The Government's announce-ment that two million workers will receive an extra eight days' paid annual holiday by 2009 is another tax on employment that could cost small businesses £800 million a year, says the Forum of Private Business.

Nick Goulding, chief executive of the FPB, which claims to represent 25,000 small and medium-sized firms across the UK, said: "We recognise that this move will prove popular with most voters.

"However, since 1998 regulatory changes have cost businesses about £50 billion. In the real world, the Government cannot simply continue to load extra costs on firms and expect to have dynamic, competitive businesses.

"While employers accept that the principle of giving workers more leisure time with their families is a desirable one, the Government should find a way of compensating firms for this by reducing other costs."

Mr Goulding said the extra holidays would have a disproportionate effect on many smaller businesses who already find it difficult to cope with losing members of staff on holidays or absent through sickness. "In a small business one skilled worker can be a large proportion of the workforce," he said.

Meanwhile the FPB is continuing its war on big retailers squeezing suppliers.

It has accused Trade and Industry Secretary Alistair Darling of "turning a blind eye" to their plight.

The FPB wants action against a series of leading name operators who have allegedly used their buying power to heap misery on suppliers.

It is a controversial subject because retailers claim there is nothing wrong with demanding greater efficiency from suppliers if they are to benefit from increased orders.

Mr Goulding said: "This is the second time we have written to Mr Darling to ask for his support for suppliers struggling with the increasingly ruthless practices of big retailers."

Both Matalan and New Look have been "named and shamed" by the FPB after recently changing the terms of payments to suppliers.

"Until the Government takes action, contracts to supply big name retailers will not be worth the paper they are written on," Mr Goulding maintained.