The head of the Institute of Directors yesterday voiced fears that business red tape will increase if Chancellor Gordon Brown takes over as Prime Minister.

Miles Templeman, director general of the IoD, said the Government had been "fixated" with interfering in the day-to-day activities of industry. He told the IoD annual convention in London: "They seem to equate doing more as a sign of strong leadership - it's not.

"Government should be about less interference, less bureaucracy and less regulation and many people fear that if Gordon Brown takes over it will be even worse."

Mr Templeman's comments are symptomatic of business groups' growing frustration at the rising regulatory cost of operating in Britain on top of the burden of surging fuel costs.

Firms have been criticising the Government for months over its public spending plans, particularly its capitulation to unions opposed to raising the retirement age for all public sector workers to 65.

With key local elections just days away, his comments are likely to cause some concern in the Labour party, which has seen its popularity with voters slip to a 19-year low and its once-cosy relationship with business turn sour over issues like red tape, public spending and pensions.

Mr Templeman also attacked EU leaders for failing to cope with a rapidly chang-ing world.

"Too many European lead-ers are providing a classic illustration of a failure to embrace change. The EU has an ageing population, a low birth rate and lacklustre economic growth.

"We need a humble EU leadership that avoids grand political projects and focuses instead on initiating economic change." Some 2,500 directors attended the conference at the Royal Albert Hall with speakers from the world of business and sport.

Mr Templeman said that by popular request no politicians had been slotted.

He added: "We all know the temptation to over-govern and over-manage. Sometimes I wish the Government would understand this."

Meanwhile, the British Insurance Brokers' Association called on the Government to take urgent action to reduce the impact of regulation on small insurance brokers.

The association said complying with regulation cost small brokers nearly five times as much as larger ones as a proportion of income.

It said the average insurance broker now spent 3.7 per cent of its annual income on regulation, but while this fell to just 1.13 per cent among companies with an income of more than £100 million, it soared to 5.2 per cent for firms that had only up to £100,000 coming in.

Eric Galbraith, chief executive of BIBA, has written to the Prime Minister calling on him to urgently review the disproportionate cost of regulation on small businesses.

Speaking on the first day of BIBA's annual conference in Brighton, Mr Galbraith said: "This new research makes it clear that the Government needs to do more to ensure that regulation is proportionate.

"Excessive regulation can be damaging for all businesses, but it is not good enough that the smallest companies have to spend five times more than the largest simply to keep up with regulatory demands. Everyone knows that regulation is required, but it should be proportionate."

BIBA is being joined in its call by the Federation of Small Businesses.

Stephen Alambritis, the federation's head of Parliamentary affairs, said: "It is clear that the disproportionate cost of regulation, outlined in this research, needs to be addressed by the Government."