Examination of Witnesses (Questions 60-79)|
BENDER, KCB AND
24 OCTOBER 2006
Q60 Mr Bone: I wanted to add something
to your report rather than subtract it. Would it be possible to
do a variant analysis between what was estimated and what the
outcome was so that you could see on the line why it has decreased
Mr Darling: I do not see why it
should not be possible to do that but I will reflect upon that
and we will come back to you.
Q61 Chairman: There are a lot of
things that are not there. I have been looking for the union modernisation
and what has been spent on that but I cannot find the figures,
although it is referred to in the report. I would appreciate a
note from Mr Clarkeyou do not have to explain this here
and nowon what is "non-cash expenditure".
Mr Clarke: If you are looking
at it not in a public sector context but in a private sector context,
that would really refer to the parts of the profit and loss account
that did not relate to cash. In other words, the depreciation
provisions, amortisation, those kinds of things that do not have
an immediate cash impact over the next few months. It is quite
Q62 Chairman: I would like a note
on what non-cash expenditure is in a little more detail too, please.
Mr Darling: It is a term that
is not used in other departmental accounts. When I first looked
at the DTI ones I asked what that was as well.
Q63 Chairman: There are quite lumpy
sums of non-cash expenditure in here.
Mr Clarke: As you would expect.
It is a basis of classification which we are obliged to use under
the Treasury's remit, where we split between what is called near-cash,
non-cash and capital. Those three things together form our expenditure.
Sir Brian Bender: It is a categorisation
that all departments have only recently been required to break
down. Mark had to explain it to the rest of the department and
he will be well versed in explaining it to the Committee.
Q64 Chairman: Under "Knowledge
Transfer Information" we have non-cash expenditure by the
National Weights and Measures Authority of £214,000 and "other"
at £52.5 million. That is quite a lot of "other"
Mr Darling: If the non-cash for
example was depreciation of something, you would expect it to
be rather smaller than the other figure. If you want chapter and
verse on any of these things, that is fine, but it is something
we ought to reflect on. Peter Bone has just asked for some additional
information. You could split all these numbers down to every last
penny, except that you would be consuming a rainforest every year
to do so. On the other hand, you are quite right in saying that
it is your job to ask departments what they spend their money
on, so there must be a happy balance to be struck between the
Q65 Chairman: I am not quite convinced
we are getting it right at present.
Mr Clarke: What we try to do in
the tables in the report is to provide quite granular detail of
that analysis. The totals are broken down into many lines, running
into many pages.
Q66 Mark Hunter: We are going to
get a detailed breakdown of the £1.2 billion beyond just
science and the RDAs?
Mr Clarke: Yes.
Q67 Mrs Curtis-Thomas: I wanted to
ask a number of questions about construction because I have been
speaking to a lot of your construction customers. There is a general
concern that the whole activity of construction, since it has
been moved from Defra to the DTI, has rather sunk without trace.
I would like to know where the construction team within the DTI
is in relation to retentions on contracts, where it is in relation
to project bank accounts and where it is in relation to the Construction
Act. When I referred to the construction industry earlier on,
and the measures needed to make it more innovative and provide
us with a better return, those three elements are extremely important.
The industry has sought to pursue discussions with your department
about those three matters. Unfortunately the response was good
but in reality we have not seen any changes at all.
Mr Darling: I am not aware of
that approach. If the construction industry generally has approached
the departmentI think you said the answer was helpful?
Q68 Mrs Curtis-Thomas: It was helpful
in that it said, "We are going to sort this out in the next
six months." That was 18 months ago and two years ago. The
Construction Act is sitting on somebody's top shelf and I wonder
if some of the project pool of people that you talk about might
be allocated to this particular Act because review of the Construction
Act is immensely important.
Mr Darling: I will have a look
at it and come back to the Committee. I cannot give you an answer
Chairman: We are looking at doing something
quite significant in the construction area.
Q69 Mr Wright: Last year, we were
told that there was going to be extensive reorganisation of the
sectoral teams. We have been told that the department has now
established a floating group of staff who can be deployed to priority
areas at short notice. How is that pool being used and can you
ensure that the expertise is not going to be lost if the pool
people are constantly redeployed?
