Local Government Business Growth Initiative

Mr. Kidney
To ask the Secretary of State for Communities and Local Government what recent assessment she has made of the effectiveness of the local government business growth initiative (LEGI); and how much additional funding has been provided under the LEGI to local authorities.

John Healey
I understand my hon. Friend means this question to relate to Local Authority Business Growth Incentives Scheme (LABGI) rather than Local Enterprise Growth Initiative (LEGI).

At the end of the first year of LABGI, we revisited the methodology used to calculate the level of funding given to local authorities to ensure that the scheme continued to deliver an incentive for local authorities to maximise local economic growth. As a result, the scheme was simplified by removing the ceiling on payments made to local authorities.

On 7 January 2007, the Government announced that, following further consideration of new legal challenges that have been made against the current scheme and the inherent uncertainty that this caused to the remaining LABGI pot, it intended to re-consider all aspects of the approach used to distribute the remaining resources available for Year 3 of the LABGI scheme. The full statement can be found at

http://www.local.odpm.gov.uk/finance/labgi/statementyr3pay.pdf

In October 2006, the Government published an issues paper, which sought views on reform of LABGI. This set out the Government’s intention to develop an incentive as a full and permanent part of the local government finance system and to phase this in from 2009-10, with funding of £50 million doubling to £100 million in its second year. We are now considering the responses that have been received.