Michael Fallon has said Labour’s plans to cancel a corporation tax cut to reduce business rates for small firms is like “robbing Peter to pay Paul”.

Fallon said: “It is a false choice to pledge to cut business rates by increasing corporation tax for medium and larger companies. We have prioritised cutting corporation tax to make our economy competitive and show that Britain is open for business.”

Labour has said if it comes into power in 2015 it will revert back to 2014 business rates and then freeze them in 2016 for small businesses. It would cover the revenue lost on this by cancelling the scheduled corporation tax cut from 21% to 20% which is due to come into force in 2015.

Fallon added: “Labour’s plans will simply rob Peter to pay Paul. You don’t help small businesses by increasing pressure on big businesses. To increase corporation tax sends a very damaging signal to those who want to invest in our country.”

Fallon, who was speaking at the Association of Convenience Stores’ Heart of the Community conference in London yesterday, was responding to Labour shadow business secretary Chuka Umunna’s challenge to the Government to match Labour’s commitment in the Autumn Statement on December 5.

Umunna said since David Cameron became Prime Minister, business rates have increased by £1,500 on average and will jump by another £430 in April when the new 3.2% hike comes into effect.

He added: “We have to act because our community depends on it, our society gains from it and our economy is strengthened by it because first you truly are the heart of the community.”

Umunna, who closed the conference today, praised the Government for the retail expert Mary Portas’ Portas Review which it conducted in 2011 to resuscitate struggling high streets.

Umunna said: “Let me give credit where credit is due. In inviting Mary Portas to conduct her review the Government showed the right intent and highlighted many of the issues that are critical to the future of the high street.

But he added: “Although I think it’s fair to say that she’s been disappointed with the follow-up.”

He said he would look at ideas published in the Grimsey Review into the high street in September, which was led by former Focus DIY boss Bill Grimsey.

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