The Department of Trade and Industry:
Role, Objectives and Targets
The Government welcomes the Second Report of the
Trade and Industry Committee on the Department's Role, Objectives
and Targets. This memorandum sets out the Government's reply to
the specific recommendations made by the Committee, following
the order of the Summary of Conclusions and Recommendations in
the Committee's report.
BACKGROUND AND RECENT DEVELOPMENTS
Since the publication of the Committee's report,
the Department of Trade and Industry has published its annual
Expenditure Plans Report for 2001-04.
The Expenditure Plans Report is the Department's main tool for
reporting on progress against targets to Parliament. Some of the
Committee's recommendations relate directly to the Report and
have been taken into account in its production (see paragraphs
b, d, e, q and t below).
A number of the Committee's conclusions and recommendations
relate to the quality of the Public Service Agreement (PSA) targets
which the Department was set in the 1998 Comprehensive Spending
Review and in the 2000 Spending Review. Before responding to the
specific points raised, it may be helpful to set the 1998 and
2000 PSA targets in context and explain how they relate to one
another and to the Department's Service Delivery Agreement and
to the Technical Notes.
The 1998 PSA targets were an innovation designed
to make clear the Government's priorities for raising the standards
and improving the quality of public services. The PSA targets
set during the 2000 Spending Review developed and improved the
1998 targets, all but one of which (which was time-limited to
31 December 2000) were refined or incorporated in the new PSA.
In addition, a new Service Delivery Agreement was introduced,
which set out the more detailed outputs on which the Department
will need to focus to achieve the higher level targets in the
PSA, and Technical Notes were published to provide more detailed
definitions to complement the PSA targets.
The Government believes that these improved targets and outputs
will significantly improve the Department's ability to measure
its performance in achieving its objectives.
RESPONSE TO THE COMMITTEE'S CONCULSIONS AND RECOMMENDATIONS
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.
The Government welcomes the Committee's recognition
of the valuable work of the Department of Trade and Industry and
the vital role it plays at the heart of government. The Government
further welcomes the comments of the Committee in recognising
the diversity of the Department's work and functions.
(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.
The 2001-04 Expenditure Plans Report was the last
report under the present arrangements. In future, as the Committee
notes, departments will publish forward looking reports in the
spring with the Main Estimates and separate backward looking reports
in the autumn with Departmental Resource Accounts.
In the interim, in view of the Committee's concerns,
the current Report makes a clearer distinction between factual
reporting of recent performance and future policies and plans
and contains new sections on "Performance in 2000-01"
and "Future targets and priorities" in each of the main
(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.
The Government accepts this recommendation.
(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.
Detailed plans for expenditure on DTI activities
over the period 2001 to 2004 are set out in the Expenditure Plans
Report. They reflect the Government's decisions on priorities
taken in the light of the Department's aims, objectives and targets.
As the Committee notes, it has been possible to make sizeable
increases in priority areas, such as science and the Small Business
Service, which are vital to the achievement of the Department's
objectives. Inevitably, the focus on priorities does mean that
other areas of work will experience smaller increases or even
decreases in expenditure.
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 public in a readily
The Government is pleased that the Committee welcomes
the trend towards fuller publication of the Department's targets
and the measures used to assess progress towards them.
The Government believes that the focus of attention
should be on the Department's overall objectives and the targets
as set out in its Public Service and Service Delivery Agreements.
These relate to Departmental objectives rather than the Department's
internal organisation and are reported on in that format.
The Service Delivery Agreement and Technical Notes
have now been published as appendices to the Expenditure Plans
Report and have also been published on the departmental website.
In the light of the Committee's comments, this website has been
reorganised to make them easier to find.
The Department also produces an annual Strategic
Framework document designed to give staff a more accessible picture
of how the Department's work fits together by bringing together
aims and objectives, PSA and SDA targets, key priorities for the
coming year and work in progress on Modernising DTI. The Strategic
Framework is circulated to staff and is also publicly available
on the DTI website.
Over the next year, the Department will be working
on arrangements for putting information on its website about the
subordinate objectives and targets which are used by directorates
for business planning purposes.
