The Federation of Small Businesses (FSB) has called on the Government to put a stop to all new business regulation and simplify red tape if it is to seriously tackle rising unemployment.

The FSB believes that a freeze on new business regulation would create more than 300,000 jobs, and provide the economy with a second economic stimulus.

A survey of FSB members showed that nearly one in three businesses (27%) that wanted to expand said they were too scared to do so, because they were put off by complicated regulation. Of those businesses planning to down-size or close, 50% said their decision was strongly influenced by the regulatory burdens they faced.

According to the Government’s own figures, 60 per cent of businesses listed regulation as an obstacle to success. Based on these statistics, the FSB estimates that removing these regulatory obstacles could create more than 258,000 new jobs and save more than 55,500 from being lost.

Released ahead of the Conservative Party Conference in Manchester, the FSB policy paper entitled ‘Regulatory Reform – a route to economic recovery’, calls for a moratorium on business regulation and accelerated simplification of current laws.

John Wright, National Chairman, Federation of Small Businesses, said:

“We cannot and must not underestimate the burden that unnecessary regulation puts on small businesses. Around half of all firms planning to close or down-size were influenced in that decision by the heavy impact of regulation. However, we know that small firms want to employ more staff and the Government should be making it easier for them to do so, especially as we pull ourselves out of recession and into recovery.

“The FSB is urging the Government to give the UK’s regulatory environment a strategic overhaul, to provide it with what will amount to a second economic stimulus, to boost growth and employment.”