Unnecessary red tape has cost small businesses £1.15 billion since 1998, according to chamber of commerce Sussex Enterprise.

The business support group has joined forces with other chambers across the South-East to draw up radical proposals to cut the burden of bureaucracy on small businesses.

The report will be presented to the three main political parties during the run-up to next week's General Election.

The aim is to convince any future government to significantly reduce the amount of new legislation small businesses have to face on a daily basis.

Sussex Enterprise consulted its members and the wider business community across Sussex to gather views on how red tape affected their ability to run their businesses.

The information was fed to the South East of England Chambers of Commerce (SEECC), who are demanding drastic changes in the law.

They want to combine Inland Revenue and Customs and Excise with National Insurance, a move they claim would save tax-payers across the country an estimated £2 billion a year.

Mark Froud, chief executive of Sussex Enterprise, said: "Eighty-five per cent of businesses that responded to our recent Voice Of Business survey said the amount of red tape their company has to deal with directly affects the company's profitability.

"Dealing with red tape has become part of day-to-day operations for businesses of all sizes but the majority feels that it is a waste of time.

"Eight out of ten respondents feel that concentrating on complying with regulations is distracting them from the core activity of their business.

"This has obvious knock-on effects on the productivity of Sussex and must be dealt with to safeguard the economic growth of the region."

Seven out of ten Sussex businesses polled felt they did not receive enough information about up-and-coming Government regulations.

Mr Froud said: "The SEECC has drawn up an exhaustive list of recommendations.

"We hope all political parties will read them thoroughly as the UK's regulatory framework must be simplified.

"Sussex businesses cannot operate efficiently with this burden on their shoulders.

"Our members are crying out for a government which properly assesses both the costs and the benefits of new regulations."

Sussex Enterprise said people at small firms were spending hours on Government paperwork such as tax and VAT returns, specialist accounting, stakeholder pensions, National Insurance and tax credits, when they could be making money.

Maternity leave, disputes and grievance procedures and health and safety inspections were also sapping valuable time, according to the Reducing Red Tape For Business report.