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Department for Business
Enterprise & Regulatory Reform
Annual Report
and Accounts 2008-09
HC 447 JULY 2009
M_044345))
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Department for Business,
Enterprise and Regulatory Reform
Annual Report and Accounts
2008-09
Including the Annual Departmental Report and
Consolidated Resource Accounts for the year ended
31 March 2009
Resource Accounts presented to the House of Commons
pursuant to chapter 20, section 6 (4) of the Government
Resources and Accounts Act 2000
Departmental Report presented to the House of Commons
by Command of Her Majesty
Resource Accounts and Departmental Report presented to
the House of Lords by Command of Her Majesty
Ordered by the House of Commons to be printed
20 July 2009
HC 447 London: The Stationery Office £34.55
I04434
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This document is part of a series of departmental reports which, along with the Main
Estimates 2009-10, the documented Public Expenditure: Statistical Analysis 2009 and the
Supply Estimates 2008-09: Supplementary Budget Information, present the Government's
outturn and planned expenditure for 2008-09 and 2009-10.
© Crown Copyright 2009
The text in this document (excluding the Royal Arms and other
departmental or agency logos) may be reproduced free of charge in
any format or medium providing it is reproduced accurately and not used
in a misleading context. The material must be acknowledged as Crown
copyright and the title of the document specified.
Where we have identified any third party copyright material you will need
to obtain permission from the copyright holders concerned.
For any other use of this material please write to Office of Public Sector
Information, Information Policy Team, Kew, Richmond, Surrey TW9 4DU
or e-mail: licensing@e
ISBN: 9780102962185
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Foreword from the Secretary of State for Business, Innovation and Skills 5
Executive Summary 7
About this report 9
1.1. The Department for Business, Innovation and Skills and the Department for 1
Business, Enterprise and Regulatory Reform
1.2 Ministerial responsibilities 12
1.3 Strategy and objectives 13
Introduction 19
és BERR's performance framework 20
2.3 Raising the productivity of the UK economy 22
2.4 Creation and growth of business 27
2.5 Better regulation 44
2.6 Free and fair markets 54
2.7 Government as a shareholder 70
2.8 Providing professional support, capability and infrastructure 77
Introduction 81
i Professional support, capability and infrastructure 82
3.3 Value for money programmes 91
3.4 Better BERR regulation 94
3.5 Promoting equality of opportunity 98
3.6 Corporate governance arrangements 105
3.7 Remuneration report 110
41 About the financial information in this Report 121
4.2 The resources available to the Department 123
4.3 Reconciling Estimates, Budgets and Resource Accounts 128
4.4 — Financial review 130
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Chapter 5: Resource Accounts
5.1
5.2
5.3
5.4
5.5
Ad
A.2
A3
AA
A5
AB
A7
A8
Statement of Accounting Officer's responsibilities
Statement on internal control
Certificate and report of the Comptroller and Auditor General
Primary Statements
Notes
Quality of DSO and PSA data systems
PSAs remaining from previous spending reviews
Delivery partners
Environmental sustainability
Health and safety report
Public Accounts Committee reports
Complaints to the Department
Expenditure tables
Acronyms
Glossary
Index
141
142
147
150
155
211
220
227
234
236
238
242
243
254
256
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To build a strong and dynamic economy in the UK, we must promote open, competitive
markets, which support enterprise, innovation and investment, and simple, yet well
targeted, regulation. To compete effectively in the global economy we must combine our
excellence in further and higher education and skills, our world-class science, technology
and research, with an active industrial strategy, to bring forward the knowledge and
innovation that will drive future wealth creation.
On 5 June 2009 the Prime Minister created a new department, the Department for
Business, Innovation and Skills, in order to bring together the strategy, policy levers and
expertise needed to realise this vision for Britain's economic future. The purpose of the
Department for Business, Innovation and Skills is to build a dynamic and competitive UK
economy by:
@ creating the conditions for business success;
@ promoting innovation, enterprise and science; and
@ giving everyone the skills and opportunities to succeed.
To achieve this we will foster world-class universities and promote an open global
economy.
The new Department was created by merging the Department for Business, Enterprise
and Regulatory Reform with the Department for Innovation, Universities and Skills. This
Report sets out the performance of the Department for Business, Enterprise and
Regulatory Reform over the twelve months to March 2009 in terms of achievements
against objectives and financial results, and will be its final annual report and accounts.
During 2008-09 the Department for Business, Enterprise and Regulatory Reform worked
hard to help people and businesses come through the recession sooner and stronger. The
Department also developed strategies, notably New Industry, New Jobs jointly with the
former DIUS, to help ensure the UK is well placed to take advantage of the new drivers for
global economic growth.
I am grateful to the many people who worked so hard over the past year. As the first
Secretary of State for Business, Innovation and Skills, I look forward to working with the
staff and delivery partners from both the predecessor departments, to build on their
previous successes as we prepare for the economic upturn and beyond.
Secretary of State for Business, Innovation and Skills
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Department for Bus Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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1 Successful enterprising businesses create wealth, help improve productivity and drive
up UK competitiveness. The Department for Business, Enterprise and Regulatory
Reform (BERR) led Government efforts throughout 2008-09 to help ensure business
success in an increasingly competitive world. This meant taking exceptional and active
measures to limit the impact of the economic downturn on the UK economy, and
taking steps to prepare business to take advantage of the upturn and the opportunities
that will arise from the new drivers for global economic growth.
2 During 2008-09 BERR provided a range of targeted support for businesses to help
them through the recession more quickly, including access to finance and business
advice, as part of the cross-Government Real Help Now programme.
3 New Industry, New Jobs, published in April 2009, is the Government's strategic vision
for Britain's economic recovery. It aims to ensure that UK businesses and workers can
compete successfully for the jobs of the future, and explains how Government is going
to take a more active approach to building British competitiveness, growth and
productivity, in order to create the best possible conditions in which UK businesses can
thrive.
4 As part of this vision the Department for Business, Innovation and Skills (BIS) was
created on 5 June 2009, whose role is to build Britain's capabilities to compete in the
global economy. The new department was created by merging BERR and the
Department for Innovation, Universities and Skills (DIUS), to form a single department
committed to leading the fight against the recession and building the conditions for
future prosperity.
5 2008-09 was the first year of a new performance management framework for
government departments. Public Service Agreements (PSAs) set out the key priority
outcomes for Government. BERR led delivery of three cross-Government PSAs in
2008-09:
@ PSA 1: Raise the productivity of the UK economy;
@ PSA 6: Deliver the conditions for business success in the UK; and
@ PSA 7: Improve the economic performance of all English regions and reduce the
gap in economic growth rates between regions.
6 Departmental Strategic Objectives (DSOs) cover the full range of a department's
activity. BERR had five DSOs in 2008-09:
e@ DSO 1: Promote the creation and growth of business and a strong enterprise
economy across all regions;
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Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
e@ DSO 2: Ensure that all government departments and agencies deliver better
regulation for the private, public and third sectors;
e@ DSO 3: Deliver free and fair markets, with greater competition, for businesses,
consumers and employees;
e DSO 4: Ensure that Government acts as an effective and intelligent shareholder,
and provide a source of excellent corporate finance expertise within Government;
and
@ DSO 5": Provide the professional support, capability and infrastructure to enable
BERR’s objectives and programmes to be successfully delivered.
