08 June 2007
Councils have been urged to drop legal challenges over the distribution of a special government grant designed to boost business growth.
Local government minister Phil Woolas this week wrote to three councils that have mounted action over the methodology governing the Local Authority Business Growth Incentive scheme saying their challenges were depriving other areas of funds. The grant, which is not ring-fenced, is awarded to councils that have successfully encouraged enterprise and employment in their areas.
Corby and Slough councils have each initiated judicial reviews against the government and Tewkesbury Borough Council has launched a challenge on the same grounds. They argue that the distribution formula is unfair, leaving them with no share of the grant or less than they deserved.
But the Department for Communities and Local Government said the challenges were holding up the entire scheme. Each successful authority has so far only received 70% of its promised grant because the government wants to retain a contingency fund to enable recalculated payments should the judicial reviews go against it.
Woolas said: 'There will always be those councils that argue they could have done better under a different methodology, however we distribute the grant. But this action is wholly unnecessary and is undermining cash for jobs and growth for hundreds of other areas.'
He added that the councils concerned should get on with delivering new jobs for their local communities. 'I seriously question whether their action is an effective use of their council taxpayers' money and I urge them to drop this challenge,' Woolas said.
Corby Borough Council said it felt let down – a new warehouse in the town has netted significant extra business rates for the government. Chief executive Chris Mallender said: 'If there was a council anywhere that was due to benefit from a business growth incentive scheme you would have expected it to be Corby with the growth we are seeing in the town at present. And yet we were awarded a nil grant because the government sought to change the methodology part-way through the process.'
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