03 August 2007
Town halls were celebrating a 'victory for common sense' this week after the High Court ruled in their favour in a dispute with Whitehall over the distribution of a special grant designed to reward councils for boosting business growth.
Corby and Slough councils initiated a judicial review against the government after the distribution of the Local Authority Business Growth Incentive Scheme (Labgi) left them empty-handed.
The councils claimed the Department for Communities and Local Government's rigid methodology was denying them funding, despite significant business development in their communities.
A stand-off between central and local government developed, prompting the DCLG to keep back 30% of Labgi funds from all eligible authorities pending the outcome of the judicial review.
But the High Court's judgment, published on July 31, overruled the government's stance and ordered the funds to be paid out. The DCLG has accepted the decision and agreed to release all the money promised to councils. A spokesman said a note setting out payment details would be published shortly.
Chris Mallender, the chief executive of Corby Borough Council, told Public Finance: 'This is a victory for common sense. We are pleased that the DCLG has decided to accept the judgment…
'It means £600,000 for Corby Borough Council and around £300,000 for Northamptonshire County Council, which is much needed in the context of our very rapid population growth. But more importantly we look forward to receiving even greater funding in coming years as the government… takes the scheme forward.'
Slough Borough Council, which can now anticipate a payout of more than £800,000 from the Labgi scheme, also welcomed the decision. Council leader Richard Stokes said: 'This is money that Slough's residents and businesses should have benefited from and were denied.'
The DCLG also confirmed that it would be dropping its defence against Tewkesbury Borough Council, which was taking forward a separate legal challenge after receiving just £60,000 in Labgi grant, rather than the expected £360,000.
The Local Government Association described the Labgi funding process as a 'bureaucratic merry-go-round', saying the need to bring about a judicial review showed that the scheme was excessively complex.
LGA vice-chair Margaret Eaton said: 'There is widespread agreement in local government that a successor scheme needs to be more simple, more transparent and more predictable.'
The DCLG is working on reforms to Labgi and has promised to consult on proposals shortly.
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