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A burdens reduction programme was launched at the end of 2006 aimed at cutting the cost to business of red-tape by £20bn by 2010. Departments were given a target of 20 per cent reductions but a survey for the official watchdog of government policies found 85 per cent of businessmen are not confident the programme will succeed.

The head of the National Audit Office, Sir John Bourn, said he thought most government departments are ill equipped to cut red-tape and do not consult sufficiently. “For regulatory reform to succeed, departments must understand business and measure and communicate results,” he said.

He said government failed to take account of irritation factors associated with bureaucracy such as keeping up to date with changes in regulations as well as the administration involved and direct costs. More than two-thirds of businesses said government did not consult sufficiently.

Bourn found red-tape costs business more than £20bn with four departments alone costing over £15bn a year: Health & Safety Executive costs £2bn, Local Government £2.5bn, HM Revenue & Customs £5.1bn and the Department of Trade & Industry £5.3bn.

Gordon Brown replaced the DTI when he formed his government with a Department for Business, Enterprise & Regulatory Reform under John Hutton with the specific task of cutting red tape. As Bourn published his findings, Hutton announced a new programme to cut red-tape, including a “root and branch review to simplify consumer policy”, changes to the Health & Safety regime and employment law.

Hutton said: “We are committed to reducing the burden on business of regulation. We also want to make it easier for businesses to meet their legal obligations with clear guidance and better communication.”