The British Hospitality Association (BHA) backs the Conservative's proposal to give very small businesses a temporary tax cut, but believe it is "arbitrary" and should be extended to all small businesses.

The Tory leader, David Cameron, has called for a 1p cut in the pound for national insurance contributions for six months, to help businesses with fewer than four employees cope with the economic downturn. It is expected to save each small businesses up to £600.

The proposal could cost the government £225m, but the Tories intend to claw this back by cutting various tax reliefs and allowances.

A spokesperson for BHA said: "Any measures that seek to alleviate pressures on business during the present economic turmoil are to be welcomed - hence our support of the Conservative party's proposals.

"The BHA successfully sought similar measures from the government during the 2001 Foot and Mouth Crisis.  A repeat of these measures would certainly help, as cash flow is critical and small businesses are especially vulnerable in time like this.

"We would like to extend the proposals to all small businesses - not just those employing fewer than five people, which is a rather arbitrary cut-off."