The Government announced on 14 September 2006 the details of the second year of the Local Authority Business Growth Incentives scheme (LABGI). LABGI aims to encourage local authorities to increase business growth in their areas. The scheme is set to run for three years (2005-06 to 2007-08) and will allocate up to £l billion to eligible local authorities in England and Wales. The money is genuinely additional and unring-fenced.

In its first year, the scheme awarded £126.6 million to 278 local authorities in England. Changes being introduced for the second year make the scheme simpler and more rewarding for local authorities. The 70 per cent. scaling factor (that applied to revenues above the floor) and the ceiling (that set the maximum revenue that could be kept in the first year), have been removed. The awards for the second year of the scheme will be announced in February 2007. It is for local authorities themselves to decide how to use this additional money.