Departmental Annual Report 2010-11 - Business, Innovation and Skills Committee Contents

Written evidence submitted by the Department for Business, Innovation and Skills

DEPARTMENT FOR BUSINESS, INNOVATION AND SKILLS ANNUAL REPORT AND ACCOUNTS 2010-11 AND THE WORK OF THE DEPARTMENT

During the evidence session on Wednesday 9 November, the Secretary of State, and Martin Donnelly, Permanent Secretary, agreed to write to the Committee with answers to a number of additional questions. Please find attached our response together with supporting annexes.

Ian Webster

15 November 2011

1.  BIS DELIVERY OF SAVINGS 2011-12

The Committee asked the Department to send "the latest up-to-date figures on [BIS'] second year savings" [Q11]

For 2011-12 we have conducted a thorough Mid Year Review, which included all of our Partner Organisations and introduced a greater focus on personal accountability by requiring CEOs and Directors General to sign-off forecasts. The Review process involved a rigorous assessment of latest estimates across all budgets, considering central point forecasts (see below) and a range where there are uncertainties.

Below is a summary of the required savings by major spending area in 2011-12. The information on current forecasts is based on work done to mid-October.

2011-12 programme

BIS is expecting to meet the 2011-12 savings targets for programme. The funding for 2011-12, compared to 2010-11, summarises as follows

£'000	2010-11 Baseline	2011-12 Budget
HEFCE Teaching Grant	5,141,848	4,645,179
Skills Funding Agency	3,828,114	3,818,425
Research Councils	2,822,172	2,774,669
Student Grants	1,607,164	1,624,000
Student Loans	1,521,140	1,601,608
HEFCE Research	1,618,300	1,549,112
Technology Strategy Board	369,246	222,800
UK Space Agency*	7,226	205,637
Royal Mail/Post Office restructuring	150,000	179,925
Regional Development Agencies	396,319	141,000
Other Programmes	1,350,741	837,573
Total Programme Resource ex Student Loan revaluation	18,812,270	17,599,928
Student Loan Reserve Claim***	2,663,000	c.3,000,000
Total Programme Resource inc Student Loan revaluation	21,475,270	20,599,928
Central point forecast from Mid Year Review		17,484,220
Central point forecast underspend		115,708
Forecast variance to budget		0.66%

Notes: The above figures include near-cash and non-cash balances.

* The UK Space Agency was created from 1 April 2011, the budget for 2010-11 reflects only some of the Space-related budget.

** Other Programmes includes funding to other BIS Partner Organisations across all BIS policy areas. Funding includes items such as Technology Innovation Centres, National Measurement Office, UKCES and organisations in the consumer and competition areas.

*** The Student Loan budget was increased to £4,184 million by a £2,663 million Reserve claim to cover impairments to the value of the Student Loan Book. The exact level of the student loans Reserve Claim required in 2011-12 will be heavily influenced by forecasts of RPI, earnings growth and the Bank of England base rate, which will be available in March/May 2012. The £3 billion figure is a provisional estimate which incorporates a measured assessment of the risk of forecasts moving adversely. The actual figure could vary significantly from this estimate.

The central point forecast from the mid-year review indicates that BIS will underspend against the 2011-12 budget. There is, however, a significant range that the final outturn could be within, due to the volatile nature of a number of BIS budgets. There is also expected to be a non-cash reserve claim in relation to the Student Loan Book, which will be subject to the macroeconomic variables which impact valuation—see the note to the table above.

In conclusion, BIS is on track with its programme spend to deliver our planned reductions for 2011-12.

2011-12 admin

Admin savings of £84 million are required in 2011-12. This saving will come decommissioning the RDAs, headcount reductions and from corporate services reform—including by continuing to rationalise our estates, renegotiating ICT contracts, implementing shared services and improving the efficiency of our procurement.

The funding for 2011-12, compared to 2010-11, summarises as follows:

£'000	2010-11 Baseline	2011-12 Budget
Core BIS Admin	279,196	273,412
Skills Funding Agency	146,823	139,358
Research Councils	158,542	151,250
Regional Development Agency	212,000	150,000
UKTI	40,000	39,300
Student Loans Company	35,909	36,180
Technology Strategy Board	28,422	28,155
HEFCE	23,836	23,723
Learning and Skills Improvement Agency	12,400	12,198
Advisory, Concilliation and Arbitration Service	10,554	10,459
Others	40,318	39,716
Total Admin Reserve	988,000	903,751
Central point forecast from Mid Year Review		862,694
Business cases to be submitted to Treasury		33,000
Central point forecast adjusted for business cases		895,694
Central point forecast underspend		8,057
Forecast variance to budget		0.89%

The central point forecast from the mid-year review indicates that BIS will underspend against the 2011-12 budget. The major driver behind this is the RDA decommissioning programme. There remains a number of risks and areas of volatility across a number of Admin budget areas. Business cases for spending proposals are being prepared for spend-to-save measures.

2011-12 capital

BIS are on track to deliver the reductions in capital spending in 2011-12. The major capital budgets for 2011-12 summarise as follows:

£'000	2010-11 Baseline	2011-12 Budget
Research Councils	522,248	351,121
Skills Funding Agency	649,302	305,200
Large Facilities Capital Fund	191,151	100,379
HEFCE Teaching and RCIF HEFCE Capital	206,929	148,599
HEFCE Research Capital	166,952	75,170
Enterprise Finance Guarantees	44,600	48,860
Grants for Business Innovation	1,600	32,000
Venture Capital Funds	48,030	28,940
Small Firms Loan Guarantees	14,000	18,830
Other	261,327	68,841
Total Capital DEL	2,106,139	1,177,940
Central point forecast from Mid Year Review		1,142,104
Business cases to be submitted to Treasury		35,000
Central point forecast adjusted for business cases		1,177,104
Central point forecast underspend		836
Forecast variance to budget		0.07%

Business cases for spending proposals are being prepared for potential capital spending proposals.

2.  STUDENT LOANS

The Committee asked for an update on the Departments discussions with the Treasury, on "issues to do with the student loan book" [Q15]

1.  Under the current system we pay out around £6 billion of loans to students each year. The loans are due to be paid back over a maximum period of 25 years. This long timeframe means the Department needs to account for the loans at net present value reflecting the time value of money and the cost of government borrowing. In layman's terms this means we need to adjust the value of future repayments to reflect the fact that £6 billion paid back in a number of years time would be worth substantially less than £6 billion paid back tomorrow.

2.  If the Department expected all graduates to repay the costs of their loans including government borrowing in net present value terms then we would fully recover our initial outlay. There would be no impact on the Departmental Expenditure Limit (DEL) budgets (the budgets for which BIS bears the risks). In this case the asset on the Department's balance sheet would exactly match what had been paid out and what it would receive back in future years (in net present value terms).

3.  In reality this is not the case. A proportion of loans is written off each year because graduates do not earn enough to repay the loan over 25 years or they become disabled or die. In addition the interest which graduates accrue on their loans each year is set at a subsidised rate of the lower of the Bank of England base rate plus 1% or Retail Price Index inflation (RPI). This means that the Government effectively subsidises loans for the "time value of money" and does not reflect the cost of borrowing in the interest charged to students.

4.  As a result of this the Department reduces the value of loans issued on its balance sheet by the amount it estimates will not be recovered over the life span of the loans. This reduction in value appears as a notional or "non cash" cost (representing an estimate of the resource cost to BIS over the lifetime of the loans issued) in BIS's DEL budget each year. The estimate of the value of loans, taking account of the reduction, is produced using a model with assumptions which include a discount rate of RPI + 2.2%, estimates of graduate earnings, the value of loans which may be written off, forecasts of the Bank of England base rate and inflation.

5.  But it is only an estimate and the assumptions it is based on can and do change. Each year the value in the Accounts is compared to the latest projections in the model and if there is a "material" difference above a certain threshold (about £150 million) the value is updated. Any update to the value, upwards or downwards, currently is recorded in our DEL budgets.

6.  In the 2010-11 Accounts there were a number of significant downwards adjustments to the value of the loan book which in total amounted to £2.6 billion. There were two key contributory factors behind this decrease: (a) the base rate cap, where borrowers accrue interest at lower rates than originally forecast—and (b) some important changes in assumptions and modelling to improve accuracy.

(a)  Borrowers accrue interest at the lower of Bank of England base rate + 1% and RPI. As the forecasts of the Bank of England base rate are so low (and inflation high), government accrues lower interest than it originally budgeted for. This reduces the amount of repayments expected in the future and reduced the valuation of the loan book by £1.5 billion in the 2010-11 accounts.

(b)  In the past we have used long term assumptions of earnings and RPI as part of the valuation reflecting the fact that fluctuations in the economic cycle would even out over the lifetime of the loans. In 2010-11 we took a decision to move to using more accurate short term assumptions on a five year rolling basis as the difference between the long term and short term were so stark. We also reflected a change to the long term RPI and other modelling improvements. These factors led to a £1.1 billion decrease in the valuation.

7.  It is likely that there will be a further significant adjustment in 2011-12 reflecting further changes in macroeconomic forecasts. More generally as the loan book increases in size, the scale of changes in valuation driven by macroeconomic factors such as inflation, earnings and Bank of England base rate forecasts will increase. The loan book is expected to exceed £100 billion within 10 years. This increases the already substantial challenges for the Department in managing changes in the valuation without breaching the Parliamentary Estimate.

8.  There are a range of ways in which we are looking to mitigate this risk (see below), however, it is important to recognise that it is impossible to eliminate the risk altogether.

—  Careful analysis and assessment of the likely path of macroeconomic factors specifically RPI, earnings growth and the Bank of England base rate to ensure we make a measured assessment of their likely impact on the loan valuation in advance of the Supplementary Estimate.

—  As mentioned at the recent Select Committee hearing, we are working with HMT to consider whether any improvements could be made to the budgeting framework to reduce in year volatility while ensuring BIS remains accountable for the real costs in the medium term. Details of how this might work are subject to ongoing discussions and have not yet been finalised.

—  Carrying out independent reviews of the student loan model to refine assumptions and ensure we are providing our best estimate of future cashflows.

—  Looking at options for the monetisation of some of the loan book. If possible this would reduce the amount of loans on the Department's balance sheet and have a consequent reduction in risk.

9.  We will endeavour to keep the Committee informed of any significant developments.

3.  OUTSTANDING DEPARTMENTAL SRP ACTIONS

The Committee asked for more detail on the Department's outstanding milestones [Q22]

The two outstanding structural reform plan actions for BIS relate to the Department's work on consumer credit, and specifically to the three Coalition Commitments in this area (ie on unfair bank charges, on a cooling-off period for store cards and on an interest rate cap for credit and store cards).

The policy work on these Coalition Commitments is being taken forward through the Government's Consumer Credit and Personal Insolvency Review. The Call for Evidence for the Review was published in October last year and closed in December. The Committee will be aware that the Department's work on consumer credit and personal insolvency is the subject of a BIS Select Committee inquiry later this month.

The two outstanding Structural Reform Plan actions are:

1.  Action 9.3(ii) Develop measures to end unfair bank and financial transaction charges for consumers.

2.  Action 9.3(iii) Announce a proposed package of measures on which voluntary agreement with banks will be sought.

The Government published a summary of the responses to the Review in July. This included the Government's response on the personal insolvency elements of the Review. However, BIS and HMT Ministers decided that the Government response to the consumer credit elements of the review (including the Coalition Commitments) should be delayed in order to deliver the best possible policy outcome for consumers and business.

The Government will publish the final Government response to the Consumer Credit and Personal Insolvency Review later this month (November), setting out how the Government will be addressing the consumer credit Coalition Commitments. As a result, the two outstanding actions above will be closed by the end November deadline, as set out in the latest Structural Reform Plan.

4.  MAS PREFERRED SUPPLIER

The Committee asked if the Department will miss the target launch for the Manufacturing Advisory Service [Q26]

—  BIS identified MAC (Manufacturing Advisory Consortium) as the preferred supplier, following the OJEC procurement exercise, on 29 September 2011. Mark Prisk formally announced the selection on 14 October.

—  Contract negotiations are progressing well between BIS and MAC, with sign off looking probable within the next few weeks.

—  The new national MAS service remains on target for 1 January 2012 launch.

5.  ROYAL MAIL

The Committee asked, with regard to Royal Mail "what guidance has BIS given to Ofcom on maintaining competition, particularly regarding Ofcom's regulatory regime"

Ofcom's consideration of competition in their overall regulatory framework was driven by the underlying legislation. BIS provided no further guidance to Ofcom over and above this, and provided no response to Ofcom in their development of proposals on the new economic regulatory framework.

However, the Secretary of State did write to Ofcom during the passage of the Bill (ie before Ofcom took over as Regulator), setting out the Government's intentions for the future regulatory framework. This letter did mention our position on competition, in summary: "… whilst competition is beneficial—and has brought real benefits to consumers over the last few years—it must not come at the expense of the universal postal service".

A copy of the letter is included at Annex A, for reference. This is also public and available on our website at http://www.bis.gov.uk/assets/biscore/business-sectors/docs/p/11-874-postal-regulatory-framework-letter-to-ofcom-postcomm.

6.  INPUT/IMPACT INDICATORS

The Committee queried the Department's indicators [Q35-46]

On Thursday 10 November, BIS published a comprehensive guide to the Department's input and impact performance indicators, supplementing the basic information which had previously been available (ie definitional information, methodology and data source). We believe that BIS is the first department to take this step in publishing this kind of supporting information about our indicators.

This information can be found on the Department's website at:
http://www.bis.gov.uk/about/performance-reports/performance-indicators, and is enclosed at Annex B for the Committee.

The Committee particularly asked about the indicator which measures the proportion of firms which are "innovation active" [Q46]. This indicator is explained in detail in pp 47-50 of Annex B. In summary:

An innovation active firm is one that has had innovation activities during the period under review. "Innovation" is defined as a new or significantly improved product (good or service) introduced to the market, or the introduction within an enterprise of a new or significantly improved process. Innovations are based on the results of new technological developments, new combinations of existing technology or the utilisation of other knowledge acquired by the enterprise.

This indicator is based on results from the UK Innovation Survey, which is funded by BIS. The Survey is part of a wider Community Innovation Survey (CIS) covering European countries.

58% of firms were innovation active during the period 2006 to 2008, which represents a fall of five percentage points from the previous survey (63% of UK enterprises were innovation active during the period 2004 to 2006). However, smaller businesses are narrowing the gap with large firms on levels of engagement across a range of innovation related behaviours.

This indicator is due to be updated in February 2012.

7.  KAY REVIEW

The Committee asked when the Kay Review would deliver its conclusions [Q55]

In June 2011, the Secretary of State appointed Prof John Kay to conduct a Review of UK equity markets and long term decision making. He is being supported by Sir John Rose, former Chief Executive of Rolls-Royce plc, James Anderson, a Partner at Baillie Gifford and Chris Hitchen, Chief Executive of the Railways Pension Trustee Company.

The Review team has launched a consultation which is due to conclude later this month. In the light of this, Prof Kay is due to publish an interim report in February and present his final report to the Secretary of State in July 2012.

The terms of reference for the Review state that:

The Government wishes to ensure that UK equity markets continue to perform to the benefit of both companies and investors. The Secretary of State has therefore commissioned a review which will consider the ways in which the mechanisms of control and accountability provided by UK equity markets, and the behaviour of the agents in that process, affect the performance of UK businesses. The review will give particular emphasis to the ability of managers to focus on the actions needed to enhance the long term competitiveness of UK based firms and achieve the best long term returns for UK savers.

8.  ONE IN ONE OUT

The Committee asked "what proportion of total measures that go in are excluded from One In One Out, as a proportion of the whole?" [Q58]

BIS does not hold data on the total range of regulation introduced to Parliament. Legislation.gov.uk (hosted by The National Archives) carries most (but not all) types of legislation and their accompanying explanatory documents. Limitations in data captured and search facilities prevent identification of legislation falling outside the scope of OIOO, and statutory instruments relating to EU directives, separately. Therefore, the department is not in a position to provide a robust assessment of what proportion of regulations introduced fall out of scope of OIOO.