(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).
The UK's productivity performance in relation to
the other G5 countries has been regularly documented by both the
DTI and the Treasury. For example, in March 2001 the Treasury
published the paper Productivity in the UK: Progress Towards
a Productive Economy showing the latest available data. Figures
were also published by the DTI in its second edition of the UK
Competitiveness Indicators in February 2001.
It is widely recognised that efforts to narrow the
productivity gap will take many years to have an effect. Consequently,
for the first set of PSA targets, the emphasis was on putting
in place policies to close the gap. However, for the 2001-04 period,
the target has been developed by the Government into a more specific
outcome-based target of reducing the gap relative to the US, Germany,
France, and Japan over the economic cycle.
The data suggest that movements in the overall productivity
gap have been relatively modest in recent years. Since the mid
1990s, US productivity performance has been very strong, but the
UK has improved slightly relative to Japan since 1997, and stayed
in much the same position on GDP per worker against France and
Germany. Productivity data are of course prone to revisions and
improvements. However, recent changes (particularly those associated
with developments to the System of National Accounts) have been
backdated and so have no impact on the consistency of comparisons
The Government has set out the policy foundations
to narrow the productivity gap in successive Budgets/Pre Budget
Reports and in the 1998 Competitiveness White Paper.
This document sets out a long-term agenda for action, and by July
2000 already 55 of the 77 White Paper commitments had been delivered
in full. More recently, the 2000 Science and Innovation White
Paper, Excellence and Opportunity: a science and innovation
policy for the 21st Century
and the 2001 joint DTI / DfEE White Paper on business, enterprise
added further to the Government's framework of measures aimed
at narrowing the productivity gap in relation to our main competitors.
The Department will be undertaking an evidence assessment
relating to its objective of boosting productivity in a joint
exercise with the Treasury later this year. The exercise will
examine the research needed to fill any gaps in our understanding
of the ways in which Government can improve productivity performance.
(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
The 1998 PSA targets included developing a set of
competitiveness indicators and securing improved performance against
them. In December 1999, the Government published the first set
of competitiveness indicators for the UK. The indicators, which
were the subject of wide consultation including with the Competitiveness
Council, were designed to compare our economic performance with
that of other advanced economies and to measure the UK's progress
in meeting the challenges of the knowledge economy.
It was recognised during the preparation of the competitiveness
indicators that they were more useful as part of the evidence
base and as a tool for analysing the performance of the economy
than as quantified targets. For 2001-04, the indicators were therefore
moved from the PSA targets to the DTI's Service Delivery Agreement.
A wide range of bodies, including the Department's
ad-hoc group on competitiveness, the successor to the Competitiveness
Council, were again consulted during the preparation of the second
edition of the Competitiveness Indicators, which were published
on 12 February 2001 in conjunction with the Opportunity for
all in a world of change White Paper. The second edition included
an evaluation of progress as measured by the indicators, although
few significant changes were to be expected in the space of a
The decision to use a multiplicity of indicators
(41 in the 2nd edition) reflects the multi-faceted
nature of competitiveness. Productivity is the most useful single
measure of competitiveness, as recognised in Department's first
2000 PSA target (shared with the Treasury) "to improve
UK competitiveness by narrowing the productivity gap with the
US, France, Germany and Japan over the economic cycle", But
no single-valued index can capture all the dimensions of performance
relevant to measuring and understanding the performance of the
UK economy. Moreover, any set of weights chosen to construct such
an index would be open to objection since there is no consensus
among economists and policy analysts on the relative importance
of different factors of competitiveness.
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.
The PSA target was to improve the quality of Business
Link services: in this context the level of customer satisfaction
is one indicator of overall quality. The Government does not believe
that the reduction in satisfaction from 75% to 74% is statistically
significant. The 2000 figure of 74% satisfaction is based on a
wider sample than that on which the 1997 baseline was based. It
includes micro businesses that were not considered part of the
core Business Link market. Satisfaction rates on a comparable
sample (businesses with 10-200 employees) have remained at 75%.
