GOVERNMENT MUST ENSURE LOCAL AUTHORITIES SPEND LABGI FUNDS ON ECONOMIC DEVELOPMENT

Commenting on some of the key issues raised, David Frost, Director General of the British Chambers of Commerce (BCC), said:

"We have always supported the original concept behind Local Authority Business Growth Incentives (LABGI), which is that Councils who promote economic growth should be rewarded for doing so. However, the reality has been that a number of Local Authorities have chosen to spend these funds on areas that are not of direct benefit to the local economy. This is not acceptable in the future and we strongly believe that LABGI funds should be specifically protected from being used to subsidise shortfalls in other areas of council spending."

ENDS

• SAM TURVEY
• Tel: 020 7654 5813
• Email: s.turvey@britishchambers.org.uk

• The BCC supported the principle of the LABGI scheme which we believe has the potential to benefit local business by focusing Local Authorities’ efforts on regeneration and policies to encourage business growth.
• Since the scheme was introduced in 2005 however, we have been disappointed by what the scheme has managed to deliver in terms of focusing Local Authorities activities towards supporting economic growth.
• We understand that Local Authorities who receive LABGI funding support have experienced problems with the complexity and unpredictability of the scheme and the proposals for a permanent incentive set out in the Government's consultation from the Pre-Budget Report seek to address these problems.
• From the point of view of business a greater concern is that the scheme has not ensured that LABGI funding is spent on directly supporting business growth rather than other areas of council spending and actually rewards Local Authorities who may not have actively contributed to the economic growth of their area.
• Our members therefore strongly support LABGI funds being hypothecated to economic growth and locally ring-fenced for this purpose and believe that Local Authorities should be asked to clearly identify how any such income received is spent specifically to assist local businesses.
• Looking forward, we are aware that many Local Authorities are worried that while the mechanisms for LABGI will improve, future amounts will be greatly reduced. With an accompanying tight local government settlement we are very concerned that Local Authorities will be faced with new proposed charges on business to subsidise their spending e.g. Business Rate Supplements, Community Infrastructure Levy, possible local workplace parking levies and road pricing proposals in cities across England. We believe it is unacceptable for business to potentially face all of these additional charges.

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.