The government has failed to hit most of its targets to encourage the growth of small businesses, the CBI has said.
In March, the chancellor pledged to help small businesses
Smaller companies have been hampered by uncoordinated delivery of support and increasing regulation, the group said.
Four out of seven targets set by the government's Small Business Service in 2004 had been missed, its report said.
The Department of Trade and Industry said it was already working to simplify the regulatory structure and the burden on small businesses.
The CBI report said the government had failed on four targets - to build an enterprise culture in the UK, create a positive environment for growth, improve regulation and encourage entrepreneurs in disadvantaged areas.
It said more red tape had been introduced since 2000 and fewer firms were hiring staff because of concerns over employment legislation.
The other three targets set by the Small Business Service were to improve small businesses' experience of government services, improve access to finance and encourage a more dynamic start-up market.
While there had been some progress in these areas, there was still much more to do, the CBI report said.
In March, Chancellor Gordon Brown pledged to "enhance" support to small businesses instead of cutting it.
A DTI spokeswoman said: "In March the government committed to one of the most ambitious programmes in the world to reduce regulation on business."
Steps to implement the recommendations of two major reports were "well in hand", she added.
"This includes simplifying regulatory structure, including merging 31 of the national regulators into seven and consulting on new measures to ensure that enforcement and penalty arrangements strike the right balance."
But CBI director general Sir Digby Jones accused the government of presiding over red tape.
He said the SBS itself was not to blame but added: "How can an enterprise economy break through when the government presides over systematic, stifling red tape, a discredited planning regime and a society that becomes more politically correct and risk averse by the day?"