The chancellor, Gordon Brown, is facing calls from small businesses to cut payroll burdens on small employers in next month's budget.

Forum Response: Federation of Small Businesses

Neil Hamper, financial affairs chairman of the Federation of Small Businesses, told ePolitix.com: "We are looking for the chancellor to give further encouragement to small businesses by recognising the role they play in administering welfare payments.

"The costs imposed on small businesses by the government delivering social policies through the employer payroll have increased dramatically since 1997. The new Tax Credit Bill will make things even worse."

"We believe that the only practical solution to the growth of the informal economy is to remove low earners from income tax altogether."