This pernicious tax on IT consultants [IR35] has created a brain drain... while at the same time the government is planning to ease immigration regulations to attract more IT workers into Britain

Alan Duncan

The Conservatives would cut back on the size of the Department of Trade and Industry in order to save money for front-line services.

"The drive for a smaller state starts here. The DTI will be reorganised to make it leaner, fitter, and smaller." he said.

But he admitted that when in government the Tories had not done enough to scrap damaging regulations.

"We checked the regulatory juggernaut, but we failed to reverse it," he told the party faithful.

Less taxes for business

Mr Heathcoat-Amory promised that taxes for business would be lower under the Conservatives.

I will deregulate before breakfast, before lunch and before tea

David Heathcoat-Amory

And he attacked Labour for raising costs for business, especially by its new energy tax, the climate change levy, and for its high fuel taxes.

He said that petrol was now taxed more heavily than champagne.

Mr Heathcoat-Amory said that his opposite number, Stephen Byers, was guilty of ripping-off Britain himself, and accused the Labour Party of having gimmicks rather than policies.

And junior shadow trade spokesman Alan Duncan pledged that the Conservatives would abolish a controversial tax on consultants known as IR35, which came into force in April.

Under IR35, if an individual worker would normally be considered an employee of the client, rather than a self-employed independent consultant, the worker should be charged tax and NIC as if they were an employee.

The government has defended the tax as fair, and necessary to close a tax loophole under which such people paid less tax.

But the Conservatives and many business organisations say it will mean IT consultants will now be taxed at a higher rate than other workers, and it will lead to an exodus of expertise from Britain.

"This pernicious tax on IT consultants has created a brain drain... while at the same time the government is planning to ease immigration regulations to attract more IT workers into Britain," Mr Duncan said.

"It is a policy not for the internet, but of inter-nuts."

A bonfire of regulations

Mr Heathcoat-Amory also accused the government of adding to the regulatory burden on business, which he said added up to billions of pounds.

Under the Conservatives, each department will have to cut back the amount of regulation year-by-year.

"We will independently calculate the total cost of regulations issued by each government department.

"And that total will have to come down year by year. William Hague has made clear that ministerial careers depend on it," he said.

Mr Heathcoat-Amory said the government was burying business in a "torrent of regulations" from Brussels.

It had caused serious damage to business by giving up its opt-out over the European Social Chapter.

"That was an act of political vandalism that is costing British business �10bn over the life of this Parliament," the shadow trade secretary said.

Mr Heathcoat-Amory called for Europe and the UK to join the North American Free Trade Area (NAFTA) rather than the euro - an idea that is unlikely to endear the Conservatives to their European partners.

"Yes to free trade, no to the euro," he said.