Memorandum submitted by the Department
of Trade and Industry
REVIEWS OF THE DEPARTMENT OF TRADE AND INDUSTRY'S
SUPPORT FOR BUSINESS AND ITS PRIORITIES AND STRUCTURE
1. The Clerk of the House of Commons Science
and Technology Select Committee wrote on 29 November to Robin
Young, Permanent Secretary at the DTI, asking for a memorandum
explaining the implications of the DTI Review for the Office of
Science and Technology (OST).
2. Following the Review the position of
the Office of Science and Technology, including the role of the
Chief Scientific Adviser, is essentially unchanged. The OST will
remain as part of the DTI. However the Review presents the opportunity
to get more value from the UK's investment in science, and to
strengthen the links between the OST and the rest of the Department.
A new group will be created, the Science, Technology and Innovation
Group, one of whose objectives will be to maximise the Government's
significant investment in science. Further details are set out
in paragraph 7 of the attached annex. John Taylor, Director General
of Research Councils, will head up this group on a temporary basis
in the Department until an externally recruited Director General
is appointed. The Director General will also sit on a newly established
Knowledge Transfer Strategy Committee, along with the head of
the Science, Technology and Innovation Group and the Chief Scientific
Adviser and others, to ensure that we make the most of the knowledge
that comes from our investment in the science base.
3. The remainder of this memorandum describes
the changes in greater detail.
4. In June 2001 the Secretary of State for
Trade and Industry launched major reviews of the DTI's support
for business, and of its priorities and structure. This memorandum
summarises progress on the conduct of the reviews and their broad
conclusions to date. A diagram showing the new structure for the
Department is annexed, together with a note on the details of
5. Both reviews are being conducted by joint
teams of officials, consultants and secondees. Over the summer
and the early part of the autumn they undertook an extensive exercise
to gather views from the Department's key stakeholders. On 22
November the Secretary of State announced the changes the DTI
would be making to respond to criticisms from its stakeholders
and how it would be working to fulfil its central role of driving
up UK productivity and competitiveness.
6. Work on the detail of the changes will
continue. The reviews are expected to be complete by the end of
the year, and the main elements of the changes to be in place
by 1 April 2002. Full transition to the new structures and ways
of working is likely to take a further year to complete.
7. In addition to DTI staff, almost 1,500
organisations and individuals gave their views to the review team
regional workshops (for about 500
people in total);
face-to-face discussions (eg with
CBI, TUC, BCC, IOD, NCC etc);
consultation with other Government
letters to businesses (including
the FTSE 100);
an NOP survey of 450 businesses and
business support organisations;
8. Much of the feedback was very positive.
Many of those who commented thought the DTI ran some effective
programmes, had considerable expertise and good, well-motivated
staff. Above all, it was clear that key stakeholders wanted the
DTI to succeed and to matter.
9. But there were also criticisms of the
Department, notably that:
it lacked a core focus for its work
and a clear strategy;
it needed to get more value from
the investment in UK science and to strengthen the links between
the Office of Science and Technology and the rest of DTI;
its customers needed a clearer understanding
of what is done at the national, regional and local level;
its organisational structure was
too confusing and silo-like;
it was too inward looking;
it did not provide effective leadership
for business in Whitehall.
10. The main criticisms of business support
the Department had too many schemes
and many were of low value and had low impact;
confusion was created by numerous
programmes, names and brands;
there was no strategic overview.
11. The Secretary of State is clear that
the DTI's role should be to work with businesses, employees and
consumers to drive up sustainable UK productivity and competitiveness.
To do that it must focus on three strategic priorities: innovation,
enterprise and competitive frameworks. These priorities will be
linked by a new productivity strategy that will focus all DTI
activity and embrace resource as well as labour and capital productivity.
They will be underpinned by a Core Services Group that will deliver
services both to external customers and to the rest of DTI.
12. Delivering its new role and priorities
will require some radical changes. The Department must:
become truly customer focused;
ensure the best possible delivery
of its services;
focus on driving innovation; and
develop and sustain consistent and
transparent competitive frameworks.
