Memorandum 2
Supplementary evidence from the Department
for Innovation, Universities and Skills following the oral evidence
session on 13 October 2008
DIUS RESPONSE TO
FOLLOW-UP
QUESTIONS
1. A note on the costs of setting up DIUS
and on its administration costs, including a reconciliation of
the administration costs of DfES and DTI with DIUS, DCSF and BERR.
(Qq 28-30, 99)
The Committee questioned the cost of setting
up DIUS as a new department. They requested an analysis comparing
the prior DFES and DTI budgets to the outturn of the three new
departments in 2007-08.
The creation of DIUS was not the only Machinery
of Government change that applied to the former DFES and DTI in
2007-08. As a result the direct comparison requested is not available.
The tables below provide evidence that the Administration
expenditure on the three newly formed departments is consistent
with the Administration expenditure on DFES and DTI.
This table records the net Administration expenditure
for the DFES and the DTI in 2006-07.
| £'000 | £'000
| £'000 |
| DFES | DTI
| Total |
| Staff | 148,146 | 175,721
| 323,867 |
| Other Admin | 97,436 | 151,717
| 249,153 |
| Income | (2,937) | (22,154)
| (25,091) |
| Net Admin | 242,645 | 305,284
| 547,929 |
This table records the net Administration expenditure for
BERR, DCSF and DIUS for 2006-07 restated within the 2007-08 Resource
Accounts.
| £'000 | £'000
| £'000 | £'000
|
| DCSF | BERR
| DIUS | Total
|
| Staff | 126,312 | 159,906
| 40,045 | 326,263 |
| Other Admin | 97,496 | 151,323
| 21,000 | 269,819 |
| Income | (14,523) | (24,176)
| (1,012) | (39,711) |
| Net Admin | 209,285 | 287,053
| 60,033 | 556,371 |
The difference between the two totals is as a result of other
MoG changes affecting the ex DFES and ex DTI.
The table below records the net Administration expenditure
for BERR, DCSF and DIUS for 2007-08 as stated within the Resource
Accounts.
| £'000 | £'000
| £'000 | £'000
|
| DCSF | BERR
| DIUS | Total
|
| Staff | 119,965 | 152,831
| 37,970 | 310,766 |
| Other Admin | 80,809 | 357,802
| 29,407 | 468,018 |
| Income | (14,436) | (41,982)
| (239) | (56,657) |
| Net Admin | 186,338
| 468,651 | 67,138
| 722,127 |
| % increase/decrease in staff costs from 2006-07
| -5% | -4% |
-5% | -5% |
| % increase/decrease in total admin from 2006-07
| -11% | 63% |
12% | |
The rise in the BERR administration costs is due to an increase
in the cost of capital charge in excess of £200 million.
The 12% increase in DIUS Administrative costs from 2006-07
to 2007-08 amounted to £7,104k consisting of £5,381k
related to IT set up costs and a reduction in staff expenditure
of £2,075k. Also included in 2007-08 are other set up costs.
The 2006-07 were produced on an estimate basis as DIUS did not
exist as a single department in 2006-07 and will not reflect exactly
the comparative expenditure.
2. The results of DIUS staff surveys. (Qq 32-34)
DIUS carried out an interrim staff survey in December 2007,
which was sent to 300 staff (about a third of DIUS staff) and
had a response rate of around 50%. It posed the question "I
am proud to work for my Department?". In response, only 20%
of staff disagreed with the statement.
The survey also showed that 78% "agreed" or "strongly
agreed" with the statement "My team looks for ways to
to serve our customers better" and 62% "agreed"
or "strongly agreed" with the statement "I feel
my work makes the best use of my skills and experience".
The annual all staff survey is currently being carried out
and the results will be published on the DIUS website later in
year. We would be happy to send a copy to the Committee on completion.
3. Confirm that a search of the DIUS website using "departmental
report" produces http://www.dius.gov.uk/annual_report.html
as the first item displayed. (Q 43)
The full DIUS Annual Report is available (and has been since
publication) on the DIUS Corporate website. It is linked from
the homepage underneath the "About DIUS" heading in
the menu on the left of the page. It is also the first link displayed
when the search term "annual report" is entered. We
are working with our website suppliers to amend the search function
to ensure that the wording "departmental report" also
produces the correct link to the DIUS Annual Report as the first
item displayed rather than simply to the foreword of the document.
