Examination of Witnesses (Questions 40-59)|
BENDER, KCB AND
24 OCTOBER 2006
Q40 Mr Binley: I understand the need
to reduce but I do not want to throw the baby out with the bathwater
either. That is where monitoring has its relevance. I wonder what
sort of monitoring you did with this plethora of activity to ensure
that we are now doing the right things?
Mr Darling: As we work our way
through the 3,000-odd schemes we will have to reach a judgment
as to whether or not each one is worth keeping or that the reason
for it is still something that we want to pursue. I suspect it
will vary. There is no way that we are going to carry out 3,000
independent separate evidence-based research projects. That would
be mad as well. Some of them I suspect we will just reach a judgment
on does this serve any purpose or not? What I am quite clear about
is that this will take some time. There is a degree of urgency
about it because frankly it is not something we can allow to go
on year after year and we will have to be brutal in some cases.
I suspect you will find that a worthy case can be made for everything,
including the Effluent Online service, but at some stage ministers
have got to say okay, tough luck, we want to rationalise this.
I would defy anyone to tell me it is not right to reduce the thing
to something that is manageable and understandable.
Q41 Rob Marris: We are talking about
the thorny issue of regulation. Eleven months ago your department
published a draft simplification plan and one of the things to
do was to save the company £643 million a year by changing
company law, which we are all painfully aware from last week has
been going ahead in the House of Commons. You also mentioned in
the Departmental Annual Report that one of the things that your
department is looking at is employment law proposals to lighten
the load on business in areas of redundancy law, maternity leave
and dispute resolution. Could you say a little more about that
because as a Labour MP I do prick up my ears when I read something
Mr Darling: There are two points.
You are right that regulation is a matter of growing concern for
businesses and for the Government. We are making a determined
effort to reduce the amount of regulation that the Department
and across government we are responsible for, some of it inevitably
coming from Europe. The whole thing does not lie in our hands.
The way in which we transpose these things, the way in which we
put them into place does need to be looked at, though a word of
caution here. We recently lost a court case where we had tried
to make it simpler and easier and the court said we need to be
more prescriptive, so it is always difficult. The question ministers
have to ask themselves when they sign off statutory instruments
is if they were running a small company how would they react to
getting this on their desk? Is it comprehensible? I said to our
department at one of the first meetings I had with the senior
people in the DTI is that we need to ask ourselves on any of these
things "do we really need to do it? Is the world going to
be a better place as a result of it?" If it is not, then
we should not be doing it. May I say a word about company law.
Although in some ways if you are confronted with a very large
piece of legislation that had three days on its report stage on
the floor of the House of Commons and you say is that simplifying
it? I think the consensus is yes, it is, because the reason it
is so big is it is consolidating all companies' legislation which,
as a lawyer of many years ago, must be a good thing so that you
do not have to go fishing around several different sources. I
hope it has also been written in language that is easier to understand.
It is also very deregulatory. There are a lot of burdens on companies
that are going as a result of this which is why it broadly speaking
has all party support. On the employment law simplification, this
is something that we are looking into at the moment. I cannot
tell you the outcome as it is not completed yet, but if you take
dispute resolution, for example, companies will tell you, especially
smaller companies, that it must be right to try to persuade people
to resolve difficulties before they go to a tribunal because tribunals
are becoming increasingly expensive and they can be quite complex.
The laudable aim back in the 1970s of keeping the lawyers out
of it has clearly failed. This is a very complicated area of the
law. When we introduced the alternative procedure we have done
so in an honest attempt to try and make things easier. I have
had a look at this, as have others, and I have come to the view
that I think in some ways we are running the risk of recreating
a problem that arose with the formal procedure. It has become
complex. When you have to call for your lawyer on the alternative
procedure so that you get it right then you do have to ask yourself
whether or not we could not have made it simpler still. Of course
we have to be mindful of the rights of employees and employersboth
are importantbut when the law gets to a stage where it
is so complex from its very start then we do need to ask ourselves
and not be too proud about these things, if you do not get it
right first time then you should be ready to sit down and try
and get it right the second time.
