Entrepreneur Sir Tom Farmer has stated that the largest burden that small companies face is red tape, and has urged the English and Scottish governments to cut the amount of paperwork that SMEs face.

"The one difficulty that all businesses face is red tape. It's a stranglehold on many firms," said Sir Tom.

The founder of the Kwik-Fit tyre company is one of the most respected entrepreneurs in the UK and his statement tallies with a recent report by the Federation of Small Business (FSB).

The FSB claimed that new employment and other laws brought in by the government every year cost small firms nearly £800million a year to implement.