In lieu of such a response, we set out below a summary of the rationale for each of the regulatory exemptions which apply to OIOO:

1.  Regulation that does not impact on business or civil society organisations:

—  Securing strong economic growth is a priority and for that reason the Government's initial focus needs to be on reducing burdens to business.

2.  European Union Regulations, Decisions and Directives:

—  The focus is on domestic regulation, which is under our control.

—  This Government is committed to working with partners in the EU to change the culture so that European regulations do not get in the way of growth.

—  We are fulfilling the Coalition Agreement's commitment to end gold-plating so that British businesses are not disadvantaged relative to their European counterparts when we implement EU Directives. Therefore, any gold-plating counts as an "IN" for One-In, One-Out purposes.

According to the European Commission's "MNE database", in respect of European Directives where the transposition deadline fell between 1 April 2011 and 10 November 2011, the UK notified the European Commission of:

—  14 complete transpositions.

—  28 partial transpositions (transpositions yet to be completed).

3.  International agreements and obligations—(See response re: EU measures)

4.  Tax—central and local & tax administration & spending decisions:

—  Tax is controlled through the financial budget process, ensuring that government can flexibly and fairly finance public services.

—  In July 2010 the Office of Tax Simplification was established to provide independent advice on simplifying the UK tax system. The Chancellor has already commissioned the Office of Tax Simplification to undertake a review of all tax reliefs and a review of small business taxation.

5.  Tax administration—this is being taken forward separately by the Office for Tax Simplification and is therefore out-of-scope of OIOO. (See above)

6.  Civil emergencies regulation:

—  It would not be practical or appropriate for the exercise of emergency powers to be constrained by the operation of the one-in, one-out rule.

—  The Civil Contingencies Act 2004 forms the basis of the powers to deal with emergency situations in the UK (eg a foot and mouth outbreak). By definition these powers are often required at short notice making it impractical for departments to comply with the One-in, One-out rule.

7.  Spending decisions:

—  Spending decisions are controlled through the financial budget process, ensuring that government can flexibly and fairly finance public services.

8.  Specific enforcement action:

—  One-in, One-out is not intended to constrain the Government's ability to end non-compliant activity.

—  Individual enforcement activities or actions to ensure compliance are not included because high levels of compliance to a particular regulation maximises the effectiveness of it achieving its purposes.

—  The cost of complying with a new regulation, in terms of the new activities a business and the relevant enforcement agent will have to undertake, is captured by One-in, One-out.

9.  Fines and penalties:

—  One-in, One-out is based on an assessment of the costs of compliance with regulations.

—  It would not be appropriate to constrain the Government's ability (to use fines and penalties) to end non-compliant activity.

10.  Fees and charges—except where they result from an expansion or reduction in the level of regulatory activity:

—  There is a distinction between fees and charges levied for the purpose of recovering costs, and regulatory charges which are levied to achieve changes in behaviour.

—  Government activities that are funded through fees or licences, sometimes as required by statute, are not included in One-in, One-out.

—  It is important to ensure government can flexibly and fairly finance public services.

11.  Contractual obligations:

—  Costs through contractual obligations should be recovered through the contract pricing and negotiated in the contract agreement.

—  Work to reduce the burdens that flow from Government procurement procedures is being taking forward by the Cabinet Office. For example, it is currently planning to implement a wide range of reforms to central government procurement practices which will yield substantial savings to both the public sector and business.

12.  Court or tribunal cases—where the conclusion of a court or tribunal case has resulted in a change in the interpretation of a regulation:

—  It would not be appropriate to constrain the ability of courts or tribunals to make decisions on the interpretation of regulation. The Government therefore does not include changes to the interpretation of regulation coming from court cases, including infractions, in One-in, On-out.

—  However, where the result of a court case requires a change to the law or regulation itself, the additional costs of such changes are included.

13.  Environmental tax—environmental measures which have been classified by the Office for National Statistics as environmental tax.

9.  STATUS OF EU REACH REGULATIONS

The Committee asked about "the status of the REACH renegotiations". [Q70]

Background

REACH (Regulation, Evaluation and Authorisation of Chemicals) is an ambitious piece of European legislation for the management of chemical substances and metals. It replaced over 30 separate pieces of legislation when it came into force in 2007 and has a long phase-in period, with the last key deadline in 2018. The high level aims are the protection of human health and the environment. This includes the removal of the most hazardous chemicals and replacement with safer alternatives. The major policy shift is that industry is now required to provide all the data on their chemicals and metals to the authorities and put in place plans for substitution where necessary. Any chemical that was not pre-registered in 2008 (which allows companies to take advantage of the phase-in periods), needs to be fully registered to stay on the market.

REACH Review

The legal text specifically requires that three reviews should be conducted by 1 June 2012:

1.  review of ECHA—the EU Chemicals Agency;

2.  review of low tonnage (only manufacturers and importers of more than 1 million tonnes pa of chemicals are covered by REACH); and

3.  review to assess whether or not to amend the scope of REACH, in order to avoid overlaps with other EU legislation.

In addition, the Commission must publish a general report on the experience acquired with the operation of REACH, and on funding for alternative test methods.

The Commission has decided to carry out a larger review exercise in 2012. Within this framework, it will include a report on the first lessons learnt from the implementation of REACH with special attention to the costs and administrative burden—a particular concern to UK SMEs—and other impacts on innovation. The Commission will consider proposing practical approaches to better implement the current legislation eg improving existing guidance documents. Once the 2012 review is finalised, ie after 1 June 2012, the Commission will also conclude whether or not a legislative revision is necessary, also bearing in mind potential impacts on the next registration deadlines (2013 and 2018).

DEFRA are planning to consult the chemicals industry about the impact of REACH early next year and the results will feed into the Government's input into the Commission's Review. The role of BIS is to encourage UK business to participate in this exercise and to ensure that their views are considered in the UK response.

10.  STAFF NUMBERS

The Committee asked if the Department would provide "further information on the impact [of staffing reductions] in Department sections". [Q83]

The table at Annex C shows headcount levels within departmental Groups at discrete points since April 2010. This is taken from BIS management information, which also forms the basis of the Department's staff data publications as part of its transparency agenda.

Key factors which should be taken account of when reviewing this data are:

(a)  Data is based on costs centres: both cost centres and team responsibilities have shifted in some cases, meaning that data across the period may not be directly comparable.

(b)  Data is based on the number of full time equivalents in the Department: some discrepancies may arise due to rounding.

(c)  Machinery of Government changes account for some changes in staff numbers, such as the move of Information Economy to DCMS (April 2011), and of Government Property Unit into BIS (January 2011).

(d)  The Permanent Secretary went into some detail to explain the Department's approach to staff changes during the hearing: see in particular Q80-84 of the transcript.

11.  EXIT PACKAGES

The Committee asked for the Department to share "what is included in [exit] packages" [Q91]

Basis for calculation of exit payments

The exits shown in the Annual Report (Table 9.1, page 113) were voluntary exits made in 2010 under the terms which applied at the time under the Civil Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972.

Three factors determined the cost of an exit package under the scheme:

—  The pension scheme to which a member of staff belonged.

—  The terms of the voluntary exit: either Flexible Early Severance (FES); Approved Early Retirement (AER); or Flexible Early Retirement (FER).

—  Individual pay and length of service.

The Department had discretion to decide whether to offer an individual voluntary exit and on which set of terms (FES, or if applicable AER or FER). The amount paid to the individual was then determined by the scheme rules, which are summarised in the Background section below.

In core BIS all staff were eligible to apply for voluntary exit in 2010. The criteria for selecting those made offers were based on the individual's performance, potential and skills.

Value for Money

The aim of the 2010 exit scheme in core BIS was to achieve in year administrative cost savings. By spending money on upfront exit costs the department will benefit from significant savings in pay costs over the Spending Review period. In core BIS, the 2010 exit scheme will generate pay cost savings of £16.7 million in each future year, at a total cost of £26.6 million.

We also had regard to the cost of each package to ensure they represented value for money. No offers of early retirement (FER or AER) were made if the cost was more than three times an individual's total paybill costs (salary, ERNIC and superannuation). All exit packages costing more than £200k were approved by the Permanent Secretary.

Background

The rules for calculating the cost of exits under the Civil Service Compensation Scheme which were in force prior to December 2010 were complex and dependent on which pension scheme staff belong to (ie classic, classic plus, premium or nuvos). The full rules are explained on the Civil service Pensions website
(http://www.civilservice.gov.uk/?s=compensation+schemes). In summary, the key terms for a member of the classic pension scheme, who make up the majority of core BIS staff who departed in 2010, were as follows:

Flexible Early Severance (staff aged under 50):

Qualifying service of less than one year: No compensation.

Qualifying service of more than one year but less than two years: Compensation of two weeks pensionable pay per year of reckonable service (plus two weeks pensionable pay for each year of service after age 40).

Qualifying service two years or more: Immediate compensation lump sum of up to two years' pensionable pay depending on age and reckonable service.

Approved Early Retirement: (Staff aged 50-60 with more than five years qualifying service):

An unenhanced pension and tax-free lump sum payable immediately.

For an individual in the classic scheme the annual pension would be calculated as final pensionable salary x years of service/80; the pension lump sum would be three times the annual pension. For example, an individual on a final pensionable salary of £25,000 with 20 years service would receive a pension of £6,250 (£25,000 x 20/80); and a lump sum of £18,750 (£6,250 x 3).

Flexible Early Retirement: (Staff aged 50-60 with more than five years qualifying service):

The choice of either:

A.  an enhanced (increased) pension based on reckonable service being enhanced by up to 6 and 2/3 years and a tax free lump sum paid immediately; or

B.  all their early retirement benefits paid solely in the form of compensation (paid immediately) with an unenhanced pension and tax free lump-sum preserved for payment at pension age. In addition, an annual compensation payment until they reach pension age equivalent to the enhanced pension of up to 6 and 2/3 years. A further annual compensation payment from pension age is also added to the preserved pension so that it is equivalent to the enhanced pension at option A.

Note that for AER and FER terms the total cost of an exit charged to the Department's accounts covers the cost of all pension payments until the individual reaches their normal scheme retirement age (60 for classic). After the age of 60 pension costs fall to the Principle Civil Service Pension Scheme, as they would for any previous BIS employee, and are not charged to the Department.

12.  REGIONAL GROWTH FUND JOBS CREATION

The Committee asked "how many jobs have been created so far as a result of the decisions made by the Regional Growth Fund" [Q96]

Final grant offer letters have been signed for seven full RGF projects and one package of eight small grants. A further grant offer letter has been signed for one of 10 projects which will form the Carbon Trust package. These 16 projects are listed below, along with the number of jobs that are expected to be created or safeguarded.

The projects will make their first claims in January 2012, at which point they will also provide details of their progress to date, including the number of jobs created. RGF funding will not be released until these first claims are made, and funding is contingent upon job creation.

Project			Number of jobs that will be created or safeguarded (information taken from bid applications provided Jan 2011)
1.	Plymouth Aspire Fund		49
2.	Proctor & Gamble		188
3.	David Brown Gear Systems		162
4.	Middleport Potteries		198
5.	Liverpool Echo Aspire Fund		50
6.	Molecular Profiles		74
7-14	Chirton Engineering Package (package of eight projects)		161 (total number of jobs created/safeguarded for the package)
	—	Almaritec
	—	Chirton Engineering
	—	Conitech
	—	Verta Energy
	—	Monitor Coating
	—	Red Marine
	—	Seaward Electronic
	—	Tharsus Engineering
15.	HSBC: SME Investment Aid Scheme		2,500
16.	Carbon Trust Package (package of 10 projects)		305 ( total number of jobs created/safeguarded for the package)
	—	Aeristech

13.  PARTNER ORGANISATIONS

The Committee asked for the status of partner organisations listed in the BIS Guide as undergoing reform, abolition or merger [Q23]

Organisation	Planned reform	Completion date (actual if already completed; estimated if not yet complete)	Comments/caveats
Design Council (DC)	DC has been changed from an NDPB into a private sector charity, with a refocused remit.	April 2011
National Endowment for Science Technology and the Arts (NESTA)	Abolish NESTA as an NDPB. NESTA will be reconstituted as an independent charity with a public sector trust holding the National Lottery endowment.	April 2012	Subject to consultation and legislation
Competition Commission	Transfer function to a new Competition and Markets Authority.	Q3-4 2013-14	Subject to legislation
Office of Fair Trading (OFT)	Transfer competition functions to a new Competition and Markets Authority.	Q3-4 2013-14	Subject to legislation
Consumer Focus	Abolish	April 2013	Subject to consultation and legislation
The London Development Agency	Abolish	By April 2012	Subject to legislation
8 RDAs	Abolish	By June 2012 (operational closure with effect from 31 March 2012)	Subject to legislation
Postcomm	Abolish Postcomm. Regulatory responsibilities transferred to Ofcom.	October 2011
British Shipbuilders	Abolish	June 2012	Subject to consultation and legislation
Local Better Regulation Office	Bring LBRO's continuing functions into the Department so it is no longer a separate NDPB.	Early 2012	Subject to legislation
Insolvency Practitioners Tribunal (IPT)	Proposal to abolish still under consideration.	Not earlier than April 2014	Subject to consultation and legislation
Copyright Tribunal	Transfer jurisdiction of this tribunal into MoJ's tribunal service.	To be confirmed	Subject to final agreement
National Centre For Entrepreneurship In Education (formerly known as the National Council for Graduate Entrepreneurship)	Become self-financing by 2013.	April 2013	BIS are working with NCGE to support their development of a business model which is self-financing from April 2013

In addition SITPRO Ltd, which does not appear in the BIS guide, was abolished in April 2011.

Annex A

Dear Colette and Millie,

The Government last week published a package of amendments to the Postal Services Bill, in the light of these, I want to take this opportunity to set out the Government's intentions for the regulatory framework that the Bill will establish and which Ofcom, as regulator, will oversee.

The challenge facing Ofcom in regulating a declining postal sector is substantial. As a result of technological developments, in particular e-communications, there are very few communications that can only be done by mail today, and, as Richard Hooper's report makes clear, post is increasingly part of a wider communications sector. This challenge is one that we have faced too in developing the legislative framework for postal services and—because this market decline is a global phenomenon—one which governments and regulators are facing around the world. As the Government is under a legal obligation to ensure the provision of a universal postal service, I have a keen interest in ensuring that the regulatory regime that protects that service is appropriate and balanced.

The Government's overriding policy objective is to secure the future of the universal postal service in the UK and, given that Royal Mail is the only company currently capable of providing it, we must therefore have particular regard to the risks that Royal Mail faces. The Postal Services Bill is an important step in fulfilling our goal. Part 1 of the Bill allows for the introduction of private capital to Royal Mail, bringing with it the commercial disciplines to drive the modernisation it needs to survive. Part 2 of the Bill will allow the Government to relieve the company from the crippling burden of its historic pension deficit. And Part 3 of the Bill—which sets the new regulatory framework—must also be seen in that context. I should make clear too that Part 4 of the Bill—which allows for the establishment of a postal administrator should the universal postal service provider go into administration—is not a set of powers that we expect to have to use.

Royal Mail is now in a precarious position. It is losing money and—as Richard Hooper has made clear—it must press ahead rapidly with modernisation in order to survive in the face of ongoing volume decline. It is also clear that the regulatory regime will have an important bearing on its position in the future. In that context, we should acknowledge that, while competition is beneficial—and has brought real benefits to consumers over the last few years—it must not come at the expense of the universal postal service.

A new approach: The passage of the Bill therefore allows the opportunity for a new start for the regulation of postal services. Given the seriousness of the problems facing Royal Mail, I believe that a comprehensive reassessment of the regulatory regime is required in the light of developments in the postal and communications sectors to:

—  look again at where regulation is needed;

—  determine what form that regulation should take if required;

—  establish whether there is a need for price controls in the future; and

—  determine whether the methods used to determine the price control in the past (and currently) will continue to be appropriate for the future.

