How Alex Salmond could save Scottish business by axing rules and red tape

Even those with pure SNP affections will have to agree that, with the tenuous majority plus the fact so many substantive powers remain in London, the new regime has barely any legislative or fiscal possibilities.

Where Salmond and his ministerial colleagues have almost limitless discretion - a euphemism for power - is in administrative matters. As Edinburgh ministers, they have all the levers of the civil service to pull and push.

There is a vast, perhaps nearly limitless, opportunity to de-regulate Scottish business.

I am always uncomfortable that so many Scottish companies appoint "compliance officers" to ensure close obedience to every regulation - however petty or daft. I urge them to appoint countervailing "defiance officers" to find ways to get around pettifogging nonsense.

The SNP could reap a huge harvest of popularity - and contribute to the flourishing of Scottish business - if they scrapped one regulation every day. Does that sound excessive? Let me remind you that, in the 12 months up to May 2006, ten new sets of regulations were imposed each day of the year.

Ross Clark's recent study of British regulation, How to Label a Goat: the Silly Rules and Regulations that are Strangling Britain offers an inventory of the over-zealous and often fatuous new directives, statutory instruments and other "obligations" imposed upon business. Clark argues the physical weight of new controls amounts to a new edition of Tolstoy's War and Peace every five days.

Whenever I meet a politician, in power or in opposition, they all agree we must lift the suffocating nature of "red tape" yet the Civil Service loves to contain, corral and command. It is in the business of red tape - not just in volume but in complexity.

My point is Salmond could liberate Scottish commerce by lifting or dissolving so many of these regulatory inhibitions. Each regulation creates its own employments and dependencies. They need departmental staff to administer the new rules. The industry regulated in turn then needs to consult or appoint lawyers and other compliance staff. Of course the public is not served. Goods or services choices are ever more restricted and expensive.

Scottish businesses are subject to 3,592 new statutory instruments every year. This is the strange twilight zone where the real Yes, Minister games are played out. What a blessing to Scottish businesses if these often pointless rules were suspended.

The Parliament has to re- affirm a statutory instrument once a year. Let them just fall into redundancy by simply not renewing them. This is not an original thought. The Dutch bureaucracy has to convince the ministers in the Hague a regulation is worth renewing.

Every Scotsman reader could come up with a vivid example of a dopey regulation. I have almost too many to select. I am currently exercised by Historic Scotland invoking powers the Parliament never intended to block the restoration of the lovely Tioram Castle on Moidart. The civil service are insisting their rules favour ruination. It is interesting how even the most well-intentioned regulation can decay into absurdity.

Scottish Natural Heritage is currently banning the restoration of the dormouse under the Dangerous Wild Animals Act. The MPs were voting against the release of lions or tigers but the bureaucrats interpret it to bar dormice or beavers.

We all think of whisky distilling as a task accomplished only in huge whisky conglomerates. Relax the regulations and every farmer with fine Scottish waters could go back into converting his grain into alcohol. There are thousands of opportunities we can barely imagine as the regulations have been enforced for so long. It would be an error to think only of the petty regulations being swept away. That is too easy.

One of the greatest acts of liberalisation achieved by the incoming Tories in 1979 was to scrap Exchange Controls. Who now even remembers we all needed Bank of England permission to take 100 out of the country or to invest abroad? Note they were not amended or thresholds merely tweaked. The vast panoply of serfdom was abolished. One reason Edinburgh's financial services flourish is the abolition of this tyrannical regulation. I praise Nigel Lawson and Geoffrey Howe for their boldness. What could Alistair Darling do now in the Treasury let alone in New St Andrews House?

There are no shortages of tiny and large liberalisations that Salmond could achieve - making business prosper and entirely wrong-footing his opponents.

Imagine how firms would migrate to Scotland if regulation was far lighter and sensible north of the Tweed.

I can think of no reforming programme that would be so cheap - saving money - and so effective at helping Scottish business. I urge the Scottish commercial community to offer a shopping list for de-regulation.

• John Blundell is the director- general of the Institute of Economic Affairs.