Select Committee on Trade and Industry Second Report


Role of DTI
(a)In our reports we have on occasion had cause to criticise the performance of the Department of Trade and Industry. But inherent in such criticisms has been a settled recognition that the Department has a vital role to play at the heart of Government. We suspect that it is not universally appreciated that much of the department's business is far removed from its role, which it shares with the Treasury, in the general promotion of enterprise and competitiveness. Any notion that its principal functions could be adequately performed by a Finance Ministry, even one with substantially more staff than the Treasury, can only be based on ignorance or misunderstanding of what the Department does now (paragraph 4).
Departmental Report
(b)We recommend that the Department make every effort to separate out within each Chapter and section of the Departmental Report those passages intended to be factual reporting of recent past performance from those passages which set out policy and plans for the future (paragraph 6).
Future expenditure
(c)The substantial real rise in planned expenditure on the Small Business Service is welcome. It was however unfortunate that neither the department nor the Treasury published the baseline figures from which these increases are measured. We recommend that this become the invariable practice of the department (paragraph 11).
(d)We note with some concern that the core of DTI's non-science programme and project expenditure shows no real growth over the three year period from 2001 to 2004. Given the welcome increases announced in some programmes, we are concerned that there will have to be as yet unannounced reductions in other areas of DTI activity (paragraph 13).
Publication of objectives
(e)We welcome the trend towards fuller publication of the specific targets set for DTI and the measurements used to assess progress in reaching them. We recommend that the objectives and targets of the directorates of the DTI be placed on the department's website, together with the assessment made of the progress in their achievement. We have published the DTI Service Delivery Agreement and Technical Notes as Appendices to the Minutes of Evidence. We regret that neither the Treasury nor the DTI made these papers available to the ublic in a readily accessible form (paragraphs 15, 16 and 18).
Productivity gap
(f)While there is still no way of telling from the figures available to us whether the productivity gap with the other major industrialised countries individually and as a whole has widened or narrowed over the past three years, it would seem to be the conventional wisdom within Whitehall that the gap has widened and is widening. It was plainly unsatisfactory that the principal competitiveness target should not have been adequately measured and that it should have explicitly given priority to enunciation of policies over measurement of outcomes. The result is that it cannot be demonstrated that policies pursued over the past three years intended to narrow the productivity gap have had any measurable outcome. Questions can indeed be raised about the usefulness of a target of seeking to close the productivity gap based on a simple comparison with other economies. There must in future be some assessment of the extent to which policies put in place to narrow the productivity gap have had some measurable effect. The productivity gap must from now on be measured on the basis of statistically consistent, readily comprehensible and speedily available figures (paragraphs 21 and 23).
(g)Given the importance of being able to measure this target [on competitiveness], which has been carried over to the new set of targets, the department and the Competitiveness Council must ensure that the first evaluation of these competitiveness indicators is clear and objective, with a weighting set out in advance of what is to constitute an overall improvement (paragraph 24).
Support for enterprise
(h)While we do not set much store by the slight fall in the proportion of businesses expressing satisfaction with Business Links, the fact is that this part of the target on support for enterprise seems to have been missed (paragraph 25).
(i)The target of increasing the number of successful high-growth business start-ups is theoretically admirable. The inevitable time-lag in measuring its attainment renders it of no practical use in assessing the department's recent or current performance (paragraph 26).
(j)The set of "enterprise society" objectives, targets and measurements is a dog's breakfast. We recommend that the department and the Treasury revise the details of this objective (paragraph 29).
(k)Regardless of any judgement as to the appropriateness of the original target for electronic commerce, it is unsatisfactory that such a high-profile target should have remained undefined for so long. We plan to look at the e.commerce targets and their attainment again in the near future. We recommend that the targets for making the UK the best place in the world to trade electronically by 2002 be extended to embrace a broader range of the key issues raised in the Government's own recent reports on the subject, with particular reference to consumer protection and removal of regulation (paragraphs 30 and 31).
Regional economic performance
(l)Once again we are at a loss to understand why what should be readily available statistics take an unconscionable time to be produced, such that the attainment of this simple target [on regional economic performance] cannot be measured in a timely way (paragraph 33).
Science and engineering
(m)Exceptionally, the new target and the measurement used of its achievement is the same as the previous one. There can therefore be little excuse for delays in providing figures by which to assess whether the international ranking of the UK's science and engineering base has improved (paragraph 38).
