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Last Updated: Wednesday, 16 March, 2005, 20:53 GMT
UK's Brown cuts business red tape
UK Chancellor Gordon Brown with a copy of his 2005 budget
The government has been facing calls to give firms a helping hand
UK Chancellor Gordon Brown has unveiled plans to cut regulation and red tape surrounding companies in an effort to ensure continuing economic growth.

In his annual Budget address, Mr Brown said global trade pressures meant that the UK needed to "remove unnecessary barriers to profitable enterprises".

The government plans to cut the number of agencies overseeing firms, as well as simplify the tax payment system.

It will also publish new guidelines for dealing with European Union regulation.

Less is more

"I am not cutting small business support, I am enhancing it," he told a packed House of Commons in London.

Business leaders and representatives have given the steps a cautious welcome.

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Mr Brown said that since the UK was one of the greatest advocates of free trade with one of the world's most open economies, its businesses needed a flexible environment where regulation was less heavy-handed.

He explained that the government would adopt a method of risk-based inspection, focusing on problem areas in the hope of allowing well-run and law-abiding companies greater freedom to operate.

"A light and limited touch where there is less risk," Mr Brown said.

Tightening up

Under the plans, 35 government agencies with watchdog briefs over business would be merged into just nine.

The number of organisations keeping an eye on the public sector will be cut from 11 to four.

Businesses have been promised bonfires of red tape in the past and they have never been ignited
Carol Undy, Federation of Small Businesses

For example, the four bodies responsible for consumer and trading standards would now become one, as would the five units that look after health and safety.

Environmental issues are set to be controlled by five agencies responsible for food safety, the countryside, animal health, environmental protection and agriculture.

As a result, inspections should decline by about one million a year, or almost a third.

Taxing issues

Mr Brown also said that he would look at ways of simplifying the tax system, accused by many small- and medium-sized businesses of being over-complicated, time consuming and unwieldy.

The Inland Revenue and Customs service will now consult on a single tax account for small business, "where information need only be provided once".

It will provide a single point of contact for value added tax (VAT) and corporation tax, as well as looking at ways of providing flexible payment terms, Mr Brown said.

Roll out

He added that the government would look at expanding its simplified VAT system.

Currently close to 70,000 small business are making a single VAT payment rather than calculating and collecting paperwork for every transaction.

Mr Brown said that the government will work with chambers of commerce to ensure that as many of the currently-eligible 600,000 firms as possible can start using the easier system.

Casting his eye towards Brussels and addressing the concerns that EU red tape would choke the UK's business spirit, Mr Brown said that the government will publish new guidelines for dealing with European regulations.

On the transport front, outgoing British Airways boss Rod Eddington has been appointed as advisor to the government on how transport decisions affect the UK's productivity, stability and growth.

Watch highlights of Gordon Brown's Budget speech

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