Lib Dems pledge to scrap DTI and offer rates rebate

The Liberal Democrats pledged yesterday to abolish the Department of Trade and Industry if they came to power as a mark of their "instinctively pro-business" ethos and opposition to "heavy-handed, interfering government".

Launching their manifesto for business, they promised to cut unnecessary legislation and offer small firms relief on rates. They also offered independent assessments of the impact of new regulations and consultation on how to simplify business taxes.

"Heavy-handed, interfering government can make it difficult for business, especially small business, to create the wealth that is so important for the health of our economy," Charles Kennedy writes in the introduction to the manifesto.

The Liberal Democrats argue that the DTI's dual roles of promoting industry and regulating it for the consumer are incompatible. They would replace the department with a minister for business, working within the Treasury, and a small department for consumer affairs. Other useful functions, such as funding for research, would be diverted to other departments.

Malcolm Bruce, the party's trade and industry spokesman, said: "With nearly a million manufacturing jobs lost since 1997, it is clear that if the state of trade and industry in the UK is the problem, the DTI is not the answer.

"Abolishing the DTI and transferring its useful functions to other departments will be the biggest single act of deregulation in history."

The proposed business rates allowance is intended to help small enterprises, with a rate able value of up to £25,000, which often pay a higher proportion of their turnover in rates than larger companies. Most such firms would save more than £600 on their annual rates bill.

Patricia Hewitt, the trade and industry secretary, said: "The Lib Dems claim they can make cuts in government departments to fund some of their commitments. But they have failed to explain the true impact of these cuts and the damage they would do ... They say they will abolish the DTI but have conspicuously failed to tell us what support for business would be cut."

Stephen O'Brien, the Tory industry spokesman, said: "The Lib Dems want to abolish the DTI so that they can ignore the nation's vital wealth creators and risk-takers."