(n)It is unfortunate but by no means untypical that it will be impossible to discover if the 1998 target [on knowledge transfer] has been met until it has been superseded by a new target and new means of measurement — if then. While there have been admirable initiatives and programmes, there is no evidence yet on the extent to which the objective of making the most of the UK science base has been achieved. The latest set of targets represent a substantial improvement on their predecessors, so long as baseline values are rapidly established (paragraphs 39 and 40).
Energy and environment
(o)The seven measures used in relation to the 1998 target on energy, while comprehensible and objective, had little to do with the role of the department. The new targets include achievement of the targets and outcomes set out in the department's October 2000 Sustainable Development Strategy and Action Plan, and include a measurable target directed to fuel poverty. This should ensure that targets are more closely aligned to the difference the DTI can and we hope does make in energy policy, so that the success or otherwise of its performance can be measured. The target on achieving competitive gas and electricity prices should in our view be explicitly taken to refer to prices for commercial users (paragraph 43).
Regulatory framework and consumers
(p)While our record on transposition of EU Single Market Directives is admirable, it is not a measurement of achievement of the overall objective of a fair and effective regulatory framework. We welcome the use of peer review to assess the effectiveness of the UK competition regime. We also welcome the way in which consumer interest has surfaced in the whole process of objective and target setting. We look forward to consideration of a more ambitious set of targets for the protection of consumers, which will enable observers to assess the impact of policies pursued, and which would reflect the level of practical protection of consumers rather than their knowledge and skills. We regret in this context the Government's failure to include the proposed Consumer Protection Bill in the December 2000 Queen's Speech, which might do more for consumers than such a modest and ill-defined target (paragraphs 44 and 45).
Electronic government
(q)The targets for electronic government are quite rightly being made more demanding. We recommend explicit identification in future DTI Annual Reports of the key departmental services not electronically accessible (paragraph 47).
Late paying of bills
(r)The failure of the DTI to meet its target of paying its bills within 30 days, as the department sponsoring legislation penalising late payment of commercial bills, is not merely an embarrassment. It is an indictment of the department's ability to manage its own affairs that, having identified its failure, things should be getting worse rather than better. We will expect the forthcoming Departmental Report to be able to report an improvement (paragraph 48).
Personnel: sickness
(s)There seems to have been no identifiable sickness problem in the DTI. The Treasury imposed an apparently arbitrary target. It now turns out that new figures take years to come through and old figures require adjustment. We cannot see what is gained by imposition of such relatively simplistic targets, which turn out to be incapable of accurate or timely measurement (paragraph 49).
Personnel: staff numbers
(t)The public is entitled to an answer to the question "How many staff does the DTI have and what are they doing?" We believe that Parliament and the public is entitled to fuller details of a department's staff numbers and structure and look to the next Report to provide such details (paragraph 57).
Personnel: diversity
(u)Achieving a greater level of diversity among the department's workforce is of a different level of significance to, for example, a slight reduction in sickness absence. We welcome the translation of the benchmarks set for DTI's programme for diversity in employment into formal performance targets (paragraph 59).
Export Control Organisation
(v)We have noted from the Service Delivery Agreement that DTI service providers "have very well developed systems for seeking users' views on their services and for monitoring performance against Service first standards." We recommend that the department ensure that the Export Control Organisation meet the highest standards set by other DTI service providers in awareness of their customer's views, and that consideration be given to testing the Organisation against Charter Mark criteria (paragraph 52).
(w)The vigour with which the department evaluates its activities and measures its output seems to grow in proportion to the distance of those activities from its centre. We can see no reason why a range of DTI activities which now go apparently unevaluated and indeed unnoticed should not be exposed to the light of day. We recommend that the practice of publication of internal and external evaluation of programme activities be applied also to evaluation of running cost-funded activities (paragraph 54).
Overall conclusion
(x)On closer examination the superstructure of measurable targets and sub-targets below the headline objective is alarmingly fragile. The targets set in 1998 were in a number of cases insufficiently precise, incapable of timely measurement or ill-judged. They were unduly reliant on bespoke surveys, which take time and money to develop, rather than readily available and validated statistics. Where outcome can be measured, some significant targets have been missed. In most cases we are left in the dark at to whether they were met or not. In some cases, we will never know. There is a prospect of never catching up with what has actually happened. The bleak truth is that we cannot tell whether some of the department's crucial objectives over the past three years, such as the promotion of enterprise, innovation and increased productivity, have been achieved (paragraph 61).

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Prepared 25 January 2001