Enterprise Zones and Jobs (Hansard, 7 June 1985)

§ Lord Graham of Edmonton
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ Lord Skelmersdale
My Lords, the consultants who monitored economic activity in the first 11 enterprise zones reported that over 8,000 jobs had been established in the zones by 31st May 1983; over half of these were in new firms. Between June and December 1983 a further 2,600 jobs had been located in the zones. We have recently completed the collation of more up-to-date information.

§ Lord Graham of Edmonton
My Lords, I thank the noble Lord the Minister for that reply. Does he not appreciate that the consultants said that in the first two years creating the jobs worked out at a cost to the public purse in excess of £16,000 per job? Does the Minister not understand that retailing and distributive outlets which operate inside an enterprise zone do so at an unfair advantage to those retailers and distributors outside who have to pay higher charges?

§ Lord Skelmersdale
My Lords, yes. I am well aware of what the consultants had to say on this matter, but of course they were taking a very narrow view of the first two years of what is a 10-year scheme. Value judgments on these matters will only be satisfactorily arrived at at the end of the 10 years. As far as the second part of the noble Lord's supplementary question is concerned, we have no evidence that traders within zones have an unfair advantage over those outside, although we are aware of concern on the part of established retailers in shopping centres close to some zones. It is likely that the economy of the area as a whole will benefit by the rapid development of the enterprise zone.

§ Lord Molloy
My Lords, is the noble Lord the Minister aware that notwithstanding the miserable trend towards an increase in unemployment year by year, as well as an increase in bankruptcies, nevertheless there is this incredible situation where newspapers throughout the country, and local newspapers in particular, seem to have pages of jobs for which people may apply? Can the Minister say whether there is any collusion between job centres to inform people who might be interested? For example, under this Government a person might be unemployed in Ealing for three years and would not mind taking up a job in Wolverhampton to get out of the awful rut. Is that not a possibility, if it is riot already being done?

§ Lord Skelmersdale
My Lords, I do not know if the noble Lord is an avid reader of the Sun newspaper, as I am. Recently it has been having a campaign along the lines that the noble Lord suggests. I might also point out that in today's Sun newspaper there is an 942 article by my noble friend Lord Young, the Minister without Portfolio, which draws attention to this particular point.

§ Lord Molloy
My Lords, the Minister has not answered the question. All he has said is that lots of other important people have asked this question as well and that they are getting no answer from us. Can we all have an answer?

§ Lord Skelmersdale
My Lords, I am sorry. I did not mean to deflect the noble Lord's pertinent thoughts. The answer is that of course there is collusion within areas between the various job centres—for example, the one in Taunton and the one in Exeter, which I know well. Whether this goes wider in the country, for example, between Northampton and Taunton, is something that I shall have to look into. I shall let the noble Lord know.

§ Lord Parry
My Lords, would the noble Lord accept that the development zone concept is one which is very important as one of the measures to try to restore the balance that has been upset by the shrinking of the heavy industrial base? Would he accept that, since it is a limited experiment, some of us are deeply concerned that in the first two years of a zone being established there is quite often very little progress at all? Would it be helpful to the House if a report were given to it which showed what progress in job creation has been made within the development zones in their initial years?

§ Lord Skelmersdale
My Lords, yes, I think it might well be helpful to the House, but as I sought to say in an earlier answer I think that it would be a little previous to make that sort of report now. I think we should wait at least until half the period of the experiment is over.

§ Lord Parry
My Lords, may I come back and ask whether a 10-year period of generation does not require a very early start indeed in order to be certain that long-term jobs are created? Is it not precisely this reason that leads us to think we should now have a report on the general position of development zones?

§ Lord Skelmersdale
My Lords, I am sorry, but I do not follow the argument. What I have sought to explain to the House is that each enterprise zone is a 10-year programme and the advantages to the firms in the enterprise zones last for 10 years. I have said that it is my view that it is too early to make the sort of assessment which the House very naturally wants us to make in due course.

§ Lord Glenamara
My Lords, will the noble Lord say what plans the Government have to make more enterprise zones in the North-east of England where the unemployment rate is the highest in Great Britain—much higher than Merseyside, higher than South Wales, higher than Scotland, and as much as 40 per cent. in some areas? In considering the North-east, will he take advice from his noble and learned friend the Lord Chancellor, who, in his former role as Minister for the North-east, made a bigger impact on unemployment there than anybody else before or since?

§ Lord Skelmersdale
My Lords, running my eye quickly down the list that I have in my brief, I see that there are two enterprise zones in the North-east, namely, in Middlesbrough, and in Scunthorpe. The Government have at the moment no plans to extend the number of enterprise zones. These are of course looked at on application from the local authority concerned.

Lord Bruce of Donington
My Lords, on the assumption that the figure of 16,000 per job given by my noble friend is substantially correct, and that these are genuine jobs which therefore are likely to last for some time, will the noble Lord draw his Minister's attention to the necessity for a very wide extension of Government creative intervention in these matters by greatly extending the job creation scheme? It seems, does it not, that the Treasury is going to make money? It will cost far less to create genuine jobs than the cost of unemployment itself.

§ Lord Skelmersdale
My Lords, this could well be true, and I shall of course draw the attention of my right honourable and honourable friends to the points that the House has made today. But as far as the £16,000 per job figure goes, I find it very difficult to actually identify how this is made up. The only cost that could be stated precisely in all this is the exemption from rates.

§ Lord Graham of Edmonton
My Lords, does the Minister recall that in his earlier reply he failed to see how there was an unfair advantage to the operator inside the zone by comparison with the operator outside the zone? Does the Minister not understand that if there is a cry that rates are too high and that the operator inside does not pay them, and the operator outside has to pay them, that is an unfair advantage?
Perhaps I may refer the Minister to his own consultants' report, which pointed out that the evidence so far indicates that the firms that operate inside the zones do not come from other parts of the country but come from nearby. In effect, they are simply shifting over the border into the zone to take what those outside consider to be a very unfair advantage.

§ Lord Skelmersdale
My Lords, so far as the noble Lord's second supplementary is concerned, there will of course always be firms who want to move from existing locations for a variety of reasons: they need larger premises or a better location for distribution, and so on. Since enterprise zones are in the main located in areas where there has been serious economic decline, there is every advantage in having vigorous, established firms moving into such areas. There is also an advantage in retaining firms within a region when otherwise they might move right outside it.
As to the noble Lord's first supplementary, I would say it is inevitable that a larger workforce in a particular area leads to increased retail consumption everywhere in the area and not only in the enterprise zone.

§ Lord Dean of Beswick
My Lords, may I ask the noble Lord to confirm that in answer to my noble friend Lord Glenamara he gave the names of two 944 enterprise zones, the first of which was Middlesbrough? Am I right in thinking that the second one he mentioned was Scunthorpe?

§ Lord Skelmersdale
Yes, my Lords.

§ Lord Dean of Beswick
My Lords, I hate to put the Minister right, but Scunthorpe of course is in Lincolnshire and the noble Lord, Lord Glenamara, was in fact referring to the area he used to represent and with which he is so familiar, which has the worst unemployment record on the mainland. I believe that was the point my noble friend was making and I think we ought at least to get the facts right.

§ Lord Skelmersdale
My Lords, I am grateful to the noble Lord for pointing out the deficiencies in my geography.