Select Committee on Trade and Industry Appendices to the Minutes of Evidence



Public Service Agreement 2001-04 Technical Notes

  The following sets out the full technical details of how the PSA for the Department of Trade and Industry published in "2000 Spending Review: Public Service Agreements 2001-2004" (Cm 4808) will be measured.

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Target 1.

Improve UK competitiveness by narrowing the productivity gap with the US, France, Germany and Japan over the economic cycle.

Joint target with HM Treasury.

Technical Notes

  Source: OECD statistics (please see:

  Timing: Based on economic cycle, which is defined as the period between two dates when the economy is judged to be on-trend, or at potential. A full economic cycle includes both a period in which output is above potential, and a period in which it is below potential. The Treasury's methodology for assessing on-trend points is set out in "Fiscal policy: public finances and the cycle", HM Treasury, March 1999.

  Ambiguous terms: The productivity gap is calculated by reference to output per worker and output per hour. To close the productivity gap it is necessary to achieve higher productivity growth over the period in question than the comparator countries. Output per worker is calculated as GDP divided by total employment.

  The methodology for calculating output per hour is set out in Economic Trends 530 "International Comparisons of Productivity and Wages" by Harley and Owen. Estimates of output per hour are less timely for international comparisons and will come out with a delay for some countries, in particular Japan.

  Productivity relative to other countries will be compared considering the factors that affect the transparency of the comparisons, such as differences in the economic cycles of the comparator countries.[8]

  Target Date: 2004.

GDP per worker
GDP per hour worked
United Kingdom

Target 2.

Help build an enterprise society in which small firms of all kinds thrive and achieve their potential, with an increase in the number of people considering going into business, an improvement in the overall productivity of small firms, and more enterprise in disadvantaged communities.

Technical Notes

A:  Individuals going into business

  Source: Annual survey carried out by Small Business Service (currently being put out to tender).

  Ambiguous terms: "Considering": to a certain extent this has to be taken on faith, but can be tested through a survey questioning business ideas, motivations and any steps they have taken thus far and compared to local variables—self-employment rates, VAT registration rates and business bank account activity.

  Date: Annual from 2001; target date 2004.

B:  Improvement in the overall productivity of small firms

  Source: Annual Business Inquiry (for general information on the ABI please see:

  Scope: England.

  Ambiguous terms: "Small firms" is taken to mean whole enterprises with under 250 employees. This matches the definition used by Eurostat and all EU member states. "Productivity" is taken to mean gross value added (gva) per employee.

  Date: Target date 2010, although progress will be monitored annually from 2001. A target date of 2010 has been chosen, due to it taking some time before being able to assess fully the impact of the Small Business Service upon small firms.

C:  More enterprise in disadvantaged communities

  Sources: VAT registrations, flow of people into self-employment, and number of people considering going into business. Only a rise across all of these measures will be considered as meeting the target.

  Ambiguous terms: Disadvantaged communities will be defined using the DETR deprivation index (please see:, both geographically (areas with high levels of deprivation) and demographically (eg single parents and ethnic minorities).

  Date: Annual from 2001; target date 2004.

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.

A:  Cost of internet access

  Source: The Office of Telecommunications (OFTEL) International Benchmarking Study of mobile services and dial-up PSTN Internet access (Public Switched Telephone Network: refers to analogue rather than digital telephone lines). (See This study reflects prices at August 2000. The survey looks at dial-up Internet access, including unmetered packages, and mobile phone services. Countries considered in the study are the UK, France, Germany, Italy (mobile only), Sweden, and the US states of Ohio and California (Internet only).

  Ambiguous terms: Lowest cost of access will be assessed on the basis of the cost of 20, 30 or 40 hours of use per month, and "always on", on-peak or off-peak.

  Date: achieve target by 2002 and maintain it thereafter. OFTEL carry out this benchmarking survey every six months.

B:  Higher percentage of business to business/business to customer transactions to be carried out on e-commerce networks that in any other G7 country

  Source: The Office of National Statistics (ONS) is currently piloting a survey to measure the extent of e-commerce within businesses. In addition, OECD are agreeing core indicators on business and individual use of e-commerce, which include measuring the proportion and value of transactions. It is hoped that individual countries will use these core indicators and the related OECD questionnaire to gather data on use of e-commerce. DTI also carry out their own international benchmarking survey on use of e-commerce which attempts to measure progress against this target.

  Ambiguous terms: the "extent" of business to business and business to consumer transactions will be measured by value and proportion.

  Date: Achieve target by 2002. DTI study is annual. The ONS pilot is to be completed next year, and maybe annual after that (this is still to be decided and may be more frequent). OECD may gather data annually or more often from next year.

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

  Source: The estimate of Gross Domestic Product (GDP) per head at Nuts level 1, current prices, (workplace based) produced by the Office of National Statistics. Further work will be needed to adjust to constant prices. The data are produced annually but are subject to revision.

  Scope: English Regions.

  Measured by: The core indicator is the regional variations on GDP. Data for 2000 will be available in the first half of 2002. When sufficient further years are available, a trend for each region will be established with respect to: similar data for the UK or England; historic data for that region and whole country; the economic cycle; GDP components and any other data deemed useful. This trend will then be compared with the benchmark trend estimates.