The regulator should question in particular the extent to which the market has moved on such that Royal Mail's pricing can in fact be moderated simply by market forces. The Government is keen to ensure that regulation is lifted wherever possible and appropriate to give the universal service provider the necessary financial and commercial flexibility to deliver the universal service in what is clearly a declining market.

The Government intends for there to be a new approach, the Bill allows for it, and I have every confidence that the expertise and regulatory experience that resides in Ofcom (including that brought by Postcomrn staff) will be brought to bear in delivering it in time to meet the target of a Spring 2012 set of regulatory decisions, in that context I would like to welcome the recent consultation published by Postcomm that asks these key questions about whether regulation is necessary and how to keep it to the minimum required. These are questions on which emphasis must be placed, particularly given the developments in the market.

In developing this new approach, there are two principles that we had in mind when developing the provisions of part 3 and that I hope will guide your thinking—flexibility and financial sustainability.

Flexibility—the structural decline in the mails market demands flexibility from operators and regulator alike. The universal service provider should have the flexibility—where appropriate—to react to market dynamics in pricing and product innovation. At the same time, the new set of regulatory decisions which you will take should themselves have sufficient flexibility and adjustment mechanisms to allow for rapid change should it be required to help secure the future of the universal postal service, while providing appropriate incentives for Royal Mail to improve its efficiency over time.

Financial Sustainability—The Postal Services Bill by itself will not secure the future of the Universal Postal Service or Royal Mail. To achieve that—as Richard Hooper has made clear and the Coalition and previous Government accept—a critical step will be obtaining private sector investment in the company. An investor will want to know that the company is a viable investment proposition and—just as has been done in other sectors—the Bill places an obligation on Ofcom, in establishing the regulatory framework, to ensure that it will have regard to the need for the provision of the universal service to be financially sustainable.

One of our recent proposed amendments to the Bill adds flesh to this requirement—specifically that the reference to the need for the Universal Service to be "financially sustainable" includes "the need for a reasonable commercial rate of return for any universal service provider on any expenditure incurred by it for the purpose of, or in connection with, the provision by it of a universal postal service". This amendment is intended to cover the universal postal service and any regulated access services in so far as they make use of the universal postal service network. I understand that from your perspective "reasonable" and "commercial" in this context essentially mean the same thing. Our inclusion of both words in the amendment does not contradict or undermine that but is simply to ensure clarity that in applying this duty Ofcom could, amongst other things, and where Ofcom deem it appropriate, take into account private sector international operators in the postal market, their respective levels of efficiency and the different markets they are operating in, as well as regulated commercial companies in other regulated sectors.

Obviously it is not within the gift of the regulator to guarantee what returns Royal Mail can make—that should depend on the market and the company's performance. Nor will this requirement remove the need to promote efficiency on the part of the universal service provider. However, it is essential that the regulatory framework should provide the space and incentives for Royal Mail to be successful, to make the necessary efficiency improvements and allow for good performance to be rewarded.

Greater Regulatory Certainty—The further amendments that the Government has published today should also serve to give better effect to the Government's policy intention. If approved by Parliament, there would be a new power for Ofcom that would allow them to require anyone seeking to set up (or expand) a significant letter delivery service to notify Ofcom before commencing operations. This would give Ofcom the time to consider whether any regulatory conditions needed to be imposed on the operator in order to prevent any "cherry-picking" that would undermine the universal postal service. At the same time, we have also published amendments that will enhance the certainty for the universal service provider that they will not be the subject of a procurement determination—without their consent—for a period of 10 years. However, the regulator would have the ability under the Bill after five years to conduct a review into the existence of an unfair burden to the universal service provider of complying with its universal service obligations.

Ensuring that network access operates effectively and fairly will of course be central to securing the provision of the universal service. As you know, the nature and extent of the access obligations imposed on Royal Mail as the universal service provider have been the subject of much debate over the years. This has been heightened by recent volume declines as well as the comparative success of upstream access competitors. Under these conditions it is more important than ever that the right balance is struck between securing the universal postal service, which is the Government's first priority, encouraging competition.

To date, competition to any real extent in the UK market has only developed upstream. So getting the balance right means in particular making sure that regulation is only used only where it is deemed appropriate by Ofcom to promote the goals of efficiency and effective competition and conferring significant benefits on users as set out in the Bill. Access must be fair to all parties and should not impose onerous burdens that could threaten the sustainable provision of the universal service, in short, in keeping with the duty that we aim to place on Ofcom, it is essential that Royal Mail is permitted to earn a reasonable commercial return on any expenditure incurred in providing the regulated access regime (insofar as it is also incurred for the purposes of the provision of the universal service).

I am confident that the regulatory framework established by the Bill, including the amendments that we have published last week, will give Ofcom the right duties to secure the future of the universal postal service, recognising that this will require a sustainable universal service provider, 1 have every confidence that the excellence that you will bring to this sector as regulator will ensure that this goal is achieved.

Vince Cable

Annex B

BIS INPUT AND IMPACT INDICATORS

The indicators are intended to broadly reflect the key objectives of the Department—we have chosen an impact area for rebalancing the economy, Further Education, Higher Education, science, innovation, enterprise, the business environment, regulation, employment law, trade and competition.

A variety of indicators in each of these areas were considered and we held an informal consultation on the draft indicators, which included meeting with the Select Committee, and have discussed them with the Department's Non-Executive Directors.

All departments have published details of their indicators—providing definitional information, methodology, and data source—in a standard format in an annex to their business plans and publish the latest results against the indicators in the standard Quarterly Data Summary.

In order to supplement this basic information with further context explaining the importance of the indicators, BIS has provided an overview of each indicator on our website: a short description on why the indicator has been chosen; the latest results on the indicator; contextual information which should assist in the interpretation of the results; and, details of the methodology.

We believe that BIS is the first department to take this step in publishing this kind of supporting information about our indicators.

We have kept this information as non-technical as possible and hope that it will help the public to judge whether our policies and reforms are having the effect they want, in line with the original purpose of the indicators. We will continue to develop the information we publish in order to ensure that it is fit for purpose and have provided the public with an opportunity to feedback on the website.

This document duplicates the information provided on the BIS website on 10 November, 2011: http://www.bis.gov.uk/about/performance-reports/performance-indicators

INPUT INDICATOR 1

OFFERS MADE FROM THE REGIONAL GROWTH FUND

Why is this indicator important?

The Regional Growth Fund is a £1.4 billion fund operating across England from 2011 to 2014.

The objective of the Regional Growth Fund is to stimulate private sector investment by providing support for projects that offer significant potential for long term economic growth and the creation of additional sustainable private sector jobs. An expected 326,000 jobs will be created and safeguarded thanks to the fund.

The Fund will particularly help support those areas and communities that are currently dependent on the public sector to make the transition to private sector led growth and prosperity.

How are we performing?

Offers made from the Regional Growth Fund (Round 1)

North, West and Midlands London, South East and East

£435 million £18 million

The first round of the Regional Growth Fund announced that the government would invest £450 million support in 50 successful bids to levering £2.5 billion in private sector investment that will create or safeguard over 27,000 direct jobs and close to a further 100,000 indirect jobs. These projects are expected to complete the due diligence process this autumn.

Successful bids from the second round of the RGF have also been announced. It will support 119 bids from businesses and local partnerships with projects to expand their operations, create new jobs and attract private investment. Discussions are ongoing with a further 10 bidders about their projects. The second round bids are also subject to the due diligence process.

The second round bids will create or protect 201,000 jobs, of these around 37,000 will be directly created jobs, and more than 164,000 will be in the supply chain. The Government investment will support nearly £6 billion of private investment secured by the successful projects.

What will influence this indicator?

Offers made through the Regional Growth Fund are dependent on the quality of the applications received.

What is BIS's role?

BIS administers the Regional Growth Fund.

Indicator definition

Cumulative total value of offers made in response to Regional Growth Fund bids. Allocations are conditional and subject to the outcome of the due diligence process.

The indicator would be assessed in two groups London, East and South East (GSE) (due to high commuting flows between these regions) and then the remaining regions of England (NMW).

Further Information

Information on the operation of the Regional Growth Fund, eligibility and the criteria used in awarding bids are available on the BIS website.

Related indicators

Impact Indicator 1: Change in private sector share of potential workforce.

Status

Last updated on: November 2011
Due for update on: To be confirmed

INPUT INDICATOR 2

GOVERNMENT FUNDING FOR THE POST OFFICE AS A PROPORTION OF THE POST OFFICE'S TURNOVER

Why is this indicator important?

Post Office Limited (POL), which is currently a subsidiary of the Royal Mail Group, is responsible for managing the Post Office network of around 11,500 post office branches. The Postal Services Act 2011, passed in June this year, will separate POL from Royal Mail, allowing both companies to more effectively focus on their own business challenges. POL will remain in public ownership, although the Government is currently consulting on plans that could lead to the company becoming a mutual organisation, subject to the successful implementation of its commercial strategy.

The vast majority of branches (around 97%) are operated by franchise partners or subpostmasters, who are independent business people. POL also directly operates 373 "Crown" branches, typically larger branches in city and town centres. Crown branches have recently operated at a significant loss. The commercial strategy, agreed with Government in 2010 will see the elimination of these losses by 2015. POL employs around 7,700 staff.

POL must meet a number of strict access criteria that demand, for example, that 99% of the national population live within three miles of a post office. To enable POL to achieve this, Government provides a subsidy to support the continued provision of post office services in communities where commercial operation is not viable.

To meet the challenge of today's retail environment, POL recognises that the network must change and become more competitive and that its renewal must be driven by what customers really want. It needs to offer longer opening hours, quicker service and high retail standards in well positioned and convenient locations. To achieve this, POL is piloting and will be introducing new operating models that will improve the customer experience, reduce operating costs and improve the financial sustainability of the network.

How are we performing?

In the long term, POL's success in growing new revenues and in operating its national network as efficiently as possible, should lead to this indicator reducing. However, while funding is provided over the Spending Review Period to enable POL to make the investments which deliver those results, we would expect this indicator to rise.

What will influence this indicator?

Post offices provide access to vital services for 20 million customers a week, and plays a key social and economic role in communities across the UK. Recognising this, in October 2010, the Government announced funding of £1.34 billion over the Spending Review period (subject to State Aid approval), which will enable the Post Office to maintain and modernise its network and safeguard its future. The breakdown of this funding by year is:

FY 2011-12	FY 2012-13	FY 2013-14	FY 2014-15
£180m	£410m	£415m	£330m

This investment addresses the BIS priority of securing the sustainable future of POL. The funding averages out at over £330 million a year, which is more than double the subsidy paid to the Post Office for the previous two years.

This investment, agreed in the Spending Review, will enable POL to modernise its network, develop new products, win new business, and reduce fixed costs. By 2015, over half of the post office network will have been modernised to meet the demands of the modern consumer. In the long term this will see POL move to a more sustainable financial footing, and will reduce future reliance on the public subsidy. However, we are clear that to enable POL to continue to meet the access criteria an element of public subsidy, albeit reduced, will continue to be required in the future.

What is BIS's role?

The Shareholder Executive in BIS manages the Government's shareholding in Royal Mail Holdings plc, which includes subsidiaries Royal Mail Group Ltd (the letter delivery business) and Post Office Ltd (which operates the post office network).

Further Information

Further information on the performance of Post Office Ltd is available in the annual reports and accounts of Royal Mail Holdings plc.

Related indicators

None.

Status

Last updated on: Quarter 2 2011
Next update due: Quarter 2 2012

INPUT INDICATOR 3

AVERAGE FUNDING PER COURSE IN GOVERNMENT-FUNDED ADULT FURTHER EDUCATION

Why is this indicator important?

Over the period of this Spending Review, up to 2014-15, the Further Education resource budget will be reduced by 25%. Dealing with this reduction will be a challenge and individuals, training organisations and colleges will have to adapt to change. Nevertheless, this challenge has stimulated fresh thinking about priorities and how we finance them.

Savings will be made by making the Further Education system more efficient. This will include: policy changes; unit cost reductions; reforming the statutory entitlements to fully subsidised training; rebalancing the investment from public spending towards greater contributions from individuals and employers who benefit most and can afford to pay. This indicator will assist in providing an assessment of whether these efficiencies are being delivered.

How are we performing?

The estimated unit cost in 2009-10 was £987 per learning aim, up from £790 in the 2008-09 academic year.

The difference was due to an increase in overall funding, up from £4.617 billion in 2008-09 to £5.143 billion in 2009-10, combined with a reduction in total aims from 5,842,900 to 5,209,200.

What will influence this indicator?

Changes in the indicator will depend on the type and mix of provision. For example we may see an increasing average funding per course as learners may be attending longer, more costly courses which better reflect the demand for skills in certain sectors. It should not be assumed that an increase in average funding per aim in itself is a poor outcome.

In order to obtain a clearer picture, a breakdown of participation by level of learning to provide will also be provided (Input indicator 5).

What is BIS's role?

BIS provides funding, through the Skills Funding Agency and the National Apprenticeship Service, for learners in further education and sets the policy framework for the further education system.

Indicator definition

The average funding per learning aim for all government-funded learning aims undertaken by adults (aged 19 or over) in the adult further education system, taken across the full range of government-funded provision within the sector, within an academic year.

A learning aim is a single course or qualification. This is different from the number of learners in further education as an individual could study more than one learning aim within an academic year.

A learner's age is calculated as at 31st August in the relevant academic year: for example, for the 2009-10 academic year, age is calculated as at 31 August 2009.

The total public expenditure on adult participation in a given on a financial year as measured through BIS finance systems divided by the total number of government-funded learning aims being studied in a given academic year.

Further Information

Information on learning aims is published in the supplementary tables that accompany the Post-16 Further Education & Skills Statistical First Release.

Related indicators

Input Indicator 4: Administration costs of the Adult Further Education system as a proportion of total funding to FE providers.

Input Indicator 5: Number of government-funded learners participating in Further Education.

Impact Indicator 2a: International comparison of the qualification levels of the working age population in the UK.

Impact Indicator 2b: Participation levels of 18-24 year olds in part-time or full-time education or training.

Status

Last updated on: January 2011
Due for update on: January 2012

INPUT INDICATOR 4

ADMINISTRATION COSTS OF THE ADULT FURTHER EDUCATION SYSTEM AS A PROPORTION OF TOTAL FUNDING TO FE PROVIDERS

Why is this indicator important?

The Skills Investment Strategy sets out how we will reduce bureaucracy and introduce new freedoms to allow the Further Education sector to better meet the needs of individuals, businesses and local communities. This is being achieved by the removal of central targets, simplifying the funding system, targeting inspection, and removing a raft of other regulations on colleges.

Improvements in efficiency will not only come from reductions in bureaucracy, but also from changes in the way that FE providers work. As a result of the reforms FE providers will work collaboratively to realise the efficiencies of shared services and economies of scale through collaboration or sub-contracting.

How are we performing?

The estimated administration cost as a proportion of total funding to FE providers in the financial year 2009-10 was 2.12%, down from 2.42% in 2008-09.

The difference was due to a combination of a reduction in administration costs, down from £112 million in financial year 2008-09 to £109 million in 2009-10, combined with the increase in total funding £4,617 billion in 2008-09 to £5.143 billion in 2009-10.

What will influence this indicator?

The level of bureaucracy will be reduced and the further education and skills landscape simplified. This should mean that a greater proportion of funding is reaching the frontline, with less being spent on administration.

The Skills Investment Strategy lays out a range of actions that BIS will be taking to reduce bureaucracy, including:

—  simplifying the funding methodology to increase transparency and rationalise funding rates;

—  reducing the number of direct contracts between the Skills Funding Agency and FE colleges and training organisations; and

—  reducing data burdens and the number and types of audit.

What is BIS's role?

BIS sets the overall funding system for Further Education and sets the role and purpose of the Skills Funding Agency (an Executive Agency of the Department).

Indicator definition

Administrative costs as reported through BIS financial systems which are assessed to be adult related compared to total funding of the adult FE system.

Further Information

The key source for these statistics is the LSC published accounts with adjustments made to reflect the element of the administrative budget that was adult related.

Related indicators

Input Indicator 3: Average funding per course in government-funded adult further education.

Input Indicator 5: Number of government-funded learners participating in Further Education.

