Magazine article Public Finance

Darling Faces Demands for a Budget for Business

Magazine article Public Finance

Darling Faces Demands for a Budget for Business

Article excerpt

Councils and industry leaders have both urged the Treasury to deliver a business-friendly Budget next week to stave offa potential economic downturn.

Chancellor Alistair Darling will have to weigh up often competing demands from local government, business and trade unions as he prepares for his first Budget on March 12.

Town hall leaders are calling for the restoration of Local Authority Business Growth Incentive Scheme funds. Almost £lbn has been distributed since 2005, but councils are due to receive no funding next year, and only £150m over the following two.

Local Government Association leaders warned that this decision had not only left a hole in council budgets, but threatens to have a negative impact on businesses.

LGA chair Sir Simon Milton said: 'It makes little sense for the government to cut back on a scheme to bolster local business at a time when the local economy needs all the help it can get

'The decision to cut £850m of funding for this scheme will put the brakes on much-needed local projects to promote economic development If the chancellor is serious about promoting business, creating jobs and ensuring Britain's economy remains buoyant, then he should commit to a substantially improved scheme in next week's Budget.'

An LGA spokesman told Public Finance that the association also wanted the Budget to widen the eligibility criteria for council tax benefits and start a drive to ensure more eligible people sought their share of the £1.8bn that goes unclaimed each year.

The LGA is also seeking clarity on the return of landfill tax. 'Councils pay £2.5bn in landfill tax and the government has said the vast majority would make its way back to local authorities. At the moment we're not convinced that has happened and we want to make sure that will happen over the next spending review period,' the spokesman said.

Business leaders, too, said the prospect of an economic slowdown should prompt a rethink of tax changes that they say will hit business hard, including a hike in capital gains tax from 10% to 18%, and ending empty property rate relief. The British Chambers of Commerce has estimated these changes will cost business an extra £3.4bn in taxation next year. …

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