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Business community's mixed feelings on enterprise zones

By Yvette Shapiro
The Politics Show

image captionGary Briers said he may not have been able to stay in business without the help of an enterprise zone

They say there's nothing new in fashion, and perhaps there's nothing new in economic policy either.

The enterprise zone, a child of the Thatcher era, has been reborn everywhere in the UK, except Northern Ireland.

Back in the early 1980s, when Michael Heseltine was environment secretary, the Conservative government introduced the concept of enterprise zones. Around 40 were set up, offering tax breaks, rates holidays and other incentives to companies locating within the zones.

The best known - and probably the most successful - was Canary Wharf, now the hub of the UK's financial services industry.

Northern Ireland Office ministers established enterprise zones in Belfast and Londonderry.

The Duncrue Industrial Estate, on the north foreshore of the city, was one of them.

It was developed at the height of the Troubles, the local economy was struggling and business owners were looking for a break.

'Big holiday'

"We located here in 1988 mostly because it was an enterprise zone," explains Gary Briers, owner of the sportswear retailer, Ski and Sports.

"There was tax relief and no rates which was a big holiday.

"About three or four years after opening, terrorists bombed us and our business was burnt to the ground.

"Cash flow was tight and it was a big advantage not to have to pay rates. Without the enterprise zone we might not have stayed in business."

Economist John Simpson watched the development of the enterprise zones in Belfast and Derry in the 1980s and has analysed their impact.

He is not impressed.

"When we look back on it, the enterprise zones of the 1980s shifted business from one part of the city to another, rather than bringing in new business, so they weren't really deemed to be a success.

"With time, the idea was dropped and none of us regretted it being dropped."

But the enterprise zone idea is back, repackaged in the 2011 Budget by Conservative Chancellor George Osborne as a way of helping some of Britain's most economically-deprived areas to attract investment.


Around 30 have been announced so far, across England, Scotland and Wales.

Businesses in each zone will get a five-year rates holiday and planning applications will be accelerated.

Six zones, including those in Liverpool and The Humber, have been given special treatment in the form of 100% tax relief for companies investing in plant and equipment.

Not surprisingly, the local business organisations are keen to obtain that privilege for Northern Ireland too.

In his latest Budget statement, delivered in the Commons last week, the Chancellor detailed the development of new enterprise zones in Scotland and Wales, and added that he was looking forward to seeing one here.

John Simpson is sceptical.

"I hope the Chancellor isn't treating the enterprise zone as an alternative to a reduction in Corporation Tax for Northern Ireland," he said.

"It's possible that we will indeed have an advantage from both, but the important thing in terms of scale, in terms of improving the whole of the economy, is that we should have the full economic benefit that comes with Corporation Tax change.

"If we can't get a Corporation Tax cut, then an enterprise zone is not second best, it's about tenth best in the ranking of the economic measures."

But Secretary of State Owen Paterson doesn't agree.

He's been pushing the idea of creating enterprise zones here since he was in opposition.

"There has been much more rapid progress in England, Scotland and Wales on enterprise zones and I think some of these ideas could apply to Northern Ireland," said Mr Paterson.

"We should try to use every tool in the box, but it's very much a devolved responsibility as to whether to go ahead.

image captionCanary Wharf - part of the Isle of Dogs Enterprise Zone

"This has been on offer since the Budget last year."

Privately, NIO officials say they're surprised that the executive hasn't taken the opportunity to apply to the Treasury for enterprise zone funding.

But local ministers have a lot on their plate at the moment.


They're currently engaged in "intensive" talks with the Treasury on a proposal to cut Corporation Tax in Northern Ireland.

Ministers have also been lobbying Business Secretary Vince Cable over plans to remove Northern Ireland's "100% status" for regional aid.

Put simply, this allows Invest NI to offer financial assistance to companies setting up or expanding their operations anywhere in Northern Ireland.

If the status is removed, then grants can only be offered to firms in a handful of economically deprived areas.

With this in mind, Enterprise Minister Arlene Foster says the time is not right to set up enterprise zones here.

"If the Treasury say they're going to give us the power to vary capital allowances in certain enterprise zones, that would be great and we'll look for that money and use it," she said.

"But we can't do that at present because we don't know what the story is in terms of regional aid.

"So it's a bit of a chicken and egg situation we find ourselves in.

"That's why we've been pushing the Treasury very hard to make a decision about re-balancing the Northern Ireland economy.

"What are they actually going to do about Corporation Tax?"

On Thursday, the secretary of state met with a delegation from the Northern Ireland Independent Retail Trade Association (NIIRTA) to discuss enterprise zones.

Spokesman Glyn Roberts says it's time that the executive started a "conversation" about the concept.

And NIIRTA has already suggested how the idea should be taken forward.

"We need a number of 'micro' enterprise zones to redress the economic imbalance in Northern Ireland, particularly west of the Bann where you've got many areas that have been effectively starved of investment over the years," Mr Roberts said.

"We'd also like to see it applied to regenerate some of our towns and cities which have been suffering for some time.

"It's an important debate and we need to be focussed on what we mean by having an Enterprise Zone."

Sunday Politics is on BBC1 at 12 o'clock.