4. Arrangements for consulting users of DIUS's website
(Q 46)
Over the next six months the DIUS corporate website will
have completed a full re-design and the Department will have switched
web service provider. As part of the re-design process a wide
range of DIUS website users will be consulted including; face
to face interviews with a selection of NDPBs and Executive Agencies,
face to face interviews with senior officials, Ministers and other
stakeholders, online questionnaire for staff and an online questionnaire
for public external users.
Full user testing will also take place at several stages
of the re-design and both internal and external users of the site
will be given the opportunity to test and comment on the proposed
site. We are also commissioning research with our intended audiences
for the DIUS website and our primary customer-facing online channels
to ensure the service we provide reflect their needs and where
they look for information online.
5. Co-operation between DIUS and DSCF on promotion of the
programme of diplomas and STEM (Qq 51-2)
At the Select Committee hearing on 13 October, members asked
for a note on the particular areas of co-operation between DCSF
and DIUS, including the level at which they occur and how they
actually co-operate.
Both Departments have a strong stake in 14-19 education and
training, and we are working together on a number of fronts.
Following the Departmental split last year, Ministers commissioned
officials to produce a joint working document which set out the
areas where joint working would be required and how this should
be structured. The aim was to secure clarity on the respective
roles and responsibilities of DCSF and DIUS; and to set out the
mechanisms and protocols for joint policy development and decision-making.
DCSF has overall responsibility for ensuring the successful
development and delivery of the 14-19 reform programme, including
the development of 14-19 diplomas. DIUS is closely engaged in
this work, to ensure close integration with apprenticeships and
progression to post 19 vocational and non-vocational qualifications,
and to improve the "flow" of skills into the workforce
through 14-19 Reform. DIUS also has a key role in securing delivery
of 14-19 learning through its overall responsibilities for improving
the structure and quality of the FE system, and actively engages
with DCSF on this. In addition, the Learning and Skills Council,
which is the body responsible for delivering post 16 education
and training on behalf of both Departments, is a key partner in
helping to develop the local 14-19 partnerships and Diploma delivery
consortia, and in encouraging more employers to support skills
development for young people.
Both the DCSF and DIUS PSA and Programme Boards have official
representation from both Departments. These arrangements are reinforced
by other joint arrangements, including the formal groups put in
place to enable DIUS and DCSF to agree the priorities and underpinning
budgets for inclusion in the joint DCSF and DIUS annual Grant
Letter to the LSC. The LSC is also held to account for its delivery
of both 14-19 and post 19 programmes through a joint accountability
system which includes the quarterly Ministerial Review meetings
and joint financial stock take meetings. DIUS and DCSF are also
represented on the underpinning 14-19 and post 19 Performance
and Funding Groups which meet once a quarter.
Formal mechanisms have also been set up to take forward the
Machinery of Government changes, which will create new delivery
arrangements for 14-19 and post 19 learning. A Joint Programme
Board is in place to monitor progress against milestones, identify
and manage risks and issues, monitor impact on wider sector, and
manage joint communications with stakeholders including through
a joint monthly bulletin. Reporting to this are a number of other
boards on which both DIUS and DCSF are represented. These include
the Post 19 Board, which is leading the set up of Skills Funding
Agency; the Cross Cutting Functions Board, which is ensuring a
joined up approach to Human Resources and Communications, and
reviewing opportunities for shared services between DCSF and DIUS
and between SFA and YPLA; and the 16-18 LSC Transition Board,
whose work is underpinned by a number of strands, including funding
and commissioning, sub-regional groupings, and performance management,
all of which have been undertaken jointly with DIUS. In addition
the Bill Team leading on the fourth session education and skills
Bill is joint across DCSF and DIUS.
We are also working closely with DCSF to ensure that no learner
falls through a gap. Until the Skills Funding Agency and the Young
People's Learning Agency come into being in 2010, the LSC will
continue to oversee provision for all post-16 FE learners. We
are working closely with DCSF to ensure that, under the new arrangements,
programmes that extend beyond 19 such as Apprenticeships and provision
for learners with learning difficulties and/or disabilities will
work together to provide a single service. As a general rule those
learners that start their course before the age of 19 should continue
to be treated in the same way while they continue on that course.
