APPENDIX 22
Supplementary evidence submitted by EEF
Thank you for inviting us to provide oral evidence
to your inquiry into "The Future of Manufacturing" on
12 December. A range of crucial points were raised during the
session, and I would like to take this opportunity to provide
some additional information for the Committee.
WHEN BUSINESS
SUPPORT IS
NECESSARY
We believe there is a role for intervention
by the Government, but there are strict criteria for what is appropriate
intervention and also that this intervention should be kept to
a minimum. First, the general business environment in the UK must
remain competitive—especially in an increasingly competitive
global marketplace—where companies are taking advantage
of the opportunities presented by the rapid growth of emerging
economies. In this case, the Government clearly has an important
role to play in ensuring that our infrastructure, our science
base and the skills supplied by our education system are world
class.
In general, EEF believes that the Government
should intervene selectively only in areas where there are clear
cases of market failure. One particular example of this is that
Government bodies are often better placed than the private sector
to provide the information required by companies to trade with
fast growing but often complex markets in emerging economies.
Governments also have a vital role in ensuring
that international markets are open and fair, with all participants
playing by the rules. Examples of this include working with the
World Trade Organisation on freeing up world markets and enforcing
existing rules, liberalising energy markets and ensuring that
other governments stick to the rules on public procurement.
PUBLIC PROCUREMENT
EEF also believes that the public sector can
and should deploy its large annual procurement budget more effectively
in order to promote our economic interests, while simultaneously
playing by the rules that govern procurement. The Kelly Review
in 2002 made a number of recommendations that the public sector
should take a more systematic and strategic approach to the markets
in which it operates, paying particular attention to the implications
of their purchasing decisions and the timing of them for the UK
supplier base.
We also need to achieve a culture change within
public sector organisations procuring goods and services from
the private sector and raise the skill levels of those undertaking
this work. Public procurement needs to be less bureaucratic, encourage
more small firms to take part and be more effective in stimulating
innovation. This would require the development of a less risk
averse culture amongst public procurers and would require an investment
of resources in developing their risk management skills.
We have also advocated earlier dialogue between
clients and potential suppliers including more work up-front on
specifications before tender. We believe that this would provide
the basis for developing more innovative solutions to customers'
needs. However, at the same time, we do recognise the risk that
this could lock out other potential bidders from the process if
it is not executed effectively. Again, this is an issue of developing
the skills of those taking procurement decisions to make sure
that they strike the right balance.
We do not believe that the UK should seek to
develop a protectionist "buy British" approach to procurement.
Apart from going against our belief in fair and open markets,
such a policy is far too simplistic in a global economy. In modern
manufacturing, it is most uncommon to have a product made solely
in just one country—a large number of components will be
sourced from a range of different countries.
However, the public sector could make better
use of standards and provide better intelligence to potential
UK-based suppliers to give UK companies a better chance of winning
public contracts. These practices are pursued legally in most
other EU countries and we should seek to learn from them. In addition,
we should do more to help UK companies understand the practices
followed in other countries—a key recommendation made by
the Wood Review.
I hope that this additional information will
be of use to the Committee, and that it helps clarify a number
of important areas of policy.
Under separate cover, I will have dispatched
14 copies of our skills report "Learning to Change".
We are more than happy for this to be submitted as official evidence
to your inquiry.
20 December 2006
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