House of Commons - Business, Enterprise and Regulatory Reform

Select Committee on Business, Enterprise and Regulatory Reform First Report

2 The Committees' work in 2007

8. Standing Order No. 152 requires us to "examine the expenditure, administration and policy" of the Department for Business, Enterprise, and Regulatory Reform. Like all departmental select committees, the Committee works within the framework of the core tasks set by the Liaison Committee. The tasks themselves are appended to this report. The way in which the Committees' work on particular inquiries addressed those tasks is summarised in Table 2. Our aim is to ensure that we scrutinise the work of the Department, and associated bodies, while also taking a broader look at particular subjects to ensure that we are able to intervene if it becomes appropriate. Our job is not to audit the Department: the National Audit Office exists to perform that function. Nor is it simply to take the Department's policies as given, and examine how efficiently and effectively they are implemented, although that is part of our role. Government cannot single-handedly produce the conditions necessary for economic success or social well being, and knowledge of the wider context is essential to assess Government's actions or overall approach. Two key tasks are to examine departmental and EU policy and, where necessary, to inquire further, and to look at policy deficiencies and make proposals. Accordingly, in most of our inquiries we seek to explore the wider picture, rather than taking the official analysis as given. Although most of our conclusions and recommendations are aimed at central Government, we deal with other bodies which spend public money or provide public services.

9. We do not believe we would serve the House effectively if we took too narrow an approach to our work. We have, on occasion, felt it necessary to bring ourselves and our Parliamentary colleagues up-to-date with developments in particular industries or even particular companies, such as in our report on Success and failure in the UK car manufacturing industry.[8] On occasion, we have had reason to criticise particular individuals or companies, and some have objected to this. However, the privilege of freedom of speech exists because it is recognized that there is public interest in a forum in which elected representatives can discuss matters of public concern and public policy without fear of legal interference. It is important that Committees and individual Members exercise this privilege responsibly. It is equally important that they are free to say what they wish when they consider it appropriate. While we intend to continue our predecessors' example of courteous engagement with witnesses, we will not be inhibited from critical comment when we believe it is in the public interest for such comments to be made.

The Core Tasks

Table 2: Analysis of programme by core tasks

Subject Departmental policy Examination of deficiencies Documents and decisions Expenditure PSAs Regulators and Agencies Legislation and initiatives

Local energy- turning consumers into producers √ √ √ √

Post Office Network √ √ √ √

Success and failure in the UK car manufacturing industry √ √

The future of UK manufacturing: public procurement √ √ √ √

The future of UK manufacturing: skills shortages √ √ √ √ √

The future of UK manufacturing: Marketing UK plc: UKTI's five-year strategy √ √ √ √ √ √

Trade with Brazil and Mercosur √ √ √ √

Recent developments with Airbus √ √

Strategic Export Controls: 2007 Review √ √ √ √

Europe moves East: the impact of the 'New' EU Member States on UK business √ √ √

The work of the Office of Fair Trading √ √

Implementation of the Report of the Women and Work Commission √ √

Ofcom Annual Plan 2007-08 √ √ √ √

Industrial action at Royal Mail √ √

The work of the Minister for Trade and Investment √ √ √ √

The UK Construction Industry √ √ √ √ √

Trade with India: One year on √ √ √ √

10. As can be seen from the table above, a single inquiry may relate to several of the core tasks. The tasks themselves are intended to ensure that Committees meet four broad objectives, and rather than go through each task exhaustively, we describe below how these objectives were met.

OBJECTIVE A: TO EXAMINE AND COMMENT ON THE POLICY OF THE DEPARTMENT

Manufacturing

11. The Committee conducted a major inquiry into the future of UK manufacturing. The seven evidence sessions led to three separate reports. The first, on skills, looked at the skills needed in manufacturing, and drew attention to the need to ensure a well-trained, highly skilled workforce.[9] The second looked at the role of UK Trade and Investment (UKTI), the Government's export and inward investment promotion body.[10] The third looked at the ways in which public procurement could be used to foster a strong and innovative manufacturing base, and suggested ways in which procurement policy might be improved.[11] In addition to this general work, we looked at challenges facing Airbus, and the ambitious restructuring programme the company has implemented to meet them, in Recent developments with Airbus.[12]

Trade

12. The Trade and Industry Committee has had a sustained interest in trade—both trade policy as a whole, and the way in which trade and investment links with particular countries can best be encouraged. In addition to the report on UKTI noted above, the Committee looked at the impact of the 'new' EU Member States on UK business[13] and trade with Brazil and Mercosur;[14] it is also reviewing the state of trade with India, one year on from the Trade and Industry Committee's major inquiry into that subject. In addition, we held an evidence session with the new Minister for Trade and Investment, and have asked him to update the Committee regularly about his forthcoming programme and the outcome of his visits. In early 2008 we held a further session with the Minister for Trade and Investment and the Minister for Trade and Development, who is a Minister in both BERR and DfID. We expect to continue this work with a wider inquiry into trade in the New Year.

