Andy Burnham’s plan to scrap the government’s technology department has triggered an angry backlash from MPs, Whitehall officials and tech experts.

The incoming prime minister has asked officials to draw up plans to abolish the Department for Science, Innovation and Technology as part of a wider Whitehall shake-up.

The plans have not yet been signed off, but they are causing significant disquiet among experts inside and outside government.

The backlash comes amid concerns in the Labour party about some of Burnham’s early decisions, including the likely appointment of Shabana Mahmood as chancellor.

Matt Clifford, an adviser on AI to the outgoing prime minister, Keir Starmer, and his predecessor, Rishi Sunak, posted on X: “This would be a big mistake. Right now is a critical moment for tech as an economic and national security issue. Tying up our most senior science and tech officials in a [reorganisation] wastes time and energy that’s desperately needed for the actual substance.”

One Labour MP referred to the plans as “getting rid of the department of the future”.

Sources familiar with the plans have told the Guardian Burnham’s advisers asked officials to work up plans to hand over much of science and technology policy to a more powerful business department, to be led by the chief whip, Jonathan Reynolds.

Responsibility for overseeing the use of AI in the public sector would be given to the cabinet secretary, Antonia Romeo, rather than a minister.

News of the proposals has caused alarm in the technology sector, with warnings AI and advanced technology are likely to dominate many of the government’s policy decisions over the next few years.

Yvette Cooper, the foreign secretary, recently said she thought AI would be the major foreign policy question of the next two years.

In a speech last year, Starmer called AI “the defining opportunity of our generation”.

AI enthusiasts point to the success of the British company DeepMind, which was bought by Google in 2014, as evidence the UK can play a global role in the sector.

Others, however, say the recent US tech deal signed by Starmer shows the British AI industry is at risk of turning into a subsidiary of the American technology industry.

Dom Hallas, the executive director of the Startup Coalition, posted on X: “Changes to DSIT (which I’ve been getting calls about) would be a mistake.”

He added: “A mega [business] department would mean British tech competing with British steel for attention. And waste 6 months reorg-ing when time is of the essence. Not good.”

Barney Hussey-Yeo, a technology investor, said: “Sad to hear that Burnham’s team is considering closing DSIT.

“The UK has a major competitive advantage in its scientific capacity. Turning that strength into economic power – DSIT’s job – would be my idée fixe as prime minister.”

Burnham’s team is finalising their plans for government over the weekend in preparation for Monday, when the MP for Makerfield will officially take over as prime minister.

Burnham will spend Monday afternoon making his most significant cabinet appointments, before making a series of policy announcements later in the week.

Those announcements are likely to include a cost of living package that could involve action to reduce the costs of housing, energy and transport.

Some in the industry believe Burnham may rethink his idea of closing the technology department over the next 48 hours. A spokesperson for the next prime minister did not respond to a request to comment.