The Government has already recognised the need for
improvement, particularly the need for more consistency in quality
across the network. The Small Business Service (SBS) has been
created to improve the overall quality and coherence of government
support to small business. The number of Business Links has been
reduced from 81 to 45 to reduce overheads and create greater critical
mass. In addition, each Business Link has had to re-bid for its
franchise, with a number of Business Links having lost their contracts.
The SBS is introducing a range of initiatives to improve quality
management of Business Links, including advisor standards and
regional contract managers.
(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.
A significant time lag in measurement of this target
is inevitable. By definition, we cannot know how many start-ups
have achieved high and sustainable growth within a short period
of time. The four year period current used in the definition of
a high growth business start-up reflects the Government's commitment
to long term goals and strategies as opposed to short-term gains
and a judgement of where the right balance lies between sustainability,
timeliness and quality of information.
(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.
The Government does not accept the Committee's criticism.
Building an enterprise society is crucial to our
future prosperity. New and small businesses stimulate competition,
generate new ideas, create jobs and help strengthen our communities.
The Government is therefore committed to improving the entrepreneurial
culture and environment for small business, to improving the overall
performance of small firms and to ensuring that enterprise and
its rewards are distributed more evenly across communities.
It is not possible to measure the incidence of enterprise
across society using a single measure. The measures in this PSA
target are ones that can be measured objectively year on year
and which are open to scrutiny. The number of people considering
going into business, productivity in small firms, and enterprise
in disadvantaged communities are all areas in which the UK must
make progress if it is to become an enterprise society.
(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.
As noted above, PSA targets were set in 1998 for
the first time and it was always recognised that they were capable
of development. The 1998 e-commerce target was refined in the
2000 Spending Review to make it clear that progress towards the
aspirational goal of making the UK the best place in the world
to trade electronically would be measured "by the cost
of Internet access and by the extent of business-to-business and
business-to-consumer transactions carried out over e-commerce
networks". The Technical Notes detailed the performance
measures which would be used to do this and the Service Delivery
Agreement listed specific actions which the Department would be
taking in pursuit of the PSA goal.
The other areas mentioned by the Committee (such
as consumer protection and removal of regulation) are covered
by detailed commitments in the UK online action plan
and are publicly reported on every month on the e-Envoy website.
These detailed commitments cover a host of different policy areas
which are relevant to achieving this target.
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
Regional figures for GDP per capita are calculated
and published by the Office for National Statistics (ONS). These
data are published under the new National Statistics guidelines
and reflect a continuous programme of quality improvements. For
example, the 1999 figures were published on 27 February 2001,
some four months earlier than the previous annual cycle. The earlier
publication this year is welcome but the final decision on the
timing of publication is for the ONS, balancing timeliness and
the quality of data published as National Statistics.
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
In 1997, OST conducted a benchmarking study
which attempted to measure the performance of the UK science base
in comparison with that of other countries. Sir Robert May published
some of the findings in the journal Science in 1997
As the study emphasises:
"measurement of the quality of the science
base will never be an exact science. The outputs of a country's
science base are many, they are used in a number of complex, and
often unforeseeable, ways, and the time scales over which the
outputs are applied, and therefore their value recognised, is
The PSA measures of quality, relevance and cost effectiveness
were taken from this work and make use of data from OECD
Each measure can be updated by these organisations only when the
relevant data sets have been received.
The delay in calculating the measures in 2000 was
regrettable. The values of all three measures based on the latest
available data have now been published in the Departmental report
|PSA Target V: To improve the overall international ranking of the Science and Engineering Base in terms of quality, relevance and cost-effectiveness.
||Met but ongoing|
|Measure: International ranking on Quality of SEB output
|Baseline: UK performance on the Science Citation Index. Over the period 1981-98 the UK received a 9.2% share of the citations*.|
At the level of subjects, the UK was second in citation shares in 14 of the 20 fields studied with the lowest placing being physics at 5th.
|No change. Over the period 1981-99 the UK's share of citations was 9.2%**.
At the level of subjects, the UK share of citations was second in 15 of the 20 fields studied with the lowest placing being physics at 5th.
