ENTERPRISE ZONE FAILURE

The news that Northern Ireland’s only Enterprise Zone (EZ), the Atlantic Link site, near Coleraine, has cost ratepayers £3m and attracted one tenant since it opened for business in 2017 is hardly a surprise.

A decade ago, in its response to  the UK Treasury consultation document on “rebalancing the Northern Ireland response economy”,  the Workers’ Party provided clear evidence that Enterprise Zones are an expensive waste of money and fail to create jobs.

The Party wrote then that “if Northern Ireland signs up to the Enterprise Zone scheme, no real jobs will be created, and the costly scheme will only benefit super-rich corporations”. In fact, due to the failure of the market and despite the lure of state subsidies,  only one medium-sized company benefitted from setting up shop in the Atlantic Link site.

Thatcherite Policy

First proposed in Britain in 1978, and a key Thatcherite policy in the 1980s, Enterprise Zones are designated sites which offer tax incentives and simplified planning procedures to help attract businesses to a specific area. In the absence of a genuine industrial policy, around 40  such zones were set up under Thatcher and John Major, offering tax breaks, rates holidays and other incentives to companies locating within them.

In Northern Ireland, two enterprise zones were set up, one in Derry and another in the Duncrue Industrial Estate in North Belfast, an area of the city where, according to recent research, one in three children grow up in poverty . If anyone gained from Thatcher era enterprise zones, it wasn’t the working people of North Belfast.

Resurrected by Cameron and Clegg

Like a horribly predictable sequel, the Enterprise Zone idea was revived under David Cameron’s disastrous austerity government, during which UK life expectancy plateaued,  the gap between rich and poor widened precipitously, and those jobs that were created in the wake of global financial collapse of 2008 were mostly badly paid and insecure.

Research shows that of those jobs that are created in Enterprise Zones, most are displaced from other areas. In other words, at the taxpayers’ expense few  to zero new jobs are created. EZs have been good news for a few  for huge corporations, mostly in the USA,  which have succeeded in making massive profits by siphoning off taxpayers’ money and leaving the scene as soon as they no longer advantaged by government largesse. In general terms, however, Enterprise Zones have proven costly and ineffective and Northern Ireland’s EZ has produced no new jobs and no inward investment.

Few Jobs, Mostly in Retail

Elsewhere in these islands, Enterprise Zones have not been successful, even by Thatcherite profit-driven standards. According to a 2019 Report by the thinktank, Centre for Cities, since 2012 Enterprise Zones in England have seen the creation of 13,650 jobs, not all of which are attributable to investment as a result of EZ incentives. This is a much smaller figure than the 56,000 new jobs touted by Cameron and Clegg in 2012. In addition, breaking down the data shows that those jobs that were created were mostly low-skilled activities in local services such as retail, and not the high-skilled, export-oriented jobs touted by the Tories.

Incidentally, back in 2010 Sinn Féin “quietly” bought into the development of Enterprise Zones in Northern Ireland, which was in line with its commitment to reduced corporate tax rates.  According to business magazine, Agenda NI “quietly, the party supports the UK Government’s enterprise zone commitment, while expressing scepticism that this will come about”.

Blame Game

When the local press highlighted the failure of the Atlantic Link site,  an almost comic round of finger-pointing began. Independent Unionist MLA Claire Sugden said it was a “wasted opportunity so far” and that “everybody involved needs to step up their efforts in order that this asset is not wasted”.

A Department of Economy spokesperson said that the council had the “lead responsibility for marketing the campus as landowners.” Democratic Unionist Party councillor Aaron Callan  went on the defensive,  saying that “we, the council, are not the only partner in this, there is the University [of Ulster], there is Invest NI and others that need to come in behind this project. There needs to be more willingness to put weight into it”.

But the blame game is a distraction, aimed at hiding in plain sight the fact that none of those involved have the slightest idea of an alternative to this failed and disastrous approach to job creation. And so, they talk of ‘wasted opportunities’ ‘the need to step up efforts’,  and lack of ‘willingness’. People seeking alternatives should look elsewhere.

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