Business leaders welcome Darling's proposals

Business leaders breathed a sigh of relief after finance minister Alistair Darling's first budget revealed a toning-down of recent proposals thought to be harmful to Britain's status as a major financial centre.

Additional measures to help out new businesses in yesterday's budget may help win over British companies, who have recently condemned the government as being anti-enterpreneur.

Suggestions of taxing capital gains and offshore income belonging to rich foreigners had sparked worries that top business talent would take its skills elsewhere.

But the Chancellor yesterday scrapped these plans, instead confirming a annual charge of £30,000 on non-domiciled individuals resident in Britain for more than seven of the past 10 years who choose not to come under the UK tax system.

"The government has much to do if it is to win back its enterprise credentials, but the measures announced today are a credible first step on the road," said Richard Lambert, director-general of the Confederation of British Industry.

"Although the anger over Capital Gains Tax is still simmering, entrepreneurs and smaller businesses will recognise that the Government has made an attempt to listen."

Opposition leader David Cameron hit out at the ruling Labour party's "incompetence" as the government unexpectedly raised borrowing to help refinance the Bank of England's loan to failing bank Northern Rock.

"In the years of plenty they put nothing aside. They didn't fix the roof when the sun was shining," Mr Cameron said.

But business representatives praised moves to help small and new businesses, who are particularly affected by the current lack of liquidity in financial markets.

The government will provide an extra £60 million for the loan guarantee scheme, which provides finance for new businesses not normally be eligible for bank funding due to a lack of a financial track record or financial security.

"Changes to the small firms' loan guarantee scheme will make it easier for firms to get credit and for banks to have a safety net when lending in that vital but volatile start-up time," said the British Bankers Association in a statement. Mr Darling added he would take steps to simplify tax calculations for small companies.