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Enterprise Zones

Volume 124: debated on Thursday 17 December 1987

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To ask the Secretary of State for the Environment what plans the Government have for further enterprise zones; and if he will make a statement about the progress of the experiment.

The first enterprise zones have been in existence for six years and are over halfway through their 10-year life. A number of proposals for new zones and zone extensions have been submitted and I have, therefore, been considering, in conjunction with colleagues in other Departments, the future of the enterprise zone experiment. In this, we have been assisted by the report of consultants who have evaluated the experiment in Great Britain on our behalf and whose report is shortly to be published. (A similar study is nearing completion in respect of the Northern Ireland enterprise zones). The latest annual monitoring report will be pubished at the same time.These two publications will show that the zones have been successful in varying degrees in regenerating economic activity in areas which had hitherto seen steady decline for several years. On the zones in Great Britain the number of firms has gone up by 125 per cent.; about 60 per cent. of the land in the zones has been developed with over 4·6 million sq m of floor space, mostly industrial and commercial; in consequence, overall employment in the zones has more than doubled. The zones have also boosted the economies of the areas in which they are located by the additional activity they have generated. These substantial achievements must, of course, be set against the costs of the experiment, which by the end of 1986 amounted to just under £300 million for the British zones.Enterprise zones were among the first of the steps the Government took on being elected in 1979 towards lifting the burdens on business and enterprise. They have been the flagship of deregulation and they have helped to encourage the entrepreneurial spirit that is now a welcome feature in many parts of the United Kingdom economy. We have subsequently developed a wide range of other measures to stimulate development in areas adversely affected by changes in the local economy: urban development corporations, urban development grants, and urban regeneration grants are among the more important. We are also applying the enterprise zone planning regime more widely in the form of simplified planning zones.We are now able to select from this range of measures the ones most suited to the needs of a particular area. In the light of this, and in the light of our assessment of the enterprise zone experiment, we have concluded that a general extension of the experiment is not desirable. In many circumstances, other measures will be more cost effective. I should make it clear that existing enterprise zones will be unaffected by this decision.Nevertheless, we recognise that there may be exceptional circumstances where the creation of a new enterprise zone or the extension of an existing zone might still be the best way of tackling a particular and localised problem. Whether or not this is so would depend upon the nature and severity of the problem, the likely cost-effectiveness of an enterprise zone in contributing to its solution (in particular compared with the other measures now available), and the extent to which the authorities and agencies concerned can ensure that the zone is a success.I do not intend to designate further enterprise zones in response to the proposals I have received for new zones, or extensions to existing zones, in England. My right hon. Friends will consider proposals for new zones or extensions in other parts of the United Kingdom.