partner feature
Enterprise Zones – quick-fix or simply ineffective?
An enterprise zone is an artificial zone created by the government to encourage industrial and commercial activity. The EZ was designed to test whether
relaxation of planning control, non-domestic rates, industrial training levies, capital expenditure subsidies and other fiscal incentives and tax breaks would stimulate economic growth. Thirty-one zones were introduced in the
UK during the 1980s and 1990s under the Local Government, Planning and Land Act 1980 and were given a fixed life of about 10 years. The initiative ended in 2006. However, in the Budget 2011, the
government announced that up to 21 new generation EZs would be established in England and a further 11 were announced in August, to help kick-start the economy. Now the Welsh government is looking to implement them. The Welsh government apparently does
not intend to replicate the English EZ model. Welsh Business Minister Edwina Hart said in September that they intend to take a ‘targeted approach in Wales and design a bespoke Welsh solution’.
The Welsh government announced approximately £10m would be made available over five years to five new EZs:
• Cardiff Central Business District, focusing on the Financial Services sector • Ynys Mon, focusing on the energy sector • Deeside, focusing on the advanced manufacturing sector • St Athan, focusing on the aerospace sector • Ebbw Vale, focusing on the automotive sector.
What this means for Newport
While Welsh EZs are welcome to stop businesses and jobs being leeched away to English EZs, the chosen locations have caused anger among Newport City Council, Newport business and citizens alike, who feel the economic vibrancy of Newport is bound to suffer. Bristol and Cardiff would be more attractive economic environments for certain people and businesses in which to work and trade. With the perceived prosperity attached to
EZs in Cardiff and Bristol, many are concerned that businesses in certain sectors may think twice before signing a new long term lease, or
THEbusiness QUARTER 11
starting a business, in Newport. What the English experiment has taught us
is that it is vital to give the right location the correct EZ status to ensure the development in a given sector will continue after the EZ term has lapsed. EZs can quickly attract investment to a certain area, but there is an established argument that EZs mostly displace jobs from other areas instead of creating new jobs.
A petition called for an EZ in Newport
was handed to the Welsh Government on November 9, 2011. Only time will tell whether or not the WAG will listen and give Newport EZ status. While an EZ would have a positive effect on businesses in Newport, it is unlikely to be a quick fix solution. Whatever
happens, you should ensure you obtain favourable terms in commercial agreements such as service contracts and leases to best safeguard your business’ future. HardingEvans is
committed to helping local businesses and we will continue to monitor developments in this area. If you need advice in relation to any business concerns, we would be happy to help, contact Sam Strong, Senior Solicitor specialising in Commercial Property on 01633 760664 or
strongs@hevans.com.
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