The Government is pressing the EU to make SMEs with less than 20 employees ‘regulation free’ zones.

John Hutton, Business Secretary, also wants Brussels to follow the British lead and channel legislative changes into one or two days every year - a practice which has been dubbed 'red tape day' - to enable business to plan ahead and save money. 

He has told Gunter Verheugen, EU Enterprise Commissioner, who is in charge of the exercise, that where it is not possible to shelter the smallest businesses from new EU regulations, Brussels' authorities should prepare a "tailor-made" approach to ensure simpler enforcement and effective guidance.

EU legislation accounts for half of the 300 regulations imposed on businesses in Britain every year and Mr Hutton is calling on Mr Verheugen to ensure that a higher priority is given to reducing red tape.