Northern Ireland Assembly Flax Flower Logo

Sir Reg Empey MLA
Minister of Enterprise, Trade and Investment
Massey Avenue

23 March 2002

Dear Minister


You wrote to Pat Doherty on 3 December enclosing the Department's draft Service Delivery Agreement for consideration by the Committee for Enterprise, Trade and Investment. We met with Departmental officials on 6 February and received further written information from officials subsequent to that meeting. The Committee has considered the draft SDA together with the supplementary information provided and offers the following comments.

The Committee acknowledges that a considerable amount of work has gone into the preparation of the SDA - the Department has clearly followed the OFMDFM guidelines for the completion of SDAs. However, this is the first fundamental problem the Committee has with the SDA. The Committee feels that the HM Treasury guidelines are much superior and would argue that in future years' SDAs should be more consistent with HMT standards.

HMT guidance recommends additional sections which the Committee believes would add value to the Department's SDA, for example the Committee would like to see a statement regarding accountability contained in the document. This would formally and personally commit you, as Minister, to making the implementation of the SDA a key priority.

SDAs in GB contain a section entitled Managing People. Given the major change management process that the Department is undergoing - creation of INI, the embedding of devolution, Modernising Government and Civil Service Reform - the lack of one in DETI's is seen as an omission. Some issues are covered in the Improving Performance Section, but the Committee believes that there is an opportunity to expand and strengthen targets relating to staff issues in a separate Managing People section. For example, how does DETI intend to meet NICS targets relating to reducing levels of absenteeism and ill-health retirements. How are OFMDFM equality measures implemented in the Department in order to reduce gender and religious imbalance?

1. Turning to what is contained in the SDA - the Committee is concerned that a consistent approach be adopted for the term innovation. It would appear that the Department considers R&D as the primary determinant of innovative activity. However, technology transfer and networking are especially important in increasing the extent of innovation. If this analysis were accepted there would appear to be no reason why only "small-scale and limited innovation" can take place within small enterprises. This interpretation is fundamental to the development of the potential of innovation.

2. The Department refers to an "identifiable 60% increase in funding" and advise that 530 companies are now involved in near market R&D and 60 companies involved in pre-competitive R&D. The Committee acknowledge this level of R&D activity, however as an indication of the success of this increased R&D spend, the Committee would expect there to be a corresponding increase in the number of patent applications. Evidence would suggest that in other regions were R&D spend has been increased there has been an increase in patent applications. An appropriate target should be added to the SDA.

3. The SDA includes a target which states "Representatives of 1000 companies to attend innovation seminars, workshops and events and 90% to take innovation action." The Department further commented in a written response that "the Department intends to benchmark innovative action by monitoring…the percentage of participants who take action as a result of the initiatives." Benchmarking would imply a comparative exercise with, perhaps some of the Regional Development Agencies in England who may have more experience in carrying out this type of activity. There is no indication of what constitutes 'innovative action'. The Committee believes this target could be related to networking or technology transfer opportunities realised as a direct result of the innovation seminars. Has the Department considered the Centre for Competitiveness' Innovation Assessment WAVE?

4. The written response to the Committee's question 32 posed under R&D needs to be revisited. Question 32 part II sought to establish whether the review referred to in the SDA would include an assessment of the impact of European funding on Innovation and R&D. The response referred to the Innovation Strategy. Likewise question 32 part III sought information on whether the evaluation exercise, referred to in the SDA under the heading policy and strategy, will take into account specific criticism on the administration of funding. The Department failed to answer the question. The response is also framed in terms of the Innovation Strategy and does not refer to the criticism.

5. The Committee is concerned that Northern Ireland has a poor record of accessing European Funds (as reported by the European Court of Auditors). Can the Department assure the Committee that appropriate procedures are in place to maximise the take up of funds from Europe - a suitable target should be included in the SDA? In addition, the Committee would want assurance that procedures are in place to ensure that European Funds are expended appropriately.

6. The Regional Development Agencies in Great Britain administer the Regional Innovation Fund (£50 million), introduced to support and complement activities supported by the Competitiveness Development Fund and Innovative Clusters Fund. The Department was asked whether similar initiatives were available in Northern Ireland? The Department stated that Northern Ireland has its own suite of programmes tailored to meet local needs and administered by IRTU, IDB and LEDU. Would the Department elaborate on it's response? Are the programmes referred to in GB not considered suitable for Northern Ireland or are not prioritised in Northern Ireland or are similar to the suite of programmes administered by IRTU, IDB and LEDU? The Committee would like the Department to provide further details of these programmes and how are they funded?

