Select Committee on Trade and Industry Minutes of Evidence

Examination of Witnesses (Questions 80-92)


24 OCTOBER 2006

  Q80  Mr Weir: How long do you feel the RDAs have to prove that they are effective in the changed circumstances?

  Mr Darling: I am not setting an arbitrary timetable but as a matter of fact one of the things we have to decide as part of the Comprehensive Spending Review process is how much we are proposing to spend, not just on programmes but also on administration. Of necessity in the next few months we will look at what we need to do here. In parallel to that, the government is looking at organisations asking how they relate to local authorities. I mentioned the city regions, the Passenger Transport Authorities and so on. These are all things that we need to take into account. Of course you learn through experience. Generally speaking, RDAs have been good. There are variations inevitably. A lot depends on the people you have in them. You should not be surprised at that. Whilst it will be changed from time to time, the principle behind an RDA is a good one because it is important that we do not become too London-centric. We have to make sure that the different regions also can attract their investment, drive their own businesses and so on.

  Q81  Rob Marris: You were talking about variations. I preface this comment and question by paying tribute to successive Secretaries of State for Scotland because I note from your departmental annual report that after devolution in 2000-01 comparing spending per capita by RDAs, the West Midlands, my region, with Scotland, Scotland was getting per capita 61% more in 2000-01. The estimated outturn for this year, that difference, has gone up from 61% to 155%. Their plans for next year are that that differential will rise to 158%. Given that GDP per capita is lower in the West Midlands than in Scotland and they are similar populations, can you account for the huge difference?

  Mr Darling: I probably can but I cannot offhand. I am six months rusty on this. Expenditure per head does vary. It depends of course what you attribute to it but it might be better for me to write to the Committee and set out what the differences are.

  Q82  Rob Marris: The figures are set out at page 178.

  Mr Darling: I know where they are set out but the explanation is what you want.

  Q83  Chairman: There are a number of West Midlands Members of Parliament on the Committee who are very interested in the answer to that question.

  Mr Darling: There will no doubt be an interesting discussion around this table.

  Q84  Mr Binley: I am particularly interested in your comment about attracting inward investment and its relationship to job creation, especially in those areas that are asked to create massive housing growth in relation to sustainable communities projects. I wondered how your department has fitted into that particular project and what hope I might give people in Northamptonshire that there will be jobs available for the 350,000 or so additional people who will be coming into the county as a result of the project.

  Mr Darling: The department is engaged principally with other departments rather than on its own as a department. The basic problem we have is that we know there is a housing shortage in many parts of the country. Understandably, people are concerned about where these houses are going to go, what is the impact and so on. What we need to focus our minds on is that we want to do everything we can to grow more jobs in this country, to attract people to come and do business here, but one of the things they will consider is can they get people to come and work for them; are there houses available? That is leaving aside that in this country the number of people living on their own is increasing so the demand is going up and so on. We have to strike a reasonable balance. In areas like Northamptonshire and large parts of the south east, we know that we need more housing. There are very few parts of the country now where that is not the case, even in areas that historically have not had this problem. We are very closely involved. Of course, the primary responsibility is with the Department of Communities and Local Government, but the Treasury is involved, we are involved and just about every other government department is involved as well.

  Q85  Mr Wright: You mentioned the transfer of responsibility to RDAs. One of those was Business Link. That was the responsibility of the Small Business Service so the SBS has lost one of its main roles. What is it expected to achieve in the future?

  Mr Darling: I refer you to the Parliamentary statement I gave at the time we did this, just after we came back in October. We want it more to concentrate on those areas of policy that affect small business. That is what its core responsibilities are. I think the RDAs are far better placed to provide frontline services. The Small Business Service is much better at looking at those areas of policy that we need to concentrate on and there will be specific projects, I dare say, from time to time that we will need to look at. I took the view not just that we need to simplify the number of things that we offer people; I would also like to reduce the number of places that you to get them because one of the things that people complain about is not just the sheer number; they also say, "Is it the RDA? Was it the Small Business Service? Is it the local authority?" The more we can simplify that the better. The RDA is quite a good place to start with.

  Q86  Mr Wright: Do you see a time when perhaps the Small Business Service will itself be encompassed within the RDAs?

  Mr Darling: No. It is going to lose its status as an agency because it is frankly too small. It will become part of the DTI within the next few months.

  Sir Brian Bender: Essentially, it was set up some years ago as a delivery body of 500 people. The Secretary of State's decision now turns it fully into a policy and analysis unit about small business enterprise policy located in the DTI, working across government, about 50 strong, plus the task and finish group that I mentioned earlier. It is and will be part of the DTI and no longer an agency, getting other people to do the delivery, RDAs, Business Link and so on.

