemes, if what attracts businesses to these zones are the discounts then surely these discounts could be applied somehow no matter where the business is located.

     

    Furthermore I was under the impression that many of the UK’s small businesses are small to the extent that they only employ 1-10 people and I am not sure that such zones really cater for that, though I may not fully know enough about that side of it. Ideally I would like to see the government providing direct small business loans with low interest rates. I am sure there are a myriad of reasons why the government cannot do this, eg would anyone then bother getting a loan from a bank?

     

    But when the government want to encourage entrepreneurship and most businesses are crying out for funding this sounds like a more viable way for the government to support fledgling businesses whilst also potentially getting the money back with interest. Thus showing a genuinely Conservative standpoint of encouraging people to get up and create a living for themselves.

  3. stiffjoint says:

    August 19th, 2011 at 9:19 am

    Use to be a case of growing business now its all about growing markets in shrinking worldwide economies. Big problem. Not so much a reversal of prospects but a complete about turn in the need to maximiize profits ethics which unfortunately in the short turn means cuts all round. For the forseeable future we’ll be bumberling along just barely ticking over.

  4. jackson mutebi says:

    August 19th, 2011 at 1:29 pm

    Start-ups and business companies will be able to promote their business in these tough times. Later to grow to big winning companies and help in employing the youth, generating talents from local communities. 

  5. Kevin Parkinson says:

    August 24th, 2011 at 5:22 pm

    The key points about EZ’s that need to be known include from April 2012 the business rate uplift from new investments on Enterprise Zones will be available to LEPs for 25 years to support growth activities.  New companies on Enterprise Zones will be eligible for Business Rate Discounts OR Capital Allowances, NOT BOTH. 

     

    Business Rate Discounts are a maximum per company of £55,000 p.a. for five years i.e £275,000.
    Capital Allowances on investments in plant and machinery are up to a maximum of £100 million and can be set against tax liabilities over years until the allowance is used up.
    Capital Allowances will be restricted to just three companies on any one Enterprise Zone.
    Capital Allowances will only be available to companies in certain industrial sectors (details to be supplied).

     

    The basic idea is to use the Capital Allowances to attract big companies with smaller supply chain businesses benefiting from the Business Rate Discounts and Site(s) in the Enterprise Zone have to be designated either for Capital Allowances or Business Rate Discounts.Capital Allowance sites will have to be specified in the Finance Bill next year and can only be in Assisted Areas because of State Aid implications.  This may render some of the LEP’s EZ plans as limited, given many Southern LEP’s and EZ’s may not be Assisted Areas.

     

    Investors and Company’s looking to create wealth on the back of the financial benefits of Rate Discounts and Capital Allowances must do their investment research well in advance.  This will also include needing to remain close to what the UK Gov Treasury and BIS Departments are currently doing in regards to reviewing Assisted Areas.

     

    Civil Servants, the Secretary of State and the Chancellor’s particular concern is about ‘additionally’ i.e. creating new jobs not just transferring existing jobs in the local economy to an Enterprise Zone.  Some LEP’s will have multiple Business Rate Discount sites in the Enterprise Zone which carries greater risks around not being able to maximise ‘additionally’.  Equally, many Local Authorities, Tier 1 County’s, Unitary (City) and Tier 2 Districts/Borough have their own Regeneration sites also competing to attract businesses to create jobs.  The only way ‘additionally’ can be controlled is through site ownership, (EZ sites may be in third party ownership and not in Local Authority control).

     

    Investors and business looking to generate growth through EZ’s must therefore be aware that where sites offer Rate Discount then Capital Allowance will only be available elsewhere, this makes good business sense though, an established production engineering company could secure the Capital Allowance to expand whilst encouraging smaller tier 2 and 3 suppliers to co-locate and benefit from Rate Discounts which will allow them to create new jobs on the back of the tier 1 pipeline growth.

  6. Bill Aitch says:

    September 4th, 2011 at 2:40 pm

    And these zones will assist/benefit sheep/goat producers, and forestry how, please?

     

    They will simply cost more Green Belt, and therefore mean that an even higher percentage of vital/essential raw food and drink must be imported. They will also inflate the price of real estate even further. These EZ will not benefit either private or public transport, as all bicycles, cars, buses and freight vehicles, also all heavy plant, will continue to be imported, all at extortionate prices. Most of the EZ tenants will be virtual enterprises, employing an average of two, both company directors, most likely providing destitute housewives with financial services, at exorbitant prices.

     

    I need British designed and built agricultural tractors and machinery at a price which I can afford. The Ferguson TD20, built in Coventry in the late 30′s (1935 on) was available as a solid workhorse @ £50 each in the mid, to late 60′s. Today, despite a further 50 years wear, and neglect, they cost £2,500 – £5,000. The Swindon (BMW) Mini is also costing 20 fold as much as the original Longbridge Mini, back in 1960.

     

    Why?

     

    I also need to purchase, or lease, agricultural land, of adequate size, at a price which is affordable.

     

    As an alternative I will be forced to set-up my enterprise in Panama, or even Costa Rica. I have now spent over 5 years searching for suitable premises, at an affordable price, in UK.

     

    How much longer before I quit, please?

     

    I am spending at least £10,000/annum, simply to locate, and view, a possible 3 properties/annum. A return train fare twixt 09:30 -15:30 is at least £50, and not much use to me, Outside these hrs it is at least £100. A seedy motel bed is at least £50/night, and the breakfast totally inedible. My own mobile hotel/office does a steady 50 MPH overnight on the M-Way, and is only costing £50 of diesel/day. Sadly, tyres are £50 each, and I need a new one almost every MoT, at ca. 12,500 miles/annum.

     

    Am I simply growing more grumpy with my slowly receding years?

  7. Nigel Weller says:

    September 23rd, 2011 at 7:39 am

    Low interest loans direct from the government, “pigs might fly”

    Not over impressed with EZ I agree it is just shifting the jobs market, we need growth and new jobs.

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