Status

Last updated on: April 2011
Due for update on: December 2011

INPUT INDICATOR 5

NUMBER OF GOVERNMENT-FUNDED LEARNERS PARTICIPATING IN FURTHER EDUCATION

Why is this indicator important?

Having a skilled workforce is vital to our future economic prospects as a country, enabling businesses to be more productive, and helps individuals to get on. However, there are still too many people who do not have the basic skills they need or do not have the opportunity to improve their skills in work. This contributes to the UK being less competitive than many of our major competitors.

To address this problem we are introducing a new skills funding system, which will focus funding where it will make the greatest difference. We will prioritise funding support for learners with very low levels of skills or the disadvantaged, while there will be an expectation that learners and employers will co-invest alongside Government in meeting the costs of intermediate and higher level training courses from which they will derive private benefits.

How are we performing?

Published information shows that 3,540,500 learners aged 19 or older participated in some form of government-funded Further Education in the 2009-10 academic year (the latest year for which final data are available) as reported in the March 2011 Post-16 Further Education & Skills Statistical First Release.

The following chart gives an indication of changes in the mix of Government funded further education courses that learners participate in over time. Some learners may participate in courses across two qualification levels in a given year and so can be counted twice in this comparison. The chart shows:

—  An increase of 10.6% in full level 3 qualifications, up from 423,900 in 2008-09 to 469,100 in 2009-10.

—  Participants on full level 2 qualifications stayed relatively stable between years, with 968,600 participants in 2008-09 and 971,000 participants in 2009-10.

—  Participants on non-full level 3 qualifications reduced by 30.7% between 2008-09 and 2009-10 to 135,700.

—  Participants on non-full level 2 qualifications reduced by 17.3% between 2008-09 and 2009-10 to 480,200.

—  Participants on below level 2 qualifications reduced by 12.4% between 2008-09 and 2009-10, to 435,300

Amongst the 3,540,500 adult (19+) learners supported in 2009-10 were 162,900 people who started an apprenticeship. The number of starts increased by 15.9% to 162,900 in 2009-10.

What will influence this indicator?

Performance on this indicator will not only be influenced by the budget available to fund-learners, but also by demand from individuals and employers to take this up.

Creating a funding system that is demand led may mean that longer, more costly courses better reflect the demand for skills in certain sectors. This could lead to a decline in overall numbers, but would mean that the needs of individuals and employers would be better met.

What is BIS's role?

BIS provides funding, through the Skills Funding Agency and the National Apprenticeship Service, for learners in further education and sets the policy framework for the further education system.

Indicator definition

Number of government-funded learners aged 19 or over who participated in Further Education at some point in the academic year (1 August to 31 July). Age is calculated as learner's age as at 31 August in the relevant academic year, for example, for the 2009-10 academic year, age is calculated as at the 31 August 2009.

Further Information

More detail is available in the Post-16 Further Education & Skills Statistical First Release

Related indicators

Input Indicator 3: Average funding per course in government-funded adult further education.

Input Indicator 4: Administration costs of the Adult Further Education system as a proportion of total funding to FE providers.

Impact Indicator 2a: International comparison of the qualification levels of the working age population in the UK.

Impact Indicator 2b: Participation levels of 18-24 year olds in part-time or full-time education or training.

Status

Last updated on: January 2011
Due for update on: January 2012

INPUT INDICATOR 6

FUNDING PER STUDENT IN HIGHER EDUCATION

Why is this indicator important?

The Higher Education funding system is undergoing radical change. This indicator will provide evidence of the savings being made over the spending review as the flow of funding changes from HEFCE teaching grant to increased graduate contributions (via higher fee loans). The indicator has been designed to best represent the cost to Government. It should not be interpreted as a measure of 'income per student' as it does not include the full increase in teaching income that institutions will receive as a result of higher fees.

Replacing teaching grant with subsidised fee loans increases the sustainability of Higher Education Funding by reducing the real cost to government of student places. This could also have been delivered by reducing the income per student for the sector, or the number of students in the system. But this would have deprived people of the opportunity to go to university or jeopardised the quality of their education. Instead, the sector will continue to receive high levels of income per student, whilst the cost to Government of providing this support will reduce.

How are we performing?

The table below shows the cost per full time equivalent student from 2007-08 to 2010-11 (provisional figures). Final data on the student population in 2010 will not be available until early next year. The impact of the reforms will not be visible until we receive 2012 data.

All Figures are on a FY Basis	2007-08	2008-09	2009-10	2010-11
(a) Total student numbers (FTE, '000s)	1,320	1,355	1,414	1,467
(b) HEFCE teaching grant (£m)	£4,766m	£4,920m	£5,076m	£5,107m
(c) Student Support—grant (£m)	£1,175m	£1,261m	£1,518m	£1,672m
(d) Student Support—loan costs (RAM, £m)	£1,048m	£1,125m	£1,356m	£1,498m
(e) Total Expenditure (£m)	£6,989m	£7,036m	£7,949m	£8,277m
(f) Cost per FTE (cash terms)	£5,293	£5,393	£5,621	£5,641

*Student loan RAB costs are based on an estimated 28% RAB charge. All figures are in cash prices.

What will influence this indicator?

This indicator will be influenced by the total number of students in the system (both entrants and continuing students) and changes in the overall cost to Government. The latter could result from changes in HEFCE teaching grant allocations, or changes in student support expenditure. Student support expenditure will depend on the eligibility and means testing regulations in place, student behaviour (ie. take up of loans), as well as changes in the RAB charge. The RAB charge represents the true cost to Government of providing loans and is dependent on various assumptions related to the speed of repayment.

What is BIS's role?

BIS provides funding for higher education and sets the overall policy framework for the higher education sector.

Indicator definition

Expenditure includes HEFCE grant, Student Support Grant and Student Support Loan Costs, and is divided by the total Home and EU domiciled population.

The population figures relate to Full Time Equivalent students in financial year terms. It covers Home and EU domiciled students in English HEIs, including full time, part time, postgraduate and undergraduate. Figures exclude post-graduate research.

The HEFCE teaching grant figures include targeted teaching grant, HEFCE admin costs, Employer Co-Funding grant and University Modernisation Funding.

Student support expenditure includes costs associated with administering student support. It does not include expenditure on English domiciled students studying in non-English institutions. Neither does it cover expenditure by the devolved administrations on Welsh, Scottish and Northern Irish students studying in English institutions. Figures include maintenance grant, fee grant and allowances. Loan figures are the latest estimated resource cost to the government of providing both maintenance and fee loans and do not represent the cash available to students nor the fees payable to institutions.

Further Information

Additional information on Higher Education spending is published annually in the HEFCE grant letter.

Related indicators

None.

Status

Last updated on: Nov 2011
Due for update on: Jun 2012

INPUT INDICATOR 7

VALUE ENTERPRISE FINANCE GUARANTEE FUNDS USED BY BUSINESSES

Why is this indicator important?

Small and Medium sized businesses (SMEs) need access to finance to enable them to invest and grow. During the economic downturn beginning in 2008 many SMEs found it more difficult to access finance from their bank due to the widespread tightening in the availability of credit. The Enterprise Finance Guarantee was launched in January 2009 to assist viable SMEs unable to access finance through their normal routes and the indicator provides a measure of the additional finance used by SMEs under the scheme.

What will influence this indicator?

The Enterprise Finance Guarantee will continue until 2014-15 and will provide up to £600 million of additional lending to around 6,000 SMEs in 2011-12 and, subject to demand, over £2 billion in total over the next four years.

The indicator will be influenced by the level of SME demand for bank finance in the wider economy and the extent to which this demand is being met by banks and other institutions.

EFG is intended to enable additional bank lending to viable SMEs that lack collateral to secure a normal commercial loan, operating at the margins of bank lending. As such, EFG forms around 2% of UK bank lending to SMEs with a turnover of up to £25 million, and is not meant to displace conventional lending.

How are we performing?

EFG lending peaked in 2009, during the middle of the Credit Crunch and has been declining since. This partly reflects the wider reduction in SMEs demand for finance, as well as finance conditions stabilising.

What is BIS's role?

BIS has established the Enterprise Finance Guarantee.

Indicator definition

Total value of loans drawn down by business from the Enterprise Finance Guarantee scheme during the last quarter.

Further Information

Statistics on business use of the Enterprise Finance Guarantee, including the regional and sectoral distribution, are published quarterly on the BIS website. This also provides further information on the application process and eligibility criteria.

Related indicators

Input Indicator 8: Businesses assisted through BIS finance schemes as a proportion of those reporting being refused finance.

Impact Indicator 8: Ease of doing business in the UK, ranking of UK on World Bank Doing Business Report.

Status

Last updated on: Q2 2011
Due for update on: Q3 2011

INPUT INDICATOR 8

BUSINESSES ASSISTED THROUGH BIS FINANCE SCHEMES AS A PROPORTION OF THOSE REPORTING BEING REFUSED FINANCE

Why is this indicator important?

The ability to access finance is critical in facilitating new business start ups, funding investment and ensuring businesses reach their growth potential. A lack of finance can constrain growth and hamper businesses' survival prospects.

In theory, a properly functioning financial market will allocate resources to the most efficient firms. However, a number of viable SMEs face difficulties obtaining finance as a result of market failures, such as when viable small businesses are refused finance because they lack a track record and/or the necessary security. It is these latter businesses that EFG intends to support.

How are we performing?

Of those businesses being refused loan finance, EFG usage is equivalent to around 8% showing the scheme is targeted at addressing the market failures affecting potentially viable businesses.

What will influence this indicator?

EFG is intended to enable additional bank lending to viable SMEs that lack collateral to secure a normal commercial loan, operating at the margins of bank lending. As such, EFG forms around 2% of UK bank lending to SMEs with a turnover of up to £25 million, and is not meant to displace conventional lending.

Although structural in nature, the market failures of asymmetric information are accentuated by uncertain economic conditions. This indicator may be greatly affected by changes in the denominator (number of businesses being refused finance). If banks make finance more readily available, a greater proportion of businesses will obtain finance through conventional means and the proportion eligible for EFG will fall. This indicator is therefore influenced by the wider macroeconomic conditions and turbulences in global financial markets.

What is BIS's role?

BIS has established the Enterprise Finance Guarantee.

Indicator definition

Number of loans drawn down by business through Enterprise Finance Guarantee divided by the number of businesses being refused loans as measured by SME Finance Monitor Survey.

The SME Finance Monitor Survey asks businesses about their finance use over the preceding 12 months. The interviews for the survey are conducted over three month periods (March to May; June to August; September to November; December to February). However, business usage of the BIS access to finance schemes is reported on a standard calendar quarter (January to March, etc). This creates a one month discrepancy between the period covered in the survey and in BIS reporting on access to finance schemes which is not taken into account in this indicator.

Further Information

The SME Finance Monitor survey is commissioned as a result of the Business Finance Taskforce. The report is produced and written independently of both banks and the Government.

Statistics on business use of the Enterprise Finance Guarantee, including the regional and sectoral distribution, are published quarterly on the BIS website. This also provides further information on the application process and eligibility criteria.

Related indicators

Input Indicator 7: Value Enterprise Finance Guarantee funds used by businesses.

Impact Indicator 8: Ease of doing business in the UK, ranking of UK on World Bank Doing Business Report.

Status

Last updated on: Q2 2011
Due for update on: Q3 2011

INPUT INDICATOR 9

EXPENDITURE ON RESEARCH AND DEVELOPMENT PERFORMED IN HIGHER EDUCATION

Why is this indicator important?

The research and development work conducted in higher education tends to be more 'basic' than the work undertaken in the private sector. This means that it is less likely to making an immediate contribution to the development of a product or process that can be brought to market, but it is nonetheless critical for the economic performance.

This basic research creates new knowledge, over the longer term, improves innovation and productivity in the wider economy. Due to the long time scales and the "spillover" benefits, public funding for the research is needed to ensure that the UK maintains its competitive position in the future.

How are we performing?

In 2009, £7.2 billion pounds of R&D were performed within the UK Higher Education Sector. The chart below shows that R&D carried out within the UK Higher Education Sector has been steadily increasing in real terms.

What will influence this indicator?

This indicator is a simple measure of public expenditure on research and development, it will be affected by the budget that Government Departments allocate.

What is BIS's role?

BIS provides funds for the Research Councils and the Higher Education Funding Council.

Indicator definition

Research and Development (R&D) related concepts follow internationally agreed standards defined by the Organisation for Economic Co-operation and Development (OECD) and published in the Frascati manual. R&D is defined as creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of the stock of knowledge to devise new applications.

Higher Education Expenditure on Research and Experimental Development (HERD), which covers all R&D carried out on in the UK within the Higher Education Sector in the year concerned.

Further Information

Data and further information are available from the Office for National Statistics.

Full details of definitions are provided in the OECD's Frascati Manual.

Related indicators

Impact Indicator 4: The UK share of highly cited papers.

Status

Last updated on: March 2011
Due for update on: March 2012

IMPACT INDICATOR 1

CHANGE IN PRIVATE SECTOR SHARE OF POTENTIAL WORKFORCE

Why is this indicator important?

Too often in the past, some regions have become overly dependent on public sector employment. This situation is fundamentally unsustainable and there needs to be a rebalancing of employment away from the public sector into the private sector.

This regional variation is not simply due to the concentration of public sector jobs in particular regions, but also because the distribution of jobs created by the private sector has not been balanced. In particular, the Greater South East has benefited greatly from private sector job creation.

This indicator provides a measure on whether the number of people employed in the private sector is increasing as a proportion of the potential workforce and whether this increase is compensating for any decline in employment in the public sector.

How are we performing?

This indicator is currently under review as methodological issues have been identified with the current formation. BIS is working with the Office for National Statistics (ONS) to outline an amended approach as soon as possible. In addition, since data was last published, ONS have revised data for some of the component parts of the indicator and released more recent information. These changes will be incorporated in to the new indicator when the methodology has been finalised.

What will influence this indicator?

As the number of people employed in the public sector decreases, this indicator will measure whether this decline is compensated for by increases in jobs in the private sector. The growth in private sector jobs will be the key influence on this indicator.

What is BIS's role?

BIS influences regional growth by supporting the development of Local Enterprise Partnerships (LEPs). LEPs, which are led by local authorities and businesses, play a critical role in ensuring that planning and infrastructure investment support business needs, and work with Government to support enterprise, innovation, global trade and inward investment in their local area.

The LEPs can apply to BIS's Regional Growth Fund. This fund is targeted at those areas and communities currently dependent on the public sector and provides support for projects and programmes that lever in private sector investment to promote private sector growth.

LEPs can also bid to establish an Enterprise Zone in their area. Businesses in these zones benefit from simplified planning and business rates discount.

Further Information

ONS Public Sector Employment Release.

ONS Labour Force Survey Release:

Who are our partners?

Local Enterprise Partnerships.

Related indicators

Input Indicator 1: Offers made from the Regional Growth Fund.

Status

Last updated on: July, 2011
Due for update on: TBC

IMPACT INDICATOR 2A

INTERNATIONAL COMPARISON (WITHIN THE OECD) OF THE QUALIFICATION LEVELS OF THE WORKING AGE POPULATION

Why is this indicator important?

Having a skilled population is vital to maintaining the international competitiveness of our economy and creating high quality jobs. OECD evidence suggests that that the UK's intermediate and technical skills lag behind our major competitors such as Germany and the US. Previous research has suggested that up to one fifth of our productivity gap compared to such countries can be attributed to a lack of skills in the UK.

The productivity gap reduces the competitiveness of UK businesses because, simply put, workers in the UK have to work long-hours or more cheaply to produce the same goods at the same cost as our competitors. Improving our skills will create more opportunities to export the products and services we produce and make the UK a more attractive place for international businesses to invest in. This in turn will create growth and jobs.

Improving our skills does not just improve our economy, it also has the potential to make the UK a fairer place by creating more social mobility and enabling people to play their part in society.

How are we performing?

