The Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, announced immediate tax holidays for firms struggling to pay VAT, Corporation Tax, Income Tax and National Insurance. He put forward a package of measures to improve access to finance for small businesses, including a temporary small business finance scheme, worth a total of £1 billion, which will provide more flexible lending facilities. In addition, the Government's temporary reduction in VAT from 17.5% to 15% could boost retail trade over the key Christmas period.

However, Mr Darling revealed that the Government's plans to increase small firms' corporation tax would only be delayed by a year, and will still go up to 22% by 2010-11. To compound this, small employers, as well as their staff, will also lose out under plans to increase their National Insurance (NI) contributions by 0.5% from 2011.

As part of its Pre-Budget Report submissions, the FPB called for the lower rate to be reduced to 20%. The FPB is concerned that, by sticking to its policy, the Government has not gone far enough to support small firms.

"The Chancellor has today announced three £1 billion initiatives to help the cash flow of small businesses. Two of these initiatives should provide accessible funds in the first quarter of 2009, one via the European Investment Bank, delivered by the high street banks, and the second new small business finance scheme guarantees, underwritten by the Government and the banks," said the FPB's Chief Executive, Phil Orford.

"These schemes are welcome, provided that the banks make them accessible, and that small businesses are proactive in seeking them out. The further scheme allows businesses to offset losses for up to three years."

He added: "However, we are disappointed that these initiatives are both temporary and short-term, and that much of what has been given today will be clawed back post 2011. In addition to short-term liquidity solutions, we were hoping for medium and long-term policies to provide more certainty for business owners."