Enterprise Zone at Avonmouth and Liz Truss's deregulation promises
Conservative MP Liz Truss is odds-on favourite to win the leadership election and become the UK’s next prime minister. As she talks about deregulating planning even more, and creating “investment zones” that “will rejuvenate local areas in the same way the London Docklands was regenerated, with new jobs in the industries of the future,” it’s important to look at who benefits and who loses out.
The following is a slightly adjusted article I wrote about Avonmouth in Bristol. Businesses get the benefits while residents suffer and aren’t qualified for the new jobs that have been promised.
On the website advertising Avonmouth to big warehouses and businesses, there is a note describing the types of companies that can benefit by moving there:
· Warehousing and storage
· Large scale distribution and logistics
· Environmental technologies
· Heavy industry and manufacturing
The area has a “highly skilled workforce”, companies are told.
We are talking about Avonmouth and Lawrence Weston and many of these types of companies have already moved in.
The ward is the biggest in Bristol but has some of the highest reported health issues, lowest social provision, high unemployment, low skills and some of the lowest satisfaction ratings with way of life and the mayor.
35% of Avonmouth and Lawrence Weston residents reported having an illness or health condition which limits day-to-day activities. The 3 in ten people in Avonmouth and Lawrence Weston who struggle with day-to-day activities compares to only 1 in ten of people in Clifton Down.
There is no enterprise area in Clifton.
Bristol Port in Avonmouth was sold under the administration of Bristol’s first mayor, George Ferguson. It was sold for £10m and £1m of that amount was diverted towards a newly created Port Resilience Fund.
The fund was intended to help ameliorate the social and environmental conditions residents faced in the area.
In contrast to the hundreds of jobs in logistics and industry that the new Avonmouth and Severnside Industrial area was bringing to the city, according to Bristol City Council, residents experienced mostly detrimental environmental consequences. They were not seeing the benefits of having such companies such as Amazon, Tesco, Lidl, Next, DHL and The Range and a Royal Mail distribution centre in the area. Along with large warehouses there are also environmental processing plants such as Sims Metals Management Ltd (link)
“Many in the local communities perceive mostly adverse impacts and disconnection from the ‘enterprise area’ instead of benefits and income” writes the officer in charge of the report, Warren Pickle.
The large majority of the ward’s population, rank among the 30% most disadvantaged in England (IMD 2015). Skills and qualification levels in the ward are generally very poor (two-thirds of the area’s population rank inside the worst 25% in England for lack of low qualifications).
Hundreds of new jobs in logistics and industrial sectors have been created in the Avonmouth Severnside Enterprise Area (ASEA) but very few local unemployed or benefit-dependent people are getting those jobs because, according to the council: there is a lack of appropriate skills, or residents can’t get to the jobs due to a lack of public transport and the inability to travel safely by foot or cycling.
I can attest to the difficulty of travel in the area as I was given a tour of it by resident Ian Robinson nearly a year ago now. The number of lorries and cars keeping roads constantly busy was incredible. The traffic was constant.
ASEA was set up in 2016 although the problems in Avonmouth have been around for longer than that. Enterprise zones are an extension of supply-side measures associated with Conservative prime minister Margaret Thatcher and US president Ronald Reagan. They are linked to trickle-down theory. The idea is that offering tax breaks and incentives to companies will encourage businesses to invest in production, thereby creating jobs and economic growth. The wealthy are the job creators and financial incentives will eventually trickle down from them to the rest of society (Basu).
In reality, the effect is to transfer wealth to the wealthiest and leave it there (see Quiggin 2010: 137–75; Hudson 2017 as cited in Basu).
Enterprise Zones in the England, for example, give businesses that transfer there up to 100% business rate discount worth up to £275,000 per business over a 5-year period; or 100% enhanced capital allowances (tax relief) to businesses making large investments in plant and machinery on eight Zones in Assisted Areas.
So they either pay no business rates or no tax.
Not only this, but they benefit from “simplified local authority planning, for example, through Local Development Orders that grant automatic planning permission for certain development (such as new industrial buildings or changing how existing buildings are used) within specified areas.” (link)
The UK government promises that these businesses that contribute no tax to the state, benefit communities because they “unlock key development sites, consolidate infrastructure, attract business and create jobs.”
The reality in one of Bristol’s wards, as described in the report on the Port Resilience Fund, shows that this has not been the case. Residents’ wealth, quality of life, job opportunities and health did not improve over the last four years.
The government suggests that communities benefit from these enterprise zones — Bristol also has one at Temple Quarter — because “business rates growth generated by the Enterprise Zone is kept by the relevant local enterprise partnership and local authorities in the areas for 25 years to reinvest in local economic growth.”
Before clarifying the nuance of ‘business rate growth’, I’ll leave you with an example of what residents are experiencing in Avonmouth. In the video below, Robinson explains how the Sims Metal Management Ltd practices affect residents by occasionally processing content they should not. What is then released he says, is carcinogenic material into the air.
These enterprise zones are effectively trickle-down economics. They don’t benefit residents.
References
Basu, Laura (2018) Media Amnesia: Rewriting the Economic Crisis. Pluto Press.
Hudson, M. (2017) J is for Junk Economics. ISLET.
Quiggin, J. (2010) Zombie Economics. Princeton: Princeton University Press.