7 All five of BERR's DSOs are assessed as showing strong progress, i.e. showing
improvement in more than 50% of the indicators of which they are comprised. Two
of the PSAs show some progress, and one is yet to be assessed as the data needed
to measure progress is not yet available.
8 During 2008-09 BERR worked to increase the capability of the Department,
improving the effectiveness and efficiency of our services. We were commended on
progress made in our Capability Review, and achieved level two of the Investors in
People Profile.
9 The Department continued to successfully deliver its objectives while deriving
increasing value for money from its budgets. The Department delivered £69.5 million
of value for money savings in 2008-09, against a target of £64 million, allowing
budgets to reduce by over 3% in real terms from 2007-08.
10 In 2008-09, the total net expenditure of BERR against its Departmental Expenditure
Limits, shown in the pie chart below, was £1,381 million. In 2008-09, the
Department's Annually Managed Expenditure was £355 million.
BERR expenditure against Departmental Expenditure Limits by DSO 2008-09 (£ million)
177.9
® Creation and growth of business
@ Better regulation
646.1 @ Free and fair markets
@ Government as a shareholder
@ Professional support, capability
and infrastructure
303.4
' DSO 4 was numbered DSO 6, and DSO 5 numbered DSO 7, prior to the 3 October 2008
Machinery of Government changes, in which responsibility for two DSOs relating to energy
security and supply and managing energy liabilities passed from BERR to the then newly created
Department of Energy and Climate Change (DECC)
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1 This report summarises the work of the Department for Business, Enterprise and
Regulatory Reform (BERR) over the period 1 April 2008 to 31 March 2009. This
combined Annual Report and Accounts brings together information about the
activities of the Department, its performance and its expenditure.
2 On 5 June 2009, BERR and the Department for Innovation, Universities and Skills
(DIUS) were merged to form the Department for Business, Innovation and Skills
(BIS). References to the work of the Department after 5 June 2009 should be
understood as referring to BIS. On 3 October 2008 responsibility for energy policy
was transferred from BERR to the newly created Department of Energy and Climate
Change (DECC). This report reflects the position of BERR, after the creation of
DECC, but prior to the creation of BIS.
How is this report structured?
Chapter 1: Provides an Introduction to the Department by outlining our role,
objectives, Ministerial responsibilities and our strategic vision for recovery.
Chapter 2: Presents a Performance Report, describing performance during 2008-09
against BERR’s DSOs and the PSAs for which BERR led delivery.
Chapter 3: Focuses on Managing the Department by describing how BERR
operated, including developing capability and value for money savings.
Chapter 4: Presents a Financial Overview explaining the financial information in the
report and the resources available to BERR. This chapter also includes a financial
review and details of budgetary spend.
Chapter 5: Contains the audited Resource Accounts for BERR and a number of
bodies consolidated with BERR for 2008-09.
Annexes: Provide details on DSO and PSA data quality, delivery partners,
environmental sustainability, health and safety, Public Accounts Committee (PAC)
reports, complaints and the Department's expenditure.
Links to websites
3 Links at the bottom of each page provide further relevant information or key source
material. References to the BERR website should automatically redirect as
information is transferred to the BIS website. The Department is not responsible for
the content of external websites, nor changes to published links.
How can you obtain copies of this report?
4 This report is available electronically from the Department's website’. Hard copies
can be obtained from The Stationery Office (TSO). Alternative formats can be made
available on request. Contact details can be found on the back cover of this report.
? BERR Annual Report and Accounts 2008-09 (BERR, 2009): www.berr.gov.uk/aboutus/corporate/
performance/annual-spending/page25111.htmlI
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Section 1.1
The Department for Business, Innovation and Skills
and the Department for Business, Enterprise and
Regulatory Reform
Department for Business
1.1 On 5 June 2009 the Prime Minister created
B I S Innovation & Skills
the Department for Business, Innovation
and Skills with a role to build Britain's
capabilities to compete in the global economy. The new Department merges the
Department for Business, Enterprise and Regulatory Reform (BERR) and the
Department for Innovation, Universities and Skills (DIUS) to form a single department
committed to leading the fight against the recession and fostering the conditions for
future prosperity, building on the work of its predecessor departments.
1.2 During 2008-09 BERR took exceptional and active measures to limit the impact of
the economic downturn on the UK economy. BERR also worked with DIUS taking
steps to prepare UK business to take advantage of the upturn and the opportunities
that will arise from the new drivers for global economic growth including new
technologies, the transition to low carbon, and the spread of international supply
chains.
1.3 Itis more important than ever that we maintain the fundamental conditions for
business success: our openness to trade and investment, our world class
competition regime and flexible product and labour markets. The Department for
Business, Innovation and Skills will take forward this agenda, building Britain's future
to help us compete in a global economy. The new Department will combine BERR’s
expertise in shaping the enterprise environment, better regulation, analysing the
strengths and needs of the various parts of British industry, building strategies for
future industrial strength with DIUS's expertise in maintaining world class
universities, expanding access to higher education, investing in the UK's science
base and shaping skills policy and innovation through bodies such as the Technology
Strategy Board. It also puts the UK’s Further Education system and universities
closer to the heart of government thinking about building now for the upturn.
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Department for Business, Enterprise
Regulatory Reform
Annual Report and Accounts 2008-09
Section 1.2
Ministerial responsibilities of the Department for
Business, Innovation and Skills*
Department for Business
Innovation & Skills
Ministerial Team
KEVIN BRENNAN
MINISTER FOR FURTHER
EDUCATION, SKILLS,
APPRENTICESHIPS AND
‘CONSUMER AFFAIRS
DAVID LAMMY.
MINISTER FOR HIGHER
EDUCATION AND INTELLECTUAL
PROPERTY
tan Lucas
MINISTER FOR BUSINESS
AND REGULATORY REFORM
PETER MANDELSON
SECRETARY OF STATE FOR
BUSINESS, INNOVATION AND SKILLS
MERVYN DAVIES
(MINISTER FOR TRADE,
INVESTMENT AND BUSINESS
ROSIE WINTERTON
‘MINISTER FOR REGIONAL ECONOMIC
DEVELOPMENT AND COORDINATION
rhs
ad
SHRITI VADERA
MINISTER FOR ECONOMIC COMPETITIVENESS,
‘SMALL BUSINESS AND ENTERPRISE
PAT McFADDEN,
MINISTER FOR BUSINESS,
INNOVATION AND SKILLS.
PAUL DRAYSON
MINISTER FOR SCIENCE
{AND INNOVATION.
STEPHEN CARTER
MINISTER FOR COMMUNICATIONS,
‘TECHNOLOGY AND BROADCASTING
‘Tony Yous
[MINISTER FOR POSTAL AFFAIRS
AND EMPLOYMENT RELATIONS.
3 For information about the BERR governance structure see section 3.6 of this Report.
IM. oases)
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Chapter 1
Introducing the Department
Section 1.3
Strategy and objectives of the Department for
Business, Enterprise and Regulatory Reform
The Strategic Framework
1.4 The 2007 Comprehensive Spending Review (CSRO7), set Government's performance
framework for 2008-11. CSRO7 defined 30 cross-Government Public Service
Agreements (PSAs) which set out the key priority outcomes which Government
wants to achieve, and therefore what the public can expect from Government. Each
PSA has a lead department, responsible for co-ordinating and driving delivery, in
addition to named contributing departments which support delivery of that PSA*.
