A scheme designed to restrict red tape costs for business is to come into effect from the next financial year.

The new plan has been announced to cap any increase in the cost of red tape for business for three years.

According to The Financial Times, the government will consult on a unique scheme to set 'regulatory budgets' for each Whitehall department.

The three-year budgets would ensure that the government could introduce new regulations only if it first axed ones that cost business at least an equivalent amount. Measures to tackle climate change will be excluded from the plan.

The new controls are expected to come into effect from April 2009.