We are also developing joined up advice services for learners
of all ages. The new adult and advancement and careers service
and Connexions will work closely together so ensure greater synergy
and coherence between youth and adult services and secure smoother
transitions for learner pre and post-19.
The discussion on 13 October also touched on the joint working
arrangements for Science, Technology, Engineering and Maths (STEM).
Our ambitions for STEM are set out in the ten-year Science and
Innovation Investment Framework (2004), which explains the importance
of a strong supply of scientists, mathematicians, engineers and
technologists to the long-term health of the science base and
the wider UK economy. The critical school age delivery of STEM
is overseen by the 5-19 STEM Programme. It is on this basis that
DIUS and DCSF work collaboratively to achieve their goals.
A STEM governance structure has been developed by DCSF to
run this programme, and includes officials from both departments,
together with representatives from a wide range of customer, stakeholder
and delivery bodies. The principal components of the governance
mechanism at present are: a High Level Strategy Group—with
senior membership from DCSF, DIUS and external stakeholders; and
a 5-19 STEM Programme Board, which is responsible for delivery
of the STEM Programme as a whole.
6. The further education voucher scheme (Qq 61-2)
The further education voucher scheme, also known as the "Perfect
Gift" voucher scheme, was a joint DIUS / LSC pilot scheme
launched by David Lammy at the College of North East London (CoNEL)
in October 2007. The scheme was launched as part of the LSC's
then "Value of Learning" campaign and involved ninecolleges
around the country offering people the opportunity to purchase
£50 gift vouchers for friends, relatives or colleagues which
could be used towards the cost of Further Education courses in
the 2007-08 academic year.
Although there was a national LSC press release, the localised
nature of the scheme meant that local marketing carried out by
the colleges involved was varied in terms of the approach and
intensity. In some cases, effective marketing of the scheme through
local press and radio resulted in a good level of take-up, demonstrating
that where properly marketed, the concept of a financial gift
towards learning is attractive to some people. However there were
also examples of less intense marketing ie only through a college
website or onsite, which resulted in no vouchers being sold.
In evaluating the success of the scheme, initial feedback
from conversations with students at a college where the scheme
was less successful suggested that the primary reason for not
obtaining vouchers was that the value was too small and did not
reflect the cost of a course. Even with a gift voucher, a student
could still be required to contribute a considerable amount to
the course cost. In addition, despite research which suggested
that 56% of people surveyed would like to receive a gift voucher,
another reason given by individuals for not purchasing the vouchers
was that they were not a gift that they wanted to buy.
It has therefore been decided not to pursue the scheme for
the current academic year.
7. The Committee noted that four out of the six "innovation
in the market" indicators on page 87 of the Departmental
Report 2008 showed a decrease between 2005 and 2007. What conclusions
should be drawn from these indicators, in particular whether the
UK is becoming less innovative? (Q 96)
Individual indicators such as the share of firms who bring
in new products or processes can vary over time, for example with
the state of the market. The 2001 survey, covering the reference
period 1998-2000, showed that 18% of businesses were product innovators
and 15% were process innovators, well below the levels recorded
by the 2005 survey for the reference period 2002-04.
The indicator of innovation intensity—share of sales
of innovative products—was on the other hand considerably
higher in the latest survey (covering the reference period 2004-06)
than in the 2005 survey.
But firms may be investing in future innovation, without
bringing in new products and processes over the same period. The
UK Innovation Survey covers this aspect through firms' spending
on R&D, acquiring knowledge from others, training staff, and
on design and marketing, The indicator for the share who are "innovation
active" includes those making such preparatory investments,
as well as product and process innovators, and is substantially
higher in the latest 2007 survey.
This is the summary market innovation measure that features
in the smaller number of indicators selected for the latest Science
and Innovation Public Service Agreement.
On balance, therefore, these indicators do not show that
the UK is becoming less innovative but are a basis for cautious
optimism about the underlying innovation capability of the economy.
8. The reasons for the overspend on higher education in
2007-08 and the underspend on Train to Gain. (Qq 103, 109) In
addition, can DIUS confirm that the virement to higher education
has been "repaid" in 2008-09, and explain the baseline
and repayment in the DIUS Main Estimate?
In response to the underspend on Train to Gain
Train to Gain is a demand led programme. There has been good
growth in the number of employers and learners engaged in the
programme, and demand is still growing. However, we still want
more employers to use the service in order to benefit their business.
