George Osborne hails first new enterprise zone jobs

George Osborne faces the media as he announces an extension to the North East's enterprise zone

The government is keen to talk up any economic good news at the moment.

So you can see why the Chancellor of the Exchequer should be keen to spend around 24 hours in the North East.

The region may have Britain's highest unemployment rate, but it also has some significant business success stories.

George Osborne has seen a few of them during his visit.

Energy jobs

First he went to see a firm in Hartlepool which is building rigs for the offshore gas industry.

Then he also heard about the growing push to bring renewable energy jobs to the banks of the Tyne.

And then he went to Sunderland where Hitachi-owned Vantec are building a huge warehouse next to their biggest customer - Nissan.

Vantec's new warehouse is the first development to be built on the government's new enterprise zones

The last one was possibly the most significant for his economic policies.

It's the first development in the country to be built on one of the government's new enterprise zones, with help from the Regional Growth Fund.

The company has benefited from the tax breaks on offer in the zones.

But the Chancellor also had some news of his own.

He announced plans to extend the North East's enterprise zone by 50%.

Another 40 acres of land will be allowed to have enterprise zone status and hopefully attract more firms in.

Zone expanded

It was welcome news for the local enterprise partnership that oversees the zone.

Crucially, the partnership doesn't have to nominate land for the expanded zone now.

Instead, it can wait to see what new firms it can attract in, and then offer the tax breaks for the location the company chooses.

Its chairman Paul Woolston said: "With the Vantec site being taken up, and a second site on the Port of Tyne due to be taken by the offshore wind energy sector, we are fast running out of enterprise zone land.

"Yet we still have businesses who want to come to the North East. This extension gives us a bit more flexibility to meet that demand."

Music to the Chancellor's ears then.

George Osborne told me as much: "The North East enterprise zone has been such a success and with demand for more businesses to locate here, we are extending the zone to attract more jobs.

"That's the national government doing its bit to bring sustainable private sector jobs to the North East."

Not enough?

But not everyone thinks enterprise zones are the panacea for the ills of the economy.

Labour welcomed the expansion of the enterprise zone but said it was not enough to compensate for coalition cuts and the abolition of the regional development agency.

Washington and Sunderland West MP Sharon Hodgson said: "While today's news is welcome, the Chancellor needs to urgently spell out how he is going to drag the UK out of the double dip recession he has created, and provide opportunities to the rapidly growing number of young people in the North East who cannot find employment or training."

And some are concerned about the areas that are not covered by an enterprise zone.

South East Northumberland is struggling at the moment because of the closure of the Rio Tinto aluminium smelter in Lynemouth.

Around 500 workers are losing their jobs.

The government did say it would give the nearby Port of Blyth enterprise zone status to help cushion the blow.

But the Wansbeck Labour MP Ian Lavery says the nearby town of Ashington is suffering because it's not been offered the same help.

He wants the Chancellor to extend the enterprise zone into a town he says is suffering badly.

He fears without the tax breaks on offer in other parts of the North East, the town may never recover.

Encouraging investment

Why then, I asked the Chancellor, couldn't he extend the tax breaks to the whole region given its unemployment is the highest in the UK?

He said: "I am always open to suggestions of how we can attract more investment into the North East and I am here to provide the help of the national government to do that.

"After a decade-long experiment of borrowing too much money and placing all our bets on the City of London, hundreds of miles to the south, what you are seeing now is the creation of sustainable jobs in the North East."

Critics will say there are still too few jobs for the Chancellor to crow about at the moment.

But it's clear that he still believes his strategy will deliver the results both the North East and the Prime Minister desperately need.