£48m Enterprise Strategy For Deprived Areas Is Failing - Cotter

1.48.30pm GMT Thu 29th Jan 2004

On the day of the Urban Regeneration Association conference, which seeks to help business set-ups in deprived areas, Brian Cotter MP, Liberal Democrat Small Business Spokesman, questioned the effectiveness of the £48 million Phoenix Fund.

Small business closures in disadvantaged areas have increased by 15.5% since Labour took office, according to new figures released today by the Liberal Democrats.

Despite the £48 million Government strategy to boost enterprise in the country's most deprived areas, there has also been a 4% drop in the number of start-ups between 1997 and 2002.

Commenting on the figures, Brian Cotter MP said: "New small businesses are unlikely to rise from the ashes in deprived areas while the Government continues to pour water on enterprise in the form of excessive regulation and hefty business rates."

"Small businesses do not want costly Government support schemes which simply don't deliver. What they do want is an economic and regulatory environment, sympathetic to their needs."

"The Liberal Democrats would end central government interference and free up more resources to help small firms by abolishing the DTI. The department's funds would be re-distributing to a local level, giving individual communities the power to decide how best to help businesses in their area."

ENDS

Notes to editors

1. Small business start-ups and closures in disadvantaged areas since 1997

Parliamentary written answer to Brian Cotter MP, 14th January 2004

Brian Cotter: To ask the Secretary of State for Trade and Industry how many small businesses have (a) opened and (b) closed in disadvantaged areas in each year since 1997. [147607].

Nigel Griffiths: Value added tax (VAT) registrations and de-registrations are the best official guide to the pattern of start-ups and closures. These cover businesses of all sizes. The Neighbourhood Renewal Unit has defined 88 local authorities in England as being deprived for the purposes of targeting the Neighbourhood Renewal Fund.

The number of businesses registering and de-registering for VAT in each calendar year from 1997 to 2002 in deprived areas in England is as follows:

Table 1.

VAT registrations and de-registrations in English deprived areas(26) VAT registrations VAT de-registrations.

1997 58,835 48,045

1998 60,490 48,890

1999 59,450 50,490

2000 60,045 52,470

2001 56,530 52,830

2002 56,255 55,530

2. Phoenix Fund distribution.

• The Phoenix Fund was created in November 1999 to "encourage and stimulate enterprise among groups who are under- represented in business and people from deprived localities". £48, 456,633 has been distributed since the Fund was created. (See table 2)

Table 2.

Total funding allocated to each region under the Phoenix Fund since its inception

Region Amount (£)

Eastern 2,516,391

East Midlands 2,769,891

London 11,679,715

North East 2,258,728

North West 9,326,749

South East 2,074,468

South West 4,892,132

West Midlands 6,284,574

Yorkshire and the Humber 6,653,985

Source: Hansard, 3 Dec 2003 : Column 109W