The Government’s optimism that new enterprises can fill the ‘jobs gap’ in deprived areas has been undermined by a new report.
The report by the New Economics Foundation (NEF), Filling the Jobs Gap: Why enterprise-based regeneration isn't working, predicts the growth in enterprise will most likely be in service industries that operate in the south and east of England.
Between 2002 and 2009 only one in four of all new SMEs established in the country were based in deprived areas, according to the study. Research also shows the jobs gap between the number of jobs available and the number of people of working age is more than 447,000 in the north-east, and for every 100 people able to work in the region there are only 72 jobs. In comparison, there are 86 jobs per 100 people in the south-east.
The NEF report weakens the Treasury’s claim that its proposal to cut national insurance for start-ups in disadvantaged regions will boost employment in areas hit hard by the collapse in manufacturing and ageing industries. It says entrepreneurs are still more likely to start a business in affluent regions where there is strong consumer demand for new or innovative services.
Entrepreneurs are still more likely to start a business in affluent regions where there is strong consumer demand for new or innovative services
Co-author of the report Dr Faiza Shaheed says: “While the Government’s Office of Budget Responsibility optimistically forecasts that 1.3 million new jobs are likely to be created by 2014, our research shows the private sector is highly unlikely to emerge and absorb those pushed out of the public sector.
“This tinkering at the edges will do little to stop the local economies in already deprived areas tipping over into further decline.”
