Bradford Chamber of Commerce today gave a lukewarm response to Government plans to give local councils financial incentives to encourage the growth of new firms.

Local Government Minister Nick Raynsford yesterday launched a second consultation paper on its Local Authority Business Growth Incentives Scheme.

It plans to give local authorities a direct financial incentive in business creation in their areas by allowing them to retain a proportion of increases in local business rate revenues to spend on their own priorities from April 2005.

The second paper sets out the Government's preferred options on the way in which the scheme will be administered and makes proposals on minimum levels, scaling factors and the division of revenues between the different tiers of local government.

Mr Raynsford said: "The scheme acknowledges that local authorities have a key role in fostering local economic growth and will encourage them to foster strong partnerships with business and other local and regional players."

But today Chamber of Commerce chief executive Sandy Needham said more information needed to be made available about how such a scheme would work.

And she said a decisive factor would be how local authorities consulted with other organisations before making decisions.

"I think the idea of giving local authorities an incentive to create a good environment for business is good, but it depends on how it is structured," she said.

"It makes absolute sense to do what we can to encourage businesses to start-up and expand, but we also know that some areas have more to offer than others - both financially and in other ways.

"I would like to know more about how local authorities would be able to claim these incentives from central Government."

James Murgatroyd, head of Bradford Council's Invest in Bradford programme, agreed that more needed to be known about the proposals.

"We need to see how this scheme is going to be rolled out and how easy it is going to be to claim the kind of benefits it talks about," he said.

"The philosophy of being able to have some local control over spending and an ability to react to local needs is a good one, however. We have seen through our own schemes that local solutions to local circumstances work extremely well."