Q42 Rob Marris: When the report uses
the phrase "to lighten the load" is it referring more,
as you have done in your answers, to the procedure to the enforcement
of rights, or is it actually talking about changing some of those
Mr Darling: No, it is about the
procedures and the process. In terms of employment regulation
and employment law, as you know, both in our manifesto and also
in the White Paper, Success at Work, which we published in March
of this year, we set out broadly that we do not anticipate changing
the standard part of employment law in this parliament. What we
are looking at is some of the procedures and if we can simplify
them. The balance we have between employers' rights and employees'
rights is broadly right. You should never say you will never change
anything but I think they are broadly right. What I think is not
right is the panoply that goes around them and we should not be
in the business of supporting the legal fraternity.
Q43 Rob Marris: I will not comment
on that. The report goes on to say: "Business and regulators
have been widely engaged". Have you engaged trade unions?
Mr Darling: Yes.
Q44 Rob Marris: It is not mentioned
in the report.
Mr Darling: Whether it is or not,
as it happens I met the TUC last week when we discussed just this.
Perhaps at some stage I should say that I am a Member of the Faculty
of Advocates. I do not practise but just in case anyone thought
that I am being unfair in criticising my legal colleagues.
Q45 Rob Marris: Can I ask a final
question on this simplification of the regulation. I see from
the report that it is one of your Permanent Secretary's top priorities.
I was wondering how the Department is getting on with these 60
measures set out in that draft plan.
Mr Darling: Who better to ask
than the Permanent Secretary?
Sir Brian Bender: We have published
the simplification plan in draft and the proposition now is that
the final version of it be published some time later this autumn.
That will therefore set out our further thinking that in the light
of discussions with variousI will not use the word "stakeholder"business,
unions, and so on, to firm up what we will be delivering in the
period ahead. The answer is to watch this space for something
to be published this autumn.
Q46 Mr Bone: I would like to ask
you some questions about public procurement. I understand that
the Department of Trade and Industry is very keen to encourage
small businesses, whether they are selling manufactured goods
or services, to be able to sell them more freely to government.
Could you give me some examples of how you are encouraging them?
Mr Darling: It goes back to the
point I was making about spending power. The Small Business Service,
which the Department hasyou may want to ask me about some
of the changes we are making therethey are trying to make
it easier for small businesses to know what government is procuring.
Part of our problem is a lot of what we procure is very large
scale and probably beyond the reach of many companies, but if
I use the word "government" broadly, whether it is through
its agencies or even local government, what we want to do is to
make it easier for people to get access to understand what it
is the Government wants. We are not at the stage where we are
quite deliberately breaking contracts down so they are biddable
for by small businesses, but the Small Business Service has worked
quite a lot with businesses that it deals with to try and make
these things easier. I do not think they have got there yet.
Q47 Mr Bone: That is very laudable
and encouraging, but there seems to be a problem here in Gershon
because under that proposal that is trying to save billions of
pounds because of government inefficiency and one of the plans,
Chairman, is that they are going to do it by central purchasing
and that is rather at odds with the answer you have just given.
If you have to purchase centrally in large quantities then small
businesses cannot get involved.
Mr Darling: There is a tension.
Firstly, government has to be more efficient. There has been a
lot of evidence and there has been a lot of select committee concern
over the years and over successive governments that people say
government is not as efficient as it could be. If you look at
IT government buyers, there you are predominantly dealing with
large suppliers and perhaps government could drive a harder bargain.
On the other hand, there are other things government buys that
are smaller scale where perhaps it would be easier for small businesses
to bid. There can be a tension but I do not think the whole thing
is insuperable. I do think that given the amount of money government
spends it can influence things. I do not want to name particular
countries but we can think of one not a million miles across the
Channel where you could be almost protectionist in your approach.
That would be wrong. In terms of encouraging the small business
sector of being more efficient, encouraging certain behaviour
and innovation we can be more imaginative.
Q48 Mr Bone: To give you a practical
example, when I was in business making high-tech clocks it was
impossible to sell to the Government because the Government wanted
to fit every department with the same clock, whereas if you break
it down there are these small companies which are growing in the
United Kingdom who are the driving force of our economy who want
to grow who are always forced to sell into the private sector
because they never seem to have this lead into government.
