Make the entire UK an enterprise zone

If the government is willing to introduce tax breaks and other perks in certain geographical regions, why can’t it make the entire country one enterprise zone?

Enterprise zones - designed to get the economy moving
Dominique Lazanski
On 17 August 2011 16:20

Today, the government announced the rest of its enterprise zones bringing the total number of them to 22.

In an effort to improve the economy, the coalition government has decided to bring in a new and reformed version of the enterprise zones first introduced in the early 1980s under Thatcher. The zones will benefit from a combination of tax breaks and other perks in their area. But if the government is willing to do this in certain regions, why can’t it make the entire country one enterprise zone?

Under the new plan, the following policies will be adopted for areas:

• A business rate discount worth up to £275,000 per business over a five year period;

• All business rates growth within the zone for a period of at least 25 years will be retained by the local area, to support the Partnership’s economic priorities and ensure that Enterprise Zone growth is reinvested locally;

• Government help to develop radically simplified planning approaches for the zone using, for example, existing Local Development Order powers;

• Government support to ensure that superfast broadband is rolled out throughout the zone, achieved through guaranteeing the most supportive regulatory environment and, if necessary, public funding.

And additionally, the government will work with local enterprise partnerships on options to suit local circumstances, including:

• Enhanced capital allowances for plants and machinery, in a limited number of cases and subject to State Aid, where there is a strong focus on manufacturing;

• Tax Increment Finance to support the long-term viability of the area;

UKTI support for inward investment or trade opportunities in the zone.

This is all well and good, but a closer look at these polices show that they aren’t radical enough and UKTI support as well as super-fast broadband are both investments made by using taxpayer funding and not private funding at all. So in effect part of the bill for the scheme will be footed by us, of course.

In order to really get the economy going, the enterprise zone policies should be amended and rolled out to the entire country and not just to areas where there is already business growth, like the Oxfordshire Science Vale where high tech companies have already started to grow and prosper without government intervention.

What is more, the proposals should include:

1.      A 5 year holiday from business rates across the entire country;
2.      The removal of the employer payment of National Insurance for the first 10 employees of any business;
3.      Simplified planning approaches in all areas based on local requirements;
4.      Incentives and regulatory certainty for private industry and investment of superfast broadband across all of the UK;
5.      Capital allowances for business equipment (without state aid) for all new business;
6.      Reduction of business and sales tax country wide.

If the government were to adopt these police across the entire country there is no doubt that UK PLC would be open for business and that start-ups would grow and thrive across the country and not just in handpicked areas. And at the very least Gloucestershire wouldn’t be disappointed.

Dominique Lazanski spent over 10 years in the Internet industry in Silicon Valley and works for the TaxPayers' Alliance in the United Kingdom. She tweets at @dml

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