Business will be promised three years without any overall rise in the costs of red tape as part of a radical plan to curb Whitehall's ability to regulate. The scheme is to be announced by ministers today.

The government will consult on an unprecedented scheme to set "regulatory budgets" for each Whitehall department from the start of the next financial year. 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.