MQT on 2009-11-18
Session date: 
November 18, 2009
Question By: 
Steve O'Connell
GLA Conservatives
Asked Of: 
The Mayor


Sutton Council has recently decided to spend 70% (£181,000) of its Local Authority Business Growth Incentive (LABGI) fund on the start-up costs for a controversial £8m project called the Sutton Life Centre, instead of investing in local businesses which may be struggling during these harsh economic times in accordance with the spirit of this scheme. Does the Mayor of London agree that LABGI money could be better spent on supporting local businesses during the ongoing recession?


Answer for LABGI

Answer for LABGI

Answered By: 
The Mayor

It is a matter for each borough to determine how to spend its LABGI award - the grant is paid over to each authority on an un-ringfenced basis by the Dept for Communities and Local Government. LABGI is an incentive scheme, however, designed to encourage the promotion of local economic growth and economic development. As a principle LABGI monies are best re-invested in economic development measures that will benefit the businesses whose taxes give rise to LABGI. If Sutton Council is - as they have stated - going to use its LABGI funding to support investment in skills and training for young people at the centre this would not be inconsistent with the overall intentions of the LABGI scheme.

London has only been awarded £10.7m in LABGI funding in 2009-10 - despite London's businesses having generated an additional £515m extra for the Treasury in business rates over the reward period for this year's scheme. It is disappointing that the Government has allocated such a small reward back to London compared to the extra contributions local businesses have made towards the national economy through their business rates. I would therefore support radical overhaul of the scheme which would ensure that London keeps a much greater share of this extra revenue in future.