Chancellor Gordon Brown is set to offer business a £300 million red tape bonfire as he addresses the CBI conference today.

It follows his address to the Institute of Directors last week when he pledged to wage war on regulation.

The money is expected to be saved in form-filling costs coupled with an audit to ensure that Brussels directives are not gold-plated as they pass into British law.

The announcement will be welcomed by industry but the CBI has weightier things on its mind.

These include the tax burden, pensions, the threatened energy crisis and Britain's EU rebate.

And his address comes in the wake of CBI directorgeneral Sir Digby Jones warning of a growing feeling that the Government is no longer "on side for business".

Despite mounting criticism, Mr Brown is expected to insist that the economy is on track.

That is in stark contrast to a weekend report from Ernst & Young's ITEM Club which claimed that the Chancellor's golden rule - meeting the cost of day-to-day expenditure with tax revenues - is at risk.

It said he was staring into an £11 billion black hole in his finances - unless the Government undershot its spending targets this year, which seemed unlikely.

Professor Peter Spencer, chief economic advisor to the ITEM Club, said: "Brown is still left staring into an abyss. How he intends to plug this hole is anyone's guess, but it is likely that he will usher in tax changes in this year's Pre-Budget Report. He may also choose to tinker with his economic cycle, as he did in the Budget earlier this year.

"However, he is likely to avoid personal tax hikes given that income and capital gains taxes have performed well in the last seven months, increasing by nine per cent -- close to the Treasury projection of a 9.8 per cent full year rise. And National Insurance Contributions over the same period were up six per cent."

ITEM says that though the Treasury projected a revenue increase of 9.2 per cent for 2005-6, in the first seven months of this tax year ( April- October) revenue increased by only 7.7 per cent on the same period last year.

Tomorrow Prime Minister Tony Blair will address the conference and is expected to address energy issues and make his most pro-nuclear power statement yet.

He is likely to tell business leaders it is vital as part of a balanced energy policy.

It is thought he may announce a review of nuclear power and a decision within a year.

Energy is particularly concerning manufacturing lobby group the EEF.

Chief executive Ian Smith said it was the number one issue for EEF West Midlands member companies.

"This Chancellor must help businesses who are facing high energy prices and a complex taxation system which are damaging the UK as a location to invest in. Our surveys indicate that companies have seen a rise of over 70 per cent in their gas and electricity prices during the past two years, and that was before the recent escalation in prices."

The EEF said that in the current difficult operating environment, the Government must avoid imposing additional tax and regulatory burdens on the cost of doing business in the UK.

It also wants the Chancellor to overhaul Employment Liability Insurance and extend and simplify the R&D tax credit.