£27m reward for economy-boosting councils

Jul 1 2008 by Chris Knox, The Journal

THE region’s councils have been rewarded for promoting business growth with a £27m government grant.

This third and last annual payment from the Local Authority Business Growth Initiatives scheme is being split between the region’s 25 authorities and will be used to further support enterprise in the North East.

The non-ringfenced payments are an attempt to decentralise much of the funding that councils are afforded by local government and have provided £296.2m to regional councils during the three year scheme.

Local Government Minister John Healey said: “This money rewards the work councils have done to boost their local economies and aims to encourage councils to play a bigger role in backing business and new jobs in their area.

“Over the last three years this scheme has made a real difference to local communities, so I want to ensure that we continue to provide an incentive for local authorities to promote local business growth.”

North Tyneside Council in particular benefited from the scheme after being allotted just over £8m, more than double Newcastle City Council, which was the second highest recipient with £3.3m. North Tyneside was given the most as it is about to lose its status as a Business Improvement District and is being compensated for the business rates local firms will begin paying.

The final decision on how the council will spend the money will be decided by a meeting of cabinet members, with proposals including schemes to get residents back into employment and training.

Jim Allan, deputy mayor for the area, said: “This is tremendous news and a great opportunity for us to continue with our business growth plans and the further encouragement of inward investment, strengthening our economic and employment contribution to the region.”

There are concerns that the Government has yet to come up with an alternative scheme. A spokesman for the Association of North East Councils, said: “The funding is fantastic news for councils in the region and will go a long way to improve the business landscape in the North East.

“However, it is because it is so successful that it will be missed next year. The Government needs to come up with another scheme to help councils support business growth going forward.”