Smaller firms would be the main winners under Liberal Democrat plans to boost British businesses, says the party's trade and industry spokesman.

Launching the Lib Dem business manifesto, Malcolm Bruce pledged action to reduce red tape and bureaucracy.

The party says it is committed to a liberal market economy in which the main role of the government is "to create the right environment in which enterprise can flourish".

Policies focus on issues such as the development of a trained workforce, with reform of education so children over 14 can mix vocational and academic learning, including apprenticeships.

And more controversially, the party is committed to scrapping the Department of Trade and Industry.

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

"Central government business support schemes are often bureaucratic, expensive in time and money, and unfair.

"Most businesses want advice and support accessible on the ground where they operate."

Business boost

Other Lib Dem policies include reforming the business rates system to allow firms with a rateable value of less than £25,000 to claim a business rate allowance of up to £1,500, saving over £600 a year for the majority of small businesses.

A rationalised Small Business Inspectorate would also replace the current "plethora" of small business inspections.

And there will be independent impact assessments on new regulations and sunset clauses in all new business regulations.

Party leader Charles Kennedy said he wanted to create "a new environment for business".

"A strong economy, with robust fiscal controls is only the first step," he added.

"We want to set business free to get on with the job of creating prosperity and jobs, innovating and trading across the globe."

Cuts

Trade and industry secretary Patricia Hewitt said the proposals would not be taken seriously.

"The Lib Dems claim they can make cuts in government departments to fund some of their commitments," she said.

"But they have failed to explain the true impact of these cuts and the damage they would do to the economy.

"They say they will abolish the DTI but have conspicuously failed to tell us what support for business would be cut.

"What extra investment in regional development face the axe? What public services currently provided would be slashed?

"Until they tell us where the money is coming from to pay for their endless list of tax and spending commitments, no one will take seriously any pledge the Lib Dems make."