Cuts to red tape are saving businesses millions of pounds a year, according to a Government report yesterday.

Business Secretary John Hutton outlined more than 280 initiatives to tackle red tape covering 19 departments and agencies, which he claimed showed that the Government was on target to hit its goal of saving business and the third sector over £3.5 billion in administrative costs by 2010.

Measures included the removal of the need for companies to hold an annual meeting, a faster process for planning consents and halving of the number of health and safety forms employers have to complete, which were producing savings of £800 million a year, said the minister. In the West Midlands the estimated savings amount to £65 million a year.

Mr Hutton said: "The plans demonstrate we are making significant headway on what is a difficult and challenging agenda.

"By tackling redundant regulation we are making a difference to the way people run their businesses and in their everyday lives.

"But we are not complacent. Government must continue to back up its proposals with credible action across all sectors. We are also outlining ways to tackle our new target to cut public sector bureaucracy by 30 per cent by 2010."

Sally Low, director of policy at the British Chambers of Commerce, said: "The plans show that Government departments are making good progress towards their regulation reduction targets, but this exercise should not just be judged solely on the numbers. There needs to be an assessment made as to whether it helps to create a better business environment.

"There is still some way to go to achieve this. The cost of regulation to business since 1998 is now more than £55 billion, up from £10 billion in 2001. Success needs to be tangible for business and we will be monitoring closely the reaction of our membership over the next 12 months."

However, the Institute of Directors released a report which it said documented a "serious mismatch" between Government claims of delivery and business perceptions of regulatory improvement.

The report, Better Regulation - Getting Worse?, highlighted that just one per cent of IoD members felt

the regulatory environment had improved since last year. Miles Templeman, director general of the IoD, said: "There is little doubt the Government are trying hard on regulation. We have received a list of potential improvements. However, to date, businesses are not feeling the impact.

"Government must shift their focus away from pure 'bean counting' and instead ensure that all future delivery will be felt by businesses on the ground. It cannot be acceptable that one year on, 46 per cent of businesses feel that regulation in the UK is worse than last year.

"The experience in Denmark and the Netherlands, where they followed the same model, is that businesses haven't noticed any regulatory improvement.

"We cannot let this happen in the UK, so Government need to be alive to the concept of change on this initiative."

Experts at Bibby Financial Services also said that red tape was still placing a real strain on small firms in the West Midlands.

Spokesman Kevin Rose said: "It's clearly been a tough year for the small business community with no let up in the amount of Government red tape that they have to deal with, but things are definitely on the up.

"With the promise of a significant reduction of red tape by 2012, owners and managers across the West Midlands will soon be able to focus more of their energy on maintaining and growing their profit whilst ensuring their businesses remain in top financial shape."

Meanwhile, the Office for National Statistics said it had managed to reduce the cost to businesses responding to economic surveys by £6 million during the last two years.