Birmingham’s new “enterprise zone” will create 50,000 jobs and raise £700 million for the region, business leaders have predicted.
The cash will be shared among local authorities in the Greater Birmingham and Solihull Local Enterprise Partnership, including East Staffordshire, Lichfield, Tamworth, Bromsgrove, Cannock, Redditch and Wyre Forest as well as Birmingham and Solihull.
The ambitious plan to boost the economy, to be set out by LEP chairman John Lewis managing director Andy Street, will mark the start of a new era in economic development in the West Midlands led by the enterprise partnership.
The cash will come from extra business rates paid by employers moving into the enterprise zone over the next 25 years.
They will be enticed into the area with the promise of a 100 per cent discount on their business rates for five years, up to a total of £275,000, relaxed planning restrictions and the possibility of cheap superfast broadband.
Enterprise zones were a centrepiece of George Osborne’s Budget last month, when the Chancellor announced he was approving ten zones across the country including one in Greater Birmingham and Solihull and one in the Black Country.
It marks the first major test of the local enterprise partnership, which has drawn up a business plan proposing a zone in Birmingham City Centre.
Mr Street has been appointed to chair the partnership and a range of top business leaders and entrepeneurs from across the region have now been appointed to sit on the board.
Steve Hollis, Midlands regional chairman of KPMG, is likely to become the partnership’s deputy chair.
Full details are being revealed at a high-profile event at Villa Park, where business and civic leaders will be addressed by Mr Street, Bridget Blow, the outgoing chair of the enterprise partnership’s interim board, and Jerry Blackett, chief executive of Birmingham Chamber Group.
The planned enterprise zone will cover a large part of the city centre, including the Science Park at Aston, the planned High Speed 2 station near Curzon Street, the refurbished New Street station, Birmingham City University’s campus, Millennium Point and much of Eastside, the city centre district currently undergoing a major redevelopment project.
The zone also, perhaps fortunately for Mr Street, includes the planned new John Lewis store next to New Street station.
A business plan drawn up by the enterprise partnership predicts a total of £700 million will be raised from increased business rate collection over a 25 year period.
Cash will not come in immediately, because of the five-year business rate holiday which is to be enjoyed by new employers.
However, councils could also apply for permission to borrow money against projected future tax revenues, under a government scheme called Tax Increment Financing.
The partnership will also submit proposals to the Treasury for a separate enterprise “belt” to cover areas outside Birmingham.
It has identified three areas that could be included – Burton, in Staffordshire; Bromsgrove, in Worcestershire, and the M42 corridor. This would probably take in parts of Solihull, Warwickshire, Coventry and Staffordshire near the motorway.
The creation of enterprise partnerships was highly controversial, with Labour claiming the abolition of development agencies would rob regions of vital support for industry. Advantage West Midlands had a budget of £250 million a year.
But the formal launch of the enterprise zone bid will put the Conservative-led government’s approach to supporting regional economic development to the test. Councils, chambers of commerce and other business organisations will be expected to work together to raise funding for infrastructure instead of relying on handouts from the development agency.
The initiative was welcomed by Solihull MP Lorely Burt (Lib Dem).
She said: “This is excellent news for industry at a time when we urgently need measures to help create jobs in the private sector.
“It’s not only firms in the enterprise zone itself that will benefit, but all those in the supply chain who work with them.”
She said she also welcomed plans for the enterprise belt, which she expected would include parts of Solihull.
However, Labour MP Richard Burden (Lab Northfield) said enterprise zones would not make up for the loss of the regional development agency.
He said: “I hope this zone is a success but I am also worried about the impact on nearby areas which are not included.
“There is a major regeneration project in my own Birmingham constituency which is not part of this enterprise zone, and it may actually put off investors and potential employers.”