7. The DTI's UK Benchmarking index appears to be becoming the global standard and businesses will soon be able to benchmark themselves against competitors in other countries. The European Commission is funding its use by more than 1,500 middle market businesses across nine European Union states. The California Council for Quality & Service is using the Benchmark Index to evaluate companies that apply for the prestigious Baldrige Award, presented by the President of the USA.

8. The main benchmarking tool in Northern Ireland is The Competitive Analysis Model (CAM) specifically designed to provide a strategic benchmarking service to developing firms. CAM Benchmarking Ltd carries out benchmarking in Northern Ireland manufacturing companies only. The UK Benchmarking Index is used only by the IDB in Northern Ireland.

9. Established businesses in all sectors would benefit from participation in benchmarking. All companies undertaking the UK Benchmarking Index complete the basic, Managed Assessed, questionnaire. However, for companies wishing to take the process further there are additional modules that can be undertaken, covering specific industry sectors (such as farming, boat building and manufacturing) or key business activities (such as marketing, warehousing and quality, cost & delivery).

10. The latest UK Economic Outlook and Regional Trends survey, published by PricewaterhouseCoopers (PwC), has found that in key areas like GDP per head and workforce participation, Northern Ireland remains at the bottom of the UK regional league table. According to Stephen Kingon, PwC managing partner and Chair of the Centre for Competitiveness "just to match the UK average level of GDP per head would mean doubling the output of both Northern Ireland's manufacturing and business services sectors."

11. In order to meet this enormous challenge it is important that Northern Ireland companies compare their performance and assess their potential against their competitors in the UK, Ireland and internationally. As stated in Invest Northern Ireland's corporate plan; "It is not good enough to be the best in Northern Ireland; we are now benchmarked against the best there is internationally."

12. InterTradeIreland is attempting to standardise cross-border tools. Does the Department intend to support the promotion of the UK Benchmarking index more widely in the SME sector in Northern Ireland? Would it be appropriate to set targets in the SDA relating to SME participation in this benchmarking exercise?

13. Under the heading 'Improving Performance', the Committee is aware the Department is undergoing some restructuring but would like the Department to consider future targets in relation to value for money and provide an estimate of the savings anticipated from their improvements.

14. Setting out specific targets providing details of appropriate benchmarking of services would be beneficial.

15. The Office of Government Commerce (OGC) has been established to improve procurement activity across government through modernising, skilling, e-tendering and strategic partnerships. The Treasury guidelines advise that Departments set out in their SDAs how they are contributing to these procurement objectives.

16. Procurement is mentioned as a high-level target under improving performance in the DETI SDA. However, the Committee would like to see more specific targets with respect to the OGC initiative.

17. Would the Department elaborate on how it intends to promote an environment where fraud is unacceptable? The Committee would like a copy of the Department's fraud policy/fraud response plan together with anti-fraud, counter-fraud strategies and written financial procedures.

18. The Department state that, "representatives will continue to contribute to a variety of inter-departmental groups on a wide range of areas to improve service to customers." Would the Department include a target committing to publish case studies of best practice?

19. The Committee requests that the Department consider including targets relating to achieving best practice recognition and through participation in the Public Sector Benchmarking Service.

20. The Committee also requests that the Department consider including targets for responding promptly to correspondence while ensuring the quality of response remains high.

21. The UK e-government Strategy contains three key targets:

· 100% of government services to be available online by 2005;
· 90% of low value goods and services (by volume) to be purchased by government electronically by March 2001; and
· 100% of procurement by civil central government to be tendered electronically by 2002.

22. Recent research suggests that moving just 20% of visits to local government offices to a website could save the UK £5 billion per annum.

23. The DETI SDA states that the Department is "committed to contributing to the overall UK target of 25% of key services delivered electronically by 2002 and 100% by 2005".

24. The key services have not been identified and there are no specific targets. The Department of Social Security's SDA gives an example of an electronic government SDA.

