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Treasury under fire as incentives fall flat

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The Treasury has been slammed for a lack of joined-up thinking after proposals for increased economic incentives for councils met with widespread disappointment.

The comprehensive spending review gave councils the ability to levy a supplement on business rates (SBR)to fund infrastructure projects.

But there was dismay about the generous levels of protection for businesses; drastic cuts in the Local Authority Business Growth Incentive scheme (LABGI); and the absence of other incentives to encourage councils to grow economies.

Dermot Finch,director of the Centre for Cities think tank, said the generous exemptions for small firms in theSBRwere "the price of winning business support".

Dr Dick Sorabji, deputy director of the New Local Government Network think tank, welcomed theSBRproposals but described the cut in funding for LABGI as "a step in the wrong direction".

"In the context of the proposals, the reduction in LABGI funding is a worry," he said. "It is another signWhitehalldoesn't do joined-up thinking."

The Treasury's review of sub-national economic development released in the summer
said the government was developing options for increasing infrastructure and regeneration investment.

But the CSR contained no mention of models it discussed including regional infrastructure funds, local asset-backed vehicles and borrowing against future revenue streams.

It did, however, pledge to set out by December details of how a£2bn 'enterprise and renewal fund' would be allocated. Dr Sorabji said fresh proposals could be bundled into the forthcoming guidance on multi-area agreements (MAAs).

A report released last week by the Local Government Association called on the government to justify its continuing involvement in developingMAAs.

Its editor, Paul Raynes, programme director for regeneration and transport at the LGA, said councils were capable of making a success of multi-area working on their own.

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