Mr Hutton was fielding questions from The Business, Enterprise and Regulatory Reform Select Committee as part of its scrutiny of DBERR's annual report and accounts for 2006-07. The Conservative Party's MP for Bromsgrove, Julie Kirkbride, argued that the changes to corporation and Capital Gains Tax would be detrimental to smaller businesses, but Mr Hutton said that they were internationally competitive and that the tax system had been simplified. 

"We know by the Chancellor, Alistair Darling's actions that he is concerned by the UK's image with bigger investors," said the FPB's Campaigns Manager, Matt Hardman, referring to the tax changes. "Does the use of the term ‘enterprise' mean the Government wants to continue to focus supporting start-ups? What about the UK's established small firms? How are they being encouraged to grow by a tax regime that continues to target them?" 

While the higher rate of corporation tax paid by bigger companies was cut in the 2007 Budget, smaller firms' contributions went up from 19% to 22% over two years. In his recent Pre-Budget Report, the Chancellor abolished the Capital Gains Tax taper relief system, including the 10% rate levied on some asset sales, and in its place introduced a flat rate of 18%. Companies making large profits from the sale of assets will pay less tax, but smaller businesses, which have typically benefited from the taper relief rate in the past, will have to pay almost double. 

The FPB believes that these measures hinder the productivity and competitiveness of many smaller firms, whose owners are increasingly concerned that their fears are not being heard by the Government. So far, more than 800 businesses have registered their opposition to the changes to Capital Gains Tax, as well as the prospect of supplementary business rates, which would mean extra business taxes to pay for local development projects, by signing a petition on the FPB's website, at www.fpb.org/petitions. 

The Chairman of the Conservative Party's Trade and Industry Select Committee, Peter Luff, who is also MP for Mid-Worcestershire, asked about the viability of the Business Council. Mr Hutton said that the Council would meet two or three times a year, and welcomed the fact that it is made up of senior business advisers.

The FPB remains concerned that no one representing smaller businesses has been given a seat on the Council, and therefore the ear of the Prime Minister, which is being bent by big firms and celebrities such as Sir Alan Sugar.