'Rate reward scheme unfair to South Cambs' - MP

A GOVERNMENT scheme that rewards local authorities for attracting new and expanding businesses has worked unfairly against South Cambridgeshire, the district s MP has protested to Ministers. The district council has received not a penny under the three-ye

A GOVERNMENT scheme that rewards local authorities for attracting new and expanding businesses has worked unfairly against South Cambridgeshire, the district's MP has protested to Ministers.

The district council has received not a penny under the three-year Local Authority Business Growth Incentive scheme, designed to reward councils for expanding revenue from national non-domestic (business) rates, which are collected for HM Treasury. A proportion is returned to councils.

But local authorities that do best in attracting additional business rates also qualify for a bonus.

Whereas SCDC has received nothing, according to the MP, Andrew Lansley. Huntingdonshire District Council has already netted around £1.5million over the three years and could get a bit more.


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South Cambridgeshire's problem is that the scheme is based on historic growth in business rates in the years immediately before the scheme was introduced in 2004, when the district's economy was expanding much more rapidly than Huntingdonshire's, with the opening of science park campuses south of Cambridge.

So to qualify for LABGI rewards South Cambs had to attract 4.9 per cent net additional growth, whereas the target for HDC was just 0.7 per cent, which has been comfortably exceeded in a growing economy.

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The figures are further distorted because business rates do not accurately reflect economic growth - high tech industries generally require less space per employee than traditional employment (it is the space on which the rates are calculated).

Mr Lansley told John Healey, Minister for Communities and Local Government: "South Cambridgeshire District Council has not received any LABGI [funds] in the 2007/2008 financial year, the third year of this scheme.

"During the three year period of this scheme, South Cambs has not received any funding at all, which is very disappointing for a council that is in one of the highest growth areas in the country.

"South Cambridgeshire has seen respectable growth in business properties during the three years in which the LABGI scheme has been in operation. However, the Government has set an annual minimum growth target of 6.3 per cent - or in excess of £6m per year - that must be achieved before the council can qualify for any LAGBI funding," he explained.

"The growth targets were set at the start of the scheme and are based on historical growth in rateable value. South Cambridgeshire's high level of business growth has resulted in the council's target being particularly high.

"This disappointingly crude approach to the calculations of LAGBI rewards has meant that South Cambridgeshire has received no LAGBI rewards. Other comparable authorities with similar growth levels will have benefited because their historical growth, and therefore growth targets, are much lower. Cambridge City Council has a zero growth target, meaning LAGBI rewards are paid in respect of any growth in rateable value.

"Overall, this means that the District's taxpayers are not receiving a fair proportion of the business rates raised locally, which could be invested into the council's services and delivering the objectives of the council.

"It is, therefore, vital to have a fairer scheme."

Because Huntingdonshire's economy has been expanding faster than in earlier years, it has benefited, said HDC's head of policy. Its business rates growth target had been just 0.7 per cent after deduction of an allowance of 1.4 per cent for every planning authority for businesses that went bust or moved away. That meant SCDC's net target was still a tough 4.9 per cent.

What Mr Lansley may be chasing on SCDC's behalf is a slice of the £101million LABGI money still left in the Government's pot in case a couple of legal challenges from aggrieved councils (not South Cambs) go against it.

If the High Court rules in favour of the Government, that money would have been expected to have been shared out pro rata on the same basis as the rest of the 2007/2008 allocations, from which HDC is due to receive more than £450,000 this week. The letter to the Minister may be the MP's bid to forestall that formula for the last of the cash.

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