Small businesses have urged the Government to fill "a missing link" by creating a growth programme to stimulate job creation.

While the Federation for Small Businesses welcomed many of the Chancellor's measures in his Comprehensive Spending Review, it said they did not include enough to help the growth of small business.

The FSB called for an extension to the National Insurance Contributions holiday to include existing firms with up to four members of staff and provide incentives when they take on three new employees, a cut in Vat to five per cen in the construction sector, and cut in business support budget to £500m, and a business-led national mentoring service to match mentors with businesses, and backed by banks.

Small enterprises created 80 per cent of new jobs in the EU between 2002 and 2007.

The FSB welcomed the decision to increase new adult apprenticeships to 75,000 a year. It also said superfast broadband was what small business had called for.

Roger House, chairman of the FSB in Kent and Medway said: "We all know we are living in an age of austerity and that these cuts will affect us all. But our members understand that to reduce the public sector deficit, these cuts had to be made. The small business community continues to have a vital part to play in driving a credible recovery and taking on new members of staff to help tackle unemployment, so it is now vital the Government puts a Small Business Programme for Growth into action immediately.

"As our research shows, small firms are at tipping point and lack the confidence to take on the 500,000 people that will be made redundant as a result of these cuts. So it is up to the Government to incentivise the small business community - through extending the National Insurance Contribution holiday to existing firms and cutting VAT to five per cent in the construction sector - to promote growth and help small firms take on new staff."

The CBI, the employers' organisation with members across the county, has applauded the Chancellor for getting the spending strategy right.

Richard Lambert, CBI director-general said: "He has stayed the course outlined in the June Budget, with economic growth a top priority.

"We particularly welcome the extra £2bn a year on capital spending, and the focus on areas that support growth. These include transport and other infrastructure, education and science, and the low-carbon economy.

"The spending cuts, though painful, are essential to balance the UK's books and build its future prosperity. Now the Government must deliver its promised savings by re-engineering public services."

For more on the spending review, see our special report.