Small Business Minister, Barbara Roche, backed up the assertion made on Thursday by the President of the Board of Trade, Margaret Beckett, that it would have no impact on employment.

Facing down Conservative accusations that this government is "bad for small business" she said Tories were "living in a fantasy world".

During a day long debate on the small business sector, the newly appointed Conservative spokesman on Trade and Industry, Christopher Chope, said the government had failed small businesses who were being "hammered" by the government's economic policies.

Bercow: "This government is bad for business..."

He said tax increases, the minimum wage and regulation were all holding small businesses back.

Roche: "Tories live in a fantasy world... "

Mrs Roche said the minimum wage should "not be seen as a burden but as an opportunity". Firms with a positive outlook knew that it paid to pay people a decent wage, she said: "It pays in terms of morale, greater commitment, less absenteeism and reduced turnover of staff."

She told MPs that people who worked for small firms were entitled to the same protection as those employed by large corporations. She insisted that the minimum wage would not lead to job losses and said the Tories were the only people who opposed the plans:

"Are they going to say that if they ever were returned to government they would not have a national minimum wage? Are they seriously going to go into the next election promising a cut to two million workers in this country?"

But Mr Chope was unabashed: "The impact of the minimum wage legislation on small enterprises will be more than twice the impact _ in businesses who employ between one and nine employees than that on businesses with between 10 and 24 employees."

He said the small print of the Low Pay Commission's report showed that small business had been let down: "It shows that there is going to be a massive impact of the minimum wage on small enterprises."

Roche portrayed a governmen committed to small business

Mrs Roche stressed the that government recognised that small firms wanted economic stability. Ministers were laying the foundation for that stability and creating a climate where enterprise could flourish she said:

"We are absolutely committed to creating in the UK a climate in which enterprise is valued and rewarded in which entrepreneurs are cherished and respected. We take our responsibility to the sector very seriously indeed _ Unlike the previous government we realise that they are our future and, this govt will not let them down."

The Trade and Industry Select Committee recently published a report on small business. The Committee's chairman is the senior Labour backbencher, Martin O'Neill. He accused Christopher Chope of whinging and criticised the Conservative Government for having a "fragmented" approach to the small business sector.

He welcomed Government initiatives to bring about a more "coherent" approach but said neither of the main parties had done enough to encourage small businesses to export:

Christopher Chope attacked the tax increases

"The high value of the pound does create difficulties for potential exporters. They are frightened because they think their goods will be too expensive and they are put off going to certain countries."

Mr O'Neill called for greater recognition of the opportunities to export to Europe.

Winding up for the Tories, John Bercow said "This government is bad for small business, bad for investment, bad for competitiveness and bad for exports and jobs."