Mandelson rejects business tax rise

TREASURY plans to slap a £20billion tax rise on business are being opposed by Lord Mandelson amid fears that it would tip many firms over the edge.

Chancellor Alistair Darling last year ordered large increases in business rates, based on a five per cent inflation rate last September. But by January inflation fell to 2.4 per cent and business groups believe lower prices should be reflected in rates.

Many companies say large increases in business rates would be disastrous and could mean the difference between staying solvent and being forced into bankruptcy.

Lord Mandelson's Department for Business, Enterprise and Regulatory Reform has decided to reflect those fears and is privately backing calls for a fresh look at the rate. Lord Mandelson is keen to support business following criticism from the CBI over his failure to implement loan guarantee schemes speedily.

The battle between the Treasury and the business department follows a tougher line from Mr Darling over public spending and the need for savings across Whitehall.