The mayor of the council overseeing London’s ‘enterprise zone’ has warned it is vital authorities and businesses managing the local growth plans learn the lessons of past failures.

Chancellor, George Osborne, announced the eventual creation of at least 21 growth-focused enterprise zones – which will enjoy significant powers over local business rates, taxes and planning regimes – in his Budget on 23 March.

 

Prime minister, David Cameron, later revealed the exact locations for the first 10 zones (see box), while London mayor, Boris Johnson, announced a single zone would operate within the capital – the Royal Docks area of Newham LBC.

Councils and local business will be handed the opportunity to control how the zones will operate – through joint local enterprise partnerships – and could in future be handed powers to improve areas through tax increment finance initiatives (TIF) which could fund transport and regeneration projects.

Local government secretary, Eric Pickles, said: ‘Enterprise zones are unashamedly pro-growth, with lower taxes and reduced regulations to attract business, but they are also unashamedly localist, keeping power and profits within the local area so communities benefit.’

Experts have compared the new zones to the urban development corporations (UDCs) of the 1980s, many of which either failed to stimulate long-term regional growth, or enjoyed limited success, in areas such as Birmingham, Bristol, Teesside, Liverpool, Leeds, Sheffield and the Black Country – all homes to new enterprise zones.

Newham’s elected mayor, Sir Robin Wales, who is already co-ordinating a growth plan linked to the 2012 Olympics, was quick to warn the zones could not fail in the same way as UDCs.

‘Newham has significant need for growth, as we have a lower-than-average employment rate for our working age population, and a relatively small business base.

‘It’s vital we create more jobs over the coming years. It is also vital that these new zones do not repeat the mistake of the past, and deliver benefits to our workless community.’

The impact the new zones could have on transport and regeneration initiatives is unknown. But a senior source at the Department for Transport said Mr Osborne’s hint that TIF powers – which allow authorities to borrow against predicted increases in business rates – could be handed to the zones promised potential funding.

‘TIFs could, in theory, be used to fund local transport upgrades, providing those improvements are linked to local regeneration and business growth. During an age of austerity, this could be a handy income stream for the sector,’ he said.