Our most recent performance is based on OECD data published in September 2011 (data refer to 2009), and re-presented in the Supplementary Tables to the BIS Statistical First Release on Post-16 Further Education and Skills. In this, the UK ranking is:

1.  19/33 OECD countries for the percentage of 25-64 year olds with at least upper secondary education.

2.  9/34 OECD countries for the percentage of 25-64 year olds with tertiary education.

What will influence this indicator?

The domestic skills level of the UK is influenced by participation in education, inward and outward migration, and the qualification levels of those entering versus those leaving the workforce.

Given that most of the workforce of the next ten years has already left compulsory education, the qualifications achieved by individuals in the workplace are as important as the qualifications being achieved by young people in school and continuing beyond compulsory education.

The indicator measures the skills level of the UK relative to other countries, hence the performance of other nations has a major influence on the indicator; if our major competitors up-skill at a faster rate than the UK then this can impact on our relative position, as can migrations and a range of other factors in those countries.

What is BIS's role?

Individuals and businesses make decisions about whether to invest in qualifications. BIS's role is to ensure that the further and higher education systems operate in a way that is responsive to the needs of individuals and businesses, to increase the incentive to invest in qualifications. The FE and HE reforms are designed to increase this responsiveness, moving away from a system where the numbers and kinds of qualifications were determined by central government.

Indicator definition

The OECD reports on people attaining at least upper secondary and tertiary education. Upper secondary is broadly equivalent to Level 2 qualifications in England, which itself is equivalent to five or more GCSEs at grade A* to C. OECD's tertiary education is equivalent to Level 4 in England, ie higher education or access to higher education qualifications.

The OECD provides unrounded percentage data for each country. BIS presents ranks based on this. The ranks are derived from the set of full OECD member countries which have returned data for the qualification level under consideration at the time of publication by OECD. Some countries are unable to report against some parts of the international standard; in recent years more countries have been included in comparisons of performance at upper secondary level than are included at tertiary level.

Methodology

These are OECD statistics and not produced within the UK statistical system.

BIS re-presents the key statistics, alongside the more up to date England indicators, within the National Statistics First Release on Post-16 Further Education and Skills.

Further information on original OECD data and methodology can be obtained form the OECD Education at a Glance web-site.

The UK ranking is published as a Supplementary Table to the Statistical First Release.

The most recent statistics for England are published in Table 12.1 of the Post-16 Further Education & Skills Statistical First Release.

Note however that the OECD indicator is for the UK rather than England, and is based on a different sub-population from the National Statistic.

Further Information

OECD data is published in Education at a Glance.

Who are our partners?

Department for Education;

Skills Funding Agency; and

Higher Education Funding Council for England.

Related indicators

Input Indicator 5: Number of government-funded learners participating in Further Education.

Impact Indicator 2a: Participation levels of 18-24 year olds in part-time or full-time education or training.

Status

Last updated on: September 2011
Due for update on: September 2012

IMPACT INDICATOR 2B

PARTICIPATION LEVELS OF 18-24 YEAR OLDS IN PART-TIME OR FULL-TIME EDUCATION OR TRAINING ACTIVITY

Why is this indicator important?

Evidence shows that participating in learning and gaining higher qualifications can act as a passport to higher earnings and success in the labour market. If someone is not in education, employment or training it can be a waste of a young person's potential and has a potential negative impact later on in their lives. It also affects their ability to contribute to their community and to the economy. The Government wants more young people from disadvantaged backgrounds to improve their skills in order to benefit from social mobility. Increasing participation in education and training will also benefit the economy more widely though increased productivity and long term economic growth.

The importance of the "transition years" is discussed in the Social Mobility Strategy: Opening Doors, Breaking Barriers. This participation indicator provides a counterpart measure to DWP's indicator showing worklessness amongst young people not in Full Time Education.

How are we performing?

In Q2 2011, 41.2% of 18-24 year olds were participating in education and training; this represented a statistically significant reduction of 3.8 percentage points compared with Q2 2010. Of the 41.2% in education or training in Q2 2011, 26.5% were in full-time education, and 14.7% were in part-time education or training.

The Labour Force Survey, used to measure this indicator, is affected by seasonal factors as young people move between school, college, university and work, which is evident in the quarterly time series chart below. This is why comparisons are made only with the same quarter in previous years.

1.  Age refers to academic age, which is defined as the age of the respondent at the preceding 31 August

What will influence this indicator?

This indicator provides a measure of the level of engagement of young people in England in full-time and part-time education and training activity. Although the number of funded places is determined by BIS, it is the demand for education and training by young people and businesses that will ultimately influence this indicator.

BIS has published strategies to make both the Higher and Further Education systems more responsive to the needs of students and businesses by increasing the flexibility of what providers can offer and increasing the information available about courses:

—  Further Education White Paper: Skills for Sustainable Growth.

—  Higher Education White Paper: Students at the Heart of the System.

What is BIS's role?

BIS provides funding, through the Higher Education Funding Council for England, Skills Funding Agency and the National Apprenticeship Service, for learners in higher and further education and sets the policy framework for these education systems.

Apprenticeships form a core part of the Government's approach to tackling youth unemployment through insuring that young people have the skills they need to compete in a global economy and by encouraging employers to offer more work experience, internships and Apprenticeship opportunities. The new Access to Apprenticeship pathway for 16-24 year olds will benefit up to 10,000 vulnerable young people to get the skills and experience they need to get onto an Apprenticeship and new employer commitments to offer more Apprenticeship places. Qualifications form the core of further learning and employment. As set out in Skills for Sustainable Growth (November, 2010), young adults aged 19 up to 24 will be entitled to full fee remission for their first full Level 2 or first full Level 3 qualification. Full funding will also be available for young adults to undertake Foundation Learning (Entry Level and Level 1) where they need this to be able to take up their entitlement to a Level 2 qualification.

Officials from BIS, DWP and DfE have been working together on the Participation Strategy which will set out how we intend to maximise participation of 16-to-24-year-olds in education, training and work and tackle the consequences of young people being NEET for an extended period. We are on course to publish the Participation Strategy as expected later in the autumn.

Indicator definition

The percentage of the academic age 18-24 year old population engaged in education or training activity, either full-time or part-time. Full-time education includes studying full time at school, college or university. Part-time education and training includes studying part time at school, college or university, enrolment at the Open University, studying for a qualification via other routes or studying for an apprenticeship.

Methodology

Data on participation in education and training for the 18-24 age group are measured using the quarterly Labour Force Survey. Trends should be assessed by comparing the current quarter with the same quarter in the previous year to account for seasonal effects.

The established official statistics series published by DfE from which this indicator is drawn includes all relevant activities as reported by respondents to the LFS. The series is well-established and stable. Revisions to LFS weighting from time to time will result in (usually) relatively minor revisions to the series.

Further Information

The key source for these official statistics is currently the DfE Official Statistics publication NEET Statistics—quarterly brief.

Who are our partners?

Department for Education; and

Department for Work and Pensions.

Related indicators

The indicator provides a measure of what percentage of the 18-24 age group are engaged with learning that leads to a qualification or develops skills for a current or future job. It complements DWP's measure of worklessness amongst those not in Full-time education and effectively forms part of the Official Statistics measure of 18-24 year olds Not in Employment, Education or Training (NEET).

Input Indicator 5: Number of government-funded learners participating in Further Education.

Status

Last updated on: August 2011 (Quarter 2 2011)
Due for update on: November 2011 (Quarter 3 2011)

IMPACT INDICATOR 3A

THE PROPORTION OF 15 YEAR OLDS FROM LOW INCOME BACKGROUNDS IN ENGLISH MAINTAINED SCHOOLS PROGRESSING TO HE BY THE AGE OF 19

Why is this indicator important?

Education and skills make an important contribution to economic growth. Skills also contribute to social mobility and fairness. Addressing differences in educational opportunity can play a role in improving long term economic growth performance, particularly through raising employment rates.

Inequality often starts early in life and such inequalities extend to participation in higher education. This indicator reflects the extent to which young people from low income backgrounds (measured by whether they have been eligible for Free School Meals) are progressing to Higher Education. Currently children from more disadvantaged backgrounds are much less likely to enter into higher education than other children. This is not only unfair on young people from disadvantaged backgrounds, but it also means that the country is not making full use of all the talent that is available to us.

Promoting widening participation and raising educational aspirations for disadvantaged youngsters are key aims of the BIS strategy to support Social Mobility: Opening Doors, Breaking Barriers.

How are we performing?

The latest data reflects the estimated percentage of maintained school pupils aged 15 who progressed to HE by age 19 in 2008-09, by Free School Meal (FSM) status.

	Estimated % entering HE
	FSM [1]	Non-FSM [1]	Gap (pp) [2]	All
2008-09	17%	35%	18	33%

pp=percentage points

^[1] FSM and Non-FSM refer to whether pupils were receiving Free School Meals or not.

^[2] Gap is the difference between FSM and non-FSM expressed in percentage points. Percentage figures are rounded; gap figures are calculated from un-rounded data and therefore may not correspond to the gap between rounded percentages.

Participation in Higher Education at age 19, England (FSM at age 15, Non-FSM at age 15 and gap, estimated)

The chart shows that the proportion of pupils with Free School Meals progressing to higher education is estimated to have increased steadily between 2005-06 and 2008-09. The progression rate for pupils not receiving Free School Meals also rose but with a smaller increase. The gap between FSM and Non-FSM rates is therefore estimated to have fallen slightly. Data are not available before 2005-06.

What will influence this indicator?

Young people from disadvantaged backgrounds have lower levels of attainment than their peers. This variation accounts from some of the gap in access to higher education. The Department for Education's The Importance of Teaching sets out the Government's vision of how attainment of young people from disadvantaged backgrounds can be supported to increase their chances of accessing higher education.

While attainment is important, it is not the only factor influencing access to higher education and young people's decisions about institutions and courses. Young people from disadvantaged backgrounds who achieve qualifications that would allow them to attend a selective university are less likely to apply than their peers. Aspiration to attend higher education and understanding of the options available are also critical, these in turn are affected by giving young people access to high quality information, aspirational advice and guidance.

As the FSM population is influenced by the economic cycle, it may be difficult to distinguish between improvements that are attributable to the HE reforms and those that reflect general economic conditions. For example a change in the level of unemployment could affect the number of people receiving Free School Meals and the number of pupils with FSM who progress to university.

What is BIS's role?

BIS's recent Higher Education White Paper: Students at the Heart of the System sets out a range of measures that the Department is implementing to improve access to higher education. This includes specific programmes of work, such as improving the quality of careers advice, and wider changes to the overall framework within which universities operate.

This framework is being revised to make universities more responsive to students, this includes requiring all institutions charging more than £6,000 for the annual tuition to demonstrate to the independent Director of Fair Access what more they will do to attract students from disadvantaged groups. BIS is strengthening the Office of Fair Access so that it can challenge and support universities and colleges in improving access.

Our funding reforms provide more generous support for low-income students and a new National Scholarship Programme will provide financial support to disadvantaged students. By 2014-15 when the scholarship programme is fully operational up to 100,000 students a year could be awarded a scholarship.

Indicator definition

Free School Meals is a proxy for low income.

The indicator takes the following form:

(i)  The percentage of 15 year olds with FSM progressing to HE by age 19.

(ii)  The percentage of 15 year olds without FSM progressing to HE by age 19.

(iii)  The overall percentage of 15 year olds progressing to HE by age 19.

(iv)  The percentage point gap between (i) and (ii).

The population of school children relates to those 15 years olds educated in English maintained schools only.

Young People eligible for FSM come from families who receive Income Support, Jobseeker's allowance and certain other benefits (see Methodology and Data Source notes). Around 13-14% of maintained secondary school children claim free school meals. This does not include those who are eligible for FSM by income criteria but don't register.

Methodology

The matched National Pupil Database, HE Student Record and the Individual Learning Records (includes key stage attainment records and learning aims data)

For more information on methodology, please click here.

Further Information

The Official Statistics Release of the data for this indicator is published on the BIS website.

Who are our partners?

Department for Education—National Pupil Database,

Skills Funding Agency—Individualised Learner Record; and

Higher Education Statistics Agency—Student Record.

Related indicators

Impact Indicator 3b: The gap between state and independent school students who go on to the 33% most selective higher education institutions.

Input Indicator 5: Number of government-funded learners participating in Further Education.

Impact Indicator 2a: International comparison of (a) the qualification levels of the working age population in the UK.

Status

Last updated on: October 2011
Due for update on: September 2012

IMPACT INDICATOR 3B

PERCENTAGE OF YOUNG PEOPLE WHO GO ON TO THE 33% MOST SELECTIVE HIGHER EDUCATION INSTITUTIONS (GAP BETWEEN STUDENTS EDUCATED AT STATE SCHOOL AND INDEPENDENT SCHOOL)

Why is this indicator important?

Education and skills make an important contribution to economic growth. Skills also contribute to social mobility and fairness. Addressing differences in educational opportunity can play a role in improving long term economic growth performance, particularly through raising employment rates.

Access to selective higher education institutions for people from low-income backgrounds has worsened as the number of young people going on to higher education has increased. The Director of Fair Access's 2010 report showed that the participation among the least advantaged 40% of young people across at the top third of selective universities remained almost flat between the mid-1990s and the mid-2000s, whereas participation of the most advantaged 20% of the young population increased.

Enabling all young people to have fair access to selective institutions is not only important in allowing them to have access to the same opportunities, when people from state schools do reach university the Social Mobility Strategy presents evidence to suggest that they outperform students from independent schools with the same grades at GCSE or A-Level.

How are we performing?

The latest data reflects the estimated percentage of A level and equivalent level students who entered the most selective Higher Education Institutions by age 19 in 2008-09

	Estimated % entering most selective HE [1]
	Independent	State	Gap (pp) [2]	All
2008-09	62%	26%	37	30%

pp= percentage points

^[1] The most selective are defined as the top third of HEIs when ranked by mean UCAS tariff score from the top three A level grades of entrants.

^[2] Gap is the difference between independent and state expressed in percentage points. Percentage figures are rounded; gap figures are calculated from un-rounded data and therefore may not correspond to the gap between rounded percentages.

PERCENTAGE OF A LEVEL AND EQUIVALENT LEVEL STUDENTS WHO ENTERED THE MOST SELECTIVE HIGHER EDUCATION INSTITUTIONS BY AGE 19 (INDEPENDENT AND STATE SCHOOL/COLLEGE AND GAP, ESTIMATED)

The chart shows that the gap between the proportion of state and independent school/college students progressing to the most selective higher education institutions has remained fairly static between 2006-07 and 2008-09, apart from minor fluctuations. Data are not available before 2006-07.

What will influence this indicator?

Students in independent schools are three times more likely to get three As at A-Level than young people educated in state schools. This variation accounts from some of the gap in access to the most selective universities. The Department for Education's The Importance of Teaching sets out school reforms will address this by raising standards in state schools, with the Pupil Premium in particular improving outcomes for disadvantaged children.

Universities are able to use contextual data, for example about levels of average attainment in an applicant's school as well as exam grades to select candidates. This can help reduce the impact of the attainment gap, particularly if young people have access to the high quality, aspirational advice that provides young people with the information they need to make fully informed choices about their future and the self- awareness, self-esteem and confidence to take the decisions. The Education Bill make a duty for schools to ensure that their pupils have access to independent, impartial careers guidance. Universities also have a role in ensuring that they make information available.

What is BIS's role?

BIS's recent Higher Education White Paper: Students at the Heart of the System sets out a range of measures that the Department is implementing to improve access to higher education. This includes specific programmes of work, such as improving the quality of careers advice, and wider changes to the overall framework within which universities operate.

This framework is being revised to make universities more responsive to students, this includes requiring all institutions charging more than £6,000 for the annual tuition to demonstrate to the independent Director of Fair Access what more they will do to attract students from disadvantaged groups. BIS is strengthening the Office of Fair Access so that it can challenge and support universities and colleges in improving access.

BIS funding reforms provide more generous support for low-income students and a new National Scholarship Programme will provide financial support to disadvantaged students. By 2014-15 when the scholarship programme is fully operational up to 100,000 students a year could be awarded a scholarship.

Indicator definition

(i)  Percentage of A level and equivalent level students from independent schools/colleges who entered the most selective Higher Education Institutions by age 19.

