'Scepticism over red tape cuts'

The National Audit Office (NAO) said Whitehall departments were committed to making it easier for firms to do business in Britain by tackling "particularly irritating" regulations.

The cost of burdens on business is estimated to be £20 billion and departments will now seek to reduce this by 25% by 2010.

The NAO surveyed 2,000 businesses which showed that almost two thirds believed regulation was an obstacle to success, but 85% were not confident the Government would succeed in cutting red tape.

Sir John Bourn, head of the NAO, said: "There is no certainty that the Administrative Burdens Reduction Programme will deliver its intended objectives. For regulatory reform to succeed, departments must understand business and measure and communicate results.

"So far, they have made a pragmatic start. Businesses, however, are not convinced that the programme will make a real difference to them. I will revisit this to check on progress."

Shadow chief secretary to the Treasury, Philip Hammond, said: "This report is an indictment of Gordon Brown's record on business regulation. Throughout his decade in the Treasury, he has talked about reducing the regulatory burden, but on his watch the cost of new business regulation has topped £56 billion. No wonder Britain's international competitiveness has slipped from fourth to tenth place since 1997."

Matthew Fell, head of the CBI's corporate affairs group, said: "The administrative burden targets are a useful tool in holding Government to account on its deregulatory promises but business will judge the project a success when it delivers tangible benefits on the ground. We welcome the NAO recommendation that departments should work more closely with firms to identify deregulatory measures that will make a real difference and business stands ready to play its part."

Sally Low, director of policy at the British Chambers of Commerce, said: "The NAO's findings are a warning for Government that must be heeded. The report highlights that the Government urgently needs to refocus on delivering outcomes for firms that will make a difference to the day-to-day running of businesses.

"A flurry of initiatives without adequate follow-up will achieve nothing for our business members and it is extremely worrying that an independent assessment casts doubt on the effectiveness of this flagship initiative."