1.5 BERR led delivery of three PSAs during 2008-09 and was considered to be a key
contributing department for delivery of a further two. The work of BERR in these
areas will be taken forward by the Department for Business, Innovation and Skills.
PSAs led by BERR:
PSA 1: Raise the productivity of the UK economy. Key contributing departments are HM
Treasury and the former Department for Innovation, Universities and Skills (DIUS).
PSA 6: Deliver the conditions for business success in the UK. Key contributing
departments are HM Revenue and Customs, HM Treasury and DECC.
PSA 7: Improve the economic performance of all English regions and reduce the gap in
economic growth rates between regions. Key contributing departments are HM
Treasury, Communities and Local Government (CLG), Department for Work and
Pensions (DWP), Department for Transport (DfT), the Department for Environment, Food
and Rural Affairs (Defra) and the former DIUS.
PSAs, led by other departments, for which BERR was a key contributor to
delivery:
PSA 2: Improve the skills of the population, on the way to ensuring a world-class skills
base by 2020, for which DIUS formerly led delivery.
PSA 8: Maximise employment opportunity for all, for which DWP leads delivery.
1.6 CSRO7 also set Departmental Strategic Objectives for each department, which cover
the full range of a department's activity and provide the framework for business
planning and resource management.
* Lead Departments are also responsible for the public reporting of that PSA. PSAs to which BERR
contributed are reported in the Departmental Report or Annual Report and Accounts of the lead
departments, available from the websites: www.dius.gov.uk and www.dwp.gov.uk
Department for B and Regulatory Reform
Annual Report and Accounts 2008-09
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Departmental Strategic Objectives for BER!
DSO 1: Promote the creation and growth of business and a strong enterprise economy
across all regions.
DSO 2: Ensure that all government departments and agencies deliver better regulation
for the private, public and third sectors.
DSO 3: Deliver free and fair markets, with greater competition, for businesses,
consumers and employees.
DSO 4°: Ensure that Government acts as an effective and intelligent shareholder, and
provide a source of excellent corporate finance expertise within Government.
DSO 55: Provide the professional support, capability and infrastructure to enable BERR’s
objectives and programmes to be successfully delivered.
1.7. On 3 October 2008 the Prime Minister announced earlier changes to the way in
which Government is organised. Responsibility for energy and climate change policy
passed respectively from BERR and the Department for Environment, Food and
Rural Affairs (Defra) to the newly created Department of Energy and Climate Change
(DECC). Responsibility for two Departmental Strategic Objectives, relating to energy
security and supply, and managing energy liabilities, passed from BERR to DECC.
Performance against these objectives will be covered in the DECC Annual Report
and Accounts®. Likewise, BERR’s Resource Accounts have been restated to reflect
these Machinery of Government changes such that they represent the position of
BERR after the creation of DECC, but prior to the creation of the Department for
Business, Innovation and Skills.
BERR’s delivery partners
1.8 Through 2008-09 BERR delivered a wide range of products and services to diverse
groups by working with a network of delivery partners. These included BERR’s
Executive Agencies: Companies House and the Insolvency Service; and Executive
Non-Departmental Public Bodies, including the Regional Development Agencies.
We include some information about BERR’s delivery partners during 2008-09 in
chapter 2, the Performance Report, but more comprehensive accounts of their work
are available in their own annual reports, available from delivery partners’ websites.
For a complete list of BERR’s delivery partners, during 2008-09 and their websites,
see annex 3.
® DSO 4 was numbered DSO 6, and DSO 5 numbered DSO 7, prior to the 3 October 2008
Machinery of Government changes.
® DECC’s Annual Report and Accounts are available from the DECC website: www.decc.gov.uk
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Chapter 1
Introducing the Department
The National Economic Council
1.9 The National Economic Council (NEC), launched in October 2008, is a Cabinet level
Committee which provides a new approach to coordinating economic policies
across Government. By taking advice from external experts across different
sectors of the economy, and by framing and coordinating the appropriate
departmental and cross-governmental policy responses, the Council has advised
on measures to steer the economy through the current global crisis.
1.10 Given the impact of the downturn on business, BERR played a key role in
developing an effective policy response. Departmental examples of successful
policy delivery resulting from the NEC discussions include the Real Help for
Businesses package and Building Britain's Future: New Industry New Jobs.
The Business Council for Britain
1.11 During 2008-09 BERR provided the dedicated secretariat for the Business Council
for Britain. The Council advises the Prime Minister and Government, and the
Secretariat ensure the Council has a relevant agenda that stimulates joined up
thinking on issues that affect business and the long-term competitiveness of the
UK economy. Discussions in 2008-09 focused strongly on the strategic challenges
facing the UK, both domestic and global’.
7 For further information about the Business Council for Britain see:
www.berr.gov.uk/aboutus/corporate/bcb/index.htm!
Annual Report and Accounts 2008-09
Department for Business, Enterprise and Regulatory Reform
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Supporting business through the recession: Real Help
1.12 Real Help for Businesses brings together a range of real, targeted support from
Government to help business through the recession. In addition to the summary below,
further details of individual policies are included in the relevant sections of this Report.
rl mata for businesses [atest
To get real help for your business go to
‘www.businesslink.gov.uk/realhelp or
speak to a Business Link adviser.
Finance from your bank: you may be able
to benefit from the Government's
Enterprise Finance Guarantee if you apply
for a loan from your bank.
Regional Loan Transition Funds: loans
available from some regional development —
agencies (access via local Business Link)
The Capital for Enterprise Fund provides
equity investment which you can use to pay
off existing debt or invest in your business.
Free guides on managing your finances are _
available at www.businesslink.gov.uk/realhelp.
Need more time to pay your tax bill? Call
the Business Payment Support Service: 0845
302 1435. (With HMRC.)
Business Link ‘Health Check’: Get a free -
review of your business with a professional
business adviser for hands-on advice and help
accessing the full range of government help.
1.13
recession:®
" eThere have been around 294,000 visits
to the Real Help for Business
campaign webpage.
eOver £546 million of eligible
applications from over 4,850 firms
have been granted, are being
processed or assessed.
eOver 3,500 businesses have been
offered loans totalling over £346
million.
Around £26.2 million of loans have
been agreed.
eFund managers have made offers .
totalling approximately £13 million to
_ nine businesses. :
Six businesses have accepted the
terms of the offer issued with a value
_ of £7.9 million. ; :
eThere have been over 76,000
downloads of the guides. -
Around 153,000 businesses have
_ gained agreement to defer payment of
_ tax worth over £2.6 billion, _
eOver 64,000 businesses have
benefited from a free Healthcheck.
In addition Budget 2009 announced further measures to help businesses through the
@ a Vehicle Scrappage Scheme which provides a £2,000 discount (jointly funded
by the Government and the manufacturer) on new vehicles bought by consumers
® For further information see ‘Fiscal Stimulus Programmes’ in section 4.2 and Notes 25.2 and 39 to
the Accounts
h_oaasa)
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Chapter 1
Introducing the Department
scrapping a vehicle which is ten years old or more and which they have owned
for at least 12 months;
@ a Trade Credit Insurance Scheme to provide up to £5 billion of top-up trade
credit insurance to businesses who have suffered partial reductions in their level
of cover.
