Enterprise zones do not work

Cllr Falvey would have us believe that it will create long term jobs for Dinnington. However evidence shows that any policy offering tax breaks and all the other incentives on offer in enterprise zones do not work. They are ineffective at stimulating sustainable economic long term growth in depressed areas such as Dinnington.

The majority of jobs, up to 80 per cent, created are taken from other areas, in other words the companies taking advantage of the tax breaks etc bring the majority of workers with them, and the other 20pc are left unemployed in the area the company moved from.

All enterprise zones do is to create a short term boom that quickly reverts back into depression, in an already depressed area. These zones are also very expensive, they can cost at least £45,000 per new job, money that could be spent creating real sustainable jobs. This is because of the incentives on offer, relief on local business rates, which can be worth up to £275,000 for some companies. Reduction in corporation tax or national insurance contributions, tax credits, capital gains allowances on investment in capital assets and premises. Fast track planning process to make construction of premises cheaper and quicker to build, in other words you can build practically any thing you want.

These incentives on offer are temporary, so in the majority of cases when they end companies pull out and move the jobs to another enterprise zone; for more incentives.

For individual workers companies’ national insurance holidays have long term negative effects. Because once short term incentives for hiring individual workers expires, the chances for a worker to get a wage increase are limited. This creates a high turnover of workers, this suits the employer because they gain new tax incentives for new workers.

Enterprise zones create artificial market activity which results in total collapse after the enterprise zone designation expires.

In Dinnington you only have to look around the factory estates built on the pit site and see how many are empty. There are no rules in place to make companies moving into areas such as ours employ local people.

What Cllr Falvey and the rest of the borough councillors should be doing is instead of sacking workers they should be employing more. They should also concentrate on long term drivers of economic growth: innovation, trade, skills and infrastructure, instead of concentrating on gimmicky easy options which are in the end short term answers, which just move the same jobs around from enterprise zone to enterprise zone, with no sustained impact on economic growth.    

Dave Smith, Victoria Street, Dinnington