(ii)  Percentage of A level and equivalent level students from state schools/colleges who entered the most selective Higher Education Institutions by age 19.

(ii)  Percentage of A level and equivalent level students from all schools/colleges who entered the most selective Higher Education Institutions by age 19.

(iv)  The percentage point gap between (i) and (ii).

The most selective are defined as the top third of HEIs when ranked by mean UCAS tariff score from the top three A level grades of entrants.

Methodology

This measure is calculated using matched data. This matches the National Pupil Database to the Skills Funding Agency (SFA) Individualised Learner Record and the Higher Education Statistics Agency (HESA) Student Record.

For more information on methodology, please click here.

Further Information

This Official Statistics Release is published on the BIS website.

Who are our partners?

Department for Education—National Pupil Database;

Skills Funding Agency—Individualised Learner Record; and

Higher Education Statistics Agency—Student Record.

Related indicators

Impact Indicator 3a: The gap between non-free school meal and free school meal 15 year olds going on to higher education.

Status

Last updated on: October 2011
Due for update on: September 2012

IMPACT INDICATOR 4

UK SHARE OF HIGHLY CITED ACADEMIC ARTICLES

Why is this indicator important?

Science and research provide the foundations for future economic success by creating the new knowledge and technologies that will maintain our competitive position. In advanced economies like the UK, innovation under all its forms is a major determinant of growth in the long run. Innovation that creates entirely new products is usually based on some form of breakthrough knowledge creation and technological progress. This type of innovation often rests on scientific and research outcomes. This indicator provides a measure of whether the UK is maintaining its world-class position with regard to the quality of its research.

While some of the advances made through research are quickly used to develop new products and services or to improve existing ones, the full impact of others can take many years to be known. Science and research also contributes with advances in new ways of doing things resulting in organisational and process innovations that further improve the national economic performance.

Citations provide a way of assessing the current strength of the UK's science and research by considering not only the use but also the acknowledged influence it is having on world-wide academic debate.

This indicator fulfils two roles:

—  research excellence: knowledge is a global good and citations are country neutral. An excellent research base attracts Foreign Direct Investment (FDI) for Research and Development (R&D); and

—  research impact: high citation papers indicate acknowledged influence in the academic and corporate communities—wider usage and influence of codified knowledge increases the probability of translating research into application.

How are we performing?

Changes in the UK proportion of highly cited articles are published biennially as part of the report on the International Comparative Performance of the UK Research Base.

The 2011 report shows that the UK share of highly cited papers has been increasing steadily from 12.09% in 2000 to 13.8% in 2010.

While it is possible to consider how the proportion of highly cited papers changes over time it is important to bear in mind that the articles that are highly cited in five-year intervals are not the same articles. The articles that make the top 1% cited in 2000-05 are identically those that are top 1% cited in 2005-10 and so comparisons are to be done with caution.

To note that the US share (only country ahead of UK in the world) is falling steadily due to the rise of new research nations so increasing share when others are reducing is even the more remarkable.

What will influence this indicator?

This indicator will be influenced by both the number and quality of the academic articles produced in the UK. Past research has estimated lags of five to seven years depending on discipline between publication and citation impact so current levels of citation reflect past investment in R&D.

This indicator will also be partly impacted by business investment in R&D. This is currently about 1.6% of GDP overall. This is especially strong in the UK in a small group of high tech industries but relatively weak in medium and low tech sectors.

There is evidence that the degree of international mobility and international collaboration increase citation levels other things equal. The UK is a net attractor of global talent and over half of publications are co-authored with international collaborators. These two factors explain at least in part high citation levels in the UK.

This indicator does not cover the full innovation potential of the economy. It is increasingly acknowledged that innovation can come in many ways and from many sources. Innovating is more than the development of new technology, it can also be a refinement in product design or an improvement in the management process. Intangible assets developed by businesses such as intellectual property, software development, skills, managerial capability, marketing and branding and other significant aspects of innovation.

What is BIS's role?

BIS manages the Government's budget for Science and Research, £4.6bn a year during the current CSR. This budget is dedicated to funding excellent research aimed at attracting FDI in R&D and improving economic performance through the translation of research into tangible and intangible innovation.

Other initiatives complementary to an excellent research base are wide ranging and about using this knowledge as inputs for value creation in the economy. These initiatives are essential for growth and managed by organisations funded by BIS (such as the Technology Strategy Board) and elsewhere in Government (such as the R&D Tax Credit).

Indicator definition

Country shares in the top percentile of cited papers are calculated in five-year intervals. This is to avoid artificial swings in the indicator, since within a year the number of highly cited papers is small and thus a single paper can change a country's share dramatically.

See www.bis.gov.uk/ukresearchbase2011

The underlying data on journals and citations comes from Scopus. Scopus is the largest abstract and citation database of research literature available, with abstracts and citation information from more than 45 million scientific research articles in 18,000 peer-reviewed journals published by over 5,000 publishers spanning all science sectors.

Methodology

Within every five-year interval the number of papers falling in the top centile of citations is counted for each discipline. Field weighting is important since citation patterns differ by discipline, and thus a country that specialises say in Social Sciences will have less citations that a country that specialises in Engineering. For the UK indicator 10 fields are considered. For each paper one or more countries may appear as co-authors. The UK share counts the number of papers in that centile where the UK is an author as a proportion of the total papers in the top centile.

Further Information

For full details on the methodology see www.bis.gov.uk/ukresearchbase2011

Who are our partners?

Arts and Humanities Research Council;

Research Councils UK;

Higher Education Funding Council for England;

Biotechnology and Biological Sciences Research Council;

Engineering and Physical Sciences Research Council;

Medical Research Council;

Economic and Social Research Council;

Natural Environment Research Council; and

Science and Technology Facilities Council.

Related indicators

Impact indicator 5: Proportion of firms who are innovation active.

Input Indicator 9: Expenditure on Research and Development performed in Higher Education.

Status

Last updated on: October 2011
Due for update on: 2013

IMPACT INDICATOR 5

PROPORTION OF FIRMS WHO ARE INNOVATION ACTIVE

Why is this indicator important?

Innovation is the application of new knowledge to the production of goods and services. It is at the core of business productivity growth, and therefore at the core of economic growth overall. There is a large body of evidence to support this.

It is important to note that innovation comes in many forms and from many sources, from the development of a new technology to a refinement in product design or an improvement in a management process. Innovative businesses are vital to drive growth through the development of skills, financial commitment and corporate strategy-making through which knowledge is put to work.

How are we performing?

	2007	2009
Innovation active	63%	58%
Product innovator	22%	24%
Process innovator	12%	13%
Wider innovator	31%	27%
Abandoned innovation activities	6%	4%
Incomplete innovation activities	8%	6%

58% of firms were innovation active during the period 2006 to 2008. On comparison with the previous survey, this represents a fall of five percentage points when 63% of UK enterprises were innovation active during the period 2004-06. Despite increased levels of product and process innovation, overall the share of innovation active firms was lower than in the UK Innovation Survey 2007 as a result of fewer firms engaging in innovation related investment.

The share of firms with a product innovation was 24% and the share of firms with a process innovation 13% during the three year period 2006 to 2008 compared with 22% and 12% respectively for the period 2004 to 2006. Nearly half of product innovations and a third of process innovations were "leading edge" or novel.

Smaller businesses are narrowing the gap with large firms on levels of engagement across a range of innovation related behaviours. More firms were cooperating on their innovation projects than has previously been recorded.

What will influence this indicator?

Innovation is not a simple phenomenon. Businesses do not innovate in a vacuum but depend on the wider institutional, regulatory and infrastructural framework (the 'innovation system') to create the conditions for innovation.

The proportion of innovative firms can be influenced by a large number of factors including the links between businesses and the science infrastructure (universities, research and development institutes), access to finance, access to appropriate skills (both in terms of research and technical skills and those of management and organisation), existing physical infrastructure (including high communication networks), Intellectual Property and competition frameworks etc.

What is BIS's role?

BIS provides funding for the research, through the Higher Education Funding Council and the Research Councils, and sets the strategic priorities framework within which the specific spending decisions are made. This framework, Investing in World-Class Science and Research, is intended to protect national capability and international competitiveness and to maximise the economic and social benefits of research, it thereby provides a foundation on which innovation can be built.

BIS also influences the wider innovation system by promoting linkages and knowledge transfers between the research base and businesses, for example, through the creation of Technology and Innovation Centres, and through the intellectual property system, which has recently been independently reviewed to ensure that it supports growth and innovation.

BIS promotes access to equity markets and venture capital for innovative businesses, for instance through the Enterprise Investment Scheme, the Enterprise Capital Funds and Venture Capital Trusts.

The forthcoming Innovation and Research Strategy will set out in more details the actions BIS will be taking to support innovative businesses.

Indicator definition

An innovation-active firm is one that has had innovation activities during the period under review. It includes those with ongoing and abandoned activities. In other words, firms that have had innovation activities during the period under review, regardless of whether the activity resulted in the implementation of an innovation, are innovation-active

Innovation is defined as a new or significantly improved product (good or service) introduced to the market or the introduction within an enterprise of a new or significantly improved process. Innovations are based on the results of new technological developments, new combinations of existing technology or the utilisation of other knowledge acquired by the enterprise. Innovations may be developed by the innovating enterprise or by another enterprise. However, purely selling innovations wholly produced and developed by other enterprises is not included as an innovation activity. Innovations should be new to the enterprise concerned. For product innovations they do not necessarily have to be new to the market and for process innovations the enterprise does not necessarily have to be the first one to have introduced the process.

Methodology

This indicator is based on results from the UK Innovation Survey. The UK Innovation Survey is funded by the Department for Business, Innovation & Skills (BIS). The survey was conducted on behalf of BIS by the Office for National Statistics (ONS), with assistance from the Northern Ireland Department of Enterprise, Trade and Investment (DETINI).

The UK Innovation Survey is part of a wider Community Innovation Survey (CIS) covering European countries. The survey is based on a core questionnaire developed by the European Commission (Eurostat) and Member States. This is the Sixth iteration of the survey (CIS 6). CIS5, covering the period 2006 to 2008, was carried out in 2007; CIS4, covering the period 2004 to 2006, was carried out in 2005; and CIS 3, covering the period 1998 to 2000, was carried out in 2001.

The UK Innovation Survey 2009 sampled 29 thousand UK enterprises through postal questionnaire, and 14,281 replied.

Full details on the Innovation survey, the questionnaire used, and further details on methodology can be found on the BIS website.

Who are our partners?

There are a large number of partners in the innovation infrastructure. It includes universities and institutions supporting public goods information such as the British Standards Institute, The UK Accreditation service, the National Measurement Office and the National Measurement Institutes, the Design Council etc. Key BIS partners are:

—  HEFCE;

—  RCUK;

—  TSB;

—  IPO; and

—  NESTA.

Related indicators

Input Indicator 9: Expenditure on Research and Development performed in Higher Education.

Impact Indicator 4: The UK share of highly cited papers.

Status

Last updated on: March 2010
Due for update on: February 2012

IMPACT INDICATOR 7

EARLY-STAGE ENTREPRENEURIAL ACTIVITY RATE

Why is this indicator important?

A strong enterprise culture and dynamic small business sector is central to restoring strong growth. Enterprise underpins economic growth through its impact on employment and productivity. New and small businesses drive economic growth by stimulating innovation, creating a competitive spur to existing businesses to increase their productivity and making a disproportionate contribution to job creation.

This indicator provides a measure of the level of new enterprise creation in the economy; it covers both individuals in the process of starting a business and those who are running businesses less than three and a half years old.

How are we performing?

The following chart shows the G7 average alongside the UK and the US:

TOTAL EARLY-STAGE ENTREPRENEURIAL ACTIVITY (TEA) IN THE G7, UK AND US (PERCENTAGES)

Since 2001, the UK rate of Total early stage Entrepreneurial Activity (TEA rate) has remained relatively stable. For much of the series it mirrored the G7 rate although in 2009, the G7 rate fell sharply while the UK rate remained steady. By 2010, the difference grew and in 2010, the UK had the second highest G7 rate at 6.4% behind the US at 7.6%, with the G7 average at just under 5%.

The Global Entrepreneurship Monitor, the source of this indicator provides lots of other relevant measures in addition to the TEA rate. Further information and country comparisons are available in the 2010 global report, including attitudes and actions around entrepreneurship and measures of countries suitability for entrepreneurship.

What will influence this indicator?

A range of interacting factors will influence this indicator:

—  The strength of the UK enterprise culture: Evidence suggests that people in the UK, while being supportive of enterprise and entrepreneurs, tend to favour employment as a career option. Often this decision is based on poor information or knowledge about the risks and benefits of running a business or the skills needed. Understanding of entrepreneurship is particularly lacking amongst those with little enterprise engagement, such as not having a parent in business or not knowing someone who has set up a business.

—  Access to finance: Information failures mean that some businesses, mainly SMEs, may not be able to assess the potential benefits of external financing or may not be able to access financing. This can be aggravated by the current challenging financial environment.

—  The wider business environment also plays a critical role in shaping both attitudes toward entrepreneurship and, most importantly, in determining how easy or difficult it is for those with the ambition to set up in business. This includes the regulatory regime (for example, the amount of bureaucracy required to set up a business and how long this process takes), the tax environment and the guidance and support that is made available.

What is BIS's role?

There are a number of specific policy areas that make a direct contribution to increasing entrepreneurship.

We are currently reforming the way that people running a business get the information, guidance and support they need to start and grow a business. This includes, for example, reforming Businesslink and creating a network of mentors who will offer practical advice on running a business.

Business access to finance is supported by a number of schemes. For example, people in the early stages of starting out in business may not have the credit history or security needed to secure a normal commercial loan. The Enterprise Finance Guarantee helps these people gain funding by providing the lender with a Government backed guarantee.

The burden of regulation is being reduced by the 'Red Tape Challenge' and the introduction of a "one-in, out-out" system for new regulations. Many of the regulations affecting business are not specifically created by BIS, but we do have a responsibility through the Better Regulation Executive of ensuring that those regulations that are introduced are justified.

BIS also has a variety of programmes aimed at promoting a culture of entrepreneurship. Details of these, and how we are helping small firms start, grow and prosper, are included in our publication: Bigger, Better Business.

Indicator definition

The proportion of adults (18-64) of working age in the process of starting or running a business less than 42 months old.

Methodology

GEM is the largest single study of entrepreneurial activity in the world. The GEM global website contains all global and UK reports since the GEM project started in 2000.

This indicator is produced by the GEM UK team and is based on responses to a telephone household survey which asks individuals questions about entrepreneurial activity. The adult population is then used for the denominator. Data is published for UK but England only data is also available. As the survey is a sample survey, results are weighted to be representative of the population. The 2010 sample size for the UK was 3000. Fieldwork is conducted by an independent research company (IFF Research in 2010) who adhere to industry quality standards. Data is subject to confidence intervals. UK TEA rate in the 2010 survey was 6.4% and had a 95% confidence interval of around 1% point.

Due to slight differences in methodology, the UK figure in the global report and in the GEM UK report may differ slightly (eg 0.1 % points).

Further Information

Further information about the GEM study and on measures of entrepreneurship coming from it can be found on the GEM website.

Who are our partners?

There are many bodies involved in the successful promotion of entrepreneurship. These include the following:

—  Skills Funding Agency—to help promote enterprise education in Further Education;

—  Association of Colleges—to develop a framework for enterprising colleges;

—  National Centre for Entrepreneurship in Education—various initiatives, including Make it Happen and mentoring schemes;

—  National Consortium of University Entrepreneurs—helping to build numbers in Enterprise Societies;

—  Specialist Schools and Academies Trust—supporting schools to enable children to engage in enterprise; and

—  Education and Employers' Taskforce—attracting volunteer local enterprise champions into schools.

Related indicators

Input Indicator 7: Value Enterprise Finance Guarantee funds used by businesses.

Input Indicator 8: Businesses assisted through BIS finance schemes as a proportion of those reporting being refused finance.

