BUSINESS leaders yesterday welcomed the announcement that Corporation Tax will be cut to its lowest rate for more than 30 years, but experts warned that "the devil may be in the detail".

The North East Chamber of Commerce (NECC), Confederation of British Industry and Institute of Directors all applauded the Chancellor's move to lower the tax from 30p to 28p from April next year. But he came under fire over plans to increase tax rates for small companies from 20p to 22p by 2009.

Graham Redman, a tax partner at PricewaterhouseCoopers, in Newcastle, said the cut in Corporation Tax was unlikely to be sufficient to have an impact and said the devil may be in the detail.

He said: "He is going to give it with one hand and take it away somewhere else with the other.

"Mr Brown claimed we would have the lowest Corporation Tax regime of all the major economies, but he does not seem to be taking into account Ireland, which has a corporation tax rate of 12.5 per cent and is booming."

The CBI also gave a cautious welcome to the tax cut.

Regional director Sarah Green said: "The cuts in Corporation Tax will be welcomed by business in the region, although with changes in various other tax allowances, it is not yet clear what the net effect of this cut will be."

Plans to increase tax on small companies also raised concern.

Colin Stratton, North-East chairman of the Federation of Small Businesses, said: "This year, after some welcome initiatives for our members, he throws it all away with a tax hike aimed at small businesses.

"Small businesses employ 58 per cent of the private sector workforce -over 12 million people -and the increase in their tax rate fails to acknowledge their contribution."

An NECC spokesman said: "We are concerned that the Government is increasing tax rates for small companies in a bid to tackle tax evasion. Why not tackle the issue head-on rather than a blanket hit on smaller traders?

"This is potentially disruptive to efforts in the North-East to encourage a more entrepreneurial culture."