DEPARTMENT FOR COMMUNITIES AND LOCAL GOVERNMENT
Local Government
The Minister for Local Government (Mr John Healey): On 7 January 2008, the
Department published a statement on its website about the Local Authority Business
Growth Incentives scheme:
(http://www.local.communities.gov.uk/finance/labgi/statemtyr3pay.pdf).
This indicated that, following further consideration of the new legal challenges that
have been made against the current LABGI scheme and the inherent uncertainty this
causes to the remaining LABGI pot, the Government intended to re-consider all
aspects of the approach used to distribute resources available for Year 3 of the LABGI
scheme.
Alongside our re-consideration of the Year 3 scheme, the Government has reconsidered
the payments for Years 1 and 2 of LABGI, which were made on the basis
of a number of Valuation Office Agency rateable value “change codes”. We have
taken the view that there are a number of Valuation Office Agency change codes that
have not previously been used in LABGI calculations, which could contain elements
of business growth. In light of this, and to avoid the additional delay and uncertainty
caused by further legal challenge, the Government proposes to reward authorities on
the basis of a wider set of codes than has so far been the case for Years 1 and 2. I will
set out the details shortly.
The Government is still finalising its analysis of options for allocating the resources
available for Year 3 of the scheme. We continue to be convinced of the value of
providing incentives to encourage business growth, a view echoed by the great
majority of the responses to our recent issues paper on the reform of the LABGI
scheme (Building better incentives for local economic growth: reforms to the Local
Authority Business Growth Incentives scheme). We also remain determined to try to
achieve this policy aim for LABGI. However, the inclination of a small number of
authorities to pursue legal action has created greater complexity, uncertainty and
delay. Given this, it will be necessary to retain a portion of the Year 3 funding as a
contingency in this final year of the current scheme. I will make an announcement on
Year 3 methodology and the size of the contingency retained as soon as possible.
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