OK so as the title says you are a small local business, you want a website and hosting.

what sort of prices are small businesses willing to pay, i am planning on starting a site which offers hosting and design and then advertising to local businesses. I am figurinmg that their wants and needs may cost me more than the average hobbyist, so i want a specialist site with plans to suit.

What are small local businesses looking for and in what price range are they willing to pay.
I know a few of the local businesses used to have one or 2 page sites which were all part of a big website, this big site has gone and the local shops no longer have a site. I know they paid between £300-£500 for these one or 2 page sites but i dont want to rip them off, it doesnt do a lot for your reputation.

You can easily see what the market pricing is by finding out what your competitors charge. But, you need to add one more factor into your pricing. What do you need to charge in order to make an acceptible profit margin? You're in business to make a profit, right?

yeah i know, the webdesign prices always make a profit so thats not too bad.

Another factor is should i make it a general uk business design and hosting site or shall i localize it with a local name to make people feel more , not at home but i know what i mean lol

That might be a good idea to have a "local" feel if you are going after "local" businesses.

I assume you'll be keeping your current site, so you won't be shutting out the rest of the UK market if you open leedshost.co.uk or whatever.

Many small businesses, I've found, are a bit internet-shy and need some hand-holding. If you think £300-£500 is too much for a 1-2 page site (I, too, think that's stretching it quite a bit, considering that usually you can't even order directly from the site) maybe £150-£200 for 3-5 pages will be worth both your time and their budget. Obviously, it's your call.

Are you planning to do local advertising?

Yep i plan to advertise locally with ads in some local shop windows and flyers to local shops with a business card attatched