Darling urged to cut red tape as Jones gets call

Business leaders have urged the new Chancellor, Alistair Darling, to cut red tape and regulations they claimed were stifling them.

But economists warned that any hopes that they might have held about tax cuts are likely to be dashed, with Mr Darling having only limited room to manoeuvre with the comprehensive spending review already complete and mounting concerns about the state of Britain's economy.

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Separately, it emerged that Sir Digby Jones, the former CBI chief, is likely to be named today as Britain's minister of trade and investment. The appointment signals Gordon Brown's desire to improve relations with business. Sir Digby, who will work in the new Department for Business, Enterprise and Regulatory Reform, will perform an ambassadorial role for British business abroad.

On Mr Darling's first day as Chancellor, the lobby group the Forum of Private Business - which represents smaller businesses - released the results of a survey of 350 members. It showed 43 per cent wanted to see cuts in tax as the top priority, 29 per cent wanted action on red tape and 11 per cent on "unfair competition". Skills were highlighted by just 5 per cent.

The Federation of Small Businesses also called for regulatory reform, saying it was pleased with the appointment of Mr Darling as Chancellor and John Hutton as Secretary of State at the Business, Enterprise and Regulatory Reform Department, the reformed Department of Trade & Industry. "We have built up a good relationship with both of them, but the new department needs to do what it says on the sign outside in terms of regulatory reform. We are hopeful that the business community will have someone at the Cabinet table defending its corner," it said in a statement.

The CBI director-general, Richard Lambert, said: "Alistair Darling looks like the right choice. He had a good record at the Treasury as chief secretary. He took over Transport at a very difficult time and got an effective grip, and has shown during his time at the DTI that he understands what makes a good economy."

The director-general of the Engineering Employers Federation, Martin Temple, said: "The simple abolition of the DTI was always a non-starter without something better in its place. We now have a beefed-up department which retains essential elements of the old with the key addition of better regulation."

But the National Association of Pension Funds demanded action from the new Work & Pensions Secretary, Peter Hain. The chief executive, Joanne Segars, said: "We have made it clear to government that they need to come forward with some serious proposals to ease cost pressures on hard-pressed pension scheme sponsors."