An Enterprising dilemma for Nottingham

Back in the mid 90s I was working as a business journalist in Leeds. It was an exciting time to be there – the economy was motoring, owner-managed firms were thriving and the city had taken on a real professional gloss thanks to the drive of the Leeds Financial Services Initiative.
It wasn’t just the deal-making accountants and lawyers who saw West Yorkshire as a lucrative hunting ground, though. One morning I picked up the Yorkshire Post to find a great exclusive: its reporters had ambushed officials from the Welsh Development Agency, who were camped out at a hotel just outside the city inviting local businesses to consider leaving Yorkshire and moving to Wales.
The WDA was, quite rightly, sent packing with a flea in its ear and politicians demanding to know why public money was being used to poach businesses from one part of the UK to another when the jobs ‘created’ in Wales would simply be those lost in Yorkshire.
The answer goes to the heart of the recent debate about whether we should bring back Enterprise Zones, and we’ll find out later this week if Nottingham has been successful in getting one on our patch.
I was chatting to Graham Chapman, the deputy leader of Nottingham City Council, about this very issue on Friday. He gave a broad hint that there are a couple of sites where they’d like to give it a go, but made it clear that the terms of the Enterprise Zone were the key: it would work only if the incentives were framed in such a way that they didn’t attract businesses who were moving only to follow the money.
As the WDA fiasco illustrated, he has point. There was another example closer to home which also threw a harsh light on the inherent weakness in inward investment underpinned by financial incentives.
Back in the early 90s, Mansfield was coming to terms with the social and economic impact of the end of the mining industry. It got a sniff that an American car components company, Johnson Controls, was interested in opening a factory making car seat covers. There were 600 jobs on offer and, quite understandably, the district council pushed the boat out for them, with an incentive package which included a contribution of nearly £2m from the European Union.
Six years later the council’s economic development chief turned up to a meeting with Johnson Control executives at which they handed over a sheet comparing the costs of operating in Mansfield and the costs of operating in the Czech Republic.
Mansfield had no answer. This was a global business, with no particular links to Nottinghamshire, which had decided elsewhere that it was going to follow the lowest cost option. So off it went, taking 600 jobs with it.
Graham Chapman, who knows a lot about economic development, says that Enterprise Zones will work only if they encourage a sustainable commitment to a location – in other words, one driven by business and economic logic rather than a short-term sweetener.
Enterprise Zones can work – the Sherwood Business Park [pictured above] just off Junction 27 of the M1 is a living, breathing example of one based on an attractive site right next to a motorway junction. So its advantages went beyond financial incentives.
But they also raise questions about fair competition in business and commercial property: why would it be right for one site to have Government support and not another?
We’ll find out how – or if – George Osborne has worked out some convincing answers to these big questions later this week.