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Spending Review
SR2002/DTI
15 July 2002
Resources and reform to promote science and innovation, enterprise and competition were announced today, which will drive forward the Government's agenda to raise UK productivity and deliver prosperity for all.
Patricia Hewitt, Secretary of State for Trade and Industry, welcomed the outcome:
"Today's announcement is very good for business, consumers and employees. This is a package designed to raise UK productivity that allows us to make real progress on the issues that make a difference to business, including manufacturing, and to the economy as a whole - a world-class science base, vigorous competition and well-informed consumers, higher levels of enterprise and innovation, and a thriving small firms sector."
Spending on trade and industry is set to grow by an annual average of 3 per cent in real terms between 2002-03 and 2005-06, with extra resources focused on key drivers of productivity - science, innovation, enterprise and competition.
The DTI Science Budget is set to rise by 10 per cent a year on average in real terms over the 2002 Spending Review period, compared with 7 per cent over the 2000 Spending Review period, and will grow from £2.0 billion in 2002-03 to £2.9 billion by 2005-06. This will fund both higher volumes and new areas of research, such as proteomics and brain science, and will provide additional support to help turn new ideas into commercial products and processes. It will allow for improvements in the quality of science and engineering laboratories and equipment, further correcting decades of under-investment in infrastructure.
It will also enable the key recommendations of Sir Gareth Roberts' review of the supply of scientists and engineers to be taken forward. This will include increasing the minimum stipend for Research Council PhD students to £12,000 a year by 2005-06, with additional funding provided to increase the stipend still further in areas where recruitment is difficult. As a result, the Government expects that the average Research Council PhD stipend will increase to over £13,000 by 2005-06 - making it twice what it was in 1997, even after inflation. Additional funding is also provided to increase the pay of Research Council funded postdoctoral researchers by an average of around £4,000 by 2005-06.
DTI funding to stimulate innovation and knowledge transfer across business and industry will also grow from £338 million this year with an additional £50 million a year by 2005-06.
Support for enterprise also gets a boost, with funding for investment in electronic delivery of government services £40 million higher by 2005-06 than in 2002-03, to make it easier and quicker for business to deal with government; and £50 million over two years is provided to extend the Phoenix Fund by 2005-06 to stimulate enterprise in disadvantaged communities.
As lead sponsor in Whitehall, DTI's contribution to the Regional Development Agencies (RDAs) will rise from £159 million in 2002-03 to £283 million by 2005-06, representing an average annual increase of 18 per cent in real terms between 2002-03 and 2005-06. These resources will equip the RDAs to engage local industry with innovation, develop key business clusters and sectors and stimulate workforce development among local employers.
The Small Business Service (SBS) and the RDAs will pilot and evaluate different RDA-led approaches to achieving improved coordination of business support services at the local level and ensuring that local Business Link services promote Regional Economic Strategies. Examples of such approaches include piloting the setting up of RDA business support boards to coordinate business support activities and piloting regional management of Business Link services in one or two regions. The SBS will work closely with pilot RDAs. These pilots should start by April 2003 and if possible earlier. In the light of the evaluation of these approaches 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.
Strong and fair competition is a stimulus to productivity growth. This Spending Review increases resources for the Competition Commission, and consolidates the 50 per cent increase in funding for the Office of Fair Trading agreed in 2002-03, to deliver the radical reforms set out in the Enterprise Bill. Informed and active consumers enhance competition, so the Government is setting up Consumer Direct, a new national help-line and website, with funding rising to £16 million by 2005-06.
The Spending Review also expands the capacity of the Employment Tribunal Service and the Advisory, Conciliation and Arbitration Service (ACAS) to handle workplace disputes effectively and efficiently, providing for an average of 4.7 per cent a year real growth in their resources between 2002-03 and 2005-06. Importantly, this Spending Review will also enable ACAS and DTI further to spread best practice in employment relations, including among the small business community.
1. The Government conducted a comprehensive review of public services - the Comprehensive Spending Review - in 1998. The 2000 Spending Review built on this by setting targets and allocating resources for the three years to 2003-04. The 2002 Spending Review revises these plans for 2003-04 and outlines new plans for 2004-05 and 2005-06.
2. The following table shows the settlement for Trade and Industry. The new spending plans provide for total spending to rise by an average of 2.8 per cent a year in real terms over the three years to 2005-06. Spending by DTI itself will rise by 3.0 per cent a year over the same period.
3. The cross-cutting review of government services for small business considered the range and scale of services provided by government through different Agencies and Departments from the viewpoint of small firms. The Small Business Service will lead a concerted government effort to improve services for small firms. A new resource pack will bring together all the information new businesses need about what government requires of them and can do to help them. Drawing on the conclusions of the cross-cutting review and building on the Capital Modernisation Fund project, business.gov, the Spending Review also provides funding which is £40 million higher by 2005-06 than in 2002-03 to enhance e-delivery of government services, which the review saw as the key to affordable, high quality, high volume services to meet customer needs.
4. Pilots of RDA-led approaches to coordination and management of Business Link services should commence by April 2003 and if possible earlier. A further announcement will be made on which RDAs have been selected to pilot business support boards, and which will pilot RDA management of Business Link Operators.
5. Net capital spending by Department of Trade and Industry falls in 2004-05 and 2005-06. This reflects the fact that most of the capital payments to help support the development of new engines and wings by Airbus and Rolls-Royce (financed during the 2000 Spending Review) will have been made by the end of 2003-04. During the 2002 Spending Review period these projects will move from the funding stage to the implementation stage.
6. For further details please contact the DTI Press Office on 020 7215 2345, or visit the DTI website at http://www.dti.gov.uk/.
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