Select Committee on Trade and Industry Second Report


New enterprise target

28. The new SR 2000 PSA target 2 brigades together three targets, including the welcome one of "more enterprise in disadvantaged communities", arising from the November 1999 PAT 3 Report on which we reported to the House in March 2000.[40] The SDA sets out four performance measures —

    (i)  increase in usage of SBS information services including its website, and achieving 80% customer satisfaction:
    (ii)  increase in productivity and profitability of businesses using SBS business support services:
    (iii)  increase accessibility of business support to identified under-represented communities:
    (iv)  increase the number of successful high-growth business start-ups.

29. These generally repeat the 1998 PSA Targets 3 and 4, adding on a reference to the new target on enterprise in disadvantaged communities. We were therefore surprised to see in the December 2000 Technical Notes no reference to performance measurements (i) (ii) and (iv). The Notes refer back to the SR 2000 targets, dealing with issues such as how to measure the number of individuals "considering" going into business and the overall productivity of small firms, as well as the desired increase in enterprise in disadvantaged communities. We also note that the target date for an improvement in the overall productivity of small firms is 2010, "due to it taking some time before being able to assess fully the impact of the Small Business Service upon small firms." The set of "enterprise society" objectives, targets and measurements is a dog's breakfast. We recommend that the department and the Treasury revise the details of this objective.

1998 PSA target 8To make the UK the best place in the world to trade electronically by 2002.

SR 2000 PSA target 3 — Make and keep the UK the best place in the world to trade electronically, as measured by the cost of Internet access and the extent of business to business and business to consumer transactions carried out over e-commerce networks.

Electronic trading

30. In our July 1999 Report on Electronic Commerce, we noted that it was not altogether clear what the Government meant by its aim for the UK to be the best environment for electronic trading by 2002 and that "the Government's aim needs to be defined before the hour at which its achievement or otherwise must be judged is reached."[41] The target itself was set not, as has been suggested, in September 1999,[42] but in the December 1998 Competitiveness White Paper .[43] Neither the May 1999 DTI Report on Benchmarking the Digital Economy nor the September 1999 Cabinet Office paper [email protected] solved the problem of defining the aim. The September 1999 paper set out a list of aims, which was passed to the E-Envoy to refine in his first annual Report. This was published in September 2000. Regardless of any judgement as to the appropriateness of the original target for electronic commerce, it is unsatisfactory that such a high-profile target should have remained undefined for so long.

31. The new SR 2000 target embraces two sensible objectives. The December 2000 Technical Notes establish the target of the UK having a higher percentage of business to business/business to customer transactions to be carried out on e-commerce networks than in any other G7 country, by 2002. SDA 2000 contains general commitments to implement European directives and only two further specific targets — 200,000 online contacts with the government business website, and for the UK to be in the top 4 OECD countries in demand for mobile data services. None of the other issues raised in the September 1999 PIU Report and in the September 2000 annual e-commerce Report seem to be embraced within the detailed targets. On 13 December 2000 we heard oral evidence from the E-Minister and acting E-Envoy, in the course of which we raised some of these other issues, including the question of consumer confidence in e-commerce and the removal of regulatory barriers. We recommend that the targets for making the UK the best place in the world to trade electronically by 2002 be extended to embrace a broader range of the key issues raised in the Government's own recent reports on the subject, with particular reference to consumer protection and removal of regulation.

SR 2000 PSA target 4 — Improve the economic performance of all regions measured by the trend in growth of each region's GDP per capita. JOINT TARGET WITH DETR

Regional economic performance

32. This new target seems intended to sharpen DTI's responsibilities for regional economic performance, as demonstrated by a number of recent initiatives. The SDA refers in general terms to continuing use of Regional Selective Assistance, without specific targets, and to the agreement of business plans with Regional Development Agencies. We intend to inquire shortly into the regional and local impact of DTI's enterprise promotion agenda. Per capita growth in a region's GDP is a relatively crude measure of the success of DTI's role in regional development. Its connection with DTI inputs is also tenuous. Serious doubts could be expressed as to the value of a target which fails to address the issue of regional priorities.

33. The baseline data for 2000 will not be available until "the first half of 2002", and that the trend for each region will not be established until figures for "sufficient further years" are available.[44] In other words, even the crudest measure of how far there has been an improvement in regional economic performance will not be available until 2004 at the earliest. Once again we are at a loss to understand why what should be readily available statistics take an unconscionable time to be produced, such that the attainment of this simple target cannot be measured in a timely way.

SR 2000 Objective IV — enhanced competitiveness of Britain's companies through overseas sales and investments; and a continuing high level of quality foreign direct investment.

PSA target 9 To improve support for exporters, raise the quality of service, generate additional exports and enhance the business image of the UK.