Visits

13. The Committee complemented the evidence taken in its inquiry into Europe moves East with brief visits to Lithuania, Hungary and Slovakia. These visits provided us with information which cannot be gathered in the United Kingdom and we found them invaluable.

14. We also continued the practice of an annual visit to Brussels. This gives us the opportunity to discuss developments in energy, trade and a range of industry issues in the European Union. It also allows us to identify issues which are likely to become prominent in future, and to shape our programme accordingly.

Post Office and Royal Mail

15. Over the years, the Trade and Industry Committee has engaged with a series of government proposals for reform or restructuring of Royal Mail and Post Office Ltd. This year was no exception. We undertook two inquiries into the Government's proposals for reducing the Post Office network. Although we reluctantly accepted that some reduction in the network was inevitable, we were concerned that the proposed criteria for ensuring access to post offices in future were overly rigid; that there appeared to be no clear rationale for the number of the proposed reductions; and that the proposals did not explain how the access criteria would be maintained in the face of future unplanned, uncompensated closures. The Government has made some changes in response to our criticisms, but many questions remain unanswered. The closure programme has now begun, and early in 2008 we will be undertaking a short inquiry to look at its progress, and, if necessary, make recommendations about how the process can be improved.

OBJECTIVES B AND C: TO EXAMINE THE EXPENDITURE AND ADMINISTRATION OF THE DEPARTMENT

Scrutiny of the Department and its associated public bodies

16. We monitored the expenditure of the Department of Trade and Industry during the year, and raised some issues on the Estimates for BERR in correspondence with the Department.

Department of Trade and Industry Annual Report

17. Most significantly, we agreed that the Departmental Annual Report could be combined with the Resource Account into a single volume giving a consolidated overview of the Department's performance. The combined report and resource accounts for the Department of Trade and Industry is an impressively comprehensive document, and, in our view, an improvement on earlier reports.[15] However, this has been a year of radical machinery of government changes. It is too early to say whether the fact that a combined document necessarily emerges later in the financial cycle than the Annual Report it replaced will have any adverse impact on our ability to consider the Estimates in normal years. We will consider this in the light of experience over the coming year.

The new Department

18. We took evidence from the new Secretary of State for Business, Enterprise and Regulatory Reform on the Report and Accounts of the previous Department, and on his plans for the future. In this session, we were particularly interested in the Public Service Agreements (PSAs) for the new Department, and their relationship to previous PSAs. We note that the PSA system has changed so that the Agreements cover outcomes which can only be achieved by cross-departmental collaboration. The new Department leads on three PSAs, which we summarise below:

PSA1: Raise the productivity of the UK economy:

i. Raise the rate of the UK's productivity growth over the economic cycle;

ii. Narrow the productivity gap with our major industrial competitors.[16]

PSA6: Deliver the conditions for business success in the UK:

i. Provide a competition regime independently ranked among the world's best;

ii. Deliver a corporate governance and legal framework at the level of the world's best;

iii. Raise participation rates and ensure UK labour market flexibility;

iv. Maintain competitively-priced energy markets;

v. Deliver better regulation;

vi. Deliver significant improvements to the administration of tax regimes that affect business.[17]

PSA7: Improve the economic performance of all English regions and reduce the gap in economic growth rates between regions:

i. Maintain macroeconomic stability to help businesses and individuals plan for the future;

ii. Implement microeconomic reforms to tackle market failures in the underlying drivers of growth—skills, investment, enterprise, competition, innovation and employment;

iii. Devolve decision making to the regional and local levels to ensure that policy design and delivery is responsive to the particular opportunities and challenges of each area.[18]

19. BERR is a 'key delivery partner' for three further PSAs:

PSA 2: Improve the skills of the population on the way, to ensuring a world-class skills base by 2020;
PSA 8: Maximise employment opportunity for all;
PSA 27: Lead the global effort to avoid dangerous climate change.[19]

It has set itself the following Departmental Strategic Objectives:

Promote the creation and growth of business and a strong enterprise economy across all regions;
Ensure that all Government departments and agencies deliver better regulation for the private, public and third sectors;
Deliver free and fair markets, with greater competition, for businesses, consumers and employees;
Ensure the reliable supply and efficient use of clean, safe and competitively priced energy;
Manage energy liabilities effectively and responsibly;
Ensure that Government acts as an effective and intelligent shareholder, and provide a source of excellent corporate finance expertise within Government; and
Provide the professional support, capability and infrastructure to enable BERR's objectives and programmes to be successfully delivered.[20]

We expect to do further work on these PSAs and Objectives in the coming year.

