The Local Authority Business Growth Incentives (LABGI) scheme was introduced in 2005/06 for a three year trial period with the objective of distributing £935m from the growth in business rateable value, to give local authorities in England an incentive to encourage local economic and business growth. As a result, the County Council has received £3.8m over the three years that the scheme has been running.

The Government announced in the 2007 Spending Review (CSR07) that it intended to reform the scheme, with smaller sums being made available in future. An issues paper on the principles that should underline the reformed scheme was circulated in October 2007, to which the Cabinet agreed a response in November 2007.

The Government issued a further consultation paper on 1 September 2008 in the light of responses to the October 2007 issues paper and the overall direction of policy as it has evolved since LABGI was introduced. The changes made reflected some of the County Council's representations.

The proposed scheme for 2009/10 and 2010/11 has the following broad characteristics:

- local authorities will group themselves, or be grouped, in sub-regions for the purposes of the scheme

- if a sub-region qualifies for reward, it will be distributed to authorities within the sub-region pro-rata to population

- in two tier areas, two-thirds of the amount attributable to a billing authority will be allocated to the County Council, one-third to the district council

- rewards will be assessed by reference to the comparative performance of sub-regions over a period of three years ending in the year before that in which the reward is calculated

- it is not proposed that LABGI be allocated to police and fire authorities, as it is not appropriate to incentivise them to promote economic growth

Consultation responses to the 1 September 2008 paper were invited prior to meet the deadline of 20 November 2008. At its meeting on 27 October 2008, Cabinet considered a report outlining the scheme The Cabinet welcomed the proposed revised scheme which recognised Hampshire, together with Portsmouth, Southampton and the Isle of Wight as a sub-region and hoped that this message would filter through to other Government departments. The substantive response to the Department for Communities and Local Government (CLG) is available on request from Democratic Services in the Chief Executive's Department.