Major concerns about the cost of creating jobs through Enterprise Zones have been raised as the Government was urged to revise past schemes if it plans to announce a new programme in next month’s Budget.
The Centre for Cities thinktank said cost per additional job created in the zones of the 1980s was £17,000 a 10-year period, which was equivalent to £26,000 in today’s market.
The Enterprise Zones did not create enough jobs and were too costly for the public purse to be effective for the 2010s, said Centre for Cities.
It called for the Enterprise Zones of the 80s - which saw the birth in the West Midlands on initiatives such as the construction of the Merry Hill Centre - to be revised if the coalition plans to include them in the March Budget, and suggested that Local Growth Zones which can be matched to the needs of the local economy would present better opportunities for real economic growth and job creation.
Alexandra Jones, chief executive for Centre for Cities, said: “It is vital that the coalition learns the lessons of the 80s. Our evidence shows that 1980s style Enterprise Zones did not deliver jobs or skills development on the scale that is needed today. A new approach to area-based growth is required.”
Meanwhile, The Work Foundation said in a separate report that previous Enterprise Zone jobs cost up to £23,000 to create, equivalent to £50,000 today.
Andrew Sissons, researcher and lead author of the report, said: “Looking at Enterprise Zones created in the 1980s, there are serious doubts about the wisdom of bringing the policy back.
“Most of the areas that had such zones are still struggling today - places like Middlesbrough, Speke, Hartlepool and Swansea. Any attempt to redesign the Enterprise Zones for the 21st century is likely to be equally ineffective.
“The key issue is that Enterprise Zones don’t tackle the real problems that local areas face. Providing artificial incentives to businesses in the short term will have little lasting effect without action to tackle the underlying drivers of competitiveness.”