Enterprise zones create just 10 per cent of promised jobs so far, MPs' report finds

Enterprise zones have so far only created fewer than 10 per cent of the jobs the government said they would by 2015, a report by a committee of MPs has found.

Margaret Hodge MP, chair of the Commons Public Accounts Committee
Margaret Hodge MP, chair of the Commons Public Accounts Committee

A scathing study by the Public Accounts Committee said the coalition government’s local job creation policies, through intiatives such as enterprise zones and the Regional Growth Fund (RGF), are "falling well short" of its initial expectations.

The report also found that only 10 per cent of the government’s promised funding for local growth initiatives had reached their targets by last year.

The report looks at the impact so far of the government’s various local economic growth initiatives, which also includes the Growing Places Fund, local enterprise partnerships (LEPs) and city deals.

As of next year, the Single Local Growth Fund, a £2 billion pot of devolved Whitehall funding, will become available for business-led LEPs to bid for.

Responsibility for promotion of local growth is shared by the Department for Business, Innovation and Skills (BIS) and the Department for Communities and Local Government (DCLG),

Committee chair Margaret Hodge MP said: "Progress in creating jobs is falling well short of the departments’ initial expectations.

"The results claimed for jobs created in enterprise zones and through the Growing Places Fund are particularly underwhelming."

According to the report, as of December last year only 4,649 jobs had been created in England’s 24 enterprise zones, though the government had expected 54,000 by 2015. The zones use incentives such as simplified planning rules and reduced business rates to attract investment.

And just 419 jobs had come from the Growing Places Fund by the same period, the committee found, despite a promise of 217,00 jobs overall.

Meanwhile, the departments’ estimate of the RGF’s cost per job created has risen from £30,400 in its first round up to £52,300 in the fourth round – a 72 per cent increase.

Despite large sums having been provided to promote growth locally, little money has actually reached businesses, the report went on to say.

Of the £3.9 billion that has been allocated in total to the various initiatives, only about £400 million had actually reached local projects by the end of 2012/13.

Hodge said that BIS and the DCLG "now face a significant challenge in meeting their spending targets by the end of this financial year".

Under the RGF, the largest scheme, they will need to spend £1.4 billion this year, compared to the £1.2 billion spent over the previous three years.

She said that about £1 billion of the remaining £3.5 billion allocated to initiatives is currently "parked" with intermediary bodies such as local authorities, LEPs and banks, with the rest with the two departments.

According to Hodge: "The departments have not managed the local growth initiatives as a coordinated programme with a common strategy, objectives or plan.

"We welcome the recent creation by the departments of a single growth directorate and a programme board which are now overseeing progress across initiatives.

"But we remain concerned that the departments are not yet using the new oversight arrangements effectively to decide which initiatives to invest in to provide the best value for money."

Hodge added that that, when introducing the Local Growth Fund, the departments need to "learn lessons" from the current programme and "adopt a more coordinated and strategic approach, including setting out the basis for how the programme will be monitored and evaluated".

In response, local growth minister Kris Hopkins said that enterprise zones had in fact created "more than 9,000 local jobs" so far.

He said: "These are old figures.

"Money is getting to local projects and making a real difference on the ground. The coalition government’s long-term economic plan has got Britain building again and kick started local infrastructure, created jobs, and stimulated growth.

"Britain’s economy is growing and more people are in work today than ever before. Not only have we rebalanced the books, but we’ve created more jobs and growth outside of London.

"The Regional Growth Fund is working – over £1.2  billion has been  paid  to projects and companies across England – helping  businesses create thousands of jobs up and down the country. We've sped up the process - companies get the money when they need it and after all the necessary checks have been carried out. Anything else would be irresponsible and a waste of taxpayers money."

Hopkins went on to say that LEPs and enterprise zones were "proving their worth", adding: "Enterprise zones have harnessed government funding to secure £1.2 billion of private sector investment and to create more than 9,000 local jobs.

"£652 million of Growing Places funding has been allocated to 305 projects that will create 4,900 businesses, 94,000 jobs and 27,000 houses."

The report, Promoting economic growth locally, can be found here


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