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Scepticism about growth potential of "enterprise zones"

The government today announced 11 new "enterprise zones" but there is doubt as to whether new jobs w

The government has announced the location of 11 more so-called "enterprise zones", brining to 21 the total number of sites marked out for redevelopment.

The Secretary for Communities and Local Government, Eric Pickles, spoke on the BBC's Today Programme this morning of the government's plan to "rebalance" the economy and "reduce dependency on the financial industry" by investing in local, targeted redevelopment programmes.

He said the enterprise zones will target "specific sites against specific industries against specific proposals". Answering presenter James Naughtie's question about the North-South divide, where economic growth and prosperity is disproportionately focused in the South East of England, Pickles said the government's plans would help revitalise manufacturing in the North.

Enterprise zones will combine tax breaks, looser planning regulation and faster broadband in certain areas in order to encourage job creation and business venture. The government has estimated that 30,000 jobs will be created by 2015 as a result of the enterprise zones.

However, there is much scepticism about the potential of enterprise zones to create jobs and lead to economic growth. Similar ventures were undertaken by the Thatcher government in the 1980s, but rather than creating new jobs, they tended to "displace" old ones, according to the Chair of the West Midlands Institute of Directors, John Rider.

Naughtie also raised the point that, as jobs are being haemorrhaged in the public sector, 30,000 new private sector jobs - if the target is even reached - may not do much to address unemployment.

The new enterprise zones are in Cambridgeshire; Cornwall; Gosport; Harlow; Hereford; Humber Estuary; Newquay; Great Yarmouth, Norfolk; Northampton; Hinckley, Leicestershire; Sandwich, Kent; Oxfordshire; Runcorn; and Lowestoft, Suffolk.


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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.