The Federation of Small Businesses (FSB) is the latest organisation to voice its concerns over chancellor Alistair Darling's Pre-Budget Report speech.

Although FSB welcomed measures to support small firms such as the temporary Small Business Finance Scheme, which will make £1bn available in loans for small firms, it expects that the cut in VAT to 15 per cent will be difficult and costly for some small and medium-sized enterprises to implement by next Monday. The FSB has also called for the government to review its decision to increase National Insurance contributions by 0.5 per cent, and is concerned that the chancellor has recouped any benefit of the VAT reduction to small businesses by tweaking fuel duty accordingly.

However, the organisation said small businesses will benefit from the ability to spread their tax payments out across the year, and will bring welcome relief to those firms that desperately need to stabilise their cash flow. John Walker, FSB national policy chair, said: “This Pre-Budget Report is a sign of the importance of small businesses to the UK economy. The Government’s Small Business Finance Scheme, which closely resembles the Small Business Survival Fund the FSB has been calling for, will provide a vital cash boost to businesses struggling with rising costs and a lack of credit.

“Many of these measures, such as giving businesses longer time to pay bills and offsetting losses, will give small businesses a welcome breather from the taxman and allow them to concentrate on sustaining their business, supporting their staff and growing the economy in the long term.”