Enterprise Zones: Hull’s successful bid

The first Enterprise Zones were created by the Conservative Government in 1981 and this year the Coalition Government announced that it would establish 21 new Enterprise Zones in England as part of its Plan for Growth. The aim of the new Enterprise Zones is to support economic development by creating the conditions for "strong, sustainable and balanced growth". The Government wants to attract new businesses to run-down areas and create new jobs which will in turn have positive effects on the wider local economy.

On 17 August 2011 the Government announced that the bid submitted by the Humber Local Enterprise Partnership ("LEP") for Enterprise Zone status was successful. The key purpose of Hull`s bid was to attract leading manufacturing companies in the renewable energy sector to further its aim to be a national and international hub for renewable energy. 

The Humber Enterprise Zone is the largest Enterprise Zone to date covering an area of 375 hectares and spread over three distinct sites in the Humber region:

1. Green Port Hull (Alexandra Dock)
2. Queen Elizabeth Dock, Hull
3. Able Marine Energy Park (southern part), North Lincolnshire

How will businesses benefit?

There are four types of benefit applicable to all Enterprise Zones: 

1. Tax breaks

A 100% business rate discount will be available for businesses that move into an Enterprise Zone during the current Parliament i.e. by April 2015. It is thought that the discounts may be worth up to £275,000 over a five year period. 

The Government will reimburse local authorities for the cost of the discount they provide to businesses. As well as reducing the tax burden on businesses, it is hoped that the discounts will increase cash-flow for local authorities enabling them to free up some of their resources for further investment. 

2. Retention of business rates growth 

All business rates growth generated within an Enterprise Zone can be retained by the local authorities within the LEP area for a period of at least 25 years. Where there is more than one local authority, the money will be shared between them. The aim is for the funds to be reinvested in the local area in line with economic priorities of the LEP. 

The Humber LEP Board has indicated that it would use the funds to invest in skills and infrastructure so as to spread the benefits of the Enterprise Zone throughout the Humber and stimulate economic growth in the region.

3. Simplified planning control

The Government and local authorities will work together to simplify the planning regime as it has often been argued that the delay, cost and uncertainty of the planning process has proved to be a disincentive to business. 

It is thought that Local Development Orders ("LDOs") will be the most likely mechanism used by local authorities to reduce planning control within the Enterprise Zones. LDOs allow development to go ahead without the need for planning permission to be obtained. LDOs can permit any development within a designated area or they can apply to a specific type of development, and they may grant planning permission outright or specify certain conditions to be complied with. 

4. Superfast broadband

The Government will provide support to ensure superfast broadband is rolled out within the Enterprise Zones. This will be achieved through guaranteeing the most supportive environment and, if necessary, public funding. The Government plans to invest over half a billion pounds over the next four years to help create this superfast broadband network.

The package of financial incentives actually available on the granting of the Enterprise Zone status will depend on what the LEP decides will promote the best economic growth in its area. 

There may also be other types of incentives available to those within the Enterprise Zones following discussions between the Government and the LEP. For example, enhanced first year capital allowances on plant and machinery will be available in designated areas within a limited number of Enterprise Zones where there is a strong emphasis on manufacturing. 

The wider impact

Despite the financial incentives only being applicable within the Enterprise Zones, it is hoped that the surrounding areas will benefit from their proximity to the Enterprise Zones. For example, as the Humber LEP originally considered putting in a bid for an 800 hectare Enterprise Zone, the remaining sites not put forward will be targeted at the supply chains which want to locate near to the manufacturers that move into the Enterprise Zone. 

Also it is hoped that the Humber Enterprise Zone will have a significant impact on employment in the region as the Humber LEP have estimated that it will help create over 4,500 jobs by 2015.

The granting of Enterprise Zone status can only be a positive step towards promoting the Humber region, allowing it to capitalise on its unique location and existing infrastructure by encouraging investment from the renewables sector.

Posted on: 01/09/2011

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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