The government recently announced plans to create enterprise zones,
featuring 100 per cent discount on rates capped at £275,000 spread over
five years and access to superfast broadband.
The first eleven zones are in Birmingham and Solihull, Leeds,
Sheffield, Liverpool, London and Tees Valley. This will soon be extended
to 21, mostly centred in the big conurbations.
There was criticism that those areas that had not formed Local
Enterprise Partnerships (LEPs) would miss out. My view is that this
provides an excellent incentive for local councils, chambers of commerce
and other stakeholders to show some entrepreneurial gumption and form
their own LEPs, or something very much like them. If they deliver
measurable results at minimal cost as the LEPs are trying to do, then
government grants will inevitably follow.
Peter Deaves is Head of Policy at the Centre for Economic and Social
Inclusion, a research organisation focused on tackling disadvantage and
promoting social justice. In the April edition of their journal Working Brief,
he questioned the effectiveness of earlier enterprise zones, based on a
study by The Work Foundation, which claimed that the cost for creating
each job was £23,000 and that 80% of new jobs were displaced from
somewhere else.
Deaves says that government has learnt useful lessons from the
earlier enterprise zone success stories, such as Canary Wharf and
Trafford Park, but argues that success should ultimately be measured by
the number of new jobs that the zones creates, especially for unemployed
young people.
Few could argue with this logic or the potential role of the
enterprise zones in reducing the twin burdens of taxation and regulation
that entrepreneurs cite as the two factors preventing them from growing
their businesses.
The solution is to provide incentives rather than impose extra
regulation. The key issue always identified by small business
associations The Federation of Small Business, the British Chambers of
Commerce and the Institute of Directors is employment law.
These organisations tell me that they want entrepreneurs to be able
to be significantly incentivised when hiring unemployed people but still
able to let them go easily if they do not work out or circumstances
change, without the burden of costly employment tribunals.
A major concern is that lax government regulation might enable a
whole new generation of Ebenezer Scrooges, but my experience of meeting
entrepreneurs is that most of them are more like Titus Salt, the
Bradford-based manufacturer, politician and philanthropist, who built
the town of Saltaire to house his mill workers.
I feel strongly that government should give eye-watering incentives
for today’s social entrepreneurs who behave in the same way. People who
work with the long-term unemployed and ex-offenders tell me that a key
success factor is to take disadvantaged people out of their current
environment by the provision of social housing elsewhere.
This is a highly effective way of enabling social mobility, both for
the first generation of a family leaving home to go to higher education
and for former drug dealers leaving their old neighbourhoods where there
is significant peer pressure to re-offend.
The social entrepreneurs will be rewarded by not only doing good
while making money, but also by adding a property business to their
business portfolio. You only have to look at the successful companies
building affordable student accommodation or the next generation of care
homes to find an excellent business model to follow.
If entrepreneurs are as successful as Salt and the other Victorian
philanthropists, then they will get other benefits that many of them
secretly crave and which a grateful government could provide at minimal
cost: a public statue and a knighthood.
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