Associated Public Bodies

20. In addition to monitoring the work of the central department, the core tasks include monitoring the work of the Department's Executive Agencies, non-departmental public bodies, regulators and other associated public bodies. There were about 50 such associated with the Department of Trade and Industry. There are over 40 such bodies associated with BERR. In previous years the Cabinet Office has produced a consolidated list of Public Bodies. This responsibility has now been devolved to departments, and although they are encouraged to print the lists with their Annual Reports, they are not obliged to do so. We urge BERR to include a list of all the public bodies associated with it in its Annual Report, so that it is possible to trace changes in the Department's responsibilities over the course of time. However, since the list of bodies associated with BERR cannot be printed until its Annual Report appears, we have appended it to this Report.

21. Some of these bodies were examined in the course of inquiries into particular subjects; for example, we have already noted that one of the reports which resulted from our manufacturing inquiry concentrated on the work of UKTI. Our work on the Post Office considered the future merger of Postwatch and the National Consumer Council.[21] Obviously, it is neither possible nor necessary for us to take evidence on, or from, each of the Department's associated public bodies every year, but we try to examine one or two such bodies each year, in addition to those which are dealt with in particular inquiries. However, given the importance of telecommunication issues, once again, we held a joint session with the Culture, Media and Sport Committee on the Annual Plan of the media and telecommunications regulator, Ofcom.[22] We also conducted an inquiry into the work of the Office of Fair Trading.

OBJECTIVE D: TO ASSIST THE HOUSE IN DEBATE AND DISCUSSION

22. Our reports themselves provide material for our colleagues, but sometimes we are involved in Parliamentary proceedings more directly. There have been two debates on Committee reports in Westminster Hall in the last year. The Fourth Report of Session 2005-06, New Nuclear? Examining the issues was debated on 19 April 2007.[23] This was particularly timely, coming a month before the Government published its Energy White Paper, including a consultation on new nuclear build. Our two reports on Post Office restructuring were debated on 29 November. This debate was one of the most heavily subscribed ever to take place in Westminster Hall.

23. The core task properly concentrates on what Committees can bring to proceedings in the House. However, we also use information from proceedings, and concerns raised in the House, as part of our work. We will build on Members' contributions in our forthcoming follow-up inquiry into the Post Office closure programme. As a first step we have written to all Members for constituencies where consultations on specific proposals for closures have begun to seek their views on the process.

The 'Quadripartite Committee'

24. We continued our contribution to the 'Quadripartite' Committee, which is chaired by one of our Members, Roger Berry. This Committee is composed of members of our committee, meeting together with the Defence, Foreign Affairs and International Development Committees. It carries out detailed scrutiny of the Government's controls on exports of equipment and technology with a military application. In 2006-07 the Quadripartite Committee carried out a wider than usual inquiry when it examined the operation of the Export Control Act 2002 and the orders made under the Act. In August the four constituent Committees reported the Quadripartite Committee's work as The Strategic Export Controls: 2007 Review—published as our Tenth Report. In the course of the Quadripartite Committee's inquiry it visited the Export Control Organisation at the Department for Business, Enterprise and Regulatory Reform and the Foreign and Commonwealth Office and took oral evidence from the Department for International Development for the first time, as well as its customary evidence from the Foreign and Commonwealth Office, HM Revenue and Customs, and the Revenue and Customs Prosecutions Office.

25. The Quadripartite Committee's work continued the Committees' interest in a range of issues, including: post-legislative scrutiny of export control legislation which will contribute to the Department for Business, Enterprise and Regulatory Reform's Review of the operation of the Export Control Act 2002; possible changes to the rules on intra-European Community transfers of defence products; the need to tighten controls on those selling and brokering arms; the need for better enforcement of the export control rules at arms fairs; and the need for better outreach to industry to prevent inadvertent export of goods subject to export control. It demonstrated that Government policy can only be properly assessed by taking a wide view of the issues involved, and that committees work most effectively when they are able to build on their work over a sustained period.

8 Fourth Report of Session 2006-07, HC 399 Back

9 Fifth Report of Session 2006-07, Better Skills for Manufacturing, HC 493-I Back

10 Sixth Report of Session 2006-07, Marketing UK plc - UKTI's five-year strategy, HC 557 Back

11 Thirteenth Report of Session 2006-07, The future of UK manufacturing: public procurement, HC 1109 Back

12 Ninth Report of Session 2006-07, HC 427-I Back

13 Eleventh Report of Session 2006-07, Europe moves East:The impact of the 'New' EU Member States on UK business,
HC 592 Back

14 Seventh Report of Session 2006-07, Trade with Brazil and Mercosur, HC 201-I Back

15 Department of Trade and Industry, Annual Report and Accounts, 2006-07, HC 584, July 2007 Back

16 Summarised from HM Government, PSA Delivery Agreement 1: Raise the productivity of the UK economy, October 2007 Back