Nissan car manufacturing plant in Sunderland
Nissan car manufacturing plant in Sunderland

Enterprise zones policy can take longer to yield results than politicians imagine. Zones with established infrastructure have got off to the quickest start, whereas those needing to build roads and buildings face slower progress.

In northwest England, for example, the already established Daresbury science and innovation centre near Warrington has attracted an extra 14 businesses employing 160 people.

Liverpool city centre has received development worth £165m with 2,000 gross jobs created in 18 months. But its waterfront zone relies on regenerating vast disused docks, and finance has been hard to come by.

In Leeds, a solitary packaging factory and waste-to-recycling plant are being built, but development is now “accelerating”, the council said.

Lancashire does not expect to create a single job before the election on land around BAE Systems’ aircraft manufacturing plants in the Preston area. “This is a long-term, 25-year project to create jobs and growth,” said a Lancashire council spokesman, adding that jobs would start to be generated by late 2015 or early 2016.

Analysts question the effectiveness of the incentives, which include business rate relief, superfast broadband and, in some zones, enhanced capital allowances for plant and equipment.

The zones are expected to cost only £325m in the three years to 2015, out of the government’s £3.9bn spending on local growth initiatives over that period.

The National Audit Office said recently that all the coalition’s local growth schemes – enterprise zones, city deals, the regional growth fund and growing places fund – had been slow to create jobs and had yet to demonstrate they were capable of achieving value for money.

The Big Innovation Centre, a think-tank created by the Work Foundation and Lancaster University, has described the zones as “ineffective” and called for the funds to be redirected to investment in science, research and technology.

But John Cridland, director-general of the CBI employers’ organisation, called for “bigger and bolder” incentives in a report last year. The CBI wants zones to be expanded and business rate rebates made more generous.

A spokesman for the Department for Communities and Local Government said the zones were all about “long-term” sustainable growth. So far, they had “laid down the foundations” of success, having brought in half a billion pounds of investment from 212 businesses.

Kris Hopkins, local growth minister, said the zones were part of a wider growth programme of investment worth billions of pounds.

Lord Heseltine’s original enterprise zones in the 1980s– set up in Corby, Belfast, Wakefield and elsewhere – typically lasted for about a decade.

The most successful was Canary Wharf, which transformed a derelict area of east London docks into a financial services powerhouse. Other sites, however – such as Gateshead and Swansea – left less imposing legacies of shopping malls and retail parks.

A report by the Work Foundation, an independent group, suggested that 86 per cent of jobs in the Heseltine zones came from within the same county: as such, only 13,000 of the 63,000 jobs created could be classed as “new”.

Similarly, the NAO has pointed out that it is hard to say how many jobs in the new sites are “additional”, meaning they would not have been created without the zones – just somewhere else.

In northeast England, Tees Valley, the most southern of the region’s two zones, comprises 12 sites ranging from heavily industrial locations to business parks and urban centres. So far, it has attracted 12 projects that will create 317 jobs.

Kevan Carrick, founding partner of Newcastle-based JK Property Consultants, has seen at first hand development of all the northeast’s zones since the early 1980s.

He said: “The art is, at the beginning, to choose the rising sector.”

Case studies

Northeast England

The North East Enterprise Zone proves an important political point: quick results are best achieved by building on existing strengths.

By winning EZ designation for land near Nissan’s Sunderland plant , the North East zone scored an early victory with the construction of the first big project in the new zone programme – a £23m warehouse for Vantec Europe, an automotive logistics supplier serving Nissan.

Three of the North East zone’s 10 sites, totalling 117 hectares, are in Sunderland’s “ultra-low carbon vehicle corridor” near Nissan and so can capitalise on the strength of the UK’s biggest single carmaking plant.

Three sites on the Tyne focus on advanced manufacturing in subsea, offshore oil and gas, renewables and port-related activity.

Here, too, the zone has built on existing industry, with a £30m rope factory at the Neptune site for Bridon International, supported by £2.2m regional growth fund money. And Fraser Hydraulics, a subsea sector company new to the area, is building a plant, a £28m private sector investment.

Even in a zone regarded as successful, development work takes time where brownfield sites are the focus. Progress has also been slower on the four sites in Blyth, Northumberland.

Humber

The country’s largest enterprise zone aimed to create almost 5,000 jobs by 2015. In its first 28 months, it has managed only 145.

The Humber zone, covering more than 484 hectares, on both sides of the river close to the country’s biggest cluster of ports, wants to become a home for the offshore wind industry.

But only a few dozen jobs servicing turbines from Grimsby have been created so far.

Andy Tüscher, regional director for the EEF manufacturers’ organisation, said government delays over incentives for wind farms played a big part. Siemens, which two years ago signed a deal to create an £80m turbine assembly plant in Hull that would add 700 jobs, has yet to confirm it.

The government also delayed by more than six months a decision to permit Able UK to build a £450m facility for turbine assembly near Immingham, granted this month.

“It is frustrating that plans have been delayed for so long. We need to get clear leadership from the government to enable the developments to happen,” said Mr Tüscher.

Associated British Ports, which operates the Humber ports, had objected to the plans and has yet to say whether it will appeal. Able hopes to create 4,000 jobs, but few will appear before 2016, when the facility opens.

Reporting by Andrew Bounds, Brian Groom, John Murray Brown, Jim Pickard and Chris Tighe

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