The Role Of The DTI
Speech

House of Commons

It is a great pleasure to follow the characteristically lively and well argued speech of the hon. Member for Edinburgh, South (Nigel Griffiths), even though I did not agree with every word he said. He did, however, anticipate my opening remarks. The debate is about the effectiveness of the Department of Trade and Industry. If true perfection were the test of which Departments to abolish, in my opinion many others should come before the DTI. My list would include the Department for Environment, Food and Rural Affairs, the Department for Communities and Local Government, the Home Office and the Department of Health before the DTI.
I wish to spend a few moments analysing Liberal Democrat policy. I am the Chairman of the Trade and Industry Committee, and I must be as non-partisan as possible, but I must say that the Liberal Democrats are profoundly and seriously wrong, and I urge them to reconsider their position. Their policy is good news for the two major parties in the House because it will lose them the votes of business, but I genuinely believe that what they advocate is not in the interests of UK business.
Two issues flowed from the Secretary of State’s opening remarks. Whenever I speak in this House on DTI or economic matters, I seem to have to make the following points, and especially the first. The Secretary of State talked a lot about macro-economic stability and the Government’s great economic record. It is worth reminding the House that that is built on Conservative foundations. The reforms of the Thatcher and Major Governments and the golden economic inheritance of 1997—the likes of which few incoming Governments have ever received—enabled that record to be continued. The Government should, however, take the credit for not having blown it, which previous Labour Governments did. They did not blow it, although they have nibbled at the edges of that inheritance and made matters more difficult.
The roots of what have been achieved lie in Conservative policies. Those with longer memories will remember the mess that we inherited in 1979; that was the real mess that had to be cleared up, and it was done very successfully. [Interruption.] I did not catch the Minister’s sedentary remarks, but I am sure that they were characteristically witty and well argued.
The Secretary of State also rightly paid tribute to the success of the automotive sector in the UK. That is also a Conservative policy that has come to fruition. I had the privilege of being a special adviser at the DTI in the late 1980s when the then Secretary of State, now Lord Young of Graffham, set as an industrial strategy—to employ a word that he would not like me to use—the attraction of all internationally mobile automotive investment to the UK. He aggressively wooed Nissan, Toyota, Honda and other companies, and they all came. It is from those companies driving up standards, particularly in the automotive supply sector, that so much of the good that has happened to the automotive sector has come. So it is worth remembering that two of the great bits of credit that the Government have sought to take in fact belong to the Conservatives. But never mind—we move on.
I want to emphasise in my, hopefully brief, remarks that the DTI has a crucial role to play, albeit in perhaps a slightly different incarnation. However, the centrality of the need for not just a Minister but a Department representing business within Whitehall is crucial. At a time when Britain faces competitive challenges as a result of globalisation—an issue that many people in this country, and even in this House, do not fully understand—it has never been more important to have an effective voice for business. We need not a junior Minister in the Treasury, where other issues will always take priority, but a Department that stands on its own, free in the Whitehall jungle to argue the case for business on each and every issue that impacts on it. It is not a sign of weakness that the DTI has to interact with many other Departments; it is a sign of its importance and of the number of issues in Whitehall that affect businesses. The voice of business must be there and expressed clearly.
David Howarth: Will the hon. Gentleman give way?
Peter Luff: I will give way once or twice but not more, in view of the fact that a number of other Members want to speak.
David Howarth: I thank the hon. Gentleman for giving way, and the argument that he is making is certainly one to take into account. However, is not the difference between having a Minister and a Department that the latter spends its time looking for activities to justify its existence? In general, those activities are not about supporting business in other parts of government, but about inventing new regulations. That is the danger of having a Department devoted to such matters.
Peter Luff: I am afraid that the hon. Gentleman has seriously misunderstood the DTI. I have some sympathy with the arguments of the hon. Member for Richmond Park (Susan Kramer) about the Small Business Service, which seems to be a relatively unloved part of the DTI. However, her proposal certainly would not save £8 billion in the lifetime of a Parliament, even if the SBS were abolished. I cannot think of any other function—she did not, I think, name one—that could be abolished within the DTI. [Interruption.] I will run through the list later, but I doubt whether there is another function that we could even consider abolishing. Of course there are things that could be reformed, improved and made more effective; but abolition, no. All these functions have one thing in common. They are not the rag-bag that the hon. Lady suggested; they are coherent and deal with issues affecting business. That is the common theme that gives them their importance, and the DTI its coherence. Perhaps the DTI is not always as effective as it might be, but broadly speaking it is a very coherent Department.
The DTI has done a lot of things well. Under this Government, I would single out the handling of the problems relating to Airbus, where a very successful outcome was achieved by the Minister for Industry and the Regions. Actually, the DTI’s handling of the fallout from MG-Rover—working, to be fair, with Advantage West Midlands—was not bad, either. However, in a number of areas it has fallen short of the high standards that we have a right to expect. Reference has been made to deregulation, and the Department has not been effective enough in getting other Departments to be as strong on deregulation as they might have been.
Anne Main (St. Albans) (Con): A recent report by the Hertfordshire chamber of commerce estimates that the burden of regulation has cost £431 million since 1998. According to the chamber of commerce:
“This government continues to write cheques that they expect businesses to cash”.
Regulation is becoming so burdensome that it will kill the goose that lays the golden egg.
Peter Luff: I entirely agree with my hon. Friend. I am currently doing battle with regulations emanating from the Department for Communities and Local Government and DEFRA, not the DTI. It is really important that the DTI is there arguing the deregulatory cause, to make sure that such burdens are reduced and minimised.
