Introduction

This chapter considers the role that enterprise and entrepreneurship can play in renewing neighbourhoods as well as reviewing the various kinds of policy intervention that have sought to stimulate enterprise in deprived neighbourhoods. Of the three different rationales that were put forward in Chapter Two for policy intervention in deprived areas, both strengthening economic competitiveness and the pursuit of social inclusion currently feature prominently in the discourse concerning the importance of enterprise and entrepreneurship in tackling the problems of deprived localities. A central question underlying this chapter is the extent to which these two rationales are in conflict with each other and whether this is reflected in a degree of confusion and tension between policies relating to enterprise in deprived areas.

From a national and regional economic perspective there is a concern that the low levels of enterprise activity associated with many deprived neighbourhoods impede the pursuit of improvements to economic performance at various spatial scales. This is based on econometric evidence supporting the Schumpeterian thesis that entrepreneurship is a vital determinant of economic growth. For example, Audretsch et al (2002, p 2) claim that ‘the positive and statistically robust link between entrepreneurship and economic growth has been indisputably verified across a wide range of units of observation, spanning the establishment, the enterprise, the industry, the region and the country’. Creating enterprises that survive and grow in deprived areas is therefore seen as helping achieve national and regional objectives of increasing economic growth, improving productivity and enhancing competitiveness. According to the government's own estimates, there would be an additional 155,000 businesses in the UK if the levels of business activity in deprived areas matched those in the least deprived areas (HM Treasury, 2005a, p 29). Thus, developing the entrepreneurial potential of those deprived areas suffering from low rates of new business formation and below-average levels of enterprise activity has become a key objective of most strategies concerned with improving regional economic performance.

Policy interventions to stimulate enterprise in deprived neighbourhoods have also been argued for on social justice grounds, focusing on the contribution that enterprise formation and growth can make from the perspective of reducing unemployment and worklessness. The creation of new businesses and the growth of existing businesses are seen as important sources of much-needed jobs and skills for the local working-age population, especially where there is little prospect of attracting large employers to an area.