SR 2000 target 10 — Deliver a measurable improvement in the business performance of Trade Partners UK customers. JOINT TARGET WITH FCO

Export promotion

34. Few of the five measurements of the 1998 export promotion target — of changes in companies' approach following advice; satisfaction; additional exports and business generated; and the impact of major events - are yet available for the most recent period. For example, the target was set of generating additional exports for each £ of public money spent, from a given baseline value. The formation of BTI has led to further work on impact measures; "no reliable figures relating to the original target are available".[45] In our 6 June 2000 oral evidence session with Sir David Wright, Chief Executive of BTI, he observed that BTI had an agreed set of six objectives, and that "what we are now seeking to do is to translate those objectives into a set of key targets for the coming year", followed by "market specific outcomes", and targets for individual posts.[46]

35. BTI's export promotion target is to be measured by achievement of at least 15% of new-to-export firms and at least 50% of established exporters assisted improving their business performance within 2 years, and at least 80% of firms receiving assistance to win major overseas projects reporting that BTI's help was a "significant factor". There is no trace of the detailed targets from 1998 relating to specific markets or events; nor is there any reflection of BTI expenditure on trade missions and trade fairs. A new performance measurement system is however still being developed to be "rolled out from the beginning of the Spending Review period", as well as a Corporate Plan to be prepared in spring 2001. We have recently received the text of the Memorandum of Understanding between BTI and the FCO and DTI.

36. Internally, BTI —

  • has an award scheme which recognises and rewards best practice in commercial work at overseas posts, intended to lead by March 2001 to a Best Practice Guide "designed to raise the performance of the average post to that achieved by the best";
  • is developing standards to apply to all Trade Partner UK services;
  • will from 2001-02 benchmark its performance against those provided by other countries;
  • will have wide-range monitoring procedures in place by March 2001, and plans to evaluate one or two areas of expenditure each year over the Spending Review period;
  • has set targets for interchange with the private sector, and for FCO and DTI staff to serve in the UK and overseas respectively.

These are matters to which we and our colleagues on the Foreign Affairs Committee will no doubt wish to return.

1998 PSA target 10To maintain the UK as the prime location in the EU for foreign direct investment.

SR 2000 target 11 — Maintain the UK as the prime location in the EU for foreign direct investment. JOINT TARGET WITH FCO

Inward investment

37. The target of keeping the UK at the top of the EU league table for Foreign Direct Investment by value has been achieved for 1999, according to National Statistics figures released in December 2000. These record a 21% rise in the value of the stock of foreign direct investment in the UK in 1999. The views expressed by the former Chief Executive of the Invest in Britain Bureau (IBB), and those attributed to the British Ambassador to Japan, which we raised with the Permanent Secretary in July 2000,[47] as well as a number of recent or pending decisions by inward investors, underline the threat to continuing achievement of this target for the recently ended year.

1998 Objective BMake the most of the UK's science, engineering and technology; in particular by achieving standards of international excellence and maximising the contribution of its outputs to economic development and the quality of life.

SR 2000 Objective II — to make the most of the UK's science, engineering and technology.

1998 PSA target 5To improve the overall international ranking of the Science and Engineering Base in terms of quality, relevance and cost-effectiveness.

SR 2000 target 5 — Improve the overall international ranking of the UK's science and engineering base, as measured by international measures of quality, cost-effectiveness and relevance.

Science and engineering

38. DR 2000 stated that new figures on outcome were expected in June 2000. In written evidence provided in September 2000 the department stated that the results of the latest data were being processed but were not yet available.[48] The note set out the same figures as those in DR 2000, which in one case apparently cover the whole period from 1981-98 and in another refer to achievements in 1990, 1993 and 1996. Exceptionally, the new target and the measurement used of its achievement is the same as the previous one. There can therefore be little excuse for any further delays in providing figures by which to assess whether the international ranking of the UK's science and engineering base has improved.

1998 PSA target 6To increase by 50% the 1997-98 number of companies spun out from universities by 2001-02.

SR 2000 target 6 — Increase the level of exploitation of technological knowledge derived from the science and engineering base, as demonstrated by a significant rise in the proportion of innovating businesses citing such sources.

Knowledge transfer

39. DR 2000 records that an annual survey of companies spun out is being developed with results expected in autumn 2000. The 1998 target has evidently now been adapted to be open to measurement in a different way. The survey of businesses spun out from universities begun this year is therefore apparently to be abandoned in favour of the Community Innovation Survey of "innovating businesses". The December 2000 Technical Notes state that this survey is to be made every two years from 2001, with a target date of 2005. It will therefore be impossible for some years to establish whether or not there has been a significant rise in the proportion of innovating businesses citing knowledge derived from the science and engineering base. It is unfortunate but by no means untypical that it will be impossible to discover if the 1998 target has been met until it has been superceded by a new target and new means of measurement — if then.

40. SDA 2000 contains a number of other measurements, including a target of 24 Faraday Partnerships by 2002/03 and year-on-year increases in various measurements. The December 2000 Technical Notes do not reveal the source of measurements to be used for these targets, which include university income from "working with business". While there have been admirable initiatives and programmes, there is little or no evidence yet on the extent to which the objective of making the most of the UK science base has been achieved. The latest set of targets represent a substantial improvement on their predecessors, so long as baseline values are rapidly established.