Measure: Relevance of SEB output.
|Baseline: the UK's world ranking in terms of proportion of HEI (Higher Education Institute) funding from non-governmental sources (business enterprise, private-non-profit and abroad). For 1997 the UK was first of the G7 countries***.
||The latest available comparative data from the OECD is 1997.
|Measure: Cost-effectiveness of SEB output.
|Baseline: the number of papers published per £1 million investment in UK compared to the G7 countries (and others). The UK was the most cost-effective in 1990, 1993 and 1996.
||For the latest year (1999), the UK continued to rank first.
* The Baseline has been revised from 9% to 9.2% due
to more accurate measurement.
** Internationally comparable citation data are available
for the period 1981 to 1999. Since citation numbers for most papers
will increase with time, a percentage share of the world total
based on a cumulative figure has been used for comparisions.
*** In the last published result, the UK ranked second
of the G7 countries. Then the HEI's own funding was included in
the calculations. However, due to the treatment of university
funds in Japan, their figures are not comparable with those of
the other G7 nations. The revised measure enables comparisions
to be made.
(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).
It remains the intention of the Government to determine
whether the 1998 target to increase by 50% the number of companies
spun-out from universities by 2001-02 compared with the 1997-98
level is met. Baseline data for 1997-98 are available from a survey
of industry-academic links in the UK carried out in 1998.
An annual survey of university exploitation activities
is currently being developed to provide year on year comparative
data on a comprehensive range of university exploitation activities,
including numbers of spinout companies. This follows discussions
by the Office of Science and Technology with other parts of DTI,
DfEE and the Funding and Research Councils. The approach will
incorporate key elements of the survey by the Association of University
Technology Managers in the United States. A pilot survey of HEI
exploitation activity is being conducted and results are expected
In the context of the 2000 Spending Review, the Government
published a target designed to capture more broadly the extent
to which the exploitation of technical knowledge from the science
base is stimulating business innovation. Performance against the
target to increase the level of exploitation of technological
knowledge derived from the science and engineering base is to
be demonstrated by a significant rise in the proportion of innovation
businesses citing such sources. The data for the baseline year
of 2000 will be obtained from the 2001 Community Innovation Survey
in the UK.
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).
The Government does not agree with the Committee
that the target for achieving competitive gas and electricity
prices should be confined to commercial users. The Government's
programme for introducing competition in energy markets aims to
deliver lower prices for companies - to improve their competitiveness
abroad - and for domestic consumers - to improve the standard
of living for all, and in particular to help those in fuel poverty,
who cannot afford to heat their homes.
It is important that domestic customers benefit from
lower prices. This is of particular significance as the Government
has just launched a strategy to tackle fuel poverty, which has
a target of ending fuel poverty for vulnerable households by 2010.
Energy prices play a large part in helping to alleviate fuel poverty,
and for example between 1996 and 1999 the number of households
in fuel poverty in England fell by 0.7 million because of reduced
energy prices alone. It would therefore seem inequitable if the
target to ensure that the UK energy market provides competitive
prices did not cover domestic customers.
The Government is pursuing its energy liberalisation
and competition agenda through regulation of monopoly activities
such as distribution and transmission and through competition
in electricity generation and gas and electricity supply. OFGEM
(the Office of Gas and Electricity Markets) has an important role
to play in implementing these policies. It also has to be recognised
that external factors also influence final prices. The recent
increases in UK gas prices have largely been brought about through
high crude oil prices feeding into gas prices in continental Europe.
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).
The Government welcomes the Committee's recognition
of the UK's admirable record on the transposition of EU Single
Market Directives. The Government further believes that monitoring
the extent to which European legislation is in force across the
EU is one useful indicator of the effectiveness of the regulatory
In 1997, the Commission revealed that more than a
third of Single Market directives had not been transposed in at
least one Member State. Common standards, enforceable across the
EU, are important for ensuring business certainty and it seemed
likely that late transposition was undermining the functioning
of the Single Market. Regular business surveys carried out by
the Commission support this view. The Commission therefore decided
to make transposition rates in each Member State the headline
indicator (amongst other data) in its Single Market Scoreboard.
