Trade watchdogs are to be given extra powers, and price fixers face jail sentences, in a drive to raise the performance of the UK economy, according to the government's programme unveiled on Wednesday.

The Enterprise Bill, trailed in the Queen's Speech, would see the government hand responsibility for deciding on "most" mergers to the Office of Fair Trading and Competition Commission.

And the legislation would see members of cartels risk criminal prosecution, and help victims of market fixing to win compensation.

The measures would help promote the vitality of British business, and provide a firm economic platform on which to launch headline health and education reforms, a briefing paper said.

"The government is committed to fairness and enterprise together," the paper said.

"With measures to advance social justice by improving public services, we will also increase economic efficiency with measures to improve enterprise."

Priority bill

The announcement followed signals from Patricia Hewitt, the new trade and industry secretary, that she would prioritise the promotion of enterprise, and repeated statements by chancellor Gordon Brown that he wants to encourage entrepreneurs and help raise the productivity of UK firms.

The bill seems also to have gained a place near the top of the government's legislative agenda, with the Department of Trade and Industry promising on Wednesday to open consultations next month on reforms to trade watchdogs.

This shake-up would see the Office of Fair Trading run by a board rather than a director general, a move which would "strengthen its independence", the DTI said.

Competition watchdogs would also gain powers to collaborate with foreign investigators to clampdown on unscrupulous businesses.

But the legislation would "de-stigmatise failure", and support failed entrepreneurs rendered bankrupt through bad luck, or bad judgement, rather than dishonest practices.

"The bill would substantially reduce the period of bankruptcy, do away with many of the provision in law that automatically stigmatise bankrupts and crack down on the irresponsible and dishonest."