The UK's first tax on parking spaces has been announced by the Government but the scheme in Nottingham was immediately condemned by local business leaders as being "all about money-raising and not about reducing congestion".

The Workplace Parking Levy (WPL) for Nottingham was confirmed by Transport Minister Sadiq Khan, although the scheme will not start until April 2012.

Commuters could be charged £185 a year to leave cars at work under the scheme, with the sum rising by 2014 to £350 per parking bay for firms with 11 or more spaces.

The revenue raised will be used to pay for the expansion of Nottingham tram network, which was given the go-ahead by Mr Khan. Nottingham City Council could net £11.3 million a year through the fees. It has been suggested that WPL could cost firms £3.4 billion a year if rolled out nationwide.

The scheme has been strongly opposed by the Derbyshire and Nottinghamshire Chamber of Commerce, which has warned that many businesses could relocate rather than pay the charges.

John Dowson, the chamber's head of policy and representation, said: "We are very disappointed that WPL is going ahead. This is all about raising money and will do nothing to relieve congestion. It adds an unnecessary tax burden on businesses."

He went on: "We support the tram extension but now that WPL is coming in, we are concerned that costs will escalate. We have tried, in vain, to talk to Government ministers about this. They have been very reticent to discuss it."

The British Chambers of Commerce has expressed fears that if the Department for Transport approves Nottingham's bid to introduce the tax, other councils will submit similar plans.

Nottingham is home to many large businesses, including retailer Boots and credit-rating agency Experian.

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