Impact Indicator 8: Ease of doing business in the UK, ranking of UK on World Bank Doing Business Report.

Impact Indictor 9: Change in the net regulatory burden imposed on business by Government.

Status

Last updated on: December 2010
Due for update on: December 2011 (estimated)

IMPACT INDICATOR 8

EASE OF DOING BUSINESS IN THE UK, RANKING OF UK ON WORLD BANK DOING BUSINESS REPORT

Why is this indicator important?

Targeted and proportionate regulation promotes economic growth and wider economic welfare. However, regulation should be designed to guide markets towards producing the desired outcomes with the minimum burden and corresponding costs for businesses.

The World Bank annually reports on regulations that enhance or constrain business activity and produces a set of indicators based on:

—  the degree of regulation, such as the number of procedures to start a business, to get electricity or to register and transfer commercial property;

—  regulatory outcomes, such as the time and cost to enforce a contract, go through bankruptcy or trade across borders;

—  the extent of legal protections of property, for example, the protections of investors against looting by company directors or the range of assets that can be used as collateral according to secured transactions laws;

—  the tax burden on businesses; and

—  different aspects of employment regulation.

The report produces a simple overall ranking based on these detailed indicators. The results are synthesized to produce a country ranking and this provides a comparison of the regulatory burden that businesses face. A positive regulatory environment implies that competition between firms should be high, as there are low barriers for new firms to be created. In turn this competitive pressure should enhance firms' incentives to innovate, increase productivity and, ultimately, create economic growth.

How are we performing?

The UK is ranked 5th out of the OECD countries, behind New Zealand, the United States, Denmark and Norway, and 7th overall in the 2012 figures, released on 19 October 2011.

Compared with 2011 the UK fell by one place from 4th in OECD and 6th overall.

The World Bank introduced methodological changes in 2011. The 2011 data have been revised for consistency purposes but the World Bank is not providing revised rankings for years before 2011.

The World Economic Forum's Global Competitiveness Index also provides ranking of the business environment across countries. In the 2011-12 report, the UK was ranked 10th in the world, increasing by 2 places on the position in 2010-11.

What will influence this indicator?

This indicator will be influenced by changes to the stock of regulation in both the UK and other countries. The 2012 report considers regulation affecting: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. Previous years have also included regulations relating to employing workers.

International rankings are sensitive to methodological changes such as sample sizes, the aggregation process and the assignment of weights and should be seen as providing a high-level assessment.

What is BIS's role?

BIS is responsible for the operation of the "One-in, One-out" (OIOO) rule on regulation. This rule means that no new primary or secondary UK legislation which imposes costs on business or civil society organisations, can be brought in without the identification of existing regulations with an equivalent value that can be removed. Regulation which is required to implement EU obligations and public sector are not within the scope of OIOO at this time.

With Cabinet Office, BIS is managing the "Red Tape Challenge" which will review the stock of more than 21,000 statutory instruments that are currently putting barriers in the way of businesses, volunteers and the public.

The Better Regulation Executive, which is part of BIS, has set out a guide to how the Government is implementing the Coalition Agreement commitments and how, over the course of this Parliament, they will reduce the quantity and improve the quality of domestic regulation and regulation that comes from the European Union.

Indicator definition

The ease of doing business index ranks economies from 1 to 183. The index is calculated as the ranking on the simple average of country percentile rankings on each of the 10 topics covered in Doing Business. The ranking on each topic is the simple average of the percentile rankings on its component indicators.

This indicator considers the UK ranking within Organisation for Economic Co-operation and Development (OECD) economies.

Methodology

The World Bank annually report on regulations that enhance or constrain business activity, using a number of quantitative indicators on business regulation and protection of property rights to compare worldwide economies over time. Surveys are issued to local experts (including business consultants, lawyers and government officials) and look at 10 aspects of a business regulations including starting a business, getting credit, and trading across borders. Data for the indicators is based on responses to a survey which uses a simple business case to ensure comparability across countries and over time (for example, assumptions about the size of a business, its legal form and nature of operations).

It is important to note that the report offers an objective, but limited, global comparison of regulatory environments. In particular, underlying indicators do not account for all important factors which matter to firms or investors; further considerations such as macroeconomic conditions, market size, workforce skills, quality of infrastructure and security, are not captured.

Full details of the methodology are available here.

Further Information

The 2012 Doing Business report is available here.

Who are our partners?

All Government Departments.

Related indicators

Impact Indicator 9: Change in the net regulatory burden imposed on business by Government.

Impact Indicator 10: Change in employment regulatory burden imposed on business by Government, measured from baseline provided by OECD Indicators of Employment Protection.

Status

Last updated on: October 2011
Due for update on: Expected to be October 2012

IMPACT INDICATOR 9

CHANGE IN THE NET REGULATORY BURDEN IMPOSED ON BUSINESS BY GOVERNMENT

Why is this indicator important?

Regulation can be a key support to the economy. It can be used to address market failures and tackle inefficiencies. It can boost the productive potential of the economy and thus raise economic growth.

However, regulation can also impose costs on business by requiring changes to working practices or leading businesses to seek external advice in order to ensure that they are compliant. These visible costs mean that businesses have less time to spend on productive work and less money to invest in their future growth. There are also less visible costs of regulation, for example the time it takes a business to comply with information obligations to show compliance with a regulation.

This indicator measures whether the total cost of regulation imposed by government is falling or growing. This indicator presents the net change in the regulatory burden imposed on business and is calculated using the policies in scope of the One-in, One-out (OIOO) Rule measured in £million. Under OIOO, for any direct net cost imposed on business and civil society organisations, departments must identify and remove or recast existing regulations with an equivalent value. It is the net effect of this system which forms the basis of this indicator. Over the life of the Parliament, the aim is to have a net regulatory reduction which will free businesses to focus their resources on performance and growth.

How are we performing?

The performance of departments under the One-in, One-out regulatory system shows that there has been no increase in the burden on business for the period January 2011 to December 2011, and that any increase in business burdens attributable to regulatory measures has been more than offset by savings attributable to a much higher number of deregulatory measures. In fact nine departments are showing a net reduction in burdens.

	Position: January to December 2011
Volume
INs	19
OUTs	33
Zero net cost	37
Annual regulatory cost to business (millions)
INs	£338.35
OUTs	-£3,381.63
Net	-£3,243.28

As the UK was the first country to introduce the current OIOO, it is not possible to directly compare our performance with that of other countries. Most other countries use versions of the Standard Cost Model which focuses on the stock of regulation whereas OIOO explicitly seeks to stem the volume of regulatory flow.

The principle international measurement of business regulation is the World Bank "Doing Business Survey" (Impact Indicator 8). While this is broken down by country it is not directly comparable to the net change in burden on business as it measures very different areas of business such as access to credit and paying taxes, neither of which are in scope of OIOO.

The OECD "Governance at a Glance" looks mostly at the structures in place to measure regulatory performance rather than at the performance indicators. The UK performs well under these measures as it has a well-established regulatory structure such as a standardised impact assessment approach for all regulatory changes which are then independently validated. At present it does not comment on the performance of countries under their existing regulatory reform arrangements.

What will influence this indicator?

The One-in, One-out Rule was developed to ensure that the volume and cost of regulation on business is minimised. It has the joint aims of creating discipline on the flow of regulation (departments are incentivised to minimise the size of IN, as they must find a corresponding OUT) while also driving departments to review their stock of regulation (the source for OUTs).

Individual departments are responsible for their own OIOO position which overtime should be in balance or ideally show a net reduction in burdens. As departments become more familiar with the OIOO Rule and identify OUTs in advance of developing regulations to introduce, the OIOO balance across government should result in a net reduction in burdens on business. In addition, the Red Tape Challenge is supporting departments to review their stock of regulation, across a number of themes, thus supporting the deregulation agenda.

The Government has committed to reducing the net regulatory burden on business over the term of this Parliament (2010-15). Given the current economic conditions, a key output of OIOO will be the reduction in red tape, thus allowing businesses to concentrate their resources on productivity and growth.

What is BIS's role?

The Better Regulation Executive (BRE) within BIS is responsible for the operation of the "One-in, One-out" (OIOO) rule on regulation. This rule means that no new domestic UK legislation which imposes costs on business or civil society organisations, can be brought in without the identification of existing regulations with an equivalent value that can be removed. Regulation which is required to implement EU obligations and public sector are not within the scope of OIOO at this time.

Indicator definition

Regulations are measures with legal force imposed by central government and other schemes operated by central government.

INs—an IN is defined as a regulation whose direct incremental economic cost to business and civil society organisations exceeds its direct incremental economic benefit to business and civil society organisations.

OUTs—an OUT is defined as a deregulatory measure whose direct incremental economic benefit to business and civil society organisations exceeds its direct incremental economic cost to business and civil society organisations.

OUTs can be sourced from:

—  existing regulations which are removed completely; or

—  existing regulations which are recast in order to reduce burdens.

The "One-in, One-out" rule currently only applies to UK regulation that impacts on business and civil society organisations. It does not include regulations that:

—  are implementing EU Regulations, Decisions and Directives;

—  are implementing international agreements;

—  are fiscal measures including measures designed to address systemic financial risk;

—  are civil emergency regulations as classed under the Civil Contingencies Act 2004;

—  are issued under Royal Proclamation or have a short-life span of up to 12 months and include an automatic sunset clause; or

—  are fees and charges imposed by public bodies for cost recovery purposes only.

Methodology

The assumptions underpinning the calculation of the costs and benefits for measures included under this indicator have been subject to rigorous scrutiny and challenge by the independent Regulatory Policy Committee (RPC), to ensure that they accurately reflect the real impacts on business.

INs and OUTs under OIOO are calculated using Equivalent Annual Net Cost to Business. Details of how this calculation is performed can be found in the One-in, One-out statements of new regulation

Further Information

Full details on the operation of One-in, One-out and the regulations being introduced and removed are available from the BIS website.

Who are our partners?

The "One-in, One-out" rule covers:

—  Whitehall departments and other central government organisations; and

—  agencies that are part of central government ie executive agencies, such as Companies House.

Related indicators

Impact Indicator 8: Ease of doing business in the UK, ranking of UK on World Bank Doing Business Report.

Impact Indicator 10: Change in employment regulatory burden imposed on business by Government, measured from baseline provided by OECD Indicators of Employment Protection.

Status

Last updated on: September 2011
Due for update on: To be confirmed

IMPACT INDICATOR 10

CHANGE IN EMPLOYMENT REGULATORY BURDEN IMPOSED ON BUSINESS BY GOVERNMENT, MEASURED BY THE CHANGE IN NET COST TO BUSINESS FROM UK EMPLOYMENT REGULATION (ONE-IN, ONE-OUT), ALSO REFERRING TO A BASELINE PROVIDED BY OECD INDICATORS OF EMPLOYMENT PROTECTION

Why is this indicator important?

All markets need rules and the labour market is no different. Labour market regulation is the system of laws and institutions covering the broad areas of; labour and employment, industrial and collective relations, and aspects of social security.

As with any regulation, labour market regulation can have both positive and negative consequences. Excessive or inappropriate regulation limits the ability of business to respond to demand and create new employment, but the right balance of regulation can give employers the confidence to create jobs while giving their employees protection. The aim of labour market regulation is to provide a framework that enables the labour market to function as efficiently as possible and consequently maximising employment opportunities by allowing businesses to offer and individuals to take up jobs. In addition, the regulation needs to achieve the appropriate balance of power between—and protection for—both businesses and workers.

The UK's level of labour market flexibility already compares well with our major competitors. The OECD's indicators of employment protection are important in demonstrating the UK labour market's absolute and relative level of performance. This indicator provides a measure on whether this position is being maintained or improved.

However, while the OECD measure provides a clear and robust assessment of the UK's labour market, it is only updated every four or five years and as such is useful as a benchmark of the current state of affairs, but not as useful for tracking short to medium term progress. Also, it is primarily a relative measure and as such will be affected not just by policy developments in the UK but also in other countries.

Therefore, our principal measure of progress in delivering a more flexible and efficient labour market is the measure of change in net cost to business from changes in employment regulation, using the One-in, One-Out (OIOO) framework. The One-in, One-out measure will provide more regular information on the change in direct costs and benefits to business as a result of changes in employment regulation. By focusing on the change in burdens placed on business by employment regulation with this indicator, we can assess whether the UK is building on past success by further improving the functioning of the labour market. Whilst there is no indicator that can fully capture the extent to which regulatory changes have increased the labour market's efficiency, the OIOO figure should be a good indicator of progress in this direction.

How are we performing?

To date, the One-in, One-out position on employment regulation shows that there has been an increase in regulatory burden on business of £8m per annum from regulations implemented since 2010, however deregulatory outs in the pipeline suggest that the regulatory burden will fall in the coming years.

The UK performs consistently well in the OECD's indicators of employment protection. In the latest OECD indicators of employment, published in 2008, the UK scored 1.09 (in an index ranging from 0-6, where lower numbers represent less strict regulation). The UK had the least strict regulation of those in the EU, and the third lowest level within the OECD. This indicator has shown the UK's position to be relatively stable over time. This is an extremely strong performance but the main focus of this indicator is our OIOO position, which we can directly influence.

The Employment Law Review (described below) means that every effort is being made to identify and implement changes that will reduce the burdens of employment regulation and improve the functioning of the labour market still further.

The OECD's index of employment protection is one of three main international comparators of employment regulation. The World Bank's Doing Business report has an "Employing Workers Index", which is a comparative ranking of the regulation of employment, specifically as it affects the hiring and redundancy of workers and the rigidity of working hours. This was last assessed for the 2010 report and the UK was ranked 35th out of 183 countries.

The World Economic Forum's Centre for Global Competitiveness and Performance ranks countries according to a global competitive index. This has a sub-indicator called the Labour Market Efficiency Index, calculated according to factors such as flexibility of wage determination, hiring and firing practices and pay and productivity. The UK scores 7th out of 142 on this index. The data compiled for both of these sources is based on self-reporting and limited samples.

The OECD indicator is chosen as a comparator because it is constructed consistently across the countries measured and is based on objective factors rather than perceptions.

What will influence this indicator?

Whether the burdens placed on business by employment regulation in the UK go up or down is directly influenced by regulatory changes made by BIS. It is also influenced by how well employment regulation functions as a system and this needs to be factored in any changes made. Therefore the One-in, One-out balance for employment regulation is within our control.

We do not have control on changes made in other countries. The UK's position in the OECD employment protection index is influenced by both the UK's employment regulation changes and developments in other countries in the OECD. It does, however, have a useful subsidiary role as a benchmark and in providing context.

What is BIS's role?

BIS has responsibility for employment law and is responsible for most employment regulations. It is currently leading the Employment Law Review. This review is considering employment laws across Government to make it as easy as possible for businesses to take people on and will extend over the life of Parliament.

The Review covers employment and workplace laws, for employers and employees; it is not limited to those laws for which BIS has policy responsibility. The purpose of the review is to ensure these laws maximise flexibility for both parties while protecting fairness and providing the competitive environment required for enterprise to thrive.

Examples of the work that the review has already undertaken are:

—  a consultation on a package of reforms to the employment tribunal system, aimed at encouraging earlier resolution of disputes in the workplace and reducing the number of tribunal cases (which are costly for employers, employees and Government; and

—  the removal of the Default Retirement Age, thus removing significant paperwork obligations for employers and bringing wider benefits to the economy, making it easier for older people to continue working.

BIS is responsible for the operation of the 'One-in, One-out' (OIOO) rule on regulation and, with Cabinet Office, the running of the Red Tape Challenge, designed to reduce the total stock of regulation.

Indicator definition

The change in the level of burdens imposed on business from employment regulation in the UK will be reported. This reporting is based on the "One-in, One-out" rule detailed in Impact Indicator 9. While this reporting will not provide information on whether the position of the UK is changing relative to other OECD countries, it will report on whether the burden of employment regulation is increasing or decreasing in the UK—how we are performing in an absolute sense. However it is important to note that the One-in, one-out indicator only tracks changes in direct costs and benefits to business as a result of change in employment regulation. It does not capture any indirect, or second order benefits that may accrue as a result of reforms to the labour market, such as an increase in business confidence resulting in increased employment.