A strategic vision for Britain's recovery
1.14 In April 2009, the Prime Minister, Secretary of State for Business, Enterprise and
Regulatory Reform and the Secretary of State for Innovation, Universities and Skills
jointly launched the publication of Building Britain’s Future - New Industry, New
Jobs’, the Government's strategic vision for taking a more active approach to
building British competitiveness, growth and productivity. This vision will now be
taken forward by the Department for Business, Innovation and Skills. The strategy
identifies how government action can support the UK's economic renewal and future
growth. In particular, the paper sets out how the Government will:
@ adapt and strengthen Britain's general competitiveness policies in critical areas
like innovation, skills, finance, infrastructure and access to global markets;
@ use its role and influence in the market in a new and more strategic way;
@ use a new approach to targeted interventions to ensure that Britain continues to
retain and develop strengths in high-value areas of global growth or rapid and
fundamental technological change;
@ better coordinate action at the national, regional and local levels; and
@ develop a different way of making policy, taking account of its impact on the total
business environment and make better use of its existing levers (such as
procurement, regulation, taxation and spending) with a clearer sense of the effect
on the business environment.
1.15 Budget 2009 established a £750 million Strategic Investment Fund (SIF). The aim
of the Fund, which will support advanced industrial projects of strategic importance
to the UK's economic renewal and future growth, is to help ensure that the UK is
able to emerge from the economic downturn in a globally competitive position.
1.16 Of the £750 million: £250 million is ring-fenced to support a range of projects on
renewable energy and low-carbon business opportunities; £50 million is for the
Technology Strategy Board to support business innovation in areas of UK capability
with opportunities for future growth; and £10 million is for UK Trade & Investment
(UKTI), to support a package of major trade and investment events in sectors
identified in New Industry, New Jobs.
1.17. The Department for Business, Innovation and Skills will manage this Fund, although
the £250 million low carbon element will be allocated only to those projects that have
been jointly agreed with the Department of Energy and Climate Change.
° New Industry, New Jobs (HM Government, 2009): www.berr.gov.uk/files/file5 1023. pdf
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Chapter 2
Performance Report
Section 2.1
Introduction
2.1 Successful, enterprising businesses create wealth, help improve productivity, create
employment and drive up UK competitiveness. During 2008-09 BERR took action to
support the economy through the recession, and with our delivery partners worked
to make a real difference to businesses, employees and consumers.
2.2 This chapter reports on BERR’s performance and achievements during 2008-09. It is
divided into sections, in line with BERR’s Departmental Strategic Objectives (DSOs)
and Public Service Agreements (PSAs), set at the 2007 Comprehensive Spending
Review (CSRO7). At the end of each section we provide a boxed assessment of each
DSO or PSA, after a more comprehensive explanation of work underpinning that
objective.
2.3. Information in this performance report about the Department's work after 5 June
2009 (particularly in the forward look pages) should be understood to refer to BERR’s
successor, the Department for Business, Innovation and Skills.
22: BERR’s performance framework 20
23 Raising the productivity of the UK economy 22
(including PSA 1)
2.4 Creation and growth of business. 27
(including DSO 1 and PSA 7)
25: Better regulation 44
(including DSO 2)
2.6 Free and fair markets 54
(including DSO 3 and PSA 6)
27 Government as a shareholder 70
(including DSO 4)
2.8 Providing professional support, capability and infrastructure 77
(including DSO 5)
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Department for Busi Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Section 2.2
BERR’s performance framework
2.4 Asummary table of the assessments for BERR's Departmental Strategic Objectives
(DSOs) and the Public Service Agreements (PSAs) for which BERR led delivery is
below.
Departmental Strategic Objectives
DSO 1 Promote the creation and growth of business and a Strong
strong enterprise economy across all regions progress
DSO 2 __ Ensure that all government departments and agencies Strong
deliver better regulation for the private, public and third —_ progress
sectors
DSO3 Deliver free and fair markets, with greater competition, Strong
for businesses, consumers and employees progress
DSO 4° Ensure that Government acts as an effective and Strong
intelligent shareholder, and provide a source of excellent progress
corporate finance expertise within Government
DSO 5" Provide the professional support, capability and Strong
infrastructure to enable BERR'’s objectives and progress
programmes to be successfully delivered
PSAs for which BERR leads delivery _ ee Assessment I
PSA 1 Raise the productivity of the UK economy Not yet
assessed
PSA6 _ Deliver the conditions for business success in the UK Some
progress
PSA7 Improve the economic performance of all English Some
regions and reduce the gap in economic growth rates progress
between regions
2.5 The Department is still responsible for two older PSAs, relating to ‘Enterprise’ and
‘Maximising potential in the workplace’. These are outstanding from the previous
spending review covering 2005-08 (SR04). Progress reports for these PSAs are
included in annex 2.
2.6 Delivery agreements giving a more detailed explanation of the delivery and
measurement of each PSA can be found on the HM Treasury website"’.
© DSO 4 was numbered DSO 6, and DSO 5 numbered DSO 7, prior to the 3 October 2008
Machinery of Government changes.
" The CSRO7 PSA Delivery Agreements are available from:
www.hm-treasury.gov.uk/pbr_csr07_psaindex.htm
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Chapter 2
Performance Report
2.7. Each DSO and PSA has its own suite of indicators. Progress against each of these
indicators is measured, and is used to inform the overall assessment of progress for
each DSO and PSA. The standard terminology used in the overall assessments for
CSRO7 (following HM Treasury guidance to government departments) is explained
below:
@ strong progress — where more than 50% of the indicators have improved;
© some progress — where 50% or less of the indicators have improved;
@ no improvement shown - where no indicators have improved; or
© not yet assessed — where 50% or more of the indicators have not yet had data
produced.
2.8 For each CSRO7 DSO and PSA we have also provided an assessment for each
indicator, as described below:
e improvement shown - where the indicator has shown progress against the
baseline;
© position maintained — where the indicator has maintained its position against
the baseline, and success for the indicator is defined as maintaining position’?;
@ no improvement shown — where the indicator has not shown progress against
the baseline, and success is defined as improving position; or
© not yet assessed — where the data used to assess the indicator has not yet been
produced.
2.9 Explanations of the quality of the data systems used to measure the DSO and PSA
indicators are set out in annex 1. A performance report for DSO 5 is included in this
chapter, but a more comprehensive explanation of work to ‘provide the professional
support, capability and infrastructure to enable BERR’s objectives and programmes
to be successfully delivered’ is provided in chapter 3, ‘Managing the Department’.
2.10 BERR reports performance on its DSOs and PSAs twice each year: in the Annual
Report and Accounts", published in July, and the Autumn Performance Report,
published in December".
’? Where success for an indicator is defined as maintaining or improving position, this is counted as
an indicator showing improvement for the overall DSO or PSA assessment.
* For further information, including copies of this and previous BERR Annual Reports and Accounts
see: www.berr.gov.uk/aboutus/corporate/performance/annual-spending/page25111.htm!
“ For further information, including copies of BERR’s Autumn Performance Reports see: www.berr.
gov.uk/aboutus/corporate/performance/service-standards/performance-reports/page24986.htm!
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Annual Report and Accounts 2008-09
Section 2.3
Raising the productivity of the UK economy
Introduction
2.11 Productivity growth is the main determinant of long term economic growth which,
together with employment growth, leads to higher prosperity. The Department's key
role in encouraging productivity growth is to develop and deliver policies to correct
market failures, set the productivity policy framework and create a business friendly
environment. During the 2008-09 period, BERR led delivery of PSA 1 ‘Raise the
productivity of the UK economy’.
