Private business forum urging councils to ‘Think small’ to help companies

10:40am Thursday 18th March 2010

By Ron Godfrey

The Forum of Private Business is urging councils in the region to use the £209,588 awarded in a £50 million Government business growth scheme to come to the aid of little ventures.

The business and support lobby group suggests that by “thinking smallest first” and pledging the money to bolster small business rate relief, the councils could help free up to £150 million in match-funding from the Government.

Its call follows this week’s publication of the latest round of Local Authority Business Growth Incentives (LABGI) grants.

The scheme is aimed at encouraging business growth by rewarding enterprise-friendly councils with grant funding that is not ring fenced – meaning they can spend it as they see fit.

Harrogate council has been awarded £56,130, Scarborough £37,945, Selby £28,677 and Hambleton £30,461. In addition, Ryedale has received £18,710, Craven £19,654, and Richmondshire £18,011.

Andrew Bacon, the forum’s rates adviser, said that as the funds from the scheme were not ring-fenced, according to the Department for Communities and Local Government, the councils should use the money to pay for hardship business rate relief for struggling business.

“If the entire £50 million was used by councils to pay for hardship relief the Government would have to give them another £150 million.

“This is because the relief is 25 per cent funded by the councils and 75 per cent by the State, but councils have sole discretion on granting it.”

It did not operate in 2008/9 but, for councils in 55 sub-regions of England, it has resumed for 2009/10 following several changes the Government says will make it more “transparent and predictable”. These include allocating initial funds to sub-regions, which are then distributed to local authorities, rather than directly to councils.

Furthermore, grants are now based on increases in income from rates rather than increases in the rateable values of commercial properties.

But there remain concerns, initially reported to the forum in 2007, that, because the level of LABGI funding is based on increases in business rates, some councils are spending their time and money courting bigger developments, such as out-of-town shopping centres, at the expense of helping independent firms within their communities.