Excessive red tape for businesses is to be slashed by the new coalition Government, as it seeks ways to help firms clamber out of the recession.

Business Secretary Vince Cable has detailed the Government’s action plan to reduce regulation following the Prime Minister’s commitment last week to “re-open Britain for business”.

The plans include forming a Cabinet ‘Star Chamber’ which will ensure the costs of rules and regulations are driven down across the British economy.

Jeremy Frost, Chairman of the Croydon branch of the Federation of Small Businesses(FSB), said: “Regulation has long been stifling business growth so these plans to put an end to the excessive legislation that choke small businesses is welcome news. It is a real victory that our calls to simplify the regulation system have finally been heard.

“Small firms have repeatedly said that the burden of regulation and the time it takes to comply with is just too much and could prevent them from taking on staff – and stunts economic growth.

“We now need to see the Government give detailed plans as to how these will take affect so that small firms can get on with growing their business, rather than spending precious time filling in forms to say they will do just that.”

Recent research by the FSB showed half of businesses planning to downsize or close said regulatory burdens were very important in their decision.

Mr Cable’s announcement included a review of all regulations currently in the pipeline from the last Government, and a new ‘one in, one out’ approach ensuring new regulatory burdens are only brought in when reductions can be made elsewhere.

He said: “The deluge of new regulations has been choking off enterprise for too long. We must move away from the view that the only way to solve problems is to regulate.

“We need to reduce regulation and at the same time meet our social and environmental ambitions.

“This demands a radical change in culture away from the tick box approach to regulation only as a last resort. It’s a big task but one worth striving for.”