Archived decisions

Contact: John Rees-Evans Ext: 6628

1. Summary

1.1 To allocate a portion of the recently received LABGI grant of £620000 to schemes, which will help address corporate objectives for business support, quality of life, and sustainability.

1.2 To set out a principle for the application of possible future LABGI receipts.

2. Recommendations

a) the Council adopts the principle of 30% of future LABGI funds being allocate to support economic development projects.

b) the Council provides support for the 3 schemes set out in the report - namely Village shops, Market Towns and Sustainable Business Partnership initiatives

3. Issues Covered in the Report

3.1 Purpose and nature of LABGI

3.2 Receipts to date

3.3 Proposals for schemes for the application of the funding

4. Purpose of the Report

4.1 The purpose of this report is to make recommendations on the application of a proportion of recent LABGI receipts to three support schemes for the local economy, and to recommend the principles for future allocations.

5. Local Authority Business Growth Initiative

5.1 The Scheme

The Government first introduced LABGI in the financial year 05/06 as a relatively small measure to re-connect the effort made by a Local Authority to support its local economy, and the rewards it derives from such effort. This link had effectively been lost when the Business Rate was taken away from Local Authorities and set nationally.

The current LABGI scheme is worth about £1000m over 3 years, nationally, and is based on an assessment of the growth of the NNDR (Business Rates) base over trend, in a Local Authority area. In two tier areas, the reward grant, which is only available if there has been above trend growth, is allocated two thirds to the District and one third to the County.

5.2 County Council Receipts

In the past, the county council has received £720k in 05/06, and £1,056,492 in 06/07. Both receipts have been used to offset the Council's overall budgetary pressures, and support reserves, as part of the Council's overall financial strategy.

5.3 Windfall

Recently, as a result of a successful legal challenge by two Councils, the Government has made an additional unforeseen payment as a supplement to Years 1 and 2 of the scheme. As a result, the county council has received an unexpected windfall of £620k.

5.4 Use of Windfall

This report proposes the allocation of approximately one third of the windfall receipts to three schemes, which provide support to the local economy under the Council's power to promote economic well being (section 2 of the Local Government Act 2000).

5.5 LABGI Consultation

The Government has recently published a consultation on the future of LABGI, a report on which was considered by the Council's Cabinet on 26^th November. In any event, there will only be one more payment (in 07/08) under the current arrangements, and no scheme in 08/09. In 09/10 and 10/11, as proposed in the Comprehensive Spending Review 07, the scheme will be re-instated, probably with a different methodology, and with a substantially reduced budget (£50m and £100m for the two years, respectively).

6. Schemes proposed for support

6.1 Support for Village Shops

The recent consultation by Post Office Ltd on possible Post Office closures in Hampshire is likely not only to lead to loss of post office services, but may also jeopardise village shop facilities, many of which depend, at least in part, on post office incomes for their viability.

The Council already runs a small support scheme for such businesses, and it is proposed that the scheme should be enhanced and aligned with likely regional funds (SEEDA's £100k proposed "Access to Services" programme). A sum of £100,000 would match the regional fund and allow the Council to make a number of significant grants (up to £20k each) to help capital investments in small village shops. These would help business diversification and viability, and have the potential to increase `footfall', thereby offsetting in some degree the loss of post office income.

The scheme would be administered by the Council and be subject to a number of conditions:

· Non-competitive (i.e. the only shop in the village).

· Closely linked to, or supported by, a community or shop association.

· Capital investment only.

In addition, and in the event of high levels of demand for the grants, proposals would be evaluated on the basis of:-

· Local significance/impact

· Degree of difficulty in accessing alternative facilities

Grants would therefore be determined based on essential conditions and a series of weighted qualifications and a scoring system.

6.2 Market Towns Partnership

This £1.2m scheme has had substantial successes in delivering local health checks in 17 market towns and approved investment projects in 5 towns. It is dependent for its effectiveness on a number of locally-based market town project or development officers and the central co-ordination of the programme. It is proposed that an allocation of £30k p.a. over 2 years be made to continue the work of the Market Towns Co-ordinator in 08/09 and 09/10.

6.3 Sustainable Business Partnership

This partnership, hosted by the County Council, and in part funded by the Executive Member for Economic Development, and Environment, has a significant role in engaging businesses in the climate change agenda. Its main Board includes all the key support agencies in Hampshire and its Network events have attracted over 500 businesses during the last 12 months.

It is inadequately resourced in relation to the potential of the role it could be playing, with a variety of funding sources currently contributing a total of about £36K p.a. to its costs.

It is proposed that an allocation of £25k p.a. for two years be made to enhance the work of the Partnership and enable it to develop further its contribution to the Council's Corporate Business Plan (e.g. reduction in CO2 emissions by business), the Climate Change Commission, and the development of sustainable business practices in Hampshire.

7. Principle for future receipts

7.1 The aim of the LABGI grant has been to incentivise Local Authorities to lead actions to improve their local economic performance and in particular to provide the right conditions for business investment. The Government stated when introducing the scheme:

"businesses should find the scheme to be of major benefit to them, as it will increase the incentives for local authorities to understand and respond to the needs of local businesses"

Most Local Authorities in England have allocated a part or all of this receipt to work in this area of service. Indeed, there should be a vested interest in supporting the local economy by this means, in that further growth over trend should produce further LABGI payments.

To date, the Council has not used any of its receipts in this way. It is therefore proposed that, both in the interests of local businesses and the Council's own interests, a 30% proportion of future LABGI receipts be allocated to supporting the local economy. In practice, this will only have a bearing on the anticipated receipt in February 2008, as there will be no LABGI scheme in 2008/09.

This principle would need to be reviewed in the future, when the Government has decided how it is going to revise the operation of the Incentive in years 2009/10 and 2010/11.

8. Conclusion

8.1 The recent unbudgeted receipt of £620K gives the Council an opportunity to use some of the funds to assist local businesses in our villages and market towns, and to promote sustainable business practices.

9. Recommendations

9.1 In sum, it is proposed that a total allocation of £210k be made from the £620k windfall receipt, as follows:

· village shop support scheme (to help alleviate the impacts of Post Office closures) - £100k

· market towns - £60k over 2 years

· sustainable business partnerships - £50k over 2 years

9.2 In addition, it is recommended that, in order to meet the intentions of the scheme (in 07/08, and then again in 09/10 and 10/11, but subject to the outcomes of the Government's review), 30% of future LABGI grant receipts be reserved, in principle, for economic development projects.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes:

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.

None