One of the barriers to growth is the burden of regulation. It takes up time and stops business growing and that means our economy does not grow.

The Business Secretary outlined changes to regulation in one area which is a massive burden to business – producing accounts. Small businesses in particular often suffer the most under the burden of bureaucracy.

Business Secretary Vince Cable said: “It’s important that we free small firms up so they can grow and drive the economy. The changes I have announced today mean that small firms will be able to concentrate on growing and taking on more people instead of paperwork.”

The Government recognises the need for high standards in audit and accounting. But some areas could do with reform so we are taking action in three areas:

• Firstly the small company audit and account rules are stricter in the UK than is required by EU law;
• Secondly for even smaller businesses (with less than 10 employees) Government will push for exemptions to remove the requirement to produce two sets of accounts;
• Thirdly for medium sized businesses Government will push for EU restrictions to be lifted so that they no longer need their account independently audited and;
• Finally, Government will look at relaxing the audit and accounts rules for subsidiaries.

The Government will amend the Companies Act to bring small company audit rules in line with the EU minimum in 2012, saving UK companies up to £40m in unnecessary audit fees. This means certain small companies who still have to have independently audited accounts will no longer have to do so, helping 42,000 businesses.

For even smaller businesses, Government will push for exemptions in European rules to remove the requirement to produce specific accounts for Companies House in addition to those for tax purposes.

The changes would mean small companies would produce just one simplified set of accounts and save £400m for some of the smallest businesses in the country – roughly 2 million of them will be able to concentrate on growing, expanding and creating jobs.

Currently medium sized businesses have to get their accounts independently audited. The Government will push the EU to release them from this requirement. This change could free over 32,000 businesses from red tape.

Government will also look at relaxing the audit and account rules for subsidiaries. The change will mean that dormant subsidiaries with parent company guarantees could be exempted from the requirement to prepare and publish annual accounts. This would benefit up to 23,000 dormant companies, including those set up to hold assets or intellectual property, or in preparation for transactions at a future date.

Wholly owned non-financial subsidiaries with parent company guarantees could be exempted from audit. This would benefit around 139,000 companies set up within groups, including for transactions, property, brand or asset management, as part of organisational structures and restructuring or for internal financial arrangements.