1998 Objective C Create strong and competitive markets; in particular by taking action to improve the openness, efficiency and effectiveness of markets at home, in Europe and across the world, and to ensure the provision of secure, diverse and sustainable supplies of energy at competitive prices.

Objective D Develop a fair and effective legal and regulatory framework; in particular by improving and enforcing a framework for commercial activity which encourages enterprise and avoids unnecessary burdens on business, while providing a fair deal for consumers and by developing a framework for employers and employees which promotes a skilled and flexible labour market founded on principles of partnership....

SR 2000 Objective III: to develop strong, competitive markets within a regulatory framework which promotes fairness and sustainability.

1998 PSA target 11 To maintain or improve levels of energy security, diversity, sustainability and competitive energy prices.

SR 2000 PSA target 8 — Ensure competitive gas and electricity prices in the lower half of the EU/G7 basket, while achieving security of supply and social and environmental objectives.
SR 2000 PSA target 9 — Improve the environment and the sustainable use of natural resources, including by reducing greenhouse gas emissions by 12.5% from 1990 levels and moving towards a 20% reduction in CO2 emissions by 2010. JOINT TARGET WITH DETR

Energy and environment

41. Three of the seven measurements for the 1998 targets, and SR 2000 target 9, are in effect the national targets on CO2, greenhouse and SO2 emissions, where it is suggested that the targets will be met. Industrial and domestic electricity prices were in 1998 above the EU and G7 medians, representing a deterioration in the position; the 1999 figures may be better.

42. A further measure of the 1998 target was achievement of the national target of 5% of electricity from renewables by 2003. DR 2000 states that the UK is "on course to meet target". The December 2000 Technical Notes confirm that this remains a formal measurement of target achievement. The 1999 figure was 2.8%, up from the 1998 figure of 2.6% and the 1997 figure of 2.1%.[49] In June 1998 we commented on the overall target of 10% of generation being from renewable sources by 2010, noting that it was ambitious and that "there is little or no likelihood" of it being met by operation of the free market alone. The new SDA target refers to achievement of the longer-term target of 10% of electricity supply from renewables by 2010.

43. The seven measures used in relation to the 1998 target on energy, while comprehensible and objective, had little to do with the role of the department. The new targets include achievement of the targets and outcomes set out in the department's October 2000 Sustainable Development Strategy and Action Plan, and include a measurable target directed to fuel poverty. This should ensure that targets are more closely aligned to the difference the DTI can and we hope does make in energy policy, so that the success or otherwise of its performance can be measured. The target on achieving competitive gas and electricity prices should in our view be explicitly taken to refer to prices for commercial users.

1998 PSA target 12To improve UK performance in transposition of EU Single Market measures to enable 98% of measures to have been transposed into UK law by end 2000.

Regulatory framework

44. DR 2000 records that 97.2 % of single market measures had been transposed into UK law by November 1999. In May 2000, we obtained a list from DTI of the outstanding measures.[50] Most are likely to have been transposed by the end of this year. Few of the delays are within DTI departmental responsibility. While our record on transposition of EU Single Market Directives is admirable, it is not a measurement of achievement of the overall objective of a fair and effective regulatory framework.

SR 2000 PSA target 7 — Have the most effective competition regime in the OECD, as measured by peer review, and achieve a fairer deal for consumers, as measured by the level of consumer knowledge and understanding of rights and sources of information.

Competition and consumers

45. Priority in the new target is given to competition and to consumers. We are not convinced that the level of consumer awareness is the most appropriate measure of the success of the department's consumer policy however and we are disappointed at the modesty of the single target associated with such a major objective. While the objective of developing a national target setting system for Trading Standards Departments is admirable, it is disturbing that there are still no national performance targets for them and no way of measuring the outcome of consumer protection policies. The only outcome to be measured against real numerical targets are the number of home accidental deaths. We welcome the use of peer review to assess the effectiveness of the UK competition regime. We also welcome the way in which consumer interest has surfaced in the whole process of objective and target setting. We look forward to consideration of a more ambitious set of targets for the protection of consumers, which will enable observers to assess the impact of policies pursued, and which would reflect the level of practical protection of consumers rather than their knowledge and skills. We regret in this context the Government's failure to include the proposed Consumer Protection Bill in the December 2000 Queen's Speech, which might do more for consumers than such a modest and ill-defined target.

40  Seventh Report of 1999-2000, Business, Enterprise and the Budget, HC 51, paras 69-83 Back

41  Electronic Commerce, 10th Report of 1998-99, HC648 Back

42  Q 65 Back

43  Para 2.77 Back

44  Ev, p 50 Back

45  Ev, p26, para 3 (a) (v) Back

46  HC 550-i, Q 20 & Ev, p 16 Back

47  Qq 3ff Back

48  Ev, p 27, para 3 (a) (vi) Back

49  Q 61 Back

50  Ev, pp 1-3 Back

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