Since then, the Scoreboard has proved to be an effective way of
encouraging Member States to transpose European Single Market
directives on time. This is evidenced by the fact that by November
last year, the percentage of Single Market directives overdue
for transposition in one or more Member State had fallen to 13%.
As a result of the Scoreboard, all Member States
are taking action to improve their performance in transposition.
This in itself should improve administrative procedures across
the EU and help to increase transparency for businesses operating
in the Single Market. The Scoreboard has been noted with approval
by the Commons European Scrutiny Committee.
This exercise has also been helpful in highlighting
areas where there are particular difficulties. For example, the
most recent Scoreboard shows that veterinary checks and food legislation
are proving to be sticking points for many Member States. As a
result, this should enable Member States and the Commission to
identify more accurately regulatory problems, which can be addressed
in the future.
In the field of consumer rights and interests, the
Government welcomes the Committee's endorsement of the importance
of consumer interests in the process of objective and target setting.
The PSA target measuring consumer rights awareness reflects the
substantial investment the Government is making in the next three
years on improving consumer information and advice. In 2001-2,
£25 million will be invested in this area, funding new Consumer
Support Networks, piloting telephone helplines on debt and consumer
advice, developing the Consumer Gateway, setting up new Consumer
Councils for energy and posts, working to improve consumer safety
and continuing to support Citizens Advice Bureaux. It is appropriate
that such investment should be reflected in the Department's targets.
The Government agrees that the target does not cover
the full range of work on strengthening consumer protection. Important
examples of work in this area include the introduction last autumn
of new consumer protection in distance selling and the imminent
introduction of new Stop Now Orders, to enable trading standards
officers and other public and private bodies to bring injunctions
against traders who flout the law in a number of important areas
of consumer protection, such as doorstep selling and consumer
credit. Because commerce and therefore the interests of consumers
are increasingly global the Government is also acting at an international
level. In October 2000, the UK signed an understanding with the
US and similar understandings will be signed shortly with Canada
and Australia to improve cross-border consumer protection. When
the PSA targets are next revised, consideration will be given
to the scope for covering this work more directly.
(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).
The Department is committed to the Government target
for all key services to be available electronically by 2005. It
has identified 62 key services, of which 16 are currently available
electronically. By 2002, 43 of these services should be available
and the remaining 19 should be by 2005. The Department already
reports publicly on its progress in electronic service delivery
through the e-Envoy website
and the Expenditure Plans Report provides an overview of progress
and indicates where further information is available.
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).
The Department regrets its failure to meet the target.
Performance in October-December 2000 stood at 95% compared with
92% in the previous quarter. Over the same two quarters, the performance
of the Ministerial private offices, which caused the Committee
particular concern, improved from 70% to 97%. The Department is
pursuing a vigorous course of action in order to build on this
(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).
While sick absence rates are relatively low, the
Department takes management of attendance seriously and recognises
it has a contribution to make towards the overall target of reducing
absence in the Civil Service as a whole by 30% by 2003.
The targets as set reflected the fact that different
parts of the Civil Service were starting from different points
and that a larger reduction could be expected in some areas than
others. The Department started from a relatively low level of
absence, but the targets are, nevertheless, stretching.
The targets and the method of collection of data
enable interdepartmental comparison and allow progress to be monitored
over time against the baseline of 1998. Figures published recently
(Commons Hansard, col 269W, 15 February 2001) show that sickness
absence in DTI reduced from the 8.0 days baseline to 7.8 days
in 1999. While this demonstrates progress in the right direction,
the Department will continue to monitor internally on a case by
case basis and continue its programme of action to maximise attendance.
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.
The Department's Expenditure Plans Reports have provided
information on its objectives, staff numbers and structure for
many years. The 2001 Expenditure Plans Report provides additional
information including short descriptions of the Department's groups
and a diagram of the Department's structure with staff number
numbers for each area and in Annex B10 a profile of actual and
projected staffing levels for HQ and Executive Agency staff from
1995-6 to 2003-04 (see extracts below).
