LEGI — England's Local Enterprise Growth Initiative: Jobs Displaced, Not Created

The Local Enterprise Growth Initiative (LEGI) allocated GBP 418 million to 30 deprived English local authority areas between 2006 and 2011, with about 60% going to business advice, grants and loans, and a focus on local retail and service firms and under-served entrepreneurs such as women-led and ethnic-minority businesses.
Einiö and Overman (CEP/SERC, 2016) evaluated LEGI with a regression discontinuity design, exploiting the arbitrary cut-off in the deprivation ranking that determined eligibility (the What Works Centre for Local Economic Growth rates the design 4 on the Maryland Scientific Methods Scale). Employment increased in treated areas close to the boundary, but at the cost of significant employment losses in untreated localities just across it; these effects vanished away from the boundary and did not persist after the programme ended.
The What Works Growth review also reports no significant effect on new business formation and no measurable effect on local unemployment, suggesting new jobs went to non-residents. It attributes the weak result partly to LEGI's non-selective support design. Lesson for cities: spatially targeted enterprise grants can relocate rather than create activity; evaluate net of displacement and design for sustained, selective support.

Read the full analysis: https://whatworksgrowth.org/resource-library/area-based-initiatives-uk-local-enterprise-growth-initiative-legi/