THE Department of Trade & Industry (DTI) faces almost-certain abolition under a shake-up being considered by Gordon Brown when he becomes prime minister.

It will be scrapped and replaced with a beefed-up energy department and its other responsibilities abolished or distributed among other departments.

A separate science department is also being considered, reflecting what the chancellor regards as its importance in Britain’s economic future.

The plan would mean Alistair Darling, the trade and industry secretary, would be the last holder of the job. He is regarded as a strong candidate to succeed Brown as chancellor.

Aides to Brown said that no hard decisions had been taken but that changes were being considered to deliver better value for money for taxpayers and ensure the right departments could manage the long-term challenges facing Britain.

They denied suggestions that the shake-up, which would occur soon after Brown is expected to become prime minister, would involve splitting the Treasury into a separate Ministry of Finance and a Department of Economic Affairs. This would echo the arrangements under Harold Wilson in the 1960s.

Brown, who has shown scant regard for the DTI and has made it a target for spending and job cuts, is known to think it represents a throwback to old-style corporatism.

One Labour party business supporter close to the chancellor said that the decision had already been taken to scrap the DTI and the only question was how it would be implemented.

The DTI dates back to 1970, when it was formed by merging the Board of Trade and Ministry of Technology.

Tony Blair announced after the 2005 general election that it would be renamed the Department of Productivity, Energy and Industry, but it reverted to the DTI after objections from Alan Johnson, the then secretary of state, who was said to have feared it would be known by the acronym “Penis”.

Currently employing 10,400 civil servants, a fall of 1,300 in the past year, it has gradually lost responsibilities. Its role in overseeing mergers and takeovers has gone to the quasi-independent Competition Commission and Office of Fair Trading. City regulation is handled by the Financial Services Authority.

The decline of manufacturing, to the point where it accounts for less than 15% of the economy, has removed much of the DTI’s historic role. In 1970, manufacturing employment was at a peak of 9m. Now it is just over 3m.

Abolishing the department is Liberal Democrat policy, but business lobby groups will object strongly to its removal.

Business will be focusing tomorrow on so-called “simplification” plans, proposals to be released by 18 government departments to cut red tape. Miles Templeman, director- general of the Institute of Directors, called for a “step change” by Whitehall.

Martin Temple, director-general of the Engineering Employers’ Federation, said: “Business will welcome the focus on reducing costs by 25% but will look to government to deliver on this target with firm actions.” David Frost of the British Chambers of Commerce said it was the first test of how serious the government was about cutting red tape. o Consumer price inflation could this week hit a 10-year high of 2.6%, up from 2.4%, analysts predict. Retail price inflation may rise from 3.7% to 3.9%.

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