Ministers have announced a Cabinet-level watchdog to oversee regulation across all its departments, with the aim of making sure it does not impede entrepreneurship.

The ministerial panel will be headed by the Cabinet Office Minister, Mo Mowlam, and promises to "call ministers to account for their regulatory performance".

Stephen Byers: "Only regulations which are genuinely necessary"

Other members of the panel will include the Trade and Industry Secretary, Stephen Byers, and Lord Haskins, chairman of the government's Better Regulation Task Force and also chairman of Northern Foods.

The chief executive of the newly created Small Business Service, who has yet to be named, will also be on the panel.

Announcing details of the scheme at Dudley in the West Midlands, Dr Mowlam said: "What we are launching today is a whole new government approach, to cut unnecessary burdens of red tape, administration and form-filling that can make life hell for small businesses and for many in the public sector."

She said each government department would be expected to appoint a minister with special responsibility for reforming regulations within their department.

Dr Mowlam announced that a team had also been set up to investigate the burden imposed on local government by Westminster regulations.

"Too late"

Mr Byers said the government had begun the process of cutting red tape for small businesses.

In the future, he said, the government would make sure it imposed only regulations which were genuinely necessary, and it would also look back at existing rules to see whether they too were necessary and if they could be simplified.

The Federation of Small Businesses said the announcement was "a positive step, but a step too late", because so many regulations were already bearing down on small businesses.

A spokesman cited the Working Families Tax Credit, minimum wage and employment relations regulations as all adding to small business pressures.

He said: "The average small business owner has increased the amount of time he spends filling in forms by 20%."

A survey by the Confederation of British Industry published in September found that 85% of companies felt the burden of red tape had increased over the past year.