The government should learn lessons from Holland and introduce a "one in, one out" approach to new regulations giving as high a priority to simplifying or removing burdensome regulations as they do to the introduction of new ones.
The government's Better Regulation Task Force (BRTF) said that all departments should develop a rolling programme of simplification - to identify regulations that can be simplified, repealed, reformed or consolidated - by September 2006
Cutting the cost of regulation on British business could increase GDP by more than one per cent and save businesses £7.5bn per year, the BRTF estimated.
David Arculus, chair of the Better Regulation Task Force, said that the "knee-jerk" attitude of government towards regulation had to be reversed.
"Everyone wants less red tape. More paperwork means less productivity," he said.
"A culture has developed in government in which the knee-jerk response to any problem is to regulate," he said. Our report promises a red tape revolution in which this first impulse to regulate will be superseded by a focus on simplification and deregulation.
"We are calling for a fundamental change to the regulatory machine in which the priority is outcome not admin, prosperity not paperwork.”
Arculus, who is also chairman of mobile phone company O2, said that the that the cost of regulation amounted to ten per cent on the UK's GDP and that £25bn a year was spent simply enforcing rules.
He said that BRTF's plan was the first time a systematic blueprint had been devised for cutting red tape.
“There is a clear and extremely efficient (judging by the amount that is produced) process for creating new regulation, but there is no equivalent process for identifying regulation that should be simplified or got rid of all together.
“One in One out” is about prioritising, recognising that - just as in our everyday lives - we should put the most important things ahead of the less important.
"We want government and regulators to ask the question ‘if I introduce this new regulation, what can I take away’?”
“There have been previous attempts to reduce red tape. Our report is different because we have spent four months looking at the problem in depth – learning from the Dutch experience – and have come up with a blueprint of how to do it.”
The Dutch method is to estimate the cost of regulation and attempt to reduce this by 25 per cent over a four year period.
The BTRF report calls for the UK to adopt a similar standard cost model and use it to provide a systematic measurement of the administrative burden in the UK by May 2006.
With the administrative burden in the UK estimated at £30bn per annum, a 25 per cent reduction over four years would see direct costs on business fall by £7.5bn and a potential GDP increase of 1.5% (£16bn) over the medium term.
Employers welcomed the BRTF's report but were sceptical that it would result in any real changes.
“Small businesses have been promised on at least 30 occasions over the past 20 years that the government is going to address the problem of red tape,” said David Bishop of the Federation of Small Businesses.
But Confederation of British Industry director general Sir Digby Jones was more positive.
"Applying a 'what gets measured, gets done' strategy will ensure that government is held to account on the delivery of its deregulatory promises," he said.
David Arculus said that the report represented a real opportunity for the UK to reduce its red tape burden.
"I hope that this will mark the beginning of a new culture in which the clearing away of regulatory clutter has greater or at least equal priority with the production of new laws.”