Sir Brian Bender: We have a bit
upwards of 150 staff in this project pool. The idea is they are
allocated in the same way as, I guess, a managing partner in a
consultancy would allocate across the business, so on a bidding
process the department does periodically a couple of times a year,
what are the new projects coming out? The purpose of this exercise
is to enable us to move staff around more flexibly and, when a
project is finished, they can then move on to something else.
If you take an issue like the collapse of the Rover Group, what
we put together was a team that consisted of our automotive unit
that had the sectoral expertise and people from the project pool
to boost the work on a short-ish term basis. They were doing it
for 18 months or so. Some of the follow-up to the Energy Review
will consist of people who are steeped in the issues in the detail
from the Energy Group and people being brought in from the project
pool. The idea is to identify what are priority activities over
the next six or 12 months or so and then allocate staff to them
alongside, quite often, the sectoral expertise that will exist
in the department to boost that and then enable them to move on
to something else. That is the nature of how it is supposed to
Q70 Mr Wright: It does not actually
work. Have there been failings within that particular pool so
that there are shortcomings?
Sir Brian Bender: I think it is
a success, but we learn more about how we can prioritise, predict
and allocate the resource to what are true departmental priorities.
I think it is something we are learning as we go along but I regard
it as one of the department's successes over the last couple of
years in how we have it that up and how we are operating it. Indeed,
the Secretary of State referred earlier to the Small Business
Service. A lot of its work consists of short to medium term project
work and the idea is that staff who are doing that will move into
the project pool and, when those projects are finished, will move
on to something else. I do not regard it as something that is
failing; I regard it as part of the department's success story.
The question is how to make it more successful.
Mr Darling: The alternative is
you maintain an awful lot of people just in case and I do not
think we can justify that.
Q71 Mr Wright: You say that there
is a pool of 150. Is that a permanent structure of 150 or does
that move from year to year?
Sir Brian Bender: The department
has built it up over the last couple of years to about 150. That
is the stable size at the moment. They are then allocated to particular
projects. That is the current size of it. It is likely to grow
a bit more as a result of the changes in the Small Business Service
and that will be a steady state, but it could increase or decrease
depending on overall resource pressures on the department. The
current plan is for it to be about 150 plus any project working
coming in from the Small Business Service changes.
Q72 Mr Wright: We talked about the
1,010 full time equivalent posts disappearing. Does it mean that
the department's overall posts are going to increase over the
Sir Brian Bender: No. All departments
will be facing resource pressures. The departments whose spending
review settlements were announced at the time of the Budget faced
a real terms reduction in their administration budgets of 5% a
year over the spending review period. That is what the rest of
us need to regard as the going rate on total admin costs. Of the
DTI admin budget, about half of that is pay or staff. The rest
is things like IT, buildings and so on. The overall number will
reduce in the years ahead. The 150 or a bit more will therefore
be a relatively larger proportion of a slightly smaller department.
Q73 Mr Wright: Over the years, you
are saying that in the sectoral teams themselves there will be
a reduction in staff and more use of pool resources to slip into
Sir Brian Bender: Or in any other
part of the department. The Companies Bill has included people
who have great depth in company law and people who came in from
the project pool. The size of standing teams will absolutely diminish,
making sure as best we can that we have expertise where we need
to have it, as the Secretary of State referred to earlier, in
relation to business relations and sectors; and then the horizontal
skills of the people in the project pool will come in and work
on task and finish work.
Q74 Mr Wright: You have no fear that
the professionalism will be diminished over time and you will
keep the skills within the department?
Sir Brian Bender: This is something
we have to keep a close eye on. The Secretary of State referred
earlier to the automotive sector. Do we have enough understanding
of what is going on in that sector, alongside our capability if
something particular happens like MG Rover, so that we can bring
in people to boost that work? Getting that balance right is clearly
one of the issues we have to tackle both ministerially and at
official level in the department.
Q75 Mr Wright: In terms of the role
of the Minister for Energy and the energy sector, it is more of
a higher profile. Does that mean there will be more resources
added to that particular sector, for instance?
