All the main parties have promised to cut some DTI jobs

"Like many parts of government the DTI is too fat and needs to be slimmed down," Shadow Chancellor Oliver Letwin told BBC Radio 4's Today Programme.

The DTI's budget had risen by 60% since 1998, Mr Letwin said.

The cuts are the latest in a series of cost-cutting plans being released by Michael Howard and the shadow cabinet.

The announcement follows a review of central government for the Tories by corporate trouble-shooter David James who has helped the party draw up plans to trim down government.

Tories plans for the DTI Saving �186.5m by cutting 3,395 civil servants from DTI HQ Saving �496m by reforming DTI business support programmes Saving �50m by reducing UKTI headcount by 658 Review future of non-departmental public bodies Discontinuing UKTI grants to regional development agencies Ending enhanced early retirement schemes saving �13.7m

"When the James committee ...asked the question how many people do we really need to do the task we think needs to be done in a government that is devoted to deregulation... in the slimmest possible machine their answer was we need about 850 civil servants in the DTI not 5,000," Mr Letwin told Today.

He added that businesses up and down the country were crying out for less regulations to be imposed upon them.

Mr Letwin said: "The DTI is all too typical of the bloated bureaucracy Labour has created.

"Instead of helping business to flourish, it all too often stifles free enterprise. These proposals will not only streamline the DTI, but will produce substantial savings for the taxpayer."

Britain had slipped from fourth to fifteenth in the international competitiveness league and currently had its biggest deficit since the seventeenth century, he said.

Shadow industry secretary Stephen O'Brien added the department would be "completely reformed and refocused".

"British business will be better supported, less burdened and free to get on with taking the risks and creating the jobs, reward, profit and investment upon which we all depend," he said.

Cutting costs

Under recommendations from Mr James' Review of Taxpayer Value, 4,060 jobs, made up of 3,395 civil servants at the DTI's London base and 665 staff at UK Trade and Investment (UKTI) would be axed.

UKTI is a government organisation that supports UK-based companies trading internationally and overseas enterprises who want to set up a UK base.

The Tories say remaining DTI staff would focus on areas such as identifying and removing barriers to business growth and representing business interests in government and overseas.

All the major parties have a commitment to shrink the DTI.

The government plans to cut 1,500 jobs at the DTI and other trade bodies, while the Liberal Democrats have proposed scrapping the department altogether.

'Dodgy figures'

Lib Dem Treasury spokesman Malcolm Bruce said a lot of the department's functions were now "superfluous" and were getting in the way of businesses' ability to grow.

"Some we think could be transferred more efficiently to other departments because they duplicate what other departments are doing.

"We have privatised much of the state owned industry over the years but the DTI has grown and grown.

"That is anomalous and those functions where the government are not assisting business should be terminated," he said.

But DTI minister Jacqui Smith said many firms benefited from the work of the department.

Mr Letwin says the DTI's budget has risen 60% since 1998

Last year some 600,000 people used business link services across the country, 20,000 people used the UKTI and 6,500 small businesses used the manufacturing advisory services, she told Today.

But she added: "We need to look very carefully at the number of civil servants that we have based in London.

"That's why we have proposed up to 2007-08 to cut by 1,500 the jobs in London."

She said the Tory plans were ultimately about cutting public services and accused Mr Letwin of "struggling around with his dodgy figures trying to find a way to save �20bn".

We need to look very carefully at the number of civil servants that we have based in London. That's why we have proposed up to 2007-08 to cut by 1,500 the jobs in London DTI minister Jacqui Smith

"Moving Whitehall deckchairs may have some superficial appeal, but under these proposals many UK businesses would lose out.

"The CBI and other business leaders have repeatedly confirmed their desire for an effective DTI that promotes British business whilst also regulating it sensibly," the minister added.

Mark Serwotka head of the Public and Commercial Services union said it was a "bad day to be a civil servant".

"It's the DTI today, next week someone will want to attack Defra (Department for Environment Food and Rural Affairs) and the week after that the Department for Work and Pensions.

"All of this debate must be seen against a backdrop of people turning on the public sector and trying to denigrate the work the civil servants do," he said.