Chapter 15

Department of Trade and Industry

The Government is committed to increasing competitiveness and scientific excellence in order to generate higher levels of sustainable growth and productivity in a modern economy, by:

building on our excellence in science, engineering and technology with a significant increase to fund science and its exploitation over the next three years, contributing to a £1 billion Science Research Investment Fund in partnership with the Wellcome Trust to ensure world class facilities;
expanding universities' potential as drivers of growth in the knowledge economy, with an extra £20 million in 2001-02, rising to £50 million in 2003-04 to commercialise research and engage with business;
helping forge an enterprise society, across the regions and in disadvantaged communities - including a significant real terms increase in funding for the Small Business Service;
working with SMEs to optimise their use of the Internet, with the UK becoming the best place in the world for e-commerce by 2002; and
building a competitive environment - with better regulation, modern company law and effective enforcement of competition policy.

15.1 The DTI's overarching aim is to increase competitiveness and scientific excellence, and it has a shared target with HM Treasury of narrowing the productivity gap relative to the US, Germany, France and Japan, over the economic cycle. This goal will be achieved through the DTI's three principal objectives: making the most of the UK's science, engineering and technology base; promoting enterprise, innovation and increased productivity; and developing strong, competitive markets within a regulatory framework which promotes fairness and sustainability.

15.2 The 2000 Spending Review builds upon the achievements of the Comprehensive Spending Review in 1998 which provided both a focus and funding for the DTI's activities in stimulating productivity, enterprise and innovation. Since then, the Government has:

started the process of renewing the science infrastructure, through the Joint Infrastructure Fund (JIF) with the Wellcome Trust for new laboratories, equipment and infrastructure;
launched the Small Business Service in April 2000, to bring greater coherence to support for start-ups and small firms, nationally and locally, and a stronger voice for small firms in Government;
introduced the Regional Development Agencies in April 1999, with pilot funding to stimulate business competitiveness in the regions; and
brought together the DTI's and FCO's export promotion activities under one organisation, British Trade International (BTI), now incorporating the Invest in Britain Bureau, to produce a unified agency for trade and investment promotion.

Promoting enterprise and opportunity

A world class science base

15.3 The UK has a world class science, engineering and technology base, but this is threatened by 20 years of under-investment in basic infrastructure.

Box 15.1: Key PSA targets - Department of Trade and Industry

Improve UK competitiveness by narrowing the productivity gap with the US, Germany, France and Japan over the economic cycle.
Build an enterprise society in which small firms 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 areas.
Improve the overall international ranking of the UK's science and engineering base, as measured by international measures of quality, cost-effectiveness and relevance.

15.4 The Government is committed to establishing an infrastructure for British science which is internationally competitive, and is launching a new two year £1 billion Science Research Investment Fund when JIF finishes, running from 2002 to 2004. This includes £775 million of Government money and £225 million from the Wellcome Trust and will allow a substantial renewal of outdated buildings, laboratories and equipment.

15.5 Alongside improvements in physical capital, the Government is committed to investing in the human capital that underpins the science base. To secure the vital flow of science and engineering PhD students in an increasingly competitive labour market, the Government is raising the basic grant from the current £6,620 outside London to £9,000 a year by 2003.

15.6 The Government is also providing extra resources of £20 million next year, rising to £50 million by 2003-04, to build on universities' potential as drivers of economic growth through knowledge transfer. This includes: more seed venture funding to commercialise research; more science enterprise centres to help train the next generation of entrepreneurs; and trebling the reach-out funding for higher education to develop closer relations with businesses by 2003-04.

15.7 As part of the 2000 Spending Review, DTI participated in a cross-departmental review of Science Research. Further details are in Chapter 34.

Boosting e-commerce

15.8 The Government's aim is that the UK will be the best place in the world for e-commerce by 2002, measured by business-to-business and business-to-consumer transactions. The number of small and medium sized firms wired up to the digital marketplace has almost doubled between 1997 and 1999, to 600,000 businesses. The spending plans will provide an extra £10 million in 2001-02 and £5 million in 2002-03, on top of the existing funding, not only to encourage more small businesses to get on-line, but also to help them make best use of e-business opportunities.

Promoting enterprise and opportunity in all regions

15.9 The Government is committed to building an enterprise culture throughout society, and encouraging innovation and growth as the route to higher productivity. The 2000 Spending Review adds to the extra funding for venture capital promised in Budget 2000, and also provides £54 million in 2001-02, £73 million in 2002-03, and £63 million in 2003-04 in new funding for the Small Business Service (SBS), maximising opportunities for start-ups and small business growth across the country. This funding will enable the Department to provide high quality information and advice on-line and via call centres to three million businesses, coordinate the delivery of support programmes to SMEs, improve service quality and help business to comply with regulation. It also confirms the trebling in the size of the Phoenix Fund, the fund launched in November 1999 to make enterprise open to all by supporting access to finance and innovative business assistance in disadvantaged communities.

15.10 The DTI is committed to help improve the economic performance of all regions. The work of the SBS nationwide will be underpinned by a strengthened role for the new Regional Development Agencies (RDAs) in enterprise development, with a flexible funding package to deliver regional leadership in economic development and regeneration.

15.11 The Government is also providing a significant real terms increase for BTI including extra funding for capital spending to modernise BTI systems, and funding in full over the Spending Review period for launch investment in the Airbus A3XX, worth £530 million, and which will bring major benefits to the manufacturing base particularly in the South West and Wales.

15.12 The 2000 Spending Review also provides a major package for modernising the Post Office network. The plans to modernise the Post Office arise from a detailed review by the Government's Performance and Innovation Unit (PIU), and were first announced by the Secretary of State for Trade and Industry on 28 June 2000. The investment is to enable the Post Office to embark on a programme of modernisation across the organisation to maintain the rural network, to improve support to local offices in urban deprived areas, and to encourage the development of new initiatives. Funding will be ring-fenced and subject to business plans produced by the Post Office for harnessing the range of new opportunities highlighted by the PIU's report.

Spending plans

15.13 The new spending plans for the Department of Trade and Industry are shown in the following table. A major element of the funding over the three years is expenditure on DTI's management of liabilities from the nuclear and coal sectors, which is set to decline in aggregate over the period. Excluding liabilities, spending is set to grow in real terms by an annual average of 6.6 per cent over the three years.

Table 15.1: Key figures

£ million
	2000-01	2001-02	2002-03	2003-04
Department of Trade and Industry ¹	3728	4595	4280	4222
Others ²	24	33	33	33
Total Trade and Industry*	3752	4628	4313	4255
of which: Resource Budget	3288	3907	3549	3217
Capital Budget	464	721	764	1038

*Departmental Expenditure Limit.

1 Figures include funding of British Trade International (which also receives £6 million in 2001-02, £6 million in 2002-03, and £3 million in 2003-04 from the FCO) and provision for management of liabilities, which decline over the Spending Review period.