Business chiefs have called on banks and Government to take direct action to rescue the economy.

The Brighton and Hove Chamber of Commerce has launched a Charter for Business Recovery. It demands that banks report their lending rates every month and that Government give tax breaks for new products and service development.

The plan comes in the wake of a call from the Shadow Chancellor, Ed Balls, for the Government to institute a so-called ‘Plan B’, focused on a drop in the VAT rate.

Julia Chanteray, president of the chamber, said a drop in VAT is welcome but is insufficient to inspire business recovery.

She said “Whatever the banks may say, ordinary businesses know that affordable lending is either hard or impossible to find, even for extremely safe, sure-fire companies. Banks claim to be lending but are hiding behind annual targets that are easy to dodge.

“So part one of our plan calls for banks to report their lending rates, lending targets and actual commitments on a monthly instead of an annual basis. This will create a transparency we don’t presently have. And to make this work, we’re calling on the government to take the lead, demanding this monthly transparency from the banks that we taxpayers still own, following the bailouts.”

The second part of the Chamber’s Charter for Business Recovery focuses on taxation.

Ms Chanteray said: “While the Government is so committed to cuts, there’s little point asking for extra spending. So our Charter is designed to stimulate new business investment – not least from the banks – without reducing HMRC’s overall income.

“In short, we’re asking for tax breaks for new product and service development, very similar to tax breaks already enjoyed by some industries for R&D, but spread across manufacturing and service businesses. When new products and services succeed, businesses pay tax on them and HMRC benefits. But while they’re being developed, short-term tax breaks make it attractive to finance their development.”

“The Brighton & Hove Chamber of Commerce, knowing what’s really needed on the ground, is taking the initiative and starting a national call for specific measures.”

Andrew Nicol, chairman of Hove Business Association, said the initiatives are a step in the right direction but action to rescue the economy is a much wider picture.

He said: “Tax breaks for new products is certainly a positive move but I’m not sure if a reduction in VAT will make much difference, and will certainly cause a great deal of work for some small businesses. “I think the core challenge is about confidence. A recent report from the Bank of England highlighted the fact that around 60% of GDP growth is generated by household consumer spending and, of course, if every time we pick up a newspaper, or turn on the TV we are greeted by more doom and gloom, people will not be spending.”

Victoria Mason, partner at Cardens Accountants and Business Advisors in Church Road, Hove, said new businesses often ask if there are ways the Government can help give them a step up.

She said: “Tax relief for new product and service development has come to the forefront at this difficult time. It is important to note that such relief relates to a new idea not the business. I agree that similar opportunities would be very well received, especially in the retail and service sector which is a big part of Brighton’s economy.”