Local Authority Business Growth Incentive
What is the Local Authority Business Growth Incentives Scheme?
Introduced in 2005, the LABGI scheme is scheduled to run for three years. It is a financial incentive scheme to encourage economic growth by allowing local authorities to retain a share of increased Non Domestic Rate (NDR) revenue. Authorities are free to spend LABGI revenues on their own local priorities.
How it works
Business growth is measured in terms of the increase in a local authority's rateable value during a calendar year. Each authority is set a target level of rateable value growth that must be reached in order to benefit from LABGI known as the floor.
The floor is derived from an authority's historic baseline growth rate minus the National Adjustment Factor (NAF), an equalising tool. Any growth above the floor is then multiplied by the business rate multiplier and a scaling factor of 70 per cent is then applied to determine the final amount eligible locally.
Each authority also has a ceiling that dictates the maximum revenue that can be kept in any year. This will range between three per cent and nine per cent of the modified Environmental, Protective and Cultural Services (EPCS) element of the Formula Spending Share (FSS) from the local authority's Revenue Support Grant calculation. Any revenue collected above the ceiling must be passed back to the central business rates pool for government distribution between all authorities. The government estimated that the scheme would provide authorities in England and Wales with up to £1billion in additional revenue over the three-year period.
To find out more about LABGI click HERE