Greater rewards for local authorities that promote business growth

Ruth Kelly, Secretary of State for Communities and Local Government, and John Healey, Financial Secretary to the Treasury, today announced that local authorities will stand to receive greater rewards for promoting local business growth. 

The announcement marks the start of the second year of the three-year Local Authority Business Growth Incentive Scheme (LABGI), which in the last financial year awarded in excess of £126million to over 270 Local Authorities in England.  LABGI delivers financial rewards directly to local authorities that promote the greatest levels of continued economic growth in their local areas by allowing them to retain increases in revenue derived from business rates.  The money is genuinely additional and the scheme encourages local authorities to build partnerships with local business and promote long-term economic sustainability in their areas.

Changes being introduced for the second year will build on the success of the scheme in its first year making the scheme simpler and more rewarding for local authorities by removing ceilings on the level of payments that can be made.   The awards for the second year of the scheme will be delivered to local authorities in February 2007, for growth achieved during 2006.   Local authorities themselves will be able to decide how they use this additional money.

Secretary of State for Communities and Local Government, Ruth Kelly, said: “The Local Authority Business Growth Incentive scheme recognises and rewards councils who grow the business base in their area. I am delighted to announce today that in future we are abolishing the ceilings and increasing the potential for greater financial reward. Every local authority now has a direct financial incentive to promote enterprise, employment and the growth of small and medium sized businesses in their local community.”

The Financial Secretary to the Treasury, John Healey, added: "We want to encourage local authorities to do more to boost jobs, growth and enterprise in their area.  The changes to the LABGI scheme make it simpler and more substantial.  The extra funds aim to reward councils whose business base is growing and promote stronger partnerships with the private sector.  With almost £1billion to be spent in total over the three years of the scheme, councils' rewards from LABGI could as much as 3 times higher this year and in the next year."