Britain to devolve public spending to boost growth

LONDON (Reuters) - A plan to devolve potentially billions of pounds of public spending to local authorities and businesses in Britain to boost a stagnant economy won a green light from the government on Monday.

The Treasury said the coalition government had approved almost all the recommendations in a blueprint drawn up by Michael Heseltine, a former Conservative deputy prime minister.

The scheme will see public money for projects such as housing and transport, now controlled by various government departments, pooled into a single pot from 2015.

Regional groupings of local authorities and businesses - known as local enterprise partnerships - will bid for the funds and, if successful, oversee how they are spent.

The amount of money to be allocated to the new "Single Local Growth Fund" will be decided in a spending review to be published in June.

Heseltine had said shifting public spending away from central government would make the country more competitive.

He said on Monday the government's decision to accept the majority of his recommendations was "the most strategic supply-side decisions" he could recall.

"In essence, it accepts that London and its functional bureaucracies should rely more on the incentivisation of England's provinces and less on central instruction," Heseltine added in a statement released by the Treasury.

One issue left for a later decision was how to devolve funding for training and apprenticeships to the local level.

Officials at the Department for Business Innovation and Skills (BIS), led by Liberal Democrat Vince Cable, have argued that fixing Britain's skills shortage required a national approach, people familiar with the negotiations said last week.

The government rejected a proposal to make greater use of its existing powers to investigate foreign takeover bids of British companies, arguing Britain was committed encouraging open markets and inward investment.

(Reporting by Tim Castle and William Schomberg; Editing by Stephen Powell)

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Wealthy homebuyers boost tax coffers

LONDON (Reuters) - Britain's taxman has raised almost 50 percent more cash than it hoped for from tax increases on property transactions over the past year as London luxury residential prices continue to climb, property data showed.

Britain's cash-strapped government said last March it hoped to raise 150 million pounds in the year to April from increasing stamp duty - paid by the buyer - on properties worth more than 2 million pounds , most of which are in London.

Property consultancy Knight Frank said though the tax hike had reduced annual sales of London luxury homes worth over 2 million pounds by 15 percent, the increased levy made up for the shortfall.

HMRC will have collected some 223 million pounds in extra tax revenue since the 40 percent rise was implemented, 73 million pounds more than forecast, said Liam Bailey, Knight Frank's Head of Residential Research.

Sales of London luxury homes worth over 2 million pounds plummeted as much as 35 percent in the six months after Britain announced its 2012 budget, but stabilised when the government said it would not introduce more property taxes in December, Knight Frank said.

Continued falls in the value of the British pound and political as well as economic uncertainty in the Middle East and Europe have kept London's allure as a safe haven to park wealth alive, supporting buyer appetite and prices, it said.

The average price of so-called prime central London property rose 0.9 percent in February, the highest rate in 10 months, boosted by price increases for homes worth between 1-2.5 million pounds. Prices have grown every month since November 2010 and are now 55 percent above the March 2009 market low.

The property consultancy said that it however expected the tax hikes to reduce sales of homes worth over 2 million pounds in the long term by about 10 percent.

(Reporting by Brenda Goh; Editing by Helen Massy-Beresford)

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