Total DTI Staff - 1995-96 to 2003-04
Actual for 1995-96 to 1999-00; estimated outturn
for 2000-01 and planned for 2001-02 to 2003-04. Includes ACAS
and Executive Agencies. More details are in Annex B10 of the 2001
Expenditure Plans Report.
The increases in staff numbers since 1997-98 are due to a number
of reasons, including increases in demand-led work at the two
trading fund executive agencies (Companies House and the Patent
Office) and at the Employment Tribunal Service, the Insolvency
Service and ACAS, new requirements relating to the establishment
of British Trade International and the Small Business Service
and the recruitment of staff to fill vacancies previously occupied
by agency workers.
DTI Staff by area on 1 January 2001
Full time equivalents. Excludes ACAS and Executive Agencies
apart from the Small Business Service. More details are in the
Introduction to the 2001 Expenditure Plans Report.
Enterprise and Innovation Group (includes DTI staff in Government Offices)
Business Competitiveness Group||
British Trade International (DTI staff only)
Competition and Markets Group||
Trade Policy Group||
Office of Science and Technology
Resources and Services Group||
Legal Services Group||
Small Business Service||
(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.
The Government is pleased that the Committee acknowledges the
work of DTI in this area and welcomes their comment.
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.
The Government aims to process 70% of export licence applications,
with certain exceptions, within the 20 day target. The Government
has improved performance from 47% in 1997 to 57% in 2000, though
recognises that this is still not good enough. Within the DTI,
the Export Control Organisation (ECO) improved the proportion
of Standard Individual Export Licence applications (SIELs) on
which it carried out its processing tasks within its internal
target of 10 working days to 79% in 2000, compared to 75% the
previous year, as reported in the 1999 Expenditure Plans Report.
This improvement is partly attributable to the introduction of
the ELATE computer system and the performance bonus scheme referred
to by the Committee.
The Government welcomes the Committee's recognition of the difficulties
it has to contend with in this area. The intrinsically difficult
issues often involved, together with the necessary consultation
between departments, mean that some export licence applications
do take too long to process. But the desire to reduce processing
times cannot be outweighed by the need to give proper consideration
to all relevant factors in taking export licensing decisions.
The Department is determined to do better. ECO is therefore pursuing
a number of initiatives to enhance performance and further reduce
processing times, including:-
10 Monitoring cases outstanding within DTI and other departments
and chasing progress so that cases are resolved as quickly as
possible. It is also seeking to improve the way it works with
20 The overall 20-day target for SIELs is "shared"
with 10 days for DTI and 10 days for other departments. Within
the DTI the 10 days is broken down into individual tasks and performance
is monitored so that bottlenecks in the process can be identified
and improvements made.
3. Being committed to improving continuously the way it carries
out its mission, the ECO has had a successful staff suggestion
scheme in place for over a year.
4. Taking steps to adopt a more structured approach to quality
The Government is committed to providing excellent service to
customers for all its services, and to sharing best practice within
the Department whenever possible. The ECO is working hard to improve
its awareness of exporters' views. The Head of ECO's Licensing
Group jointly chairs a quarterly ECO-CBI Working Group, which
provides a forum for working closely with exporters over export
licensing issues and the development of the ECO's service. The
Group's work has already led to improved guidance for exporters
on the ECO website.
The ECO also plans to seek feedback via the website. In addition,
the 600 compliance visits undertaken annually by the ECO's compliance
officers provide a two-way communication channel; exporters are
encouraged to give their views. Finally, feedback is sought at
the regular seminars the ECO holds for exporters.
The ECO has used its website to provide exporters with up to date
information on export controls. ECO is also currently planning
a system to be introduced in 2002 that will allow for licence
applications to be made over the Internet. The ECO's Service and
Performance Code, setting out its commitments to exporters, is
also published on its website.
Given the work described above, and particularly the need for
the more structured quality improvement work to bear fruit, the
Department has concluded that ECO is not ready to apply for the
Charter Mark, but will keep Charter Mark accreditation under consideration
as a possibility for the future. Meanwhile, the ECO and its staff
are strongly committed to seeking further improvements in the
efficiency of the service they provide.
(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.
