"Crackpot" VAT laws are being blamed for encouraging British firms to outsource jobs to foreign countries.

So says Shadow Chancellor, Oliver Letwin, who claims a tax loophole is providing an extra incentive for companies to outsource jobs overseas.

He accused the Government of effectively "providing a subsidy of 17.5 per cent to people who want to go offshore".

His comments follow remarks made by Foreign Secretary, Jack Straw, over the weekend. On an official visit to India, Mr Straw said that "offshoring" jobs, such as calls centre positions, could boost the UK economy.

Separately, some of the UK's largest unions - which represent office staff and call centre workers - are to carry out an independent public investigation into the offshoring of UK jobs abroad.

The enquiry will invite evidence from the Department of Trade and Industry (DTI), among others, into the issue.

In a statement Amicus said: "The unions do not want a protectionist solution but believe that the DTI has needs to do more to address the offshoring phenomenon which has resulted in 15,000 UK jobs being offshored since October 2003."

The issue of jobs to India - or Argentina, in the case of Lastminute.com - is gaining increasing momentum.

Only last week, for example, there was an outcry after it was revealed that following a new deal up to half of calls made to the UK's rail enquiries would be handled by operators in India.

Recently, one BT call centre worker was suspended after putting himself up for sale on eBay in what appeared to be a protest to offshoring.

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