Alistair Darling found himself under attack on two fronts last night as both business leaders and unions criticised his first Pre-Budget Report and Comprehensive Spending Review.

John Cridland, deputy director-general of the CBI, called the report a “mixed bag for business”. He said: “The CBI was hoping for a statement for enterprise with encouragement for small businesses, which were hit by tax increases in the last Budget. There was no such statement and many small businesses will be hit by the increase in the capital gains tax rate.

“Raising the minimum capital gains tax rate to 18 per cent will adversely affect the balance between risk and reward, both for entrepreneurs and for the UK’s vital private equity industry. This is disappointing and may lead to a reduction in investment in start-up and growing businesses.”

Martin Temple, director-general of the EEF manufacturers’ organisation, echoed the CBI’s view. “There was little added value for business from today’s statement. Whilst there were some small steps towards tax simplification, which are welcome, there were, as always, further piecemeal measures with the potential for unintended consequences,” he said. “In particular, the changes to capital gains tax are another example of a policy change which is rapidly reversed with no consultation and may have negative consequences for investment.”

The British Chambers of Commerce attacked the Chancellor to failing to boost transport infrastructure. David Frost, its director-general, said: “The £14.5 billion of new investment announced is a smokescreen, covering only a series of already announced projects. We would have hoped for a greater injection of funds to cover the wider improvements that are so desperately needed.”

Miles Templeman, director-general of the Institute of Directors, said that the Chancellor’s tax revenue forecasts were too optimistic and that public spending needed curbing. He said: “We have a new Chancellor but the same old story with regard to the public finances - greater borrowing in the short term and tax revenue projections which yet again look too optimistic.”

Paul Kenny, general secretary of the GMB, the union that has led a campaign against private equity, said the tax changes were good but did not go far enough. He said: “The new rate of 18 per cent still leaves the multimillionaire elite paying a lower rate of tax on their income than ordinary working men and women. There is no justification for affording privileges to this elite and, indeed, proposing to continue to do so is scandalous. It is time that the few were treated like the many.”

Brendan Barber, General Secretary of the TUC, gave warning of dissatisfaction in the public services, after difficult pay talks this autumn. He said: “There is much to welcome in today’s statement, especially new investment in education, health, transport, science and the environment . . . But some parts of the public sector have received a very tight settlement. The Government must understand that it cannot expect public servants to fund this through further cuts in their real pay after this year’s staged awards.”

PCS, the civil service union, questioned the Government’s pledge to make a further £30 billion of efficiency savings. The union said that more cuts would lead to a further deterioration in services and the loss of more civil and public service jobs.

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