The Confederation of British Industry (CBI), the British Chambers of Commerce (BCC), the Federation of Small Businesses (FSB) and the Institute of Directors (IoD) have collectively written to Alistair Darling to complain about the plans because the "reaction of their combined memberships has been so universally strong".

The groups, which also plan to meet Mr Darling to discuss their concerns, claim the impact of the decision will hit the whole economy, discourage risk taking and investment and hit small business, among other effects.

The letter added:

"On behalf of our combined memberships we urge you to pause, suspend your decision and enter into urgent and detailed discussion with the key business organisations to resolve this situation.

"We will work with you towards a better solution that meets the Government's objectives, however we do need to understand what those objectives are."