THE Chancellor of the Exchequer likes to surprise even the Prime Minister with the contents of his Budget, and there will undoubtedly be some specials in today’s speech aimed at further endearing Gordon Brown to voters. Some hints, however, have been dropped about what might be expected, and comforting words for those who hate red tape are widely predicted.

This should come as no surprise. In the Labour Party manifesto of 1997, Tony Blair himself promised not to “impose burdensome regulations on business” and to “cut unnecessary red tape”. But it is so much easier to talk of that when not in government than to actually do it once in office. Whatever the claims that the Government may now make to having cut red tape — and we will surely hear more of them today — business knows that the regulatory burden has grown under Labour. In the World Economic Forum’s international competitiveness league, Britain has fallen from fourth to eleventh, brought down by the weight of regulation.

Now, offering further ammunition to those who believe that the next Government needs to be far more brutal in attempting to hack back red tape, the Better Regulation Task Force has produced a report which suggests that cutting the cost of regulation to business could produce an increase of more than 1 per cent in GDP.

This is a figure that no Chancellor can afford to ignore, even if he would prefer to be viewing it from No 10 Downing Street rather than No 11. It may well be that Mr Brown will today announce that he is planning to act on the task force’s report.

The first element involves following the Dutch example and first working out the cost of the paperwork demanded by regulation and then committing to reduce it. Setting targets has been a peculiar fetish of this administration so this idea is likely to have particular appeal.

However, before the target can be set, there will have to be detailed work on calculating the cost of the current burdens. The task force, which has been looking at regulation for several years, can do no better than to estimate that complying with the administrative burdens of regulation costs between £20 billion and £40 billion a year.

That might seem to offer plenty of scope for reductions but the task force acknowledges that achieving targets for cutting back this bill would require incentivising: civil servants are adept at instituting rules, not doing away with them.

Implementing the task force’s other main recommendation, a “one in, one out” approach to regulation, would undoubtedly focus minds on doing away with unnecessary regulations. But, as Stephen O’Brien, the shadow trade secretary, has noted before, when the Government claims to have lifted burdens on business, business may not have noticed the difference.

When Mr Brown crowed about the 147 regulations that he had reformed or removed to the benefit of business, there was some surprise to see that these included the introduction of new dispute resolution regulations which the Federation of Small Businesses described as “a potential minefield for small firms”.

Small firms have a new champion in the shape of Philip Hampton. Although he is chairman of Sainsbury’s, not as large as it was but still hardly a small firm, Mr Hampton has been looking at the burdens that they have to face and his report will provide Mr Brown with some of his material today.

But the cheering should not be too loud, whatever promises he makes during the course of today’s speech. Expect more working parties and consultation before there is much sign of action.

Figuring out the mysteries

ANY business that outsiders cannot readily understand is ripe for malpractice and ultimately vulnerable to fraud. Insurance accounting is so arcane that even top accountants struggle to understand what the numbers mean. Companies set up offshore for tax convenience have many other unfortunate secrets, such as losses or shortages of reserves.

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