The government's plan to force retailers to charge shoppers for plastic bags unless the number of free bags is dramatically reduced has been slammed by the industry.

The Chancellor warned in this week's Budget that legislation would come into force next year if the government "had not seen significant progress on a voluntary basis" from retailers.

"Given the damage that single-use carrier bags inflict on the environment, we want to be able to take action," Alistair Darling said. "Based on other countries' experience, it could lead to a 90% reduction with about 12 billion fewer plastic bags in circulation."

The move was condemned by the BRC, which accused the government of abandoning its agreement with retailers. Last year, 21 of the UK's biggest retailers, including the big four, joined forces as part of a Wrap-led commitment to cut bag usage 25% by the end of this year.

"By setting a date for legislation the government appears to have jumped to a verdict already," said BRC director-general Stephen Robertson. "Retailers take their environmental responsibilities seriously, but want policies based on evidence, rather than kneejerk reactions to emotive campaigns."

Retailers and manufacturers were also disappointed Darling failed to reduce VAT on smoothies and fruit juices. In last year's Budget, the Chancellor promised to review the current 17.5% tax, but there was no mention of the issue this time. "We're going straight back to the Treasury," a spokeswoman for Innocent said. "We've got questions to ask and other routes to explore. One is to go to HM Revenue & Customs and move forward with a legal challenge."

Asda has also thrown its weight behind a VAT cut and this week launched a petition on the Downing Street website, led by president and CEO Andy Bond.

However, the FSB welcomed plans to simplify taxes paid by small companies and to increase funds available through the small firms loans guarantee scheme by £60m.

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