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The Department of Business, Enterprise and Regulatory Reform is ending its regulatory budgets scheme to consider the cost of red tape imposed on British businesses.

Regulatory budgets meant government departments were supposed to estimate the total cost for businesses of implementing new regulations. Once a ceiling was reached, of costs imposed within a certain period, government would effectively hold fire on introducing new rules.

Yesterday, Berr quietly dropped this policy.

The British Chambers of Commerce is unhappy with the U-turn. A spokesman said: "A cynic might say putting out this announcement on the day of the G20 meeting was an attempt to bury bad news. The annual burden on businesses continues to grow. We need to start action now to have a benefit as the economy recovers."

The BCC estimates the cumulative cost of regulation at £77bn since 1998.

David Frost, director general of the BCC, said: “This is not the time to scrap regulatory budgets as this is the mechanism that would force departments to take account of the burden of their legislation on business. It is a vital discipline in these current economic times."

But a spokeswoman for Berr said the department was acting to reduce the burden on businesses.

She said: "Introducing regulatory budgets is complex and given the state of the economy we've introduced a package of measures to give more immediate help to businesses instead." These will be focussed on climate change and financial reforms.

About £1bn to £1.5bn in costs from additional regulations is added to business overheads each year, although this total is offset by some financial benefits to business - for instance regulations enforcing energy efficiency will lead to long-term savings.

The BCC statement is here. ®

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