Red tape is costing independent shops 23 million a year, an average of £10 a week for every local store.

Figures released by trade magazine Independent Retail News showed how small businesses were being bogged down by tasks such as payroll administration, packaging waste regulations and the Working Families' Tax Credit.

Added costs incurred in handling red tape have forced one in five retailers to cut back staff hours and one in seven to lay people off.

The study found a quarter of retailers were spending between three and six hours a week on red tape tasks and a further ten per cent more than six hours.

In total, the 45,000-strong independent retail sector was spending at least 119,000 hours per week, an average of two hours and 40 minutes per shop, on administration.

The study gives further weight to demands of the Better Regulation Task Force for small retailers to be treated differently from other small businesses in handling red tape.

Ram Gidoomal, chairman of the task force's small shop division, said: "The results of the survey indicate the extent to which small retailers suffer as a result of bureaucracy.

"A heavier burden of paperwork falls on small retailers because they have less staff, time and expertise to deal with it."

A report from the Institute of Chartered Accountants showed regulation was considered the most serious barrier to growth for small businesses.

It said the cost of red tape amounted to between four and six per cent of their turnover.