Examination of Witnesses (Quesitons 100-119)
RT HON
JOHN HUTTON
MP
20 NOVEMBER 2007
Q100 Miss Kirkbride: But will it
remain within state control rather than the control of Lloyds
Register-type organisations which do that kind of work?
Mr Hutton: I have not seen any
work that has covered the issue you have just raised, but we are
looking very carefully at the whole health and safety framework
here. One of the matters that emerged clearly from the consultation
just ended, particularly the eight or nine events that we organised
in cities across the UK, is public anxiety about the safety of
the nuclear industry. You would expect that. We know there is
a risk. Fortunately, apart from the fire at Windscale which I
believe was a military facility, there has never been a significant
health and safety concern at any of our civil nuclear installations,
and long may that continue to be the case. As you rightly say,
given it is 12 or 15 years since we built a nuclear reactor it
is quite right that we take stock of best practice internationally
and reflect that in the UK.
Q101 Mr Binley: Turning to PSA5—trade
barriers—I do not need to tell you that that is intended
to achieve significant reductions in EU and world trade barriers
by 2008. There has been a sizeable slippage and many people begin
to be concerned about what appears to be a protectionist, defensive
view emanating from certain countries within the EU. What can
you do to change this situation?
Mr Hutton: The UK Government has
a very clear position on it. I was in Brussels only last week
and made a speech about the trade defence review and mechanisms,
that is, the Trade Defence Instruments. As to what we are trying
to do with the review of TDIs, our position is clear and is on
the department's website. We have to resist the slide into protectionism
and politically ministers intervene regularly in the council and
elsewhere to make that point. The slippage in relation to the
public service agreement is largely due to the fact that there
are difficulties with the Doha Round and getting international
agreement. The extent to which we can make progress in this PSA
is not down entirely to the UK Government; it is part of an international
agreement. I can assure you that we are very vociferous in relation
to open markets and free trade both within the European Union
and outside. We are also very strongly supportive of both the
EPA and FTA process. I have just returned from Korea. We believe
that a very important free trade agreement could be reached soon
with the Koreans and that will be of immense benefit to both the
European Union and Korea. They have just reached a similar FTA
with the United States. We look for broad parity between that
FTA and agreement with the European Union. As part of my job I
travel internationally and speak to people; I make the case and
argue. The department and government as a whole do what they can
to ensure that progress is made on all these fronts, and it is
important that we do so. It is instrumental to our view about
the European Union going forward: it should be open, not closed,
willing to trade and to lower tariff barriers. That is the right
way to continue to develop world trade and tackle international
poverty and development.
Q102 Mr Binley: I welcome that and
wish you Godspeed because it is an important area. I am delighted
that we are moving in that direction. I turn to the new PSA targets
which relate to trade chiefly in terms of the UK's development
goals. The transfer of lead responsibility on trade policy from
the DTI to DFID suggests a change of emphasis. What responsibilities
on trade does your department retain and how will it ensure UK
business interests are still represented? There is some concern
about the transfer of emphasis.
Mr Hutton: Trade policy is now
the joint responsibility of my department and the International
Development Department and there is a new cabinet sub-committee
on trade which I attend and the Secretary of State for International
Development chairs. Together we take the appropriate action actively
to promote the full range of trade policy objectives set by the
UK Government. My department has lead responsibility in relation
to trade defence instruments and mechanisms, so it was I who went
to Brussels to make this intervention and lobby the Commission
to take a progressive and, as we would say, as open a free trade
perspective as possible. Douglas Alexander has the principal responsibility
in relation to Doha and represents the Government in that process.
I think that is an entirely reasonable division of responsibility
given the very significant development agenda that the world trade
round incorporates, but I can assure you that the voice of business
in the conduct of trade policy is loudly heard in the cabinet
committee and across Whitehall as a whole.
Q103 Mr Binley: Are you happy that
you are far enough up the batting list to make sure you have an
effective innings. Is that what you are telling me?
Mr Hutton: I used to play a lot
of cricket.
Q104 Mr Binley: I know you did; that
is why I put the question to you in those terms.
Mr Hutton: My personal view is
that the key position is to bat fourth or fifth.
Q105 Chairman: We hope to be able
to explore these issues in more detail with Digby Jones and Gareth
Thomas, subject to the former's agreement, at a meeting scheduled
for next month.
Mr Hutton: For the record, trade
promotion is still the principal responsibility of my department
and the Foreign and Commonwealth Office and Digby Jones is a minister
in both departments. Therefore, the trade promotion work has not
changed.
