The Chancellor announced in the 2011 Budget that there will be an additional 11 enterprise zones in the UK, bringing the total to 21. Businesses based in enterprise zones will be offered tax breaks, superfast broadband and simplified planning rules.

All 21 enterprise zones will be in areas that already have a Local Enterprise Partnership (LEP) in place to manage them. So far they have chosen places with the most potential for growth and those which could attract inward investment from abroad.  Businesses in the enterprise zones will get discounts on business rates for five years, which will give them capital to invest in the firm. They will also get a guarantee of superfast next generation broadband of 100 Mbps and it will have tangible benefits. They will need to provide this if they want the zones to be a real catalyst for growth.

There are other benefits that will be available in some zones depending on the types of industry that are prevalent there, like capital allowances to help businesses to invest in machinery. The zones will be most useful for businesses that have been going for two or three years, and are looking to expand and inhabit their first business premises. It is very attractive commercially for businesses to look at what’s on offer in enterprise zones and to move there.

We saw enterprise zones in the 1980s but these were focused on developing derelict sites, and the incentives were biased towards property development initiatives rather than existing businesses. This time they will be run by the LEPs, so they will have a more realistic, on-the-ground approach. The LEPs will keep hold of some of the revenue created, from any increase in business rates, so they will have a vested interest in the zones. LEPs have a real motivation to make enterprise zones a success, as this is the only way they will make money to fund projects within and outside the zones.

More information is available on the Department for Business, Innovation and Skills (BIS) website.

www.bis.gov.uk/policies/economic-development/leps