Between 1981 and 1996 the Conservative governments of Margaret Thatcher and John Major established 38 enterprise zones across the UK – small areas where tax breaks and reduced planning regulations were intended to attract new business and create new jobs. The most famous of these was the Isle of Dogs in London’s docklands, now the beating heart of the UK financial services industry.

The coalition, faced with a similar problem, has now dusted off this blueprint and rolled it out in a bid to kickstart the flagging economy. As a result, 22 new enterprise zones have been announced, featuring simplified planning regs, superfast broadband and a total of £150m worth of tax breaks over the next four years.

The 22 areas include 11 in the UK’s largest cities and a further 11 in areas such as Cornwall, Leicestershire and the Humber Estuary. In addition to the above benefits, the government has announced plans to make enhanced capital allowances available for plant and machinery investment in enterprise zones in Assisted Areas, including the Tees Valley and North East. From April 2012, companies setting up in these areas, will be eligible to claim enhanced first year capital allowances of up to 100%.

While at first glance, the initiative might seem positive, some printers feel that the policy is indicative of a government that is out of touch with today’s business landscape.

Mark Snee, managing director of Leeds-based printer Technoprint says: "My view is that there are many more fundamental things that the government should be doing. It makes me despair."

Snee’s views are echoed by Terrye Teverson, owner of Cornwall-based KCS Print, who feels that the policy will lead to unfair advantages for new businesses set up inside the zones.

She says: "If you fall in the zone will you be advantaged compared to businesses just outside it? If printers move into Cornwall just because of these benefits, how will it affect existing companies, and what will happen if these benefits are taken away, will they up sticks and leave?

"Perhaps it will encourage printers to move into the area, but it will not be a level playing field and it may displace existing businesses. Surely it would be a better idea to give the benefits to all the businesses that already operate in the area?"

No long-term gains
Teverson’s concerns echo the findings of a Work Foundation paper published in February. The study, Do Enterprise Zones Work, evaluated the 1980s initiative and similar schemes internationally and found that around 80% of the jobs created scheme were taken from other areas. It concluded that zones tend to create a short-term boom followed by a long-term reversal into depression.

Both Snee and Teverson would prefer the government to focus on encouraging businesses to boost workforce training as well as helping to relieve the burden of red tape and high taxes. Snee says: "Business rates are crippling. Our rates were revalued at the beginning of 2010 and went up from £15,000 to £22,000. We have now successfully appealed and the rate has gone down to £18,000, so we will get a refund, but we have still had to find this extra money for more than a year."

Business rates is one area where companies setting up in enterprise zones stand to make a significant saving – 100% over a five-year period, up to a maximum of £275,000 for businesses that set up in the area before March 2015.

They will also benefit from "radically simplified planning approaches". However, Snee argues that planning regulations should be simplified for all businesses and not just those operating from the zones. "The last time we put in an application for a building the local authority application fee alone was around £4,000. It is ridiculously expensive and acts as a disincentive," he says.

Rather than encouraging businesses to relocate to enterprise zones to take advantage of temporary – albeit potentially significant – incentives, Teverson believes the government should be giving funding directly to existing businesses to invest in areas such as training. "We have recently taken on three new staff that need to be trained on the job," she explains. "There is a cost involved because they will not be as productive as experienced employees. However, there is no relief for that. Also, there should be better relief packages for capital investments across the country, not just in these zones."

Tellingly, the Work Foundation highlights Canary Wharf as the biggest success story of the 1980s enterprise zones scheme, but attributes its growth to investment in regeneration and infrastructure rather than temporary tax breaks.

Only time will tell if the new initiative will herald new Canary Wharf-style success stories or put more pressure on already struggling businesses, however, for many printers the signs are not encouraging.

30-SECOND BRIEFING
• The government has launched 22 enterprise zones across the UK in a bid to boost growth outside the South East. These include 11 in the UK’s largest cities and a further 11 in areas such as Cornwall, Leices-tershire and the Humber Estuary
• Businesses in these selected areas will benefit from business rate discounts of 100% over a five-year period (up to a maximum of £275,000) provided they set up in the area by the end of March 2015
• These enterprise zones will also feature significantly reduced planning regulations and super-fast broadband, while those in ‘Assisted Areas’ will also be eligible for enhanced first year capital allowances of up to 100%
• The scheme echoes that set up by the Conservative governments of Margaret Thatcher and John Major in the 1980s and early 1990s, when 38 enterprise zones were established – the most famous being in London’s Docklands
• The resurrection of the initiative has drawn criticism from the Work Foundation, which claims that the scheme only displaces jobs from one area to another, rather than creating new ones