Planning red tape is hindering progress in the region’s construction sector at a time when an above-average number of companies are expecting to grow.

Findings by the Institute of Chartered Accountants in England and Wales (ICEAW) reveal that while growth in turnover and gross profits at Yorkshire companies fell in 2012 to below the UK average, they are expecting a stronger bounce-back in the next 12 months than the rest of the country.

However, the strong rise in capital investment growth seen in 2012 is not expected to continue and employment growth looks set to remain flat.

In its 16th annual Enterprise Survey, ICEAW said increased profitability, followed by increased turnover, were the main business objectives for the next 12 months among UK businesses.

In Yorkshire, twice as many firms were looking to focus on increasing cash balances and reducing debt as well as increasing turnover.

Chris Manners, ICEAW regional director, said: “This may be a reflection of the region’s above average numbers of construction businesses – the sector which is most strongly focused on this objective.

“Half of the region’s businesses believe the UK’s tax and regulatory system is business friendly, in line with the UK average. However, Yorkshire and Humber businesses have shifted their opinion since 2011 to a much greater extent than the UK average. In 2011, barely one-third agreed that the UK tax and regulatory system was business friendly.

“And while employment legislation and employment tax are hindrances to about six in ten businesses UK-wide, with Yorkshire and Humber being no exception, planning regulation is considered a drawback by higher than average proportions here – 61 per cent compared with a UK average of 48 per cent – a further reflection of the region’s above-average construction industry base.”

Mr Manners said that, in line with the UK generally, Yorkshire businesses had experienced pressure on their performance this year from increased competition and deteriorating customer demand. These pressures were expected to continue over the coming year, although anticipated turnover and gross profits growth were relatively strong.

ICEAW has called for measures to help businesses at a time of uncertainty. It wants the Government to set up a powerful new Office of Regulatory Reform able to comment on EU regulations or regulations made by independent regulators to replace the Regulatory Policy Committee.

It also wants trade support body UK Trade & Investment to improve access to export information to new markets and the establishment of a new start-up division within Vince Cable’s Department of Business, Innovation and Skills to support business development and improve survival rates for new businesses.