2.12 The Government's policy framework for improving productivity is based on the five
drivers of productivity: investment; innovation; skills; enterprise; and competition.
For each driver there are programmes seeking to improve UK performance. We lead
on the development of the Government's productivity evidence base, which is used
to ensure that resources are targeted in the most effective way, to report on
progress to improve productivity, and to produce economic reports.
Impact of the economic climate
2.13 Productivity growth fluctuates over the economic cycle and it is therefore monitored
as a trend growth rate over the cycle, which strips away cyclical distortions.
2.14 The likely impact of the economic downturn on productivity depends on the period of
time being looked at. The performance of productivity measures is likely to be
adversely affected in the short term, but will pick up with economic recovery, and,
over longer periods will tend towards trend productivity growth. Persistent declines
in output and employment could potentially affect underlying productivity for quite a
few years if the drivers of productivity, such as investment and skills, are adversely
affected. In the long run, over the full business cycle, both the productivity measures
and the underlying productive capacity of the economy are less likely to be affected.
2.15 Output per hour and per worker measures of productivity tend to be pro-cyclical
(declining in downturns and rising in upturns) because they are sensitive to changes
in labour utilisation rates: employment tends to decline more slowly than output in
the short term. Thus short term movements in these measures do not necessarily
imply a deterioration in the productive potential of the economy. This analysis
explains why the most recent data show negative growth in output per worker.
2.16 The short-term outlook for productivity growth depends on outcomes in the labour
market, in particular the extent to which employers are able to benefit from labour
market flexibility. The longer term outlook depends on outcomes for investment,
innovation, skills, enterprise, and competition.
2.17. While there is some uncertainty about the outlook for productivity, over the previous
economic cycle the UK saw record trend productivity growth and significant progress
in narrowing the productivity gap with comparator countries.
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Drivers of productivity
2.18 The 2008 Productivity and Competitiveness Indicatorseport'® discusses progress on
the headline indicators and the five main drivers of productivity. While raising
productivity growth is a long-term objective, current economic conditions have
implications for productivity growth in the short term, and the report discusses the
policies the Government is putting in place to address these.
e Investment Over 1997-2007, the UK scored well in terms of relative
macroeconomic stability, but the global economy has since markedly deteriorated.
The UK's specialisation in services means that business investment in physical
assets is relatively less intense, while investment in intangible assets is thought to
be more intense. The normal decline of investment in downturns is exacerbated by
problems with availability of finance, particularly among small and medium sized
enterprises (SMEs).
e Innovation: The UK performs relatively well in measures of wider forms of
innovation such as the proportion of innovation-active firms and the rate of
introduction of new products. Its relative specialisation in services explains much of
its relatively lower R&D intensity. R&D investment as a proportion of GDP is
unlikely to be significantly reduced as a result of the downturn, and broader types
of innovation could increase as firms develop new products and processes.
e Skills: The UK performs relatively well in terms of the number of people holding
higher level qualifications and the level of basic skills such as literacy and numeracy
has improved. The proportion of workers not considered fully proficient in their jobs
has fallen, and there has been some progress in leadership and management skills.
The downturn is also likely to lead to an increase in enrolment in higher education
and training by firms, leading to improved skills in the long run.
The Department co-sponsors the UK Commission for Employment and Skills,
contributing to the setting of its objectives and supporting it to make
recommendations for a simpler, more responsive and flexible skills system for
business. BERR’s work included supporting the delivery of an effective network of
Sector Skills Councils and helping successfully integrate the Train to Gain skills
brokerage service into Business Link in England, making it easier for businesses to
access skills advice.
e Enterprise: The UK performs well in the effectiveness of its regulatory framework
as indicated by the World Bank measuré®. There is scope for improvement in
developing a positive enterprise culture. Firm closures are increasing in the
downturn, although rates of business formation tend not to decline sharply, for
example due to increased self-employment.
e Competition: The UK remains an open economy that is in a position to reap the
benefits of international trade and inward investment. Its regulatory environment is
recognised as among the best in the world, and its competition regime is well-
regarded'’. The impact of the downturn on the degree of competition cannot be
predicted with any precision, but indicators are fairly stable over time.
© The 2008 Productivity and Competitiveness Indicators (BERR, 2009): www.berr.gov.uk/files/file49953.pdf
‘© For further information about the ease of doing business in the UK see DSO indicator 2.5.
The UK regulatory environment and competition regime are assessed as part of DSO 3 in section2.6.
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Not yet assessed
2 out of 2 indicators not yet assessed
Indicator 1: Labour productivity (output per hour worked) over the economic
cycle
Not yet assessed
UK trend economic growth (output per hour worked) was estimated to have grown
by 2.4% per annum over the most recent full business cycle (H1 1997 to H2
2006), which ended during SR04. This was a significant improvement compared
with 1.9% over the two previous economic cycles.
Progress is assessed over a full business cycle to smooth out the cyclicality of
output per hour measures, which tend to fall in recessions and rise in booms.
Current unadjusted HM Treasury estimates of productivity growth from H2 2006
onwards are 2.3%,'* slightly lower than over the last full economic cycle from H1
1997 to H2 2006. ONS estimates show weaker recent annualised changes in
productivity, falling from growth of 2.0% p.a. in Q4 2007 to a fall of 1.8% p.a. in
Q4 2008. However from such short term movements it is not yet possible to
conclude how much represents permanent as opposed to cyclical changes.
Measures of productivity growth may continue to be weak over the slowdown,
but will pick up with economic recovery.
Indicator 2: International comparisons of productivity (per worker, per hour
worked)
Not yet assessed
An assessment of progress in the reduction of international productivity gaps
cannot yet take place for CSRO7 (which began in 2008) because the most recent
data are for 2007.
UK productivity has historically lagged behind that of other major industrialised
economies, but there has been a significant narrowing of the gaps over the past
15 years. The latest estimates show the UK maintaining the strong progress made
in narrowing gaps in both output per worker and per hour worked.
® Budget 2009, Table B2: Contributions to trend output growth, p197:
www.hm-treasury.gov.uk/d/Budget2009/bud09_completereport_2520.pdf
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Since 1997:
* the gap in output per worker between the UK and Germany has reversed to a
3 percentage point UK lead;
* the gap with France has halved to 7 percentage points; and
* the gap with the US in 2007 fell to 23 percentage points, compared to 28
percentage points in 1997.
Between 1997 and 2007, UK gaps in output per hour narrowed to:
* 14% with the US (from 20% in 1997);
* 14% with France (from 22% in 1997); and
* to 13% with Germany (from 25% in 1997).
Output per worker in the UK grew 23.3% between 1997 and 2007, faster than in
the US, France and Germany (where it grew by 17%, 12% and 10% respectively).
UK GDP per hour worked rose by 28.8% between 1997 and 2007, faster than the
US, France and Germany (where it rose by 21%, 19% and 15% respectively).
Figure 1: International Comparisons of GDP per worker 1992-2007
140
135
130
125 -
115
110
105
100 +
95 fo
mee France oe UK
comme Germany ommme US
© Source ONS International Comparisons of Productivity:
www.statistics.gov.uk/cci/nugget.asp?id=161
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Annual Report and Accounts 2008-09
Productivity: forward look
2.19 Following the November 2008 Pre-Budget Report”’, Real Help for Businesses
Now’', a cross-government package of support was launched to address the cash
flow, credit and capital needs of small businesses, by helping banks lend to viable
SMEs during the economic downturn.