Becoming truly customer focused
13. The Department needs to identify the
customers for whom it can really make a difference, to understand
their needs and to work with them to help them grow and become
more productive. To do this it must also excel at creating effective
partnerships with and between Regional Development Agencies, Business
Links, the Learning and Skills Councils, the Research Councils
and other public bodies, as well as with business, unions and
other key partners with which it works. This will mean re-focusing
the work of the Department's sector teams so that they develop
the relationships with customers and partners that are needed.
Transforming our delivery
14. DTI must make a dramatic improvement
in the way that it delivers services to all its customers. In
the area of business support, it will simplify the services it
offers to customers, moving from a plethora of schemes to five
strategically driven portfolios. Customers will be able to access
the Department in whatever way they find most convenientin
person, by telephone or via the weband the service it provides
will be consistent and delivered to the standards of the best.
The Small Business Service will be strengthened and will build
on its achievements to improve service delivery.
15. People will be drawn from across the
Department and from outside to develop a new group responsible
for innovation and technology. The division will act as a catalyst,
connecting the key players and formulating an overview of the
issues. It will build on our investment in the science base to
ensure that UK businesses are able better to exploit the results
of scientific research and the latest technologies and create
better, cleaner products and processes. It will do this through
an innovation strategy co-developed with a variety of key partners
from universities, research and technology organisations, business,
unions and others. A priority will be to ensure that we properly
exploit the considerable investment we make in scientific excellence
and particularly to help raise awareness of, and stimulate demand
for, technology within business and manufacturing industry.
Creating competitive frameworks
16. The UK is already one of the best places
to do business in the world. The Department will build on this
success by focusing more on best practice and better regulation,
particularly for small businesses. It will ensure that the best
practice it sets in one sector is transferred to other sectors
and will develop a more consistent approach to sectoral regulation.
It will continue to empower consumers and to drive competition
through all markets so that consumers enjoy more choice, better
service and competitive prices. It will also set standards for
the treatment of employees and encourage best practice and partnership
to help workplaces become more productive.
A NEW DTI ORGANISATION
Changes in the way the Department works
17. The DTI must be at the forefront of
modern Government. It is the Department closest to business and
sees at first hand the most innovative and effective ways of working.
As an organisation with over 10,000 staff and responsible for
an annual budget of £4.5 billion it should be managed like
a first-rate business. It must be:
better led and focused on productivity
and competitiveness. A new small Strategy Board with Ministers,
officials and outside non-executives will strengthen the Department's
leadership and management. A new Strategy Unit including a new
Chief Economist will help develop productivity strategy;
open to its customers and stakeholders
and deliver measurable results. Its policies will be developed
with business, employees and consumers. People with relevant skills
will be invited to act as non-executives on new Group Boards to
strengthen our leadership and management, and challenge us to
become more effective. First-rate policy analysis will not be
enough: the Department must be able to make things happen. Delivery
skills will be more highly valued and nurtured and internal management
and training will be strengthened to improve the setting and achieving
of goals. DTI staff will spend more time in business and the programme
of two-way secondments will be stepped up. For a start, all senior
officials will be required as from next year to spend a week a
year in business, particularly smaller businesses;
better connected across boundaries.
Project working will become a way of life and staff will all spend
more time working in teams that cut across organisational boundaries.
The Department will also capture and share knowledge more effectively
across the organisation and with our external partners and customers.
The new structure
18. A new organisational structure has been
designed to help facilitate the changes set out in this memorandum.
A structure alone will not bring about the changes, but it draws
people together to focus on the Department's new priorities and
it has been designed to support some of the new ways of working
that will be needed to implement them.
11 December 2001
DTI ORGANISATION STRUCTURE
NOTES ON THE NEW STRUCTURE
1. The new organisation includes a new Strategy
Unit to provide a significantly strengthened analytical and strategic
core at the heart of DTI. That team will include a new Chief Economist,
recruited by open competition, who will be able to speak, both
within and outside the Department, with authority on industrial
2. The new organisation brings together
the most customer-focused activities into a new Group that will
concentrate on managing and supporting relationships with key
business customers. It will include:
business support. Our customers tell
us they are confused by the plethora and bureaucracy of schemes,
initiatives and other activities we offer to support businesses.
