Councils can use new fund to increase rate relief

Councils have been urged to use £50m of new Government cash to increase rate relief for struggling small firms.

The money comes from the Government's Local Authority Business Growth Incentives (LABGI) scheme.

This aims to encourage business growth by rewarding "enterprise-friendly" councils with grants that can be spent as they see fit to help firms.

"As the £50m from the LABGI scheme is 'un-ringfenced', according to the Department for Communities and Local Government, councils should use this money to pay for hardship business rate relief for struggling business," said Andrew Bacon, rates advisor at the Forum of Private Business.

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

"This is because the relief is 25% funded by the councils and 75% by the state but councils have sole discretion on granting it."

The Forum of Private Business fears that because the level of LABGI funding is based on increases in business rates, some councils are courting bigger developments, such as out-of-town shopping centres, at the expense of helping independent firms.

Forum's policy representative Matt Goodman said: "This latest LABGI scheme is only relevant if it encourages the council to focus on the growth of small firms.

"Local authorities are free to spend the LABGI money as they please but given their importance to the community as employers and rate-payers, and with the tough economic climate we still face, it is fair that small firms should be the main beneficiaries.

"Let's give the money back to the businesses that are trading and get the economy moving again."