GOVERNMENT plans to encourage business start-ups by waiving National Insurance contributions are unlikely to work in Liverpool or other deprived areas, says a new think-tank report.

The New Economics Foundation says the region has missed out on business start-ups and job creation between 2002 and 2009.

In that time, only one in four of all new enterprises created in England was based in the most deprived areas, despite decades of government programmes encouraging enterprise in regions with high unemployment.

The researchers found that, in the North West, the jobs gap between the number of jobs available and the number of people of working age, is over 847,000. Across England as a whole, the “jobs gap” is currently 5.3m.

The report, Filling the Jobs Gap: Why enterprise-based regeneration is not working, says that the growth in enterprise since 2002 has been in service industries that have not located in areas where manufacturing previously provided employment.

For that reason, the Government’s optimism that new enterprises can fill the jobs gap in deprived areas is unfounded.

For every 100 people able to work in the North West, there are only 80 jobs., whereas, in the South East, there are 86 jobs per 100 people able to work.

The report highlights how Liverpool would need to create an additional 54,900 jobs and Burnley 7,000 new jobs just to reach average employment levels for England, even before taking into account proposed public sector cuts which promise to widen the jobs gap further.

“It is totally unrealistic to expect the enterprise sector to create an additional 59,400 jobs in Liverpool, for example, just by offering a temporary waiver in NI contributions for new small enterprises,” said report author Dr Faiza Shaheen.

“Government needs to acknowledge that here is a strong case for protecting public sector jobs in the country’s most deprived areas, at least in the short term,” he added.

The report’s recommendations include protecting the most deprived areas from public sector cuts and extending the NI waiver to companies based in London and the South east who want to set up operations in the most deprived areas.

“While the Government’s Office of Budget Responsibility optimistically forecasts that 1.3m new jobs are likely to be created by 2014, our research shows that the private sector is highly unlikely to emerge and absorb those pushed out of the public sector, particularly in already deprived areas,” said Dr Shaheen.