Red tape is costing small businesses in Sussex £2,000 more than it did last year.

A report by the Institute of Chartered Accountants said bureaucracy was smothering small businesses and the Government was offering too little help to new businesses.

The report, Developing the Enterprise Economy, showed businesses with 11 to 50 employees had been hardest hit.

For them, the cost of implementing new legislation was estimated to have risen from £8,000 to £10,100 a year.

For businesses with one to ten employees, the average cost was estimated to be £4,100, up from £3,600 last year.

Sole traders were thought to be facing costs similar to last year, at around £1,140.

The majority of chartered accountants surveyed for the report agreed the Government was not doing enough to encourage an enterprise culture.

More than half considered current support from Government for start-ups was poor or dismal.

The institute's members in Sussex were generally positive about the climate for new businesses in terms of economic stability but they took a dim view of the current regulatory environment, with only four per cent rating this as good.

Seventy-nine percent regarded it as either poor or dismal.

Linda Wiggins, president of the South-Eastern Society of Chartered Accountants, said: "Too many new businesses are constrained by red tape, cumbersome regulations and lack of access to finance.

These barriers urgently need addressing if the UK is to become the world's enterprise capital."

The institute said its members could best assist start-up businesses by helping to develop business plans and break-even and profitability models.

Ms Wiggins said: "Businesses should undertake systematic reviews of strategy and business plans and have high awareness of competitors and potential market developments."

Many small businesses were disappointed with the aggression of the Inland Revenue and Customs and Excise, which contrasted with the helpful approach taken by Companies House.

Trevor Freeman, of Brightonbased accountants TR Freeman, said the Department of Trade and Industry had been charged with the task of reducing the the amount of red tape facing businesses but he had yet to see any results.

He said: "Legislation introduced subsequent to the announcement there would be less red tape has, in fact, resulted in more."