Headlines: September 15th, 2006



Local authorities have been promised bigger financial awards if they promote the growth of businesses in their areas. Ruth Kelly, Secretary of State for Communities and Local Government, and John Healey, Financial Secretary to the Treasury, announced the extra benefits to mark the start of the second year of the three-year Local Authority Business Growth Incentive Scheme.

In the last financial year the Scheme awarded in excess of 126 million pounds to more than 270 Local Authorities in England. Its financial rewards go directly to councils that promote the greatest levels of continued economic growth. It works by allowing those authorities to retain increases in revenue derived from business rates. The Government says the money is a genuine addition to the councils’ finances and that the scheme encourages authorities to build partnerships with local business and to promote long-term economic sustainability.

Changes to be made in the Scheme for its second year have been designed to make it simpler and more rewarding for councils by removing ceilings on the level of payments that can be made. The awards for the second year will be made in February 2007 based on growth achieved this year and successful councils will be free to decide for themselves how they use the money.

Ruth Kelly said the Scheme recognised and rewarded those councils who grew 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,” she said.

John Healey said the changes being made this year meant the rewards would be more substantial. “With almost one a billion pounds to be spent in total over the three years of the scheme, councils’ rewards from LABGI could be as much as three times higher this year and in the next year,” he explained.