Mr Darling: My recollection isand
if I get it wrong I will write to youwe are doing two pilots
at the moment in the West Midlands and in one of the London Boroughs
where we are trying to see how we can better engage small businesses
with being able to get into government contracts. You are absolutely
right, if you look at the shape of the British economy, and manufacturing
in particular, the vast bulk of it are quite small and the reason
why we are spending time and resource on training peoplea
number of people in business have been trained in how better to
engage with governmentwe also have to look at those aspects
of government services or tools where you can quite rightly, and
it is the right thing to do, you can break them down so that they
are more bite-size. That is something we can do. I know the RDAs
are looking at that as well. I would be very happy to provide
you with further details of these pilots. I am not sure of the
position yet. They are not finished yet but maybe some preliminary
conclusions, as long as you regard them as just that, would not
Mr Bone: That would be most helpful,
Q49 Mark Hunter: I would like to
ask some more questions about Gershon and the Comprehensive Spending
Review. Firstly, can I ask you in relation to the Department's
Annual Report about financial efficiency gains that are referred
to in figure 6.4. Are you on track to achieve those financial
efficiency gains that you have set out to do so? Could you expand
on how you intend to achieve those targets?
Mr Darling: With your permission,
Chairman, I will set out the overview and it may be that Brian
or Mark can expand on them. Firstly, the Department is becoming
more efficient. We have reduced the headcount quite substantially
since 2003 and it will reduce further. We are quite deliberately
concentrating on those areas where we can make a difference. I
mentioned the Small Business Service where we are very substantially
reducing the amount of staff because there are some things I think
we can do more effectively than others and we are reducing the
staff accordingly. In UKTI, for example, which I think you have
an inquiry into, we have reduced the staff there because, having
looked at it, we think we can do it with less staff than we have
got. We are concentrating on specific areas. There will be reductions
in headcount and that is likely to continue. The Department has
also been looking at the way in which it does things. It has gone
from eight buildings down to two and a half which is more efficient.
Where we can we have been shifting people out of London. We have
people in Aberdeen dealing with Energy, for example, and other
areas too. In terms of both staffing what we doI suppose
you will touch on this at some point during this hearinginevitably
everybody says what is the DTI for?
Q50 Chairman: We will keep that until
Mr Darling: Just touching on that,
it is a very intelligent question to ask because I think there
are things where we can make a difference. There are other things
where we are not really making a difference that frankly we should
not be doing. That is my general overview. Do you think it would
be helpful if Brian or Mark were to say something briefly to you?
Sir Brian Bender: As figure 6.4
indicates, the headcount reductions are only a small proportion
of the total efficiency programme. As the Secretary of State said,
we have been reducing our accommodation costs. We have moved from
an estate in London of eight buildings to two and a half and we
have future plans to consolidate that further. We have improved
our procurement. We are driving out the efficiency too of some
of our arms-length bodies like the research councils. On the headcount
we achieved, as the Departmental Report indicates, the 1,010 savings
we were required to do during the Spending Review period 2004
by April of this year. We are still on track. In the few months
since the publication of the report, the last report we provided
to the centre, which was dated June, we delivered efficiency savings
of £212 million against a target of £146 million. We
are continuing to be on track or slightly ahead of track on that.
Q51 Mark Hunter: Moving on to the
next one, the Annual Report last year planned total public spending
by the Department for 2005-06 was £6.3 billion; in this year's
Report the estimate was £7.5 billion. Can you explain the
difference in those figures and what we are getting for that fairly
Mr Clarke: It is largely in respect
of the Science budget is where that came mostly through.
Mr Darling: There has been an
increase in the Science budget.
Chairman: We will give Mr Clarke a chance
to find this. It is actually £1.2 billion we are talking
about so I do not want to pass over this too lightly.
Q52 Mark Hunter: It seems rather
a lot for Science, important though it is.
Mr Darling: Do you want to come
back to that?
Q53 Mark Hunter: Okay. The final
question I was going to ask you have touched on, which was about
the reduction in full time equivalent posts. Again under Gershon
the DTI is set to lose just over 1,000. Looking through the annual
report, there appears to be some variation in these figures between
the annual report and the resource accounts, although I accept
you still seem to be on target to reach them. I wanted to ask
whether or not you could confirm the size of reduction that has
taken place so far and, secondly and more importantly, given the
reduction is clearly happening, what feedback are you getting
from customers, as you term them, and their levels of satisfaction
about the service the DTI is still providing, given that you are
trying to provide it with a lot fewer people?
