Select Committee on European Union Fortieth Report


Government response to the Thirty-fourth Report of the House of Lords Select Committee on the European Union, Session 2002-03



  1.  The Committee recommends that in any action plan based on the Commission's Green Paper close attention should be paid by both the Commission and the Member States to the arguments justifying EU action as opposed to actions properly left to individual Member States.

  Agree. Careful attention should be paid to justifying action at EU level but it is important that the Commission recognises that it has a significant part to play in creating the right environment for entrepreneurship to thrive, particularly in relation to issues such as better regulation and state aids.

  2.  The Government should pay special attention to the views of the Commission, in particular, the view that the support of entrepreneurship is primarily a Member State activity. The Government should also support the Commission in its desire "to go for savings by reducing complexity in the support of networks".

  Agree but we should acknowledge the issues raised in response to the previous recommendation. We do support the Commission's desire to go for savings by reducing complexity in support networks by encouraging integration and simplification for businesses trying to access advice, funding and information.

  3.  The Committee recommends that no action plan based on the Green Paper should be agreed before the lessons have been drawn from the strategic valuation of the EU's enterprise support programme which is currently being undertaken by the Commission. It also recommends that where new EU schemes are proposed, no action plan should be agreed before a clear framework is established setting objectives, and a system is in place for monitoring and evaluating such schemes. The Committee further recommends that in disseminating best practice, the Commission stress the importance for Member States to set clear objectives and to establish a system for monitoring and evaluating national schemes to promote entrepreneurship.

  Agree in part. Linking the action plan to the strategic evaluation of the EU's enterprise support programme being currently undertaken by the Commission is likely to delay the development of the action plan for some considerable time. The evaluation of the Multi-Annual Programme for Enterprise and Entrepreneurship, required by Article 5.1 of the Council Decision 2000/919/EC, is unlikely to be presented to the relevant parties before the end of 2004. In the meantime, various evaluations have been or will be taking place which the Commission should have due regard to in formulating the action plan. These include:

    —  a strategic evaluation of financial assistance schemes for SMEs by Deloitte & Touche (in progress);

    —  evaluation of the enterprise projects element of the Multi-Annual Programme (completed and recommendations for better focus and priorities noted by the Enterprise Programme Management Committee); and

    —  evaluation of the EIC[1] network (completed and recommendations for increased funding and tightening of the EIC mission have been noted by the Enterprise Programme Management Committee).

  As for monitoring and evaluation of national schemes, we agree with the recommendation. The DTI has already in place strong mechanisms for evaluating its schemes and has published its evaluation guidelines (http:/ and as part of the Business Support Review introduced balanced scorecards to monitor the effectiveness of its schemes (see response to recommendation 61).

  4.  The Committee recommends that any EU scheme to support entrepreneurship which is included in the action plan based on the Green Paper should:

    —  address a clearly identified need at EU level and have a clearly specified objective or set of objectives;

    —  have an agreed set of quantifiable outcomes against which monitoring and evaluation can take place;

    —  have a built-in costing, information and reporting system designed to provide the necessary material on which to base monitoring and evaluation.

  Agree. We are aware that the Commission is still in the process of reviewing its monitoring and evaluation procedures and has produced three communications on evaluation. The most recent (on European Evaluation Standards and Good Practice, December 2002) proposes standards for organisation and conduct of all evaluations to be implemented in 2003. We will continue to support and encourage the Commission in its efforts to implement more effective monitoring and evaluation procedures.


  5.  The Committee recommends that the Government clarify and rationalise further the structure of administering agencies delivering or involved in enterprise policy at local and regional level.

  Agree. The SR 2002 White Paper indicated that "SBS and RDAs would pilot and evaluate different RDA-led approaches to achieving improved co-ordination of business support services at the local level and ensuring that local Business Link services promote Regional Economic Strategies". Three RDAs (Northwest Development Agency, Advantage West Midlands and East Midlands Development Agency) submitted proposals to bring greater cohesion to business support at the regional and sub-regional level that include taking over management of their Business Link Operators. The business support pilots will involve the Operator Agreements assigned from the SBS to the relevant RDA. The North West has also been selected by DfES to run an LSC/RDA pilot looking at joint pooling of resource to improve the adult skills agenda.

  The pilots began in April 2003 and will run until March 2005. In the light of the evaluation of these approaches, and similar developments in other English regions, and the results of the SBS drive to improve the delivery of services from Business Link Operators over the next year, the Government will consider what further changes in the organisation and management of Business Link Operators might be appropriate.

  The July 2003 Skills White Paper also invited each RDA to agree with its partners "innovative proposals covering planning, governance and funding, with a view to securing lines of accountability and effective action".

  6.  The Committee recommends that the Government encourage the fuller exploitation of the potential of the Teaching Company Scheme in the UK and continue to support schemes that work well, such as SMART.

  Agree. The Government welcomes the Committee's suggestion that it should encourage the fuller exploitation of the Teaching Company Scheme (TCS). As a result of the Department of Trade and Industry's Business Support Review, and with the agreement of the other Departments and public sector organisations that have been funding TCS, it is being succeeded by a new and more flexible product known as Knowledge Transfer partnerships. This operates throughout the UK on exactly the same basis as TCS but with enhanced flexibility. Projects may now involve Further Education Colleges, as well as Higher Education Institutions and public and private sector research organisations, and they may be between one and three years in duration rather than the norm of two years that was possible under TCS.

  The Government also welcomes the Committee's recognition that SMART has worked well. The Department of Trade and Industry built on that success following its Business Support Review by introducing an enhanced Grant for Research and Development on 1 June 2003 to replace SMART. The Government is confident that this new grant will help even more small and medium sized businesses bring their technology innovative, new products and processes to market.

  7.  The Committee recommends that the Government give attention to devising methods to assess the impact of general tax changes on entrepreneurial activity in the UK.

  Agree. The Government is increasing the resource available to the Inland Revenue, the Small Business Service and the Treasury to enhance our evidence base on linkages between policy drivers, including tax, and key success measures. This forms part of a wider strategy, set out in the Government Framework for Small Business The Way Forward, to improve coherence and co-ordination of policy across Government. Seven strategic themes have been identified, which will enable the Government to focus its efforts on producing real outcomes at the key phases of business development. Success measures are being developed for each of the seven themes. On tax, there has been a substantial increase in the Revenue's analysis and research function over the last few years, underlining their commitment to evaluating the effectiveness of tax measures designed to address market failures that hinder small business start-up and growth.

  8.  The Committee recommends that, in the UK, any proposed scheme to support entrepreneurship which seeks to implement the action plan based on the Commission's Green Paper should:

    —  address a clearly identified market failure and have a clearly specified objective or set of objectives;

    —  have an agreed set of quantifiable outcomes against which monitoring and evaluation can take place; and

    —  have a built-in costing, information and reporting system designed to provide the necessary material on which to base monitoring and evaluation.

  Agree. Under the new arrangements in the Department for Trade and Industry all new proposals to support entrepreneurship must put forward a rigorous business case before the proposal is agreed. That business case must set out the rationale for the proposal based on market failure, provide clear objectives and set out clear criteria against which the success of the proposal will be judged. Each major business support product relating to entrepreneurship will, in future, have a balance scorecard providing regular management information on key performance criteria.

1   Euro Info Centres. Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2003