In response to what actions are in place to ensure that the underspend
will not be repeated
Alongside significant communications campaigns designed to
increase employer demand, we are building on the flexibilities
that were made available from Summer 2008 to ensure that businesses
are able to use Train to Gain in a more flexible way to meet needs
of their business and sector.
We have already agreed 10 compacts with sector skills designed
to meet the needs of individual sectors and drive up demand from
employers. We are negotiating more compacts with other sectors.
To help them respond to changing economic circumstances,
we have introduced a new package of support for SMEs which is
designed to meet their particular needs.
Resource Accounts and Budgetary Transfers
The Secretary of State agreed to write to Mr Willis on this
issue, following the DIUS oral questions session on 16 October.
We expect this letter to be with the committee shortly.
Disclosure within the Accounts
Government Accounting requires explanations for significant
variances between Estimate and Outturn. The variances on the HE
overspend and LSC underspend were less than 10% and so in our
assessment not significant. However we have noted the interest
generated in relation to these areas and we will reflect this
in the preparation of future DIUS Resource Accounts.
9. On page 84 of Departmental Report 2008, the number of
patents granted to higher education institutions is used as an
indicator. They fell from 711 in 2004-05 to 576 in 2005-06. What
conclusions should be drawn from this?
These are still relatively new data series and there do seem
to be variations from year to year in the indicators. It is more
important to focus on the broad trends, which are positive, than
on year on year variations.
More recent 2006-07 data show patent applications up to a
new high of 1,913 and a 12% increase in patents granted to 647.
There is of course a lag between applications and patent grants.
10. On page 85 the Public Sector Research Establishments
Income from business consultancy fell significantly in 2005-06,
to £26 million, from previous two years. What conclusions
should be drawn?
Firm conclusions cannot be drawn from one year's data and
DIUS takes into account the overall trend in numbers to inform
policy decisions.
The PSRE income data can be volatile—they may be affected
in particular by the presence of a small number of large but "lumpy"
projects. More recent 2006-07 data shows an increase in PSRE income
to £43 million.
For the purposes of measuring progress in the new PSA, from
2008, a three year average of business consultancy income will
be used, to correct for this volatility.
11. In July 2004, the Government published a 10-year Science
and Innovation Investment Framework, which set out a long-term
vision for UK science and innovation. It included "the ambition
that public and private investment in R&D should reach 2.5%
of GDP by 2014". According to page 86 of the Departmental
Report 2008 the BERD [business enterprise research and development]
expenditure as a proportion of GDP was 1.08%. Is 2.5% still the
target?
The aspiration for total R&D, (GERD—Gross Expenditure
on Research and Development) including both public and private
spending, to reach 2.5% of GDP by 2014 has not been changed.
Note: The BERD share of GDP at 1.08% accounts for only part
of the total expenditure on R&D (GERD), which was 1.75% of
GDP in 2006, a slight increase on the share for 2005 of 1.74%.
12. On page 16 under business operations the Departmental
Report says all staff were issued with modern, lightweight laptops.
What was the cost?
Following a competitive procurement exercise run by the Cabinet
Office, DIUS adopted the Public Sector Flex contract with Fujitsu
Services. Flex provides ICT as a shared service across the public
sector. The cost to DIUS is under £1,700 a year per user,
and includes state of the art, lightweight, encrypted laptops,
peripherals, printers, all software, email services, internet
& GSI connectivity together with helpdesk services, support
and maintenance.
Flex is a regularly benchmarked service which provides a
comprehensive range of ICT and which allows Departments to enjoy
economies of scale, improved sustainability and opportunities
for flexible working. John Suffolk, Government Chief Information
Officer, described Flex as "good for the taxpayer, good for
our employees and good for the planet".
13. Table 7 on page 106 of the Departmental Report identifies
"total identifiable Departmental spending on services by
country and region" It shows that England DIUS spending fell
everywhere except London between 2006-07 and 2007-08. What was
the reason for this?
Following your question, we have reviewed the underlying
data that supported this table and identified an inconsistency
in the allocation of spend by the Learning and Skills Council
between 2006-07 and 2007-08. We will supply an updated table as
soon as possible and will in any case aim to do this within two
weeks.
October 2008
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