Every four or five years the OECD produces a report based on indicators of employment protection. The indicator draws on 21 items relating to three areas of employment protection legislation (individual dismissal of workers with regular contracts, additional costs for collective dismissals and regulation of temporary contracts). Countries are then ranked in terms their total level of employment protection.

Methodology

The assumptions underpinning the calculation of the costs and benefits for measures included under the One-in, One-out indicator will be subject to rigorous scrutiny and challenge by the independent Regulatory Policy Committee (RPC), to ensure that they accurately reflect the real impacts on business.

INs and OUTs under OIOO are calculated using Equivalent Annual Net Cost to Business. Details of how this calculation is performed can be found in the One-in, One-out statements of new regulation.

A European wide measure of employment regulation is provided by the OECD indicators of employment protection. The indicator draws on 21 items relating to three areas of employment protection legislation (individual dismissal of workers with regular contracts, additional costs for collective dismissals and regulation of temporary contracts).

The OECD rankings are only updated every four to five years. On an ongoing basis the change in the regulatory burden imposed on business from BIS employment regulation will be reported.

The OECD produce a detailed note on the methodology used to calculate their indicators.

Further Information

OECD Indicators of Employment Protection and supplementary information from BIS Labour Market impact assessments.

Who are our partners?

The "One-in, One-out" rule covers:

—  Whitehall departments and other central government organisations; and

—  agencies that are part of central government ie executive agencies, such as Companies House.

Related indicators

Impact Indicator 8: Ease of doing business in the UK, ranking of UK on World Bank Doing Business Report.

Impact Indicator 9: Change in the net regulatory burden imposed on business by Government.

Status

Last updated on: May 2011
Due for update on: TBC

IMPACT INDICATOR 11

OPENNESS TO TRADE: EXPORTS PLUS IMPORTS AS A SHARE OF GDP, RANKED AGAINST MAJOR COMPETITORS

Why is this indicator important?

Trade (both imports and exports) is vital to any successful modern economy. Trade is crucial for the competitiveness of the UK economy in the long run. There is a large body of evidence to support this. By exposing firms and products to international competition, economies are encouraged to focus on areas of comparative advantage. This helps ensure that scarce skills and resources are deployed where they are most productive. Trade increases, amongst other things, competition (hence boosting productivity and innovation), enable firms to capitalise on economies of scale from having access to larger markets and encourage the spread of skills, knowledge and innovation.

The UK has a strong commitment to trade and has competitive strength in a variety of sectors vital to a modern economy, but there are opportunities for improvement. While the share of UK trade with emerging economies has been growing, it has grown less rapidly than has been the case for other advanced economies. Moreover in recent years net trade has been estimated to have been making a negative contribution to growth.

This indicator enables to assess the UK's openness to trade over time and benchmarks the UK against other economies.

How are we performing?

The UK trade to GDP ratio was 62.3% in 2010, up from 53.7% in 1999. The overall trend has been an improvement, although there have been fluctuations over recent years.

In terms of international comparisons, the UK ranked 24th in 2009, from 29th in 1999 (out of 37 countries). The UK is the third ranked G8 country behind Germany (17th) and Canada (23rd). Due to incomplete country coverage for 2010, a UK rank is not available yet. However the underlying ratio has seen an improvement from 2009 to 2010 and the ratio is now at the highest level since the series began in 1999.

UK POSITION OVER TIME: RANK OUT OF 37 COUNTRIES, AND UK RATIO OF TRADE: GDP

	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Rank	29	29	28	29	29	30	28	26	31	27	24	n.a.
Ratio	53.7	57.1	56.5	54.8	53.3	53.2	56.2	60.0	56.3	61.1	58.2	62.3

Source: OECD Macro Trade Indicators

More recent trade data published by the ONS for the first six months of 2011 show an 11% increase in trade on the same period in 2010, with exports also increasing at a faster rate than imports, leading to a reduction in the trade deficit. With GDP also increasing in early 2011 but at a slower rate than total trade, if these trends were to continue then the ratio would see a further improvement in 2011.

Corroborating this, there has been an increase in the number of businesses assisted by UKTI to break into new markets, up from 23,400 in 2010-11 to 24,600 as at Q2 2011-12.

Whilst the EU and the US remain the UKs largest trading partners, with EU trade accounting for 50% of UK trade in 2010, the BRIC nations and others have seen a faster increase in their trade between 2009 and 2010 than the EU and US. This information is provided by the Office of National Statistics (ONS) Economic Accounts publication. ONS are planning revisions to their country data in this publication and therefore figures are likely to change.

What will influence this indicator?

This indicator will be influenced not only by the trade policies adopted by the UK and the result of multilateral trade negotiations, but also, and importantly, by the wider macro economic context such the state of the world economy. For instance, during the recent financial crisis of 2008 global trade fell by almost a quarter.

What is BIS's role?

BIS is the leading department on trade negotiations. International and bi-lateral trade agreements (negotiated by the EU) create opportunities for UK businesses. However, all government departments have a role in trade and investment policy and a coordinated approach is ensured by a Cabinet sub-Committee under the chairmanship of the Minister for Trade and Investment, a joint BIS and FCO responsibility.

Even when markets are open, businesses can face difficulties in entering export markets because of other barriers such as identifying or gaining access to the right contacts. UK Trade and Investment, partly funded by BIS, provides information, advice and guidance to businesses of all types and sizes about trading internationally and investing in the UK.

Businesses can also face barriers in accessing trade finance, particularly SMEs. BIS assists in addressing this problem through its support for the Export Credits Guarantee Department and by working with banks through the British Bankers' Association to share credit risks on new products.

Indicator definition

The indicator is defined as follows (at current prices, current exchange rates):

Imports + exports (both goods and services)
GDP.

Methodology

The data are taken from the OECD ANA (Annual National Accounts) database, based on the OECD's annual national accounts questionnaire sent to OECD member countries. Goods consist of merchandise imports and exports. Services cover transport, travel, communications, construction, IT, financial, other business, personal and government services, as well as royalties and license fees.

The trade-to-GDP-ratio is the sum of exports and imports divided by GDP. This indicator measures a country's "openness" or "integration" in the world economy. It represents the combined weight of total trade in its economy, a measure of the degree of dependence of domestic producers on foreign markets and their trade orientation (for exports) and the degree of reliance of domestic demand on foreign supply of goods and services (for imports). The trade-to-GDP-ratio is often called the "trade openness ratio".

A low ratio for a country does not necessarily imply high (tariff or non-tariff) obstacles to foreign trade, but may be due to the factors mentioned above, especially size and geographic remoteness from potential trading partners. For example, it is generally the case that exports and imports play a smaller role in large economies than they do in small economies. It should be noted that this indicator may also be expressed as average of exports and imports (not as the sum of both).

It should be noted that ONS data differ slightly from the OECD trade and GDP data but data trends are generally consistent.

Further Information

OECD Trade Indicators database:
http://stats.oecd.org/Index.aspx?DatasetCode=TRADEINDMACRO

Who are our partners?

UKTI;

FCO; and

ECGD.

Related indicators

UKTI DPIs.

Status

Last updated on: 29 September 2011.

Due for update on: data are updated throughout the year when each country is able to provide updates. 26 countries (out of 37) currently have data for 2010.

IMPACT INDICATOR 12

THE VALUE OF THE CONSUMER BENEFITS OF THE COMPETITION REGIME

Why is this indicator important?

Where markets work well, they provide strong incentives for good performance—encouraging firms to improve productivity, to reduce prices and to innovate; whilst rewarding consumers with lower prices, higher quality, and wider choice.

However, markets can and do fail. Competition policy aims to ensure that the markets work efficiently and to avoid market failures, most notably the harm that can come from market power. Market power arises when one or a small number of firms dominate a market and it is difficult for other firms to enter. It leads to less innovation, higher prices, lower choice, and lower quality than would result from efficient competition.

The monitoring and enforcement activities of the Competition Commission (CC) and the Office of Fair Trading (OFT) should mean that action is taken to avoid or address these issues. This indicator provides a measure of their success by estimating the additional costs consumers would have paid if the market had not been working efficiently.

How are we performing?

BENEFITS (£ MILLION)

	Year
	2007-08	2008-09	2009-10	2010-11
Competition Enforcement(1)	77	78	84	83
Mergers(2)	368	313	310	127
Markets(3)	266	358	345	479
Total	711	749	739	689

(1) "Competition enforcement" is the investigating cartels and other commercial agreements, and abuses of dominant position in markets.

(2) "Mergers" refers to proposed mergers abandoned on referral to the Competition Commission or those blocked or amended by the CC.

(3) "Markets" are examinations into the causes of why particular markets are not working well for consumers, leading to proposals as to how they might be made to work better. These market studies take an overview of regulatory and other economic drivers in a market and patterns of consumer and business behaviour.

Source: OFT

The OFT estimates that the competition regime benefited consumers almost £689 million in 2010-11. Markets work led to the majority of benefits (£479 million)—this has included work on high profile cases such as the Cash ISAs market and the Care Homes market. Merger control provided benefits of £127 million and Competition Enforcement benefits of £83 million.

This is a fall from £739 million in 2009-10. This decline is largely due to a decrease in the benefits from work of Mergers because in 2007-08 a large proposed merger was prevented estimated to lead to a detriment to consumers of £242 million a year.

What will influence this indicator?

The indicator will vary depending on the mix of casework by the competition bodies. For example, the benefits to consumers from mergers work is in part be determined by the volume of merger activity and the scale of the mergers proposed. For example in 2007-08 the Competition Commission found five mergers that were likely to be anti-competitive and it was estimated that the cost to consumers of these mergers proceeding without remedy would have been  £29million a year; it reached similar conclusions on five mergers in 2006-07 but the cost of these would have been  £279million a year.

The OFT is currently considered to be a world leader in the measurement of consumer benefits. However, this is a recent measure, therefore subject to methodological improvements. The department will continue to ensure that the most robust methodology is used to assess consumer benefits.

What is BIS's role?

The Secretary of State for Business, Innovation and Skills sets the overall policy framework for competition, which is regulated by the UK's independent competition authorities. There are four main competition bodies that are responsible for investigating and enforcing decisions on competition matters in the UK market:

—  The Office of Fair Trading is the principal competition authority whose responsibility is to enforce competition and make markets work well for the benefit of consumers.

—  The Competition Commission conducts in-depth inquiries into mergers, markets and the regulation of certain industries such as utilities and communications.

—  The Competition Appeal Tribunal is a specialist judicial body whose function is to hear and rule on appeals of decisions made by the competition authorities.

—  The European Commission (Directorate General for Competition) has powers to act on certain large mergers with a European dimension.

Sector regulators also have a role thorough concurrency powers. For example, Ofcom referred the Pay-TV movies market to the CC and has used its competition powers in relation to BT (with the creation of BT Openreach) and access to Satellite Sports channels.

Indicator definition

The consumer benefits of the work of both the Competition Commission (CC) and the Office of Fair Trading (OFT) are calculated by the bodies and published in or alongside their annual reports. The consumer benefits of their combined competition work can be calculated from OFT Positive Impact report, which takes account of the overlap of work between the two bodies and explicitly outlines the consumer benefits by each competition tool and for each body.

Results are annual estimates averaged over a three-year.

Methodology

Total consumer benefits from competition policy is calculated by the OFT on an annual basis. Full details on the methodology in use is available here.

It should be noted that consumer benefits may be underestimated by the current methodology:

—  Consumer benefits from mergers and competition enforcement do not include benefits from deterrence, which are considered to be much greater than the direct static benefits estimated; The indirect benefits of deterrence have been estimated by Deloitte in 2007 and can be found here: "The deterrent effect of competition enforcement by the OFT".

—  Consumer benefits for markets work relate to the scope of harm in the market that have been investigated.

The OFT methodology was assessed independently in January 2010 by Professor Stephen Davies and is available here website.

Further Information

The last report from OFT is available here (July 2011):
http://www.oft.gov.uk/shared_oft/reports/Evaluating-OFTs-work/OFT1354.pdf

Who are our partners?

Office of Fair Trading; and

Competition Commission.

Related indicators

Other competition indicators available focus on assessing the performance of competition agencies rather than the competition regime. The UK competition authorities are generally well placed in international rankings.

Of particular interest, the Global Competition Review's annual ratings of competition agencies, rates both OFT and CC in the top five agencies in the world, putting US DOJ, FTC at the top and the European Commission's DG Comp in fourth place.

BIS commissioned a Peer Review of Competition Regime in 2007, which found the UK competition regime to be third among the regimes assessed, behind USA and Germany.

Status

Last updated on: November 2011.
Due for update on: July 2012.

Annex C

BIS FTE HEADCOUNT APRIL 2010-NOVEMBER 2011

Departmental Group	Directorate	30 April 2010	31 October 2010	30 April 2011	11 November 2011
Business & Skills	Advanced Manufacturing Industries and Services	101	180	173	125
	BG Operations	15	16	1
	Business and Skills				4
	Business and Skills Corporate Services	3	4	11	35
	Economic Development	72	73	82	138
	Enterprise Directorate	75	76	78	89
	Further Education	104	104	3
	Further Education and Skills Investment	58	89	108	90
	Government Skills	45	44	29
	Information Economy	90	99	100	17
	Life Sciences	21	19	15	13
	Skills	125	97	125	98
	Solutions for Business Low Carbon Services	83
Business & Skills Total		793	801	725	610
Economics, Strategy and Better Regulation	Economics (inc. assistant economists)	26	29	4	36
	Analysis	11	1	57	44
	Economics Strategy and Growth			42
	Performance Evaluation and Business Economics	15	14
	Performance Measurement and Analysis		17
	Productivity Performance, Macroeconomics and Spending		8
	Risk and Regulatory Advisory Council	17		1
	Statistics and Analysis	18	19
	Strategy and Growth	18	29		22
	Better Regulation	96	84	85	52
	Chief Scientific Advisor	2	2	2
ESBR Total		201	202	191	154
Finance & Commercial	Commercial	182	182	136	129
	Finance	123	124	135	103
	Internal Audit	16	20	19	18
Finance & Commercial Total		321	326	290	250
Government Office For Science	Government Office for Science	78	71	69	65
Government Office For Science Total		78	71	69	65
Knowledge & Innovation	Business and Innovation Group	49
	Business and Innovation Group Staff out of Department	5
	DG Knowledge and Innovation			3	2
	HE Policy and student funding	134	132	132	100
	Innovation		47
	Innovation Directorate			34	46
	Knowledge & Inn, GO Sci Fin & Cor Plan Team			28	23
	National Weights and Measures Laboratory	2	1
	Research Base	91	95	73	66
	Science & Research Group Staff out of Department	18	1	1
Knowledge & Innovation Total		298	277	271	239
Legal, People & Communications	Capability and Change	118	106	6	3
	Communications	125	119	95	87
	Fast Streamers			9	10
	Human Resources	126	132	112	114
	Innovation Capability			10	9
	Legal Resource	186	191	180	157
	Other	1	4	4	1
Legal, People & Communications Total		556	553	416	381
Market Frameworks	Business Environment and Growth	35	40	4
	Consumer and Competition Policy	71	71	62	67
	Corporate Law and Governance	40	39	1
	Employment Relations	119	118	109
	Europe		29
	Women and Equality Unit	2
	Europe Trade and International Directorate	164	138	145	137
	Business Environment Directorate			65	61
	Labour Market				87
	Resource and Planning	12	12	10	19
Market Frameworks Total		442	447	397	370
Ministerial & Parliamentary Support Team	Ministerial and Parliamentary Support	117	95	91	91
Ministerial & Parliamentary Support Team Total		117	95	91	91
Office of Manpower Economics	Office of Manpower Economics	29	30	30	28
Office of Manpower Economics Total		29	30	30	28
Perm Sec Delivery Team	Perm Sec Delivery Team				5
Perm Sec Delivery Team Total					5
Shareholder Executive	Shareholder Executive	46	51	90	103
Shareholder Executive Total		46	51	90	103
Grand Total		2,881	2,852	2,571	2,295

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Prepared 9 February 2012