2.20 The Digital Britain Report set out proposals for Government aimed at securing the
UK’s place at the forefront of innovation, investment and quality in the digital and
communication sectors. It was published in June 2009” jointly by BIS and the
Department for Culture, Media and Sport (DCMS).
2.21 NESTA (National Endowment for Science, Technology and the Arts)’ is developing a
new Innovation Index with the aim of improving our understanding of service
sector, user-led and public sector innovation, and building on measures that
innovative firms and their investors find useful.
2.22 The Department is working with other contributing departments to PSA 1 to assess
how best to incorporate business views in policy design and implementation,
and the extent to which productivity impacts are taken into account in policy
evaluation.
Pre-Budget Report 2008: Facing global challenges: Supporting people through difficult times (HM
Treasury, 2008): www.hm-treasury.gov.uk/prebud_pbr08_repindex.htm
For further information about Real Help Now see:
www. direct.gov.uk/en/campaigns/RealHelpNow/index.htm?
For further information about Digital Britain see:
www.culture.gov.uk/what_we_do/broadcasting/5631.aspx
* For further information about NESTA see the website:
www.nesta.org.uk
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Section 2.4
Creation and growth of business
Introduction
2.23 The Department aims to help create the environment in which business can
succeed. As the world economy enters a more turbulent time we are working to help
UK businesses through the global economic downturn and help them to emerge
stronger on the other side, through safeguarding business creation, welfare and
growth, and supporting enterprise, skills creation and innovation. The Department:
e listens carefully to the different economic players, weighs up the evidence behind
their views, and assesses where Government needs to act;
e develops and maintains effective relationships with key players in both
established and newly emerging business sectors, focuses on the issues which
matter most to UK business and draws on business expertise in finding solutions
to the challenges we face as a society;
e is helping SMEs access the finance they need during the economic downturn;
© promotes stronger regional economies, through enhanced economic
performance across England and fosters business friendly policies at national and
European level; and
@ works with others to encourage long term wealth creation, strengthening the UK
enterprise culture and environment, and simplifying business support.
2.24 This section discusses the work we have
done in support of BERR’s Departmental
Strategic Objective (DSO) 1 to ‘Promote the
creation and growth of business’ and Public
Service Agreement (PSA) 7 ‘Improve the
economic performance of all English regions
and reduce the gap in economic growth rates
between regions’.
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Key achievements 2008-09
e@ Launched the Real Help programme which has delivered additional help for
businesses, including the Enterprise Finance Guarantee and Business Link
‘Health Checks’
Provided help for corporates — not only SMEs, for example offering a total of £174
million in repayable Launch Investment to Bombardier Aerospace and GKN for
the design and development of new civil aircraft programmes.
e Delivered a new strategy for UK manufacturing”, setting a framework to
facilitate success in the evolving global market place and helping manufacturers
compete effectively in the short, medium and longer term.
e Delivered Solutions for Business, the simplified framework for government
funded business support as a result of the Business Support Simplification
Programme (BSSP)”°.
e@ Simplified the Government's web estate by converging information from
various sites onto the Directgov and Business Link websites.
e Facilitated the agreement of a Memorandum of Understanding between internet
service providers to address the issue of illegal file-sharing.
e Launched a joint industry/Government Strategy for Sustainable Construction’®
to provide clarity to business by bringing together diverse regulations and
initiatives.
e Published the Government's response to the consultation on the review of
sub-national economic development and regeneration”.
e Accepted recommendations to improve SME access to public procurement
opportunities, made in the Glover Review”.
e As a result of UK Trade & Investment (UKTI) support, more than 10,500
companies improved their performance, generating around £3.6 billion additional
profit”®. We maintained the UK's position as the number one inward investment
destination in Europe with more than 1,700 projects coming into the UK.
* For further information, including Manufacturing: new challenges, new opportunities
(BERR, 2008) see:
www.berr.gov.uk/whatwedo/sectors/manufacturing/strategyreview2008/page4527 1.htm!
For further information about Solutions for Business see:
www. berr.gov.uk/whatwedo/enterprise/simplifyingbusinesssupport/page44805.html
For further information, including Strategy for sustainable construction (HMG, 2008) see:
www.berr.gov.uk/whatwedo/sectors/construction/sustainability/page 13691 .html
Prosperous Places: taking forward the review of sub-national economic development and
regeneration, The Government response to public consultation (BERR/CLG, 2008);
www.communities.gov.uk/publications/citiesandregions/govresponseprosperousplaces
For further information about the Glover Review and its recommendations see:
www.ogc.gov.uk/news_2008_8804.asp
UKTI's Performance and Impact Monitoring Survey (PIMS), accessed via UKTI's website:
www.uktradeinvest.gov.uk
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Enterprise policy
2.25 The Department is responsible for implementing Government's framework for
enterprise policy and small business. As such, BERR led the launch of a number of
policy initiatives to support SMEs through the recession, including’:
e The Enterprise Finance Guarantee which secures up to £1.3 billion of additional
bank loans to small businesses with a turnover of up to £25 million. Over £546
million of eligible applications from over 4,850 small businesses had been
assessed, were being processed or had been granted by end June 2009.
e The £75 million Capital for Enterprise Fund which provides funds for
investment in small businesses needing equity. The appointed fund managers
have now made offers totalling approximately £13 million to nine businesses and
are continuing due diligence on the further proposals that have been put
forward*’.
The Working Capital Scheme which offers bank guarantees of up to £10 billion
on portfolios of working capital loans to enable new bank lending to SMEs and
mid-sized companies.
Offering further support and help for SMEs’ cashflow, all central government
departments have signed up to the Prompt Payment initiative helping bring
forward payments from 30 to ten working days. Government departments have
made good progress against this target and, in March 2009, 90% of payments
against a total annual value of around £66 billion were made within ten days.
2.26 In March 2008 the Enterprise Strategy” was published, setting out the
Government's renewed vision to make the UK the most enterprising economy in the
world and the best place to start and grow a business. During 2008-09, 46 of the 52
project commitments in the strategy were implemented and the remainder are
underway. The projects included:
e Asuccessful Global Entrepreneurship Week involving 644,000 individual
participants in the UK. 77 countries took part internationally.
e The first two Premier League Enterprise Academies, launched by Manchester
City and Aston Villa, using football clubs as business models to encourage young
people into enterprise.
e Schemes targeting women: the Aspire fund encourages women to seek equity
finance and highlights investment opportunities in women-led businesses.
e The first three university enterprise network regional clusters, launched in
November 2008. These encourage graduate enterprise by bringing together
business, universities and RDAs.
*° For further information see ‘Fiscal Stimulus Programmes’ in section 4.2 and Notes 25.2 and 39 to
the Accounts.
* As at end June 2009.
® For further information, including Enterprise: Unlocking the UK's talent (HMT/BERR, 2008):
www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/enterprise-framework/index.htm!
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Business relations
2.27. The Department works with key business sectors, UK and EU policy makers, and
regulators on business issues. Our work includes strategic initiatives to improve
competitiveness and influencing others to ensure that wider government policy takes
account of the legitimate needs of business. Good relationships with business are
even more important now, to help us understand what is happening in the economy,
and what Government can do to help. Examples of our activity in 2008-09 are below.