Sir Brian Bender: There are two
aspects of what is going on in energy at the moment. What I might
call business as usual, where I have asked that Director General
to look as carefully and as rigorously as he can at how we can
do stuff more efficiently. Then there is a peak of work as a result
of the higher profile of energy issues and the review and follow-up
to the review. That is largely project work. Overall, energy at
least in the foreseeable future in a slightly smaller department
will take a slightly higher proportion. To answer your question,
there will be a slight shift of overall resource into energy from
Mr Darling: The other thing that
you ought to be aware ofyou may be alreadyis that
the Department of Trade and Industry increasingly does work with
other departments. For example, along with Defra, who have established
a climate change office, Civil Servants will be working on issues
in relation to climate change which affect both the DTI and the
energy review, as well as responsibilities that the Secretary
of State for Defra has. Where we can use resources across government
to complement our own we ought to do that. The main thing is it
is essential that any government has available to it the right
advice so that it can make the right decisions. On the other hand,
we do have to make sure that we are becoming more efficient and
that, if we do not need to be doing things, we do not do them.
If we do not need to do them all the time, you equip yourself
to deal with a particular problem but once that problem is sorted
you can then use these people elsewhere. For a lot of civil servantsin
my experience, the same thing happened in transportthey
quite like the variety and change. You can attract and retain
some very good people.
Q76 Mr Weir: Over the last few years
considerable responsibilities have been transferred from Whitehall
to the Regional Development Agencies, with a consequential transfer
of staff and funding. I understand the budget for the RDAs is
planned to more than double between 2003 and 2008. Are the RDAs
coping with such a large transfer of responsibilities and resources,
particularly within a comparatively short timescale?
Mr Darling: In general, yes. There
is a variation between RDAs. The NAO has, I think I am right in
saying, completed two reports on two RDAs, the north west of England
and the east of England. One of the things that we are looking
at as part of the spending review process is the relationship
between RDAs, passenger transport authorities and some of the
work that my colleague, David Miliband, started when he was at
the Office of the Deputy Prime Minister, which Ruth Kelly is continuing
in relation to the importance of what we call city regions, which
are important. I am concerned that we do not transfer things that
are not appropriate and that we enable RDAs to have a clear focusif
you give them too much, that can be difficultand also to
make sure that the areas in which they operate make sense in terms
of the economics and social patterns we see in the country today.
In general, yes, but it is something that we are looking at. It
may be necessary to make some changes. RDAs are very MP and we
were absolutely right to set them up but it makes sense in any
organisation or group of organisations to ask whether or not we
can do things better. There are some of the alignments that we
need to look at as well as maybe some of the responsibilities.
Q77 Mr Weir: One of the things that
was transferred was responsibility for inward investment and you
mentioned earlier staff reductions in UKTI. Do you see any tension
between the role of the RDAs and UKTI?
Mr Darling: This is a difficult
Q78 Chairman: Your response to our
India report has been received by the Committee and we agreed
to publish it yesterday. I assure you it does deal with this issue.
Mr Darling: I am happy to answer
Q79 Chairman: As you are writing
to the Committee already, you have answered in part.
Mr Darling: I will just refer
the honourable gentleman to the answer I gave, which he will see.
Part of the responsibility of RDAs is to attract inward investment.
To that end, they undertake promotional activities in different
parts of the world. Where there is a legitimate question to be
asked is, if you are in India, you turn up at one of these things
and find UKTI and three RDAs all telling you that they are all
in the right place. The question is which one is right. I have
to think long and hard before saying to an RDA, "No, you
cannot promote yourself overseas" because they will say,
"If we have jobs going in this area or we think we have an
expertise, who is going to make a pitch for us?" We need
to make some sense of this, and that is leaving aside the fact
that you will undoubtedly find someone from Wales and Scotland
at the same presentation. People will say, "How come, in
a country of 60 million people, we need quite so many people there?"
It is something we are going to sort out on a practical level.
I want to avoid a situation where we have rather too many people
increasing the current footprint across the world.