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.

  Source: OECD ( Science Citation Index (

  Measured by: International ranking on quality, relevance and cost-effectiveness of the science and engineering base output.

  Date: Annual from 2001; target date 2004.

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.

  Source: Community Innovation Survey.

  Measured by: the percentage of innovating businesses, as defined by the Community Innovation Survey, citing science and technology base sources, including DTI supported standards and measurement.

  Date: survey every two years from 2001; target date 2005.

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.

A:  Most effective competition regime

  Source: Survey of experts in the competition field, commissioned by the Competition Policy Directorate within DTI.

  Measured by: Views of experts.

  Ambiguous terms: Peer review will be conducted through identifying a group of experts, both in the UK and abroad, who could give an objective assessment of, and will be asked to rate, the UK's competition regime. Work is ongoing to identify this group of experts.

  Date: Survey carried out at beginning and end of PSA period; 2001 and 2004.

B:  Level of consumer knowledge and understanding

  Source: MORI Survey.

  Measured by: Consumers surveyed to assess consumer knowledge and skills.

  Date: Survey carried out at beginning and end of PSA period; 2000 and 2003.

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.

A:  Prices

  Source: International Energy Agency and European Commission published in IEA Energy Prices and Taxes Quarterly Statistics and converted by DTI using EUROSTAT exchange rates.

  Measured by: Pre- and post tax gas and electricity prices to final consumers (industrial and domestic). "EU/G7" means the price in the 15 EU member states and the non-EU G7 (USA, Japan and Canada). This definition may be reviewed if significant price convergence in the Euro zone occurs or if significant shocks in one or more comparator might make comparison less useful.

  Ambiguous terms: Security of supply objectives are pursued through emergency planning, transmission system operator investment signals (reflected in price controls) and wider UK and EU level policies. They should be achieved without compromising the price target. Social and environmental objectives are pursued through a range of policies (and reflected in statutory guidance to the Gas & Electricity Markets Authority).

  Date: annual from 2001; target date 2004.

B:  UK to obtain 5 per cent of its electricity from renewable sources by 2003 as a step towards a 10 per cent reduction by 2010, subject to the cost to consumers being acceptable.

  Source: Energy statistics produced by the Energy Technology Support Unit and the DTI and published in the DTI's digest of UK Energy Statistics annual publication.

  Ambiguous terms: Renewable sources are defined as those which are continuously and sustainably available in our environment. In relation to the costs of renewable sources being acceptable to consumers, the DTI have, in the publication "New and Renewable Energy, Prospects for the 21st Century, The Renewables Obligation, Preliminary Consultation", set out the costs and invited comments from the readers.

  Date: annual from 2001; target date 2004.

C:  Fuel expenditure as a percentage of income for the lowest three income deciles to be reducing and below 4 per cent by 2003-04.

  Source: Family Expenditure Survey run by ONS.

  Date: Annual from 2001.

Target 9.

Improve the environment and the sustainable use of natural resources, including by reducing greenhouse gas emissions by 12.5 per cent from 1990 levels and moving towards a 20 per cent reduction in CO2 emissions by 2010.

Joint Target with DETR.

  Source: The National Environmental Technology Centre (NETCEN), part of the European Network of Environmental Research Organisations (enero), on behalf of DETR. (Please see NETCEN publishes an annual inventory of the UK's historic greenhouse gas emissions. Data for CO2 emissions are available for each year from 1990 to 1998. Data for non-CO2 emissions are available for 1995 and 1998. Disaggregated data for England, Scotland, Wales and Northern Ireland are available for 1990, 1995 and 1998. In the future, data will be available for each series on an annual basis. Projections of greenhouse gas emissions to 2010 and to 2020 are produced regularly, although not necessarily every year.

  Scope: Applies to UK.

  Measured by: The baseline for the UK's greenhouse gas emissions is 1990 although, as allowed by the Kyoto Protocol, 1995 is used for emissions of hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

  Target Date: The UK published a draft climate change programme—, setting out how it proposes to deliver the 12.5 per cent target and move towards the 20 per cent goal in March 2000. The final programme was published on 17 November 2000. The programme will be formally reviewed and evaluated in 2004.

Target 10.

Deliver a measurable improvement in the business performance of Trade Partners UK customers.

Joint Target with FCO.

  Details for this target will be set out in the British Trade International Service Delivery Agreement (for details of this please see:

Target 11.

Maintain the UK as the prime location in the EU for foreign direct investment.

Joint Target with FCO.

  Details for this target will be set out in the British Trade International Service Delivery Agreement (for details of this please see:

Target 12.

Achieve value for money improvements of 1.5 per cent a year across the Department as measured by a set of indicators.

  Source: Annual monitoring by the Department's Finance and Resource Management section.

  Date: annual from 2001; target date 2004.

  For full details of this target and the set of indicators it is to be measured by, please refer to the DTI Service Delivery Agreement (specifically section C.2. Value for Money. See: The target will be achieved through aggregate performance against the set of indicators.

8   The comparative baseline productivity figures are: Back

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