The Government were slow and confused in their handling of energy policy. I personally welcome their conversion to the nuclear cause, but it is a shame that a previous White Paper effectively dismissed the nuclear possibility. Of course, their handling of the energy review did not cover them in glory: it led to a successful judicial review that has significantly delayed the energy review’s implementation. Aspects of the post office closure programme have also caused my Committee concern. We have produced one quite critical report already, and another report, to be published on Saturday morning—I will not say much about it, as I must not leak my own report to the House—will have further things to say about the closure programme. We were concerned, moreover, about the lack of priority that the Government in general and UKTI in particular attached to places such as India. However, the Government have responded magnificently, and I am very grateful for the serious way in which not just the DTI but other Departments treated our report.
The real problem for the DTI is that it has taken quite a hit on efficiency savings. Its staff have struggled hard to face round after round of cuts. It has not been confident of its own future, which has been very damaging and has demoralised it. That is another reason why the Liberal Democrats are seriously mistaken in the position that they are adopting. They do not understand the demoralising effect that such talk has on hard-working civil servants. That is another reason I urge the Liberal Democrats to abandon their policy.
The Department has also been subject to external pressures. The report on UKTI, which we published this morning, highlights the fact that that organisation has had three strategies in four years. Those strategies have been imposed on UKTI by the Treasury, so the ineffectiveness of UKTI—which my hon. Friend the Member for Rutland and Melton (Alan Duncan) mentioned—is not its fault, but that of the Treasury for demanding arbitrary and unnecessary changes in strategy. The organisation now needs a period of stability, because it is capable of doing a very good job.
Mr. Weir: As a member of the Committee, I agree with the hon. Gentleman about UKTI. Does he recall that when we spoke to members of UKTI abroad, many of them were well thought of and were doing good work, but they felt that the problem lay back here, with the continual changes that the organisation had been put through? A period of stability is essential if it is to make progress.
Peter Luff: It will not surprise the House to learn that I strongly agree with my—for these purposes—hon. Friend, who was present for our consideration of the report. He makes an important point. Although performance is obviously variable, in the main the UKTI staff overseas do a first-rate job and we have been consistently impressed by the quality that they offer to exporters. We have often had reservations about management back here, and that could be an element in the successive strategy reviews and the demoralisation. We are concerned about that, as we say in the report.
The functions of the DTI do need to be done, somewhere. The “Capability Review of the Department of Trade and Industry”, which has not been mentioned so far, is an excellent document. It has some criticisms to make, but it is an objective and fair document. Its major concern is the one that I expressed about the lack of political stability undermining confidence in the Department. That is one of the major reasons why the Department has not performed as well as it might have done.
The document lists the areas with which the DTI deals. I remind the hon. Member for Richmond Park that those include inward investment; outward investment; encouraging innovation; management of Government assets and liabilities, including nuclear liabilities and coal, steel and shipbuilding; Government interests in public corporations, such as the Royal Mail and British Nuclear Fuels; competition policy; and company law. Those functions have to be performed by someone. What is the point of moving the deckchairs around for no net benefit?
The capability review is clear about the importance of the DTI strategically in delivering any Government’s objectives, never mind this one’s. The voice of business is also clear on that point. I have received a briefing from the British Chambers of Commerce which mentions the importance that it attaches to maintaining the DTI, although it has doubts about the way in which it is administered.
I also have a copy of the detailed report of a survey for the London Chamber of Commerce and Industry, which says that 59 per cent. of respondents think the DTI is fit for purpose, but 92 per cent. think there should be a Government Department responsible for enterprise, business and the private sector, and 92 per cent.—presumably the same 92 per cent.—think a Cabinet Minister should be responsible for business interests in the community. Fascinatingly, the survey also lists the duties that the respondents think are important for a Department with responsibility for business, and the Liberal Democrats must answer the questions raised by those findings. I am aware that I sound partisan, but I speak out of passion for UK business, not out of partisanship. Some 99 per cent. thought that it was essential, very important or important to have a Department that supported small businesses, and 85 per cent. think it should promote corporate and social responsibility. Some 75 per cent. think it should be responsible for employment relations, 96 per cent. for deregulation, 97 per cent. for productivity, and 98 per cent. for the promotion of UK trade overseas. Those are high figures. The only area of responsibility that the respondents do not think important is regions policy. There is a strong consensus in the business world about the need for a Department, not just a Minister, with responsibility for business.
Susan Kramer: Will the hon. Gentleman give way?
Peter Luff: I must give way to the hon. Lady because I have said much more than I intended to about her party’s policies.
Susan Kramer: In that same report, only some 7 per cent. of businesses think that any of the tasks have been performed with any quality over the past God knows how many years. Businesses have thrived without that, so the hon. Gentleman is arguing for something that the present environment demonstrates is relatively redundant.
Peter Luff: The hon. Lady is simply wrong. Although the DTI does not get hugely good scores, 66 per cent. think that it has been good or adequate at creating the conditions for business success, to take one example.
I must bring my remarks to a conclusion. I refer the whole House to the excellent Engineering Employers Federation report on the business of Government, from which I had intended to quote at length. It makes an extremely cogent case for changes in the handling of responsibilities, as well as for the need for a Department for business.
I had hoped to say much more, but time is against me. The DTI is an extremely important Department but there is much room for improvement, so I shall have great pleasure in supporting the motion. I am slightly nervous about the wording on UKTI, which does not do justice to the organisation; the problems it has experienced are not of its own making, but due to external factors. UKTI, like the whole DTI, could do better; it needs stability and a vote of confidence. I am delighted that the official Opposition called the debate because I agree strongly with my hon. Friend the Member for Rutland and Melton that opportunities on the Floor of the House to argue the case for the DTI and its functions come all too rarely. I am delighted that my hon. Friend did so with such passion when he opened the debate. We need less duplication—RDAs in particular need to be re-examined; we need less external interference and a period of calm in the Department so that it can do its crucial job of standing up for British business in a challenging world.


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