Red tape costs businesses £80bn

Government regulations impose a collective cost of £80bn on British businesses, well above ministers' £13bn estimate, the Institute of Directors (IoD) has claimed.

The employers' organisation said because of the burden - which equates to 5.7% of UK GDP - business owners are spending more than a month every year filling in forms, reading advice and complying with legislation.

It called for a new approach to measuring the cost of regulation based on the experiences of real people running real companies.

No matter which party wins the general election the IoD said a culture change in government is needed with a "wholesale review" of Civil Service incentives, job evaluation and career progression. "Success in most of the Civil Service is still defined by getting as many regulations onto the statute book as possible, regardless of the cost," the group complained.

In addition, the IoD called for a change in the culture of legislating so businesses have "the freedom to operate".

Miles Templeman, IoD director general, commented: "£80bn is effectively being taken out of the UK economy each year due to excessive regulatory paperwork. When the regulatory burden is so large that it typically occupies one employee in every private enterprise in the UK for nearly half a year, it’s obvious we have a problem.

"This isn’t a debate about diluting protections, because form filling doesn’t protect anyone. This is about getting a culture change in Whitehall. Officials are incentivised to produce legislation.

"Unless the next government changes the way civil servants are evaluated and rewarded, businesses will continue to face a large and ever increasing burden of paper work that hinders them from growing and, ultimately, creating jobs"