Arbitration and conciliation body Acas will not be as effective in resolving workplace disputes or preventing strikes if proposed budget cuts are approved, MPs have been warned.

Employer bodies and trade unions have both told the Commons that cutting the funding for Acas by £3m will damage the service it provides to industry.

The body, which is funded by the Department of Trade & Industry, settles more than 77 per cent of disputes before they reach employment tribunals, saving time and money.

About 150 Acas staff are expected to be cut as part of an efficiency drive, prompting fears of a reduced service for employers and workers.