25. The Committee suggests that the Department list the key services identified through its customer consultation exercise and provide associated targets. Specific targets in relation to procurement should also be included.

26. The e-commerce Directive was approved on 8 June 2000 and Member States had until 16 January 2002 to implement the Directive into national law. Only Austria, Finland, Germany, Ireland and Luxemburg are reported to have met the target.

27. The Committee is concerned at the delay in implementing the Directive and is aware of the rate of progress in the Republic of Ireland and hopes that no competitive or strategic advantage is lost.

28. The Committee asked if the Department could comment on the delay in the implementation of the e-commerce directive and advise whether they expect any action to be taken against the UK for delaying the implementation. The Department provided the following response:

· The implementation of the e-commerce directive is currently the subject of correspondence between NI and GB Ministers.
· Action against the UK for delay in implementation is a matter for the European Commission.

29. The questions were posed in an effort to improve the Committee's understanding of the issues surrounding the delay in implementation of the directive. Would the Department detail how the delay in implementation has affected businesses in Northern Ireland.

30. The Committee would also like to endorse the comments of Janet Caldow, Director of IBM's Institute for Electronic Government who highlighted what she sees as the danger for government and more widely in adopting a narrow view as to what e-government involves:

"Leaders who define e-government in a narrow sense - simply moving services online - miss larger opportunities which will determine competitive advantage in the long run…governments today have no choice but to aggressively pursue an all-encompassing shift from traditional to online service delivery. To do otherwise places them in jeopardy of falling below minimally accepted standards of service…A broader grasp of e-government is imperative for leaders to position their governments, citizens, businesses and communities for sustainable strategic advantage."

31. In the Department's response to written questions it stated that "Whitehall was charged with getting everything on line while in Northern Ireland we saw the telephone remaining a major part of service delivery."

32. This comment would suggest that the Department consider the telephone as an alternative to online delivery. The Committee is concerned with "the telephone remaining a major part of service delivery" as an alternative to online delivery and questions whether this is consistent with the intent of the electronic government initiative. The vision contained within the Corporate Strategy Framework is of "a modernised, efficient government, alive to the latest developments in e-business and meeting the needs of citizens and businesses in Northern Ireland." The consultation document envisages the use of ICT to deliver government services electronically.

33. The Committee asks the Department to revise its targets, excluding the telephone as a major part of service delivery.

34. Better policy-making, research and analysis are strong themes in the Modernising Government White Paper and in the Performance and Innovation Unit report on analysis and modelling in central government, 'Adding it Up'.

35. The focus of the DETI SDA, however, is in the evaluation of programmes. There are no outcomes/targets in relation to policy and strategy. The Department has not established how they intend to improve policy-making, research and analysis.

36. Is it appropriate that the Department develop an analysis and research strategy in accordance with the Performance and Innovation Unit "Adding it Up" report?

37. In response to written questions the Department advises how it intends to address policy improvement in four main ways: training, capitalise on corporate knowledge, economic research and evaluation, partnership with others in policy development and evaluation. It is not clear how the Department intends to 'capitalise on corporate knowledge' and 'economic research and evaluation.'

38. The Committee request that the Department consider appropriate targets for all four areas for inclusion in the SDA.

39. The Committee asks the Department to indicate how it's evaluation exercises will lead to improvements in policy-making research and analysis, for example:

40. Forfás is the policy advisory and co-ordination board for enterprise, trade and science and technology in Ireland. It is the body in which the State's legal powers for industrial promotion, trade and technology development have been vested. It is also the body for which powers are delegated to Enterprise Ireland for the promotion of indigenous industry and to the IDA Ireland for the promotion of inward investment.

41. The Committee would welcome the Department's views on the potential for a similar policy advisory body in Northern Ireland.

42. The Committee has expressed concern in oral evidence regarding the presentation of the Department's SDA. Numbering individual targets would facilitate discussion and analysis of the document.

The Committee would also wish to request that at the end of each 12 month period the Department formally resubmit the SDA with an additional column indicating progress made in achieving each target. The Committee will also wish to have regular updates on how the Department is performing against the targets but on a less formal footing.

The Chairperson would be happy to discuss the points raised at your convenience.

Yours sincerely

Cathie White

Committee Clerk
Committee for Enterprise, Trade and Investment