2.28 Developing and delivering the UK's Automotive Assistance Programme to support
the delivery of new investments by automotive companies to develop technology
and create jobs in the transition to a low carbon economy”.
2.29 Provided repayable investment funding, subject to European Commission approval,
to Bombardier Aerospace for the design and development of the composite wing for
the CSeries aircraft programme; and to GKN for the development of the A350XWB
composite wing structures.
2.30 The Manufacturing Strategy”, launched in September 2008 set out a powerful
new vision for how UK manufacturing can be ready to take advantage of global
trends and seize new opportunities. It brings together £150 million of support for UK
manufacturing, based around commitments under five key dynamics: global value
chains; technology exploitation; intangibles; people and skills; and low carbon. The
majority of measures will be delivered during 2009, with all commitments due to be
in place by 2010.
2.31 A successful start to the implementation programme for the Digital TV switchover.
2.32 Participated in, and contributed to, the Hooper Review®® and subsequent proposals.
on the future of the UK postal services market.
2.33 Facilitated Sir David Cooksey’s independent review and refresh of the Bioscience
Innovation and Growth Team Report, to which the Government responded
positively*®. This will be a key influence on the strategy of the newly formed
Government Office for Life Sciences.
2.34 Influenced policy making in support of business innovation and performance in
services following the joint BERR/DIUS report Supporting Innovation in Services’,
including trying to maximise opportunities for the UK in Europe.
2.35 Prepared to amend legislation on the operation of construction contracts to
improve cash flow and dispute resolution.
°° For further information see ‘Fiscal Stimulus Programmes’ in section 4.2 and Note 39 to the
Accounts.
* For further information, including Manufacturing: new challenges, new opportunities (BERR/DIUS,
2008) see: www.berr.gov.uk/whatwedo/sectors/manufacturing/strategyreview2008/page45271
html
°° Modernise or decline: policies to maintain the universal postal service in the United Kingdom
(Hooper Review) (Hooper, Hutton, Smith, 2008): www.berr.gov.uk/files/file49389.pdf
°° The Review and Refresh of Bioscience 2015 Report (BERR, 2009) and the Government
Response: www.berr.gov.uk/whatwedo/sectors/biotech/biotechmedic/page10217.html
*” Supporting Innovation in Services (BERR/DIUS, 2008): www.berr.gov.uk/files/file47440.pdf
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Digital Britain
2.36 Digital Britain is an action plan (prepared in
partnership with DCMS) to secure the
UK's place at the forefront of innovation,
investment and quality in the global digital
and communications industries.
2.37 The interim report*® contained more than 20 recommendations, including
proposals on broadband, public service broadcasting, spectrum, digital radio,
digital content rights and the digital delivery of public services.
2.38 Forward plans included developing plans for a Universal Service
Commitment in broadband, to be effective by 2012, and exploring with
interested parties the potential for a rights agency which would bring
industry together to work to provide incentives for legal use of copyright
and to prevent copyright infringement.
2.39 The Digital Britain Final Report was published in June 2009.
2.40 Through the Solutions for Business range
of products®’, the Business Support
Simplification Programme (BSSP) has made
it easier for companies and entrepreneurs
to understand and access government
funded grants, subsidies and advice on how
to start and grow their businesses.
Solutions
for Business
2.41 In March 2009 the Government announced that Solutions for Business,
its simplified framework for business support products, was in place. The
package includes around 30 support products and services, accessible
through Business Link, to replace the estimated 3,000 schemes previously
on offer. Transition is phased and due to be completed by March 2010.
Products will help companies with common business problems, such as
accessing finance, as well as providing support for innovation, skills,
exporting and resource efficiency. Business Support products will be
provided by a range of respected public sector providers such as government
departments and their agencies, RDAs and local authorities.
%8 For further information including Digital Britain: The Interim Report see:
www.culture.gov.uk/what_we_do/broadcasting/5631.aspx
*° For further information and a full list of Solutions for Business products see:
www.berr.gov.uk/whatwedo/enterprise/simplifyingbusinesssupport/page44804.html
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Service Transformation
2.42 The rapid expansion of e-technologies and communication channels has
revolutionised the way in which citizens and businesses access information and
services. The challenge for Government is to improve and match the changing
delivery practices in the private sector, and help save businesses and citizens time
and money in these challenging economic times.
2.43 The Service Transformation programme’s aims are to align services, reduce
duplication, and place the user at the heart of service delivery. The Department is
working with its delivery network to design services around the customer, at a time
that is convenient for them, and using effective communication channels. To achieve
this we are:
e working to converge information hosted on the Department's and delivery
network's web estate onto the Government's two principal websites, Directgov
and Business Link, by 2011;
e leading the Department's and delivery network's contact centres to achieve
industry recognised accreditation by the end of 2009, such as the Customer
Service Excellence Standard; and
@ running concurrent with this, we are working across the Department's delivery
network and Whitehall, to lead public policy on using the most effective, efficient
and appropriate communication channels (web, telephone, or face to face) to
communicate the availability of services and guidance to businesses and citizens.
2.44 Through this programme the Department and its delivery network will build on
understanding of their customers, in order to deliver tailored services and ensure
value for money.
2.45 Business Link helps businesses save time and
money by giving them easy access to support at
a local, regional and national level. It provides the
information, advice and support to help start,
Business maintain and grow a business, though the
Link website — www.businesslink.gov.uk and through
a network of local advisers across England.
2.46 Support and advice are just as critical as finance. Business Link offers free
advice and support, available online and through local advisers. Business Link
health checks (part of Real Help), were launched in October 2008, to help
businesses identify problems early, survive in the current economic climate
and go on to future success. By April 2009 nearly 40,000 businesses had
benefited from a free health check.
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Regional policy
2.47. The Department works in partnership with its key
regional stakeholders, in particular the Regional
Development Agencies (RDAs), to ensure policy
and delivery is led at the appropriate level and
informed by national, regional, sub-regional and
local circumstances. In this way the Department
can develop better national policies and
processes which reflect regional diversity and
promote economic development across England.
2.48 Achievements in 2008-09 included:
e@ Worked in partnership with local
government through local area agreements, multi-area agreements and
city-region pilots to maximise the economic growth of all localities.
e@ Agreed a new cross-government approach to deliver government policies through
new Regional Strategies, developed and delivered by a powerful new partnership
between RDAs and local authorities.
e Published the independent evaluation of the impact of RDA spending on their
regional economies. This was one of the largest of its kind, evaluating nearly
£6 billion of RDA spending between 2001-02 and 2006-07. The report shows that
RDAs have added value to their regions’ economies; their programmes generating
at least £4.50 Gross Value Added (GVA) on average for every £1 spent over the life
of their programmes. Looking forward, RDAs have committed to use the report to
learn lessons and reprioritise their spending towards programmes with higher
economic value focused on driving up the sustainable economic growth rate of
their region.
2.49 The RDAs are business-orientated organisations promoting enterprise
throughout the country and driving up economic growth in their regions.
They provide regional economic leadership, co-ordinate strategy, deliver vital
national and regional programmes to provide real help to people and
business today, invest for our future, and help join up the full range of public
sector economic activity in the region, contributing to delivery of PSA 7.
There are nine RDAs, covering each of the English regions plus London.
