Excessive red tape is hampering business who are trying to grow their workforce, it is claimed, which could prevent role creation for IT contractors.

According to the Institution of Directors (IoD), UK businesses are entangled in the "excessive burden" of red tape, which drains time and resources.

IoD spokesman Alistair Tebbit says that there has been a gradually growth in employment law in the last ten to 15 years, encouraged by the Labour government.

However, despite the coalition's promise to reduce red tape, it seems to have instead continued to create more of it, Mr Tebbit suggests.

"It's all very well talking about cutting red tape or stemming it, but actions speak louder than words and we've yet to see the government take the whole regulation seriously," he said.

The Federation of Small Businesses recently revealed that EU regulation costs firms €123.8 billion (£107.6 billion) each year - 3.5 per cent of the continent's GDP.