A new Cabinet committee with the job of reducing the heavy burden of red tape on business, chaired by business secretary Vince Cable, has met for the first time.

The Reducing Regulation Committee discussed its fundamentally different approach to regulation and began its major review of all regulations in the pipeline.

The Committee has the power to send burdensome red tape back to departments and also guarantees that all other options have been considered before more regulations are introduced.

Vince Cable said: “As the deputy prime minister said, we need to change the balance of power away from the state and back to individuals, businesses and communities. For too long, there has been a misplaced notion that Government’s job is to regulate. That is not the case. Regulation should be the last resort.

“This committee, along with the new “challenge group”, will help change the culture of Government and find new ways of solving problems, reducing the red tape that is strangling enterprise.

“We need businesses to drive the growth our economy needs, not be tied up with form filling, and the Government is determined to do all it can to make that happen.”

Policy chairman at the Federation of Small Businesses Mike Cherry welcomed the move: “Small businesses want to grow, but are stifled by red tape and excessive legislation, with 33 per cent of FSB members citing regulation as the biggest obstacle to growth in 2009.

“We have seen similar initiatives from previous administrations and we hope that the Government puts the needs of the 4.8 million small businesses in the UK first.”