The Better Regulation Executive aims to save small businesses £3bn per annum by cutting red tape.

The lobby group has been in discussions with small businesses across the UK in the hopes of meeting the target.

The news comes as the Forum of Private Business (FPB) released a statement suggesting that small companies in the construction sector are losing in excess of £1.3bn each year because of government red tape.

The not-for-profit organisation, which advises its membership on good business practice, discovered that SME companies spent millions each year merely complying with regulation.

The figure was taken from the organisation’s quarterly member survey, Referendum, based on the reported amount of company time, and therefore money, that was spent on government-imposed beaucracy.

This latest issue of Referendum, which focused on ‘the cost of compliance’, found that recession-hit construction companies are forced to spend an average of 37 hours of company time each month on form-filling and paperwork.

Those with nine or fewer employees spend an average of 34 hours on it, while those with between 10 and 50 employees spend around 28 hours and firms with up to 249 workers devote approximately 131 hours.

Phil Orford, FPB chief executive, said: “As many people will be aware, the UK’s construction industry has been particularly badly affected by the recession. The FPB is urgently campaigning for the government to cut down on the regulatory burden placed on small businesses in this sector to free up owners and enable them to spent vital time and resources on pulling through the current trading conditions.”