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20 September 2004

On the road to recovery

NS business voices dinner - The Department of Trade and Industry seemed to have lost all pu

By Wilf Stevenson

For a number of years, many people on both sides of the political divide, as well as in business, have questioned the role – even the point – of the Department of Trade and Industry. Commentators have struggled to understand how the department contributes to UK plc. Indeed, the Liberal Democrats recently committed themselves to scrapping the department and transferring its responsibilities across Whitehall.

A recent seminar, sponsored by KPMG and attended by the permanent secretary at the DTI, Sir Robin Young, gave British business leaders the chance to learn more about the challenges facing the department.

Before Patricia Hewitt, the current Secretary of State for Trade and Industry, took up her brief, morale at the DTI was low. Civil servants were unsure of their purpose and frequently faced calls for their jobs to be cut. They had become inward-looking and defensive. For Tory and Labour ministers alike, the entrance to the DTI had become a revolving door: the average tenure was less than 12 months.

The first thing Hewitt’s new team did was ask key stakeholders what they thought of the department. The overall result showed that British business was comfortable with the role of the DTI, provided that the department had a strategic focus and clear business priorities. On the back of this review, the DTI has been reorganised to focus on four main objectives: supporting successful UK business; driving innovation and promoting science; establishing and championing fair markets; and creating a sustainable energy policy.

Over the past three years, the department has encouraged shadowing and exchanges between the private sector and government, so that DTI staff have a far greater understanding of what business needs and wants from government. The numbers seconded from the private sector to the DTI has trebled, and the departmental board has a much greater input from the business sector.

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The department now concentrates on helping to create the conditions for sustained success in business by developing the essential building blocks of growth – innovation, skills, the encouragement of enterprise and investment. It has sought to do this by shedding its Whitehall-centred image and, consistent with trends across Europe, by helping the regions of England, via the nine DTI-sponsored regional development agencies (RDAs), to exploit their indigenous strengths. Although participants in the forum expressed reservations about the limited powers of RDAs to bring about change on the ground, the signs so far are good, with the National Audit Office and others having described the development agencies as “a success”.

Business leaders at the seminar were keen to hear about the DTI’s approach to some of the issues thrown up by the global economy. For example, the department’s approach to the increasing amount of offshoring taking place was that, in line with the government’s support of free and fair trade, attempts to prevent offshoring would, in the long term, be protectionist and anti-competitive.

A recurring theme of the discussion was the DTI’s approach to regulation. What, businesses asked, is the government view on regulation, particularly from the European Union? Through its work with the Regulatory Impact Unit, the DTI is succeeding in developing “better regulation”. Indeed, evidence now shows that most businesses would rather set up their enterprise in Britain than in any other EU country.

At the same time, more could be done, according to the DTI, to ensure that British businesses and government work together effectively to understand the true impact of EU regulations. This would help ministers defend the needs of British business. It was recognised that although the department has good contacts with small and medium-sized enterprises through Business Links, and with the FTSE 100 companies through the Confederation of British Industry, more could be done by mid-market companies to press their case both to the DTI and in Brussels.

It was clear from the seminar that the DTI has undergone significant reform. With a new strategic focus, as well as a basis of greater departmental stability and sustained leadership, the department has made a major contribution to many of the government’s economic achievements over the past three years.

The DTI intends to continue to support the notion that the nations which thrive will be those that can compete in high technology and intellectual strength – attracting both the highest-skilled people and those companies that have the potential to innovate and to turn innovation into commercial opportunity.


Robin Bayford Finance director, Brewin Dolphin Holdings
Mel Egglenton Partner, KPMG
Ken Fenwick Partner, KPMG
Paul Johnson Partner, KPMG
Bill Shaul Partner, KPMG
Neil Sherlock Partner, KPMG
Stelio Stefanou Chief executive officer, Accord
Wilf Stevenson Director, Smith Institute
Jon Tyler Managing director, Gatton Volt Group
Simon Tyler Managing director, Chase de Vere Mortgage Management
Geoff Wood Electrobug Technologies
Robin Young Permanent secretary, DTI

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