The Government plans to introduce new legislation that will both remove some of the red tape currently tying up businesses, especially small enterprises, and strengthen the hands of customers.

The aim is to create an enterprise culture, and one of the ways being proposed to do that is to loosen the bankruptcy laws to encourage those who try in business and fail to try again, as long as they do not fail through recklessness or dishonesty.

Bankrupts who are not reckless, irresponsible or dishonest should be discharged from debts and released from restrictions within 12 months, says the Government.

However, there is recognition that some bankruptcies are the result of negligent or fraudulent acts and tougher penalties are proposed in these cases, including new Bankruptcy Restriction Orders lasting for between two and 15 years.

It is suggested the phoenix company syndrome should be tackled by: strengthening the existing provisions on transactions between a company and its directors; stronger safeguards where a director of a failed company applies to the court to be a director of, or concerned in the management of, another company with the same or a similar name; interim orders for disqualification of directors in advance of final disqualification proceedings, enabling speedy preventative action in serious cases.

The proposals on bankruptcy are among the suggestions in announcements made by the Government just as the country was taking off for its summer holidays.

As well as removing red tape they give the public and representative bodies more power to insist that businesses do compete with each other. There will be Competition Appeals Tribunals with new powers to make it easier for individuals and consumer groups to bring claims for damages against anti-competitive behaviour.

Such claims have been possible before, but there has not been a single successful action in 30 years.

The proposals come in White Papers (the first step in creating laws) on Competition and Insolvency, published following the final report of the independent Company Law Review, started in March 1998 by Margaret Beckett when she was Secretary of State.

The current Trade & Industry Secretary, Patricia Hewitt, welcomed the report. "Years of neglect have left us with an archaic, Victorian system that is holding British business back. We want to bring British company law into the 21st Century, she said.

For small companies, the intention is to simplify and reduce the amount of legislation covering decision making, accounting and auditing. Notably, AGMs, annual laying of accounts and re-appointing of auditors will no longer be necessary and companies will not have to have a company secretary.

Companies with a turnover of less than £4.8million, a balance sheet total of no more than £2.4million and less than 50 employees will be able to use the small company accounting regime to reduce the burden of financial reporting.

However, accounts of such companies will have to be filed within seven months in future rather than 10 at present and \'abbreviated\' accounts will no longer be acceptable.

The complex provisions prohibiting a company giving any form of financial assistance for the purchase of its own shares will be abolished for private companies.

The White Papers \'Productivity and Enterprise: A World Class Competition Regime\' (Cm5233) and \'Productivity and Enterprise: Insolvency - A Second Chance\' (CM 5234) are available on the websites below. Comments on the White Papers are invited by 5 October.