Select Committee on Trade and Industry Memoranda

Memorandum by the Department of Trade and Industry



  1.  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 the changes.

  2.  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.

  3.  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.


  4.  In addition to DTI staff, almost 1,500 organisations and individuals gave their views to the review team through:

    —  regional workshops (for about 500 people in total);

    —  face-to-face discussions (eg with CBI, TUC, BCC, IOD, NCC etc);

    —  consultation with other Government Departments;

    —  letters to businesses (including the FTSE 100);

    —  an NOP survey of 450 businesses and business support organisations; and

    —  a website mailbox.

  5.  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.

  6.  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; and

    —  it did not provide effective leadership for business in Whitehall.

  7.  The main criticisms of business support were that:

    —  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; and

    —  there was no strategic overview.


  8.  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.


  9.  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

  10.  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

  11.  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 convenient—in person, by telephone or via the web—and 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.

Driving innovation

  12.  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

  13.  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.


Changes in the way the Department works

  14.  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

  15.  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.

7 December 2001


DTI organisation structure



The Strategy Unit

  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 economic issues.

Business Relationship Management and Business Support group

  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.

Science, Technology and Innovation Group

  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 for 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 within DTI.

Research Councils

  5.  We will retain the independence of and build on the excellence of our science base. The Director General for 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.

Competitive Frameworks

  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 frameworks.

Core Services

  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 services—human resources, finance, IT, accommodation etc—will 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 Service.


  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.

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Prepared 18 December 2001