  Q87  Chairman: And finally, the big one. What are you for? Apart from being a home to 92 non-executive Departmental Public Bodies and executive agencies, tucked away on page 161, paragraph 6.5 under "Setting and Delivering Priorities", "Performance in 2005-06", you say that you have initiated the DTI 2020 project which aims to identify how the department may look in 2020, including its future role, policies and spending priorities. Give us a hint.

  Mr Darling: Every Secretary of State for Trade and Industry gets asked this question. I was looking back at what the DTI had done over the last 30 years and it is remarkable how much has changed. With practically every reshuffle, something comes in or goes out. The longest single period of stability happened between 1621 and 1970 when it was called the Board of Trade. Since then it has changed. It has been the Department of Energy, the Department of Industry; Trade has been and gone; Employment has been and gone. It was called the Department of Prices and Consumer Protection, or at least some part of it was, in the second Wilson Government, I think. The DTI is unusual in that it covers a very large number of sometimes unrelated subject matters. That is one of the good things about it. It is a very interesting place to work. You mentioned energy which is of crucial importance, whereas a few years ago it was not. It will be probably one of the biggest things the government is going to have to deal with in years to come. We have not mentioned today the whole question of nuclear. That is the second biggest item that the DTI spends its money on through the NDA and so on. We have mentioned science and technology which is by far the biggest area. As you say, there are a very large number of arms' length bodies which over the years have been brigaded under the DTI. Who is to say whether every one of them should be there? There are always going to be arguments. At the end of the day, it is for the Prime Minister to decide what shape the government is to take and not for any individual Secretary of State. There are functions within the department that are going to have to be carried out in one place or another. My guess is that over the years what is important and what is less important will change according to circumstances. What I am very clear about is that the DTI has, like many other government departments, some very good people in it who we want to keep. It is very important, if we are going to maintain the efficiency of the British Civil Service, that we make sure that we can retain these people to serve successive administrations. Rather than looking at what is the DTI—because the answer is it will probably change and has changed in the past—and incidentally I discovered I was still president of the Board of Trade, despite the fact that if there is a board I have not seen it. A lot of the stuff that happens here is going to continue for many years.

  Q88  Chairman: That is not a strong, strategic case for the department. You have offered a pretty strong case for the Department of Energy but do you think there is a need for a business-facing department within the machinery of government?

  Mr Darling: Firstly, yes, there is a case for energy. Yes, for science and technology. Yes, for company law and employment relations. All these things need to be done by the government. The shape of priority and so on will vary from time to time. In relation to government, as I have been suggesting throughout this examination, there are things that government needs to do. Some of them will be done within the DTI. Some of them might be done in the Treasury or Transport or Defra or wherever. What I am very clear about is we should not be duplicating them. We should ask ourselves which areas of work are not being done by anybody else that we do need. For example, maintenance and an understanding of relations like aerospace, pharmaceuticals and so on. If they can be done better elsewhere, that is what we should do. If they need to be done better in the DTI, we should do them there. The better question to ask is: what are the functions that the government needs to discharge? What does the government need to know? Then you deploy your resources accordingly. The name on the silver plate on the front door is of secondary importance to what needs to be done within the department.

  Q89  Chairman: You indicated earlier that you would be entirely supportive of next year's departmental report. There are people I hear speculating that you may have a different job in a year's time as Chancellor of the Exchequer, some say. There is historic tension between the Treasury and the DTI. I am sure we would love to know what view you would take as Chancellor of the need for a business-facing department.

  Mr Darling: It is a nice try. There is no tension between my department and the Treasury.

  Q90  Chairman: That is a first. They are still in mourning for the loss of the Financial Services Regulation.

  Mr Darling: I cannot remember whether that came over just before the general election 1997 or just after, but it rather makes my point about how Whitehall is organised, which is ultimately for the Prime Minister.

  Q91  Chairman: The important thing from what you have said is that all the major parties have toyed with the abolition of the DTI in the sense of some huge, low hanging fruit to gain public expenditure and regulation back. Most of those functions have to be done somewhere.

  Mr Darling: You make a very good point. I do not know if you pointed that out at last year's general election.

  Q92  Chairman: I thought it.

  Mr Darling: I cannot conceive that any government would say, "We have no responsibility for science and innovation." Science and innovation have been moved around Whitehall several times, certainly within my recent memory. How you organise Whitehall or government, whatever you do—I remember the debate about work and pensions, for example, when it was set up—what do you split? Should employment law be part of work and so on? These are arguments that state a case for just about every single proposition.

  Chairman: I think you have told us what DTI 2020 will conclude. We are very grateful to you. Thank you very much indeed for your time. We look forward to getting the very important information relating to the financial aspects of the department. Thank you very much.

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