CCI chief executive John Dunne said: 'By raising the cap on commercial rates, the government expects business to pay an extra 7.5 per cent next year towards the cost of running local authorities, at a time when the government itself is only willing to pay an extra 3 per cent under the Local Government Fund.'

'On average,' he added, 'business, through commercial rates, pays for almost £1 in every £4 spent by local authorities and in the case of some local authorities, business pays as much as £3 out of every £4 spent. Business has to pay double for some services as it also pays for water, disposal of commercial waste and other levies and charges separately.'

Mr Dunne said the CCI is not ruling out the possibility of legal action against the government in a bid to persuade it to change its mind. 'CCI believes that the current system of financing local authorities is fundamentally flawed to the extent that we are considering a legal challenge,' he said.