Q106 Mr Bailey: I turn to the Defence
Export Services Organisation. Given the fact that the UK defence
industry is generally regarded as a successful part of our manufacturing
base and that DESO is widely perceived as very successful, why
is to be transferred into UKTI?
Mr Hutton: Because I think it
offers the opportunity for greater synergy and efficiency and
therefore value for money for the taxpayer. I believe that we
can provide a good strong continuing level of support for UK defence
exporters through the new arrangements. DESO has not been abolished
and we need to deal with that myth. The Government will continue
to support proactively the work of arms companies trading properly
and lawfully around the world. I think it is important that we
do that given the very significant employment in manufacturing
strengths that defence companies represent in the UK.
Q107 Mr Bailey: Why are government-to-government
deals being retained within the Ministry of Defence?
Mr Hutton: Because we believe
that is where they can be most effectively administered.
Q108 Mr Bailey: Will the MoD then
become a sponsoring department for the UKTI?
Mr Hutton: The MoD will not be
a sponsoring department for UKTI; it will continue to be sponsored
by the Foreign and Commonwealth Office and my department. Obviously,
we are very well aware of the need to maintain strong links between
the MoD and UKTI, and discussions are ongoing to ensure that these
strong links are established in future which are very important
for defence companies that seek to export equipment. There has
been an historic reliance on co-operation with our Armed Forces
in demonstrating the efficacy of this equipment abroad and I think
it is important that we find the right way to continue that help
and support. For a UK defence company to be able to say that it
sells its goods to the UK Armed Forces and to have those pieces
of equipment demonstrated by members of the Armed Forces is a
very significant attribute. We should look to continue that in
future.
Q109 Mr Bailey: Will UKTI receive
additional resources with its added responsibilities?
Mr Hutton: When the machinery
of government changes like this there is a protocol for transferring
the appropriate level of resource going into the new organisation.
The appropriate amount of resource that is needed to support the
work of DESO will be transferred from the MoD into UKTI's budget.
Q110 Mr Bailey: I switch to the enterprise
element of your portfolio, in particular the small business service.
Effectively, this has been downgraded. Why is that so?
Mr Hutton: I do not believe the
small business service has been downgraded. It was providing a
direct service to small businesses. One of the things we have
been trying to do with the business support simplification programme
is make Business Link the principal focus for delivering services
to small business. Therefore, the small business service has become
instead a policy directorate of my department rather than an entity
that delivers a product, as it were, to small businesses. It is
now leading the work on the new enterprise strategy to which I
referred earlier.
Q111 Mr Bailey: The consultation
document on business support simplification states that a "comprehensive
portfolio of one hundred or fewer business support schemes"
will be developed by the beginning of 2008. Will that deadline
be met?
Mr Hutton: I am fairly certain
that the deadline is 2010, not 2008.
Q112 Mr Bailey: It does seem rather
a long time.
Mr Hutton: Perhaps I should write
to the Committee to confirm that.
Q113 Chairman: We think that you
will decide what you want by 2008 and then achieve it by 2010.
Mr Hutton: It is certainly to
be delivered by 2010.
Q114 Mr Bailey: What do you believe
has been achieved so far?
Mr Hutton: I think the small business
service has done a good job in driving forward the Government's
enterprise policy. It was the small business service, for example,
that introduced the common commencement date concept; in other
words, new regulation should have only two points in the year
when it comes into effect, that is, April and October. It introduced
the first national campaign to promote enterprise culture among
young people, which is very worthwhile. We estimate that for every
£1 spent on programmes in 2004-05 in relation to the small
business service there was a positive impact on gross value added
to the economy of at least £2.40, so it was good value for
money. I think that with the business support simplification programme
this was the right change to make in the work of the SBS. I am
sure that is the right thing to do going forward.
Q115 Mr Bailey: From my own dealings
with business in my particular area I certainly support the need
to reduce the number of business support systems, but there is
an issue about different regions having different priorities and
needs. How do you think that by reducing the number you will meet
the sheer comprehensive nature of different needs in different
areas?
Mr Hutton: There will still be
a very substantial amount of support available. You referred to
100 projects. There are 17 objectives, themes and so on. I am
fairly confident that they are broad enough to encapsulate the
need on occasions for some bespoke service, but we do not help
small business find the right portal into the system, which can
often be confusing and obscure, by maintaining 3,000 different
entry points and programmes. There must be some sensible rationalisation.
