Enterprise Zones: are they all good news?

So, a second wave of enterprise zones has been announced. Britain’s fragile economy is to be kick-started.

David Cameron, fresh from breaking the rioters, heralds their arrival: “These new enterprise zones will be trailblazers for growth, jobs and prosperity throughout the country.”

And with 30,000 new jobs by 2015 and over £150 million in tax breaks, this really is good news for everyone, isn’t it?
Back in March, during the ’Austerity Budget’ we learned there would be 21 enterprise zones in total. And now we have the full list, you could easily start to feel left out if you happen to be on the wrong wide of the ’enterprising’ fence.

Each of the latest spots will focus on some new area of technology. Hereford will specialise in defence, Newquay on aerospace. The automotive industries, transport and defence will receive a boost in Gosport and Hinckley whereas the Oxfordshire zone focuses on advanced material engineering. Biotechnology, pharmaceuticals, offshore wind farms, science parks.

Investment in economic growth has rarely sounded so sexy.

Investment in economic growth has rarely sounded so sexy. The PM is determined to make sure the message is clear: Britain is open for business. Clearly, that message is all the more difficult when gangs of people are wrecking the streets and looting their way to riches. Nonetheless, the 22 zones are out in the open and the proof will most definitely be in the pudding.

As a chartered surveyor, I’m interested in detail: the boring bits that headlines and spin doctors tend to enjoy skipping over.

What about the law of unintended consequences? What if 30,000 people around these new zones (added to the 24,000 people from the previous zone announcements) decide they would rather work in the hi-tech industries? Will we be seeing a skills shortage on the other side of that there fence? I suspect the Government hopes not.

Under these new rules, local authorities will be able to retain additional revenue from business rates from new developments including those in enterprise zones from 2013. The Government hopes that this will enable councils to raise capital for the improvements so desperately needed for local infrastructure projects which, in turn, unlock additional economic growth.

Will we be seeing a skills shortage on the other side of that there fence?

But back to the detail. What about the impact on property values of these zones? Will prices drop just outside the designated areas?

For those businesses that do see a drop in their property values, it’s critical they look to appealing their rating. Significant savings can be made even if business haven’t made the cut but this will mean less rates going into councils and less for them to invest. It all gets very complicated.

For those with short memories, enterprise zones haven’t always smelled of roses. In the 1980s, they enjoyed more than a chequered reputation. Canary Wharf was the great success story but less successful were the North East and Glasgow. Enterprise zones didn’t achieve much in those areas.
Let’s hope the 38,000 unemployed also announced today can hold on long enough for the new zones to really make their mark.

Peter Chapman is head of rating and compensation at property consultants and chartered surveyors Cluttons