Watchdog in growth warning over key department’s limited industry support
The National Audit Office said the Department for Business and Trade must boost support for sectors if the Government is to achieve its main mission.
The Government’s priority mission to boost the economy after years of sluggish growth could have a limited impact if a key Whitehall department does not address weaknesses in its support for UK industry, the public spending watchdog has found.
Ahead of the publication of the Government’s industrial strategy, the Department of Business and Trade (DBT) was found to have a limited overview of what it and other departments spend supporting business sectors.
This limits the department’s ability to make “sound decisions” in the future and allocate resources strategically, according to the National Audit Office.
Other concerns raised include the department’s lack of transparency when making decisions to support firms, and problems influencing other departments to change policy.
Responding to the findings, Sir Geoffrey Clifton-Brown, chair of the Commons Public Accounts Committee, said the department must improve key elements of its approach or there is a risk businesses and taxpayers will lack confidence in the new industrial strategy.
He said: “DBT’s role in providing joined-up support for industry is central to the Government’s ambitions to grow the economy.
“However, DBT is not yet working effectively across Whitehall to provide a unified voice for business. It also lacks an overall picture of where taxpayers’ money is being spent to support sectors and which interventions work when.
“For businesses and taxpayers to have confidence in the new Industrial Strategy, DBT must be much clearer about the business support decisions and trade-offs it makes, and ensure these are backed by evidence of what works to drive economic growth.”
The Government announced a new industrial strategy in October and identified eight sectors that could drive improvements in output and productivity over the long term.
DBT was formed two years ago to specifically drive economic growth, with relevant functions brought in from the former Department for Business, Energy & Industrial Strategy and Department for International Trade.
DBT’s role is to support businesses to invest and expand to boost jobs, and increase opportunities across the country.
The NAO said the department had “done well” to merge structures and teams from the former departments while addressing shortfalls in skills.
The department was also found to have “engaged extensively with industry stakeholders to understand their needs and developed sector plans using its knowledge of the economy”.
DBT also shares its business intelligence widely across government, the NAO said.
However, alongside a lack oversight on cross-government spending on supporting industry, the NAO identified that DBT had not assessed its sector-specific strategies collectively, which has limited the department’s understanding of the trade-offs involved in business support decisions and support for different sectors.
The report said: “This can make it difficult for stakeholders to understand the rationale behind support, and for DBT to evaluate the effectiveness of its portfolio of initiatives as a whole and demonstrate how and why it is prioritising certain interventions over others.
“This can make it difficult for stakeholders to understand DBT’s decision making, and for DBT to demonstrate how and why it is prioritising certain decisions over others.”
The department was also found to have have given limited regard to evidence of what approaches have proved effective when developing new support initiatives.
The NAO added that DBT is not always able to exert influence over other departments, despite the Government’s mission-driven approach and commitment to cross-department collaboration.
Some progress was noted on working closely with other departments, but a “lack of clarity has caused frustration among some businesses regarding which department can best support their needs,” the report said.
It added: “The success of the Industrial Strategy will depend on whether DBT and other government departments can work effectively together, and with industry, to prioritise and target interventions that drive growth in the priority sectors and across the whole economy.
“The NAO recommends that DBT uses the forthcoming industrial strategy to review its operating model for supporting key industry sectors.
“It should also clarify the metrics it uses, and the trade-offs it makes, when prioritising certain business support decisions over others; consider how it can collate its spending to support business in a more useful way; lean more heavily on evidence when making such decisions; and develop its approach to monitoring and evaluation to understand what works.”
Gareth Davies, head of the NAO, added: “DBT was created to provide a ‘front door’ to the UK’s key industries, supporting government’s priority mission of growing the economy.
“It has made early headway, and now needs to build on its approach to supporting industry and make transparent, informed decisions about where best to deploy its resources.”
A DBT spokesperson said: “Growth is at the heart of everything we do, and we have robust systems in place to undertake due diligence when we monitor, deliver and evaluate grant funding to ensure it provides value for money.
“Our modern Industrial Strategy will prioritise the high growth sectors most promising for future prosperity, creating the right conditions for increased investment and ensuring a lasting impact in communities across the UK.”