(See annex 3 for a list of RDAs.)
2.50 The RDAs are helping businesses through the recession for example
delivering extra funding specifically for small firms through:
e £75 million contribution to the Enterprise Finance Guarantee fund; and
@ £25 million Transition Funds for companies unable to access bank credit
and in need of short term funding.
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Some progress‘®
Improvement against 4 out of 4 indicators
Indicator 1: Regional Gross Value Added (GVA) per head growth rates
Improvement shown
Progress was mixed over the period 2002-07*". Five regions (North East, North
West, East Midlands, East of England and London) improved on baseline (1990-
2002) performance and four regions (Yorkshire and Humber, West Midlands, South
East and South West) saw weaker growth compared to the baseline period.
Between 2002 and 2007, the Greater South East (GSE) and North, Midlands and
West (NMW) grew by an average of 2.3% and 1.9% per annum respectively. This
compares to average per annum growth across the baseline period of 2.5% in the
GSE and 1.8% in the North, Midlands and West.
The gap in growth rates between the lead regions (the Greater South East) and
the lagging regions (the remaining six regions) fell from 0.6 percentage points over
the baseline period to 0.5 percentage points over the period 2002-07.
Figure 2: Real GVA growth rates (adjusted using national deflators) (by region)”
70% ————_——
6.0%
5.0%
& 40%
a
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2
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S 1.0%
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2
Although four indicators are showing improvement, this PSA is assessed as some improvement,
as improvement has not taken place in all regions
The most recent data available to assess this indicator is for 2007.
The Greater South East (GSE) comprises London, South East and East of England. The North,
Midlands and West (NMW) comprises the North East, North West, Yorkshire and Humber, East
Midlands, West Midlands and South West.
Key: NE - North East, NW - North West, YH — Yorkshire and Humber, EM - East Midlands, WM
-West Midlands, E - East of England, L - London, SE - South East and SW - South West.
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Figure 3: Real GVA growth rates (by area)*
7.0%
6.0%
5.0%
5 4.0%
5
E 3.0% +
S 20%
2
S 1.0%
@
0.0%
1.0%
2.0%
S06] fot to it 1-1 at 1 io to
Sea 8s SBSSERBBSSES BES BSSSE
oo 8 So 3 8G oe ee 8 Be ee
Beek e ieee egestas iia
2 SRaSR aS SESS ESS SES ES
fo oo om oe 2 9 2 Sk 8s 88 8
==GSE --NMW ~~ Eng
Indicator 2: Regional Gross Domestic Product (GDP) per head levels indexed
to the EU-15*° average
Improvement shown
Between 1995 and 2006, all of the English regions grew relative to the EU-15
average. Growth relative to the EU-15 was strongest over this period in London,
East of England and the South West.
Figure 4: Regional GVA per head relative to the EU-15 average, compared using
purchasing power parities
@
$s
By
8
I
I
I
2
8
Regional GDP relative to the EU 15 average
g
i 7 I 1 7 ; i 7
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year
—NE EM LEU
NW WM == SE
moe YH omit — SW
“ Key: GSE - Greater South East, NMW - North, Midlands and West, Eng - England.
“© The EU-15 is the EU member countries prior to 1 May 2004. It comprises Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal,
Spain, Sweden and the UK.
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Indicator 3: Regional productivity as measured by GVA per hour worked
indices
Improvement shown
London, East of England and the North East have shown the greatest
improvements in productivity over the period 2002-07 compared to the baseline
period of 1990-2002.
The West Midlands, Yorkshire and Humber and the South West recorded the
lowest improvements in productivity relative to their own performance in the
baseline period.
Figure 5: Gross value added per hour worked (by region)
140
130
S
3S
Index (UK=100)
3
I
I
i=
is)
90
80 + T T T T T T T T T T 1
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
a NE va EM iit
NW ==" WM —— SE
eH — = — SW
Figure 6: Gross value added per hour worked (by area)
130
rs
3S
So
100
Index (UK=100)
©
3
80 T T T T T T T T T T 1
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
==—GSE ==—NMW <= Eng
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Indicator 4: Regional employment rates
Improvement shown
All English regions have seen improvements in their employment rates over the
period January 2003 to December 2008 relative to the baseline period of April
1992 to December 2002 (averaged).
The North East has had the largest rise in employment although it started from a
smaller baseline.
The South East had the highest employment rate in England over the period
January 2003 to December 2008.
Figure 7: Employment rate of working age people
90
% of working age population
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Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
UKTI
2.51 UK Trade & Investment (UKTI) has the lead role within Government for delivering trade
development and inward investment services for business. It is supported jointly by
BERR and its successor, the Department for Business, Innovation and Skills and the
Foreign and Commonwealth Office (FCO). It consequently shares its objectives with
its parent departments and draws staff and resources from them. UKTI also works in
close partnership with, and draws staff on loan from the Ministry of Defence (MOD).
2.52 UKTI works with a variety of partners including the nine English RDAs, the trade
promotion and inward investment organisations in the Devolved Administrations, other
government departments and agencies, trade associations and private sector
organisations active in the field of business development. UKTI also has a newly
enlarged network of over 50 private sector specialists who provide knowledge,
expertise and contacts to help UKTI deliver its strategy.
2.53 UKTI is a service delivery organisation. Its mission is to deliver maximum value for the
UK and for business in the global economy. It does this by helping UK businesses to
succeed internationally, and by helping overseas companies to bring high quality
investment to the UK. The overall direction and focus for UKTI is guided by UKTI's
strategy, Prosperity in a Changing World®. The strategy has three key themes:
marketing, partnership and focus.
2.54 Key achievements for UKTI during 2008-09 included:
e UKTI playing its part in the Government's Manufacturing Strategy by providing
£1 million of funding to help UK companies of all sizes access manufacturing value
chain opportunities in India and China. The target is to help 600 businesses access
opportunities through this new initiative.
e Continuing to play a key role in delivering the business and economic benefits of
the Government's Olympic Legacy objectives ‘to maximise the wider economic
benefits of the Games across the UK, including those for tourism and business
promotion’ and ‘to promote positive images of the UK to international audiences’.
UKTI is developing a series of programmes to maximise the impact of the London
2012 Olympic Games and Paralympic Games on British business and the UK
economy, and to demonstrate to potential inward investors that the UK is the place
with which and in which to do business.
e The creation of a Business Ambassadors network. Their role is to work with
Government to promote the UK’s excellence and support the success of UK
business in overseas markets, focusing on helping SMEs.
e The launch of two further marketing strategies covering low carbon and advanced
engineering. This is in addition to UKTI marketing strategies across five specific
sectors: information and communication technology; life science; energy
technologies; financial services; and creative industries. The aim of these marketing
strategies is to place the UK as the leading partner of choice in all of these fields.
“© UKTI's strategy, Prosperity in a Changing World (UKTI, 2006):
www.uktradeinvest.gov.uk/ukti/fileDownload/UKTIStrategyJuly2006.pdf?cid=391741
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e The transfer of responsibility for defence export support from the Ministry of
Defence to the UKTI Defence & Security Organisation on 1 April 2008. UKTI
Defence & Security Organisation now has access to UKTI's global network of
staff based in around 100 overseas markets.
2.55 UKTI's Annual Report & Accounts 2008-09*’ discusses in greater detail all aspects of
the work and performance of UKTI.
“” For further information about UