Welsh Enterprise Zones, or Subsidy Farms?

Russell George argues that new data shows the Welsh Government’s Enterprise Zones have failed to deliver

Enterprise Zones can take longer to yield results than the public might imagine. In government, the seed of an idea can often take years to germinate – much to the frustration of opposition politicians like myself, who want to see evidence of something sprouting from the flower bed as soon as possible. Particularly where public money is committed.

Patience is key, for sure. But five years is long enough to wait for results.

The Labour Government left itself open to criticism from the start because they were too slow to set them up – allowing competing zones across the border to steal a march on Welsh firms.

In fact, they’ve never quite managed to shake off that false start, or to instil public confidence that they can create jobs or demonstrate value for money.

In that time, more than £220 million has been invested by the Welsh Labour Gvernment in the zones – but it’s difficult to see evidence of growth. And to make matters worse, at every stage since they were established the Welsh Government has sought to keep information away from prying eyes.

Despite Written Questions, FOIs, letters and articles, successive ministers have refused to disclose the number of new jobs created by the zones.

We’ve been consistently fobbed off with a global figure, comprising an impenetrable combination of jobs ‘created, safeguarded or assisted’.

Labour’s enterprise zones could be the biggest waste of public money in the devolved era – but you have to admit that it’s difficult to tell.

Until now, that is, because the most secretive use of taxpayer cash (since the mythical Delivery Unit) just pulled back the curtains at long last.

We now know for a fact what we already suspected: that some of the zones have been absolutely disastrous, supporting only a handful of jobs – creating even fewer.

As we argued all along, there is a world of difference between a created or safeguarded job, and an “assisted job” – whatever that actually means.

It’s this kind of opaque reporting which muddied the waters and bred cynicism.

It’s Orwellian double speak. It could mean anything, or nothing at all: from a friendly phone call or a cup of tea, to a firm receiving an information leaflet or a brochure.

So, what have we learnt from this new data?

£220 million spent on fewer than 3,000 jobs is – on  the surface of it – a very poor return.

When they were launched by Edwina Hart in 2012, we were told that enterprise zones would “strengthen the competitiveness of the Welsh economy”.

Bold claims. And difficult to believe for someone who’s lived through four major refreshes of Welsh Labour economic strategy in the devolved era, with little sign of an end to the stagnation of the Welsh economy.

Despite those early claims it now appears that the focus has shifted – from enterprise, to subsidy.

These zones were supposed to enable job creation. They were meant to build capacity in specific sectors of the Welsh economy, and to build specific skills capacity in relation to those sectors.

But instead of creating vibrant hubs for enterprise, these zones look more like the subsidy farms of the Soviet era.

We were told that St Athan Enterprise Zone could deliver 10,000 jobs by 2025 – but in five years we’ve seen just 137 new jobs.

In Ebbw Vale, £94 million has been spent on just 175 new posts – at more than £500,000 a head.

In Snowdonia, £2.1 million spent and just 6 new jobs.

Ultimately, for the Welsh economy to thrive we need to build a genuine culture of investment and enterprise. It’s clear that these zones are not achieving that.

Sooner or later the question will have to be asked: is it time to stop throwing good money after bad?

All articles published on Click on Wales are subject to IWA’s disclaimer.

Russell George is Welsh Conservative Assembly Member for Montgomeryshire and Shadow Economy Secretary.

5 thoughts on “Welsh Enterprise Zones, or Subsidy Farms?

  1. Ah yes! Remember Techniums anyone? Enterprise zones are a classic case of ‘build it and they will come’ thinking by well meaning ‘public sector’ people who have never had a ‘proper job’, run a business or even studied the concept in other countries.
    We all know that Wales is not an entrepreneurial society, never has been and never will be. There are, of course, many energetic individuals who have ‘entrepreneurial’ tendencies (some people call them fly by nights) but if you have these rather dubious attributes then you will seek to satisfy them in richer pastures like the USA or even, dare I say it, England. Welsh society should never aspire to be Lord Sugar’s ridiculous apprentice!
    Entrepreneurial activity never goes on in nice places to live or bring up children. It flourishes in a fantasy land of fake dreams, exploitation, bullshit and often tragic financial disaster. Do we really want Wales to be be such a society- surely we are better than that?
    So what should have been done with all that EU money wasted on enterprise zones as described in the article? Somebody must have the answers.

  2. @TheBellwether –
    Enterprise Zones are not paid for out of EU money, that’s Welsh Govt cash.

    It’s not even necessarily the case that enterprise zones are in of themselves a bad idea. They’ve just been managed very poorly – slow to start, poorly targeted. And the refusal (until now) to publish proper data means that their failure has been obscured until now.

    They were supposed to create new jobs. They’ve become a grant scheme.

  3. Welcome to the Guinness Book of Records!

    I have been , it seems forever, asking – where the is the over arching economic development policy, where is the plan, where is the vision?
    Enterprise Zones was yet another Assembly good idea, and of course the problem with good ideas is that they are good ideas at the time….

    And the Guinness reference? According to the jobs and cost presented here; £73,300 per job created MUST be a world records.

    Dr John Ball

  4. Enterprise zones are rarely successful anywhere. Most academic research shows they divert activity rather than creating new business. The Welsh ones were a panic response by Mrs Hart to the establishment of enterprise zones on the English side of the border. As such they were not planned or thought through. And, of course, too many were created because once you set up one, political lobbying follows from localities that want their own. Since the whole thing was a political panic move anyway, that lobbying was not resisted. Is it any wonder if they turn out to be an expensive folly?
    Dr Ball is right that the Welsh government needed a thought-through strategy. It is then supposed to stick to it and implement it properly not invent instant policies in a fit of reaction. May we hope that the lesson has been learned?

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