In the consultation held with small businesses that has come up
time and time again; they are just not sure where to go. There
is an overwhelming crescendo of paperwork and bureaucracy that
descends upon them when they try to find the right way forward.
We have to move on and streamline it. We have done a lot of consultation
on this matter, and I believe there is a consensus that this rationalisation
is now the sensible thing to do.
Q116 Mr Bailey: I certainly concur
with that assessment. Earlier this month it was announced that
the full implementation of much of the Companies Act would be
delayed by a further year. This has caused some anxiety amongst
some businesses that it may cause confusion and diminish the impact
of the legislation. What is the reason for this delay?
Mr Hutton: The reasons for the
delay are problems to do with CHIPS, that is, the Companies House
Information Processing System programme that underpins the final
delivery of the Companies Act reform. Remember that we are talking
about the final phase. The first two phases have been successfully
implemented. I think that in the first two phases many of the
major deregulatory benefits to companies of the reforms were carried
through. They were very simple things like the ability to email
one's shareholders which until then had not been possible. Some
of the reforms have taken place and there has been significant
benefit to companies as a result, but the final stage of implementation
depends on CHIPS. The advice we have received is that although
we think we can have the system in place by October 2008 there
are risks and we cannot guarantee the October 2008 delivery date.
I did not want to inflict unnecessary cost on businesses or waste
any parliamentary time in proceeding with the October 2008 deadline.
It was not a decision that I wanted to make. We were trying to
get all of it done by October 2008 but there was a sufficient
degree of risk in the timetable that ministers felt, rightly so,
that the only sensible thing to do to stop waste of time and avoid
cost was to tell companies well in advance that they would not
need to be in a position of compliance until October 2009. It
was not a decision I wanted to make but it was the only reasonable
one given the technical problems we had with the IT system. I
do not know the detail of these technical problems, but I am more
than happy either to arrange for one of my officials to brief
the Committee in more detail or write separately about the specific
details.
Chairman: We are concerned about this
issue and perhaps we can discuss with officials how we handle
it.
Q117 Mr Bailey: Obviously, we seek
some assurance about the robustness of the revised estimate but
that may be better teased out in discussions with an official
as it is technology driven.
Mr Hutton: We are happy to do
that. This IT package was not something that we could buy off
the shelf; it had to be a bespoke system. It has run into difficulties
and we have had to take a prudent decision about how to avoid
extra costs and burdens on business. We made the decision we did,
but the detail we can happily go through with the Committee.
Chairman: We have five minutes left and
we turn to a matter which, if I were you, would keep me awake
at night.
Q118 Mr Weir: I should like to ask
quickly about the Nuclear Decommissioning Authority. If revised
estimates of the UK's civil nuclear liabilities increase significantly,
as the NDA itself expects, will the department provide a commensurate
increase in funding to the authority?
Mr Hutton: We always estimated
there was a risk that the size of the liability would increase
as our understanding of the legacy issues developed, and that
has happened. The budget for the NDA is increasing under the Comprehensive
Spending Review and I believe that is a proportionate response
to the set of challenges faced by the NDA. We have some agreements
with the Treasury on the use of in-year flexibilities and other
devices which give us a degree of comfort around the NDA's resources.
I do not anticipate going back to the Treasury during the period
of the Comprehensive Spending Review to ask for more money for
the NDA. I do not think that would be right. As I say, we have
some flexibilities to look at in-year pressures and so on. We
must manage our resource as efficiently and effectively as we
can. That is why it is very important that the NDA presses on
with the changes that it is trying to make to get better value
for money from the resources it has, but in the circumstances
I think we need to prioritise those resources and deal with the
greatest risks to the public.
Q119 Mr Weir: Are you confident that
within your existing budget you can accommodate any increases
in NDA funding?
Mr Hutton: We have some flexibility.
Obviously, it would depend on precisely what type of scenarios
we are talking about. One thing I should make clear to the Committee
is that public safety is the top concern here. Government as a
whole would have to look very seriously at any new or further
evidence about public safety issues of which we are currently
not aware, but given there is always a degree of risk in an organisation
like NDA, half of whose money comes from the taxpayer and half
from privately-generated income, the balance could shift depending
on all sorts of circumstances. We have flexibility in some of
our budgets in terms of how we use NDA flexibilities, underspends
and so on. I believe that we have enough to cover the risks as
we know them to be in this spending cycle. We are in very close
touch with all the relevant stakeholders in this very important
sector, including UKAEA and BNFL.
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