Council regroup forced by LABGI scheme

How England could be divided sub-regionally

Local councils will be forced to immediately arrange themselves into sub-regional groupings after the government unveiled long-awaited plans for economic incentive grants.
The proposal to pay the new Local Authority Business Growth Incentives (LABGI) scheme to clusters of councils rather than individual authorities prompted howls of dismay from districts which claimed it "marginalised" their economic development role.

But the plans - which will see councils forced into sub-regions based on EU guidelines unless they devise their own groupings - were broadly welcomed in local government.

Councils will share in £150m of LABGI grant over the next two years. Payments will be made to sub-regional partnerships for growing their economies on the basis of rises in business property valuations.

The cash would be split by sub-regions between all authorities according to population. In two-tier areas, two-thirds would be retained by counties.

A consultation paper launched last week by local government minister John Healey, called for councils to decide in which sub-region they belong. The paper suggests basing sub-regions on "level 2 of the nomenclature of units for territorial statistics (NUTS2)", a system used by the EU. And with ministers keen to announce payments early next year, councils have precious little time to agree on alternatives.

The EU system would see 29 groupings such as Surrey, East & West Sussex, along with more established sub-regions such as Greater Manchester.

Paul Hymers, Corby BC's corporate director of resources and the Society of District Council Treasurers' adviser on LABGI, said the proposals suggested a "marginalisation of districts' role in economic development".

"It is appropriate that it has been labelled 'nuts'," he said.

"These groupings don't mean anything in terms of the way we work on economic development. If I was being cynical I'd say the government is just trying to direct more resources to county councils for things like social services."

The Local Government Association labelled the £150m sum as insufficient, but its policy consultant David Madison said the plan "should be fairly acceptable to authorities. The County Councils Network also welcomed the plan.

The Department for Children, Schools & Families has told councils to arrange themselves into sub-regional groups in preparation for the transfer of further education funding. Chris Leslie, director of the New Local Government Network thinktank, urged Whitehall to adopt a joined up approach.

A Department for Communities & Local Government spokeswoman could not confirm if the LABGI structures would form the basis for all future sub-regional working. She said it was "nonsense" to suggest the proposals were a device to divert money to county councils.

The suggested groupings are: Bedfordshire and Hertfordshire; Berkshire, Buckinghamshire and Oxfordshire; Cheshire; Cornwall and Isles of Scilly; Cumbria; Derbyshire and Nottinghamshire; Devon; Dorset and Somerset; East Anglia; East Riding and North Lincolnshire; Essex; Gloucestershire, Wiltshire and North Somerset; Greater Manchester; Hampshire and Isle of Wight; Herefordshire, Worcestershire and Warwickshire; Kent; Lancashire; Leicestershire, Rutland and Northamptonshire; Lincolnshire; London; Merseyside; North Yorkshire; Northumberland and Tyne and Wear; Shropshire and Staffordshire; South Yorkshire; Surrey, East and West Sussex; Tees Valley and Durham; West Midlands; West Yorkshire.