A Black Country Enterprise Zone: a stimulus for business or a bullet to kill off enterprise?

Sometimes it is the juxtapositioning of events which adds to the poignancy of a situation. Such was the case today, with George Osborne’s budget announcement of 10 Enterprise Zones to stimulate business growth. This coincided with a letter in the local Express and Star, inviting ex-employees of a closed iron and steel plant, to meet up for a reunion.

What are you talking about you ask? Well this famous plant in the Black Country, and known as Round Oak, closed in the 1980’s. The derelict site was designated by the government of the time as an EZ at Brierley Hill, to stimulate new manufacturing and jobs. Planning controls were to be freed up and favourable tax and rate incentives posted.

Sorted then! Well not quite. A loop hole in the regulations encouraged rapid retail development, often using semi-skilled labour and consumer imports to the detriment of skilled artisans, manufacturing and exports. Nothing for the apprentice to go into then.

Local shopping centres could not compete with this regional shopping giant at Merry Hill. Firms which hitherto were located outside the EZ jumped across the boundary to access the financial goodies. Not much of a net increase in regional jobs to talk about.

The lamentable economic performance of places such as Walsall, Wolverhampton, Dudley and Sandwell today, may in part and ironically, owe their current status to the decision to create the initial EZ in the first place. See how many empty shops there are today with artistic posters outside to encourage you to think otherwise. What is being done to rectify the situation? Another EZ of course and thirty years on.

There is nothing wrong with these zones, as long as we ensure that they act as a stimulus to local enterprise and the benefits are spread. The reverse may be the case as their performance sucks the energy from the surrounds – a bit of a backwash or tsunami. Vicious rather than virtuous circles.

The newly created Local Enterprise Partnership (LEP) will have enough challenges ahead of it as it removes the barriers to business. George Osborne has now added another ingredient into the mix. The boundaries will have to be drawn very carefully. We are still living with the impacts of the first EZs. The task ahead is to ensure that we have not just been given extra toppings.