A BONFIRE of time-consuming and costly business regulations has been promised by Chancellor Gordon Brown.

He pledged to reduce the burden by cutting back on the flow of regulations and accept recommendations in a report from an official task force yesterday, which urged that administrative costs imposed on business should be slashed.

Mr Brown said there will be a million fewer business inspections a year, a reduction of a third, but he promised tougher penalties for firms that broke rules.

VAT will be simplified for 600,000 firms, and the Inland Revenue and Customs will consult on a single tax account for small businesses so there will be a single point of contact for VAT and corporation tax.

There would be a "light and limited touch" on inspections where there was less risk to consumers and employees.

Carol Undy, chairman of the Federation of Small Businesses, which represents thousands of firms and traders in Hampshire and the Isle of Wight, remained unconvinced.

She said: "Businesses have been promised bonfires of red tape in the past and they have never been ignited.

"Whether or not the report will result in 'fundamental change' and 'a red tape revolution' awaits to be seen.

"Businesses are cynical because of past broken promises - 30 reports, seven White Papers and two Acts of parliament during the last 20 years alone."

However, Sir Digby Jones, director general of the Confederation of British Industry, said: "I applaud the deregulation measures outlined. This must be at the heart of the UK's battle to be competitive.

"This is a measured Budget which has been crafted to ensure that economic stability is maintained."

Fiona Bradford, a tax partner at business advisor Ernst & Young, which provides advice to hundreds of regional firms, said: "There were welcome words on entrepreneurship and support for the smaller business sector, together with a strong message on stability."

She added: "Business wasn't the target constituency for this Budget. Small businesses will be pleased to see fewer visits from the regulators but disappointed that there were no increases in corporate tax thresholds.

"The real policy challenges will come after the election. This Budget was a holding operation in fiscal policy terms, leaving outstanding a number of policy areas.

"For instance, we heard nothing in the speech about reforming the taxation of owner-managed businesses, which was put forward in the Pre-Budget Report.

"And, as expected, the government has acted to close down a number of tax avoidance schemes used by certain companies and wealthy individuals."