The Federation of Small Businesses has hit out at Lord Heseltine's plans to strengthen regional Chambers of Commerce.
The former Deputy Prime Minister has proposed giving chambers more funds and statutory recognition.
He has considered the possibility of making membership of Chambers of Commerce compulsory for larger businesses. But Wilfred Mitchell, policy chairman at the Federation of Small Businesses (FSB) has said that while Lord Heseltine raises many good points, giving chambers more power would not be beneficial for all businesses.
"The FSB disagrees that chambers should be legislated as they do not represent all businesses - particularly self-employed and micro firms," he said. "To create a stable environment for businesses to thrive, the FSB would encourage the Government to look to the success of the US Small Business Administration (SBA).
"Instead of pooling enterprise funding and central staff, Lord Heseltine should have looked at good practice from across the world, such as the SBA, and recommended a better policy making machine and an agency which co-ordinates small business policy such as lending, procurement and exporting."
He added: "The FSB has said that Local Enterprise Partnerships (LEPs) should discuss growth ideas with local stakeholders and should have more resources to identify local economic shortfalls. However, the boards of LEPs must represent all sizes and sectors of local businesses otherwise they will fail."