The 1998 Comprehensive Spending Review highlighted the need to
develop more strategic evaluation and to widen the scope of evaluation.
It has led to wider recent coverage of administration cost activities
and, in particular, a pioneering evaluation of the sector sponsorship
activities of the Engineering Industries Directorate (EID).
The Department has recently established a Strategic Evaluation
Committee (SEC) to provide overall direction to evaluation within
the Department, and specifically to ensure that evaluations are
broadened to provide fuller coverage of administration costs.
The details have yet to be finalised but significant work on administration
costs is planned for the 2001-02 evaluation programme, although
it will take time for this to build up.
The Government accepts the Committee's recommendation that the
practice of publication applied to evaluation of programme expenditure
should also apply to administration cost activities. The executive
summary of the recent EID sector sponsorship evaluation is available
on the DTI's evaluation webpage
and the full report will be published shortly. It is intended
that future evaluations of administration cost activities should
typically be published in the normal way.
(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
The Committee's specific comments and recommendations have been
addressed earlier in this memorandum.
As to the Committee's general remarks, the Government notes that
the 1998 PSA targets were a radical innovation aimed at making
more explicit the final outcomes on which the Department was to
focus. Inevitably, as with any new initiative, the 1998 PSAs were
capable of improvement and it was always expected that they would
be developed. The PSA targets set in the 2000 Spending Review
- together with the Service Delivery Agreements and Technical
Notes which accompanied them - built on those first PSAs to provide
an even sharper focus on the Government's priorities and clearer
details of how the Department will deliver its high level targets
and modernise and reform to get better value for money.
The Department's business is complex. As the Committee itself
appreciates, much of it is far removed from the Department's role
in the general promotion of enterprise and competitiveness. Although
the entire work of DTI can be captured under the Department's
four objectives, to have specific targets for each individual
area of the Department's work would result in an unmanageable
and confusing proliferation of targets given the diversity of
the Department's activities. Instead, the targets are designed
to focus on a limited number of key priorities.
The Government agrees on the desirability of timely information
which can be used to track progress. At the same time, it needs
to be recognised that there can be trade-offs between timeliness
on the one hand and on the other accuracy and the long term nature
of the outcomes sought.
Although the Government recognises the convenience of using pre-existing
and readily available data sources for measurement purposes, it
does not want to compromise the target-setting processes by setting
targets according to whatever measures are available. Targets
should be determined according to the outcomes sought. Where this
results in the setting of targets which are not supported by existing
information sources, new performance indicators should be developed,
as in the case of the Competitiveness Indicators.
The 2001-04 DTI Expenditure Plans Report (Trade and Industry:
The Government's Expenditure Plans 2001-02 to 2003-04 and Main
Estimates 2001-02, Cm 5112, March 2001) was published on 30
March 2001. It is available from The Stationery Office or on the
DTI website at www.dti.gov.uk/expenditureplan/expenditure2001. Back
3 The Service Delivery Agreement and Technical Notes are on the DTI website at www.dti.gov.uk/about/spendingreview/index.htm. Back
The second edition of the UK Competitiveness Indicators
is available online at the DTI website at www.dti.gov.uk/opportunityforall/indicators2.
Our Competitive Future: Building the Knowledge Driven Economy
(Cm 4176, December 1998), available from The Stationery Office
or online at www.dti.gov.uk/comp. Back
Excellence and Opportunity: a science and innovation policy
for the 21st Century (Cm 4814, July 2000), available
from The Stationery Office or online at www.dti.gov.uk/publications. Back
Opportunity for all in a world of change (Cm 5052, February
2001), available from The Stationery Office or online at www.dti.gov.uk/opportunityforall. Back
9 www.e-envoy.gov.uk/2000/progress/actplan/table.htm Back
The Quality of the UK Science Base, March 1997 Back
Science, vol 275, 7 February 1997 Back
Science, vol 281, 7 July 1998 Back
OECD make their data available via their website which is revised
continually, see www.oecd.org/statistics. Back
Institute for Scientific Information, see www.isinet.com.
Information from ISI, the Science Citation Index, is purchased
annually in the form of a CD-ROM Back