Mr Darling: We will achieve what
we said we would but we need to do more than that. One of the
areas in which we need to do more than that is in business relations
in the department. I have mentioned the Small Business Service
but the department needs to know what is going on in industry
generally. My view is that we need to focus our attention on those
areas where we know that they need DTI engagement, either because
of regulation in Europe or because of structural changes, like
the automotive industry, for example, where there are continuing
regulatory issues, and like pharmaceuticals and so on. We concentrate
our efforts far more there. In terms of feedback, as you know
there are surveys carried out by various people and inevitably
they will be mixed. As with most things, if you have a good experience
with somebody, you think very highly of them. If you do not get
what you want, you tend to have a more negative view. What most
people want to know is that they can deal with the government
at whatever the appropriate level is. Here I would make an important
point. I do think that the DTI should not be seen as the only
intermediary between business and government. If you have a problem
or a concern about tax, you should be able to speak to the Treasury.
I know from the Department of Transport that managers may have
all their relationships with the people concerned. They do not
go to other government departments. If we are going to be more
efficient, if we concentrate on those areas, we can make a difference.
Sir Brian Bender: I appreciate
there are slightly different publications. Sometimes they include
our executive agencies; sometimes they include UK Trade and Investment
as part of the core department; sometimes it is an average during
a particular period. As of 1 September, the full time equivalent
number of staff in the core department, excluding UK Trade and
Investment, was 3,078. That takes account of a few dozen who moved
as a result of the machinery of government change when the Department
of Communities and Local Government was set up. It is a matter
of fact confirmed by the centre in Whitehall that we have achieved
the headcount target of over 1,000 that we were committed to.
As the Secretary of State said, we are not stopping there because
it is right that we continue to look across the piece at where
we can do things more efficiently and more effectively.
Q54 Mark Hunter: In summary, you
have had no customer feedback that tends to suggest people are
dissatisfied as a result of these savings?
Mr Darling: I am not aware of
any evidence that we have of people saying, "Because you
have reduced staff, therefore I am not getting anything."
Of course there are still people who will say, "I thought
you might be able to do this or that and you have not been able
to do it" and that is something clearly we have to be mindful
Mr Clarke: I mentioned the Science
and Research Council spending earlier on. That is about £400
million of the increase. £300 million relates to the RDAs
and the rest is related to what is called annual management expenditure
relating to provisions for old liabilities in respect of the UK
Atomic Energy Authority.
Mark Hunter: I think it is worth having
Q55 Chairman: The total public expenditure
figures are all over the place. The department seems to be giving
a very lumpy pattern of expenditure up and down. For example,
2003-04 outturn was 5.5 billion, 2004-05, 4.7 and 2005-06, 7.5.
Mr Darling: It is the case that
there are some areas that we are quite deliberately spending more
money on. There are other areas which Mark has just referred to
which are not wholly within the department's control such as the
liabilities which we have not just for the Atomic Energy Authority
but also for coal, shipbuilding and so on. I am very happy to
let you have chapter and verse.
Q56 Rob Marris: On page 171 of your
annual report, it delineates between the 2004-05 outturn and the
estimated outturn for 2005-06, an increase of £2 billion
spending on increasing UK competitiveness, going up in round terms
from £1.5 billion to £3.5 billion. What does that mean:
"increasing UK competitiveness"? It is quite an umbrella
Mr Clarke: It covers a range of
Sir Brian Bender: I would expect
it to cover things like the technology strategy where that involves
capital. You will see in the further tables on page 183 onwards
they give quite a detailed analysis of that showing the technology
Q57 Rob Marris: Perhaps you can give
us a note on that.
Mr Darling: We will write to you.
Q58 Rob Marris: As to what that term
Mr Darling: What Mark is saying
to you is that if you look further on that money is accounted
Rob Marris: I have no doubt of that.
I was wondering what the phrase meant. £2 billion is a lot
Q59 Chairman: We are laughing about
this but one of the most important jobs this Committee does is
to scrutinise expenditure and we are not getting very clear, convincing
Mr Darling: I am very happy to
let you have further details. One of the things that clearly we
need to look at is the way in which we describe things, although
we need to watch when we describe them that we do not lose something
with that and we are very accurate about where the money goes.