Businessman Brian Rhodes has revealed innovative proposals ahead of Chancellor Gordon Brown's March Budget which he believes could help the government better manage its over-stretched finances.

Mr Rhodes, managing director of Royd Lane textile dyers Herbert Roberts Ltd, put forward his ideas at a Keighley Business Forum lunch attended by an attentive Ann Cryer, Keighley's Labour MP. He now intends to make them known to Gordon Brown.

Mr Rhodes outlined his own proposals for establishing an interest rate levy, which he says would prevent banks being "spoon-fed" profits by the Bank of England setting the minimum lending rate.

He says: "My thinking is this. The Bank of England interest rate drops to three per cent and a floating level of interest rate to control inflation takes the form of an interest rate surcharge, which goes directly to the Exchequer to fund social and capital costs such as new hospitals and schools.

"This could apply after Britain joins the EMU, because the UK is unique in Europe in having 60 per cent of the population involved in home ownership. The main benefit is that it gets rid of speculative investment in the UK money markets and securities by overseas investors, who cause instability in the value of Sterling."

Mr Rhodes says this would allow UK companies quoted on the Stock Exchange to be freed from the need to pay shareholders punitive levels of dividends.

It would free the excess profits currently going to the banks to fund social investments such as one-parent and disability benefits, which the Labour government cannot currently find any way of funding.

He adds: "Anyone who is borrowing from a bank would pay just the same rate as now, but instead of interest going directly to bank profits it would go to the Exchequer. I can't think why no-one has thought of this before."

KBF director Iain Copping says: "I hope the powers that be in Westminster will at least give Mr Rhodes' very sensible and seemingly viable proposition serious consideration."

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