GORDON Brown's incentive scheme to encourage local authorities to promote business start-ups could backfire if safeguards are not put in place.

The Chancellor's announcement means that, from April 2005, instead of rateable income from new businesses going directly to the Treasury, local authorities will now receive a share of the receipts.

The Association of Chartered Certified Accountants (ACCA) said this means those authorities which encourage more start-ups stand to benefit more.

But the ACCA is concerned that, in the rush to create businesses, some start-ups with little realistic chance of success will receive support and public money as authorities try to demonstrate they are performing well in encouraging start-ups.

Any subsequent failures would have implications for the wider business community.

Robin Jarvis, the ACCA's head of small business, said: "The incentives on offer could make it very tempting for some councils to encourage many new start-ups without insisting on viable business plans.

"We want to see checks and balances put in place which will prevent large numbers of unsustainable businesses being created."