Select Committee on Trade and Industry Third Special Report


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.


Since the publication of the Committee's report, the Department of Trade and Industry has published its annual Expenditure Plans Report for 2001-04[2]. 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[3]. The Government believes that these improved targets and outputs will significantly improve the Department's ability to measure its performance in achieving its objectives.


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.

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.

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 chapters.

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.

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 accessible form.

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[4]. 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.

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).

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[5].

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 over time.

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[6]. 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[7] and the 2001 joint DTI / DfEE White Paper on business, enterprise and skills[8] 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 24).

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 year.

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[9] and are publicly reported on every month on the e-Envoy website[10]. 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 way.

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 38).

In 1997, OST conducted a benchmarking study[11] 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[12] and 1998[13]. 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 long (decades)."

The PSA measures of quality, relevance and cost effectiveness were taken from this work and make use of data from OECD[14] and ISI[15]. 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 as below:-

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 2001.

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 environment.

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.

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).

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[16] 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 improvement.

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).

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
Energy Group
Trade Policy Group
Office of Science and Technology
Resources and Services Group
Legal Services Group
Small Business Service

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.

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 other Departments.

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 management.

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[17]. 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[18] 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.

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.

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.

2   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 Back

3   The Service Delivery Agreement and Technical Notes are on the DTI website at Back

4 Back

5   The second edition of the UK Competitiveness Indicators is available online at the DTI website at  Back

6   Our Competitive Future: Building the Knowledge Driven Economy (Cm 4176, December 1998), available from The Stationery Office or online at  Back

7   Excellence and Opportunity: a science and innovation policy for the 21st Century (Cm 4814, July 2000), available from The Stationery Office or online at

8   Opportunity for all in a world of change (Cm 5052, February 2001), available from The Stationery Office or online at

9 Back

10 Back

11   The Quality of the UK Science Base, March 1997 Back

12   Science, vol 275, 7 February 1997 Back

13   Science, vol 281, 7 July 1998 Back

14   OECD make their data available via their website which is revised continually, see  Back

15   Institute for Scientific Information, see Information from ISI, the Science Citation Index, is purchased annually in the form of a CD-ROM Back

16   www.e­ Back

17 Back

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