BUSINESS leaders say new Government regulations introduced yesterday, including a 35p rise in the minimum wage, will cost firms in the region millions of pounds.

Dubbed Red Tape Day by wary business leaders, yesterday saw the introduction of rules on unfair dismissal, legislation on disabled access and an increase in the minimum wage from £4.50 to £4.85.

The British Chambers of Commerce (BCC) said the changes would cost businesses an extra £525m.

George Cowcher, chief executive of the North-East branch of the BCC, said: "When new laws come into force, such as the latest equal access disability legislation, it adds to the burden on business.

"Company owners find it increasingly difficult to keep abreast of all these developments, which they must do to avoid breaking the law."

An estimated two million workers received a pay rise yesterday with the increase in the minimum wage.

The minimum rate, which for the first time applies to homeworkers, rose from £3.80 to £4.10 for workers aged between 18 and 21.

A rate of £3 an hour has been introduced for 16 and 17-year-olds in a move aimed at ending exploitation.

More than 100,000 home workers will be better off by thousands of pounds a year under rules linking their pay to the minimum wage.

Trade and Industry Secretary Patricia Hewitt said the changes had gone a long way to protecting workers from exploitation without affecting employment or the economy.

She said: "We are committed to eradicating poverty pay and today's new rates are another big step towards turning that aim into a reality.

"The change to the home working rules will protect people who work in an industry that has a history of exploitative rates of pay, especially for minority ethnic and women workers."