We plan to sort out that muddle, cutting out ineffective schemes,
simplifying our procedures and making sure the schemes have maximum
impact. We will do this through a new portfolio approach. At the
same time we will make sure that our delivery of business support
matches the best in business by focusing the Small Business Service
(SBS) more directly on delivery;
sectoral links with business. Our
approach to sponsorship will become more keenly focused on understanding
better the competitive forces affecting industries and working
more closely with those firms where we can add real value in line
with our productivity priorities. The links between the sectoral
sponsorship role and other delivery partners such as the Regional
Development Agencies will be strengthened;
regional policy. The regional dimension
is crucial for DTI. One of the key messages from our stakeholders
was that they were confused about who does what in the regions.
It will be important therefore to clarify the roles of the various
agencies. The Regional Development Agencies (RDAs) should continue
to set the regional economic strategies, while access to business
support should, as far as possible, be through Business Links.
We see a continued need for a strong DTI presence in Government
Offices, but we see their role changing, with a much greater emphasis
on influencing the whole range of government activity in the regions
which affects business and on playing a stronger role in helping
to shape policy and strategy in partnership with colleagues at
the centre. We also want Government Offices to develop their role
as the "eyes and ears" of the Department around the
regions; this will include monitoring the performance of RDAs
and other regional players.
3. To make roles and responsibilities clearer
in the regions, and to allow the Government Offices to focus fully
on their new role, we propose to transfer responsibility for Regional
Selective Assistance cases (other than the large cases) from the
Government Offices to the RDAs. The large cases, which have national
significance, will remain for Ministers to decide supported by
the Industry Development Advisory Board and the professional advisers
in the Department's Industrial Development Unit. Responsibility
for the Enterprise Grants and Smart schemes for SMEs will transfer
to the SBS.
4. We will create a new Group, to be headed
by someone with strong scientific and technological credentials,
to be recruited by open competition, who will work closely with
the Director General of Research Councils and the Government's
Chief Scientific Adviser. Amongst other things, the Group will
work to integrate our policy-making on science, innovation and
technology with our productivity agenda. A key objective for the
Group will be to maximise the Government's significant investment
in science by providing a sharper focus on technology transfer
5. We will retain the independence of and
build on the excellence of our science base. The Director General
of Research Councils will continue to be responsible for managing
our nearly £2 billion investment in scientific research.
The Director General will also sit on a newly established Knowledge
Transfer Strategy Committee, along with the head of Science, Technology
and Innovation Group and the Chief Scientific Adviser and others,
to ensure that we make the most of the knowledge that comes from
our investment in the science base.
6. This Group will bring together work on
setting the framework for business and markets including better
regulation, competition, the high productivity workplace, consumer
protection and company law. Importantly, the Group will also draw
in our Trade Policy and European Policy activities through which
we influence the development of European and international business
7. This Group will have a vital role in
driving and delivering the change programme outlined here and
which will be developed over the next few months. A key challenge
for the Core Services Group Board and for those who work on the
development of policy and delivery of our corporate serviceshuman
resources, finance, IT, accommodation etcwill be to draw
on wider perspectives in taking forward the modernisation agenda
in the Department.
8. The Core Services Group will also be
responsible for general policy in relation to Agencies and for
the management of a number of individual Agencies (including Companies
House, the Insolvency Service, the Employment Tribunals Service
and ACAS). The Group will continue to build on their strengths
in modern governance, customer focus and service delivery. The
Group will also be responsible for other delivery functions including
Export Control and Nuclear Proliferation and the Redundancy Payments
9. One of the objectives of our review was
to see if we could better integrate the Energy Group into the
rest of the Department. That is still the objective and we aim
fully to achieve it in about two years. But Energy is a large
and complex Group and the transition from a separate Group needs
to be carefully managed. A new Director General for Energy will
be appointed for a proposed two-year period to take forward the
work arising from the PIU Energy review and oversee and manage
the transition whilst ensuring that Energy policy issues continue
to be addressed at a very senior level.
13 December 2001