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Businesses should not plug council's £4bn deficit

A leading figure at the North East Chamber of Commerce has urged councils not to increase taxation on local businesses after a £4bn deficit in authority income.

Ross Smith, head of policy for the NECC, has warned that further taxation would only add to the problem - and that it is more important than ever that local companies are given the space to be successful.

As well as town halls being hit by a £4bn deficit in just two years, Local Government Association figures also show that the selling of land, council buildings and other capital projects has fallen by £2.7bn since 2007/08.

Despite this, Ross Smith said: “These figures demonstrate the funding black hole that councils across the North East are facing and illustrate the tough financial decisions they have to contend with.

“However, over-burdening businesses with further taxes is not the answer.”

According to Mr Smith, businesses in the region are the driving force behind the economy, and he insists that the local government have a duty to look at the impact further taxation would have on the wider economy and not just the bottom line.

He added: “We cannot afford for this deficit to drive councils back to a ‘cheap is best’ approach to the decision-making process when it comes to procurement.

“The more councils work with local companies the greater the financial benefit for the local economy.”

Sir Jeremy Beecham, Vice-Chairman of the LGA, said: “Town halls are being hit by a perfect storm caused by the recession. Sources of income have dropped sharply at a time when more and more people are turning to councils to help them.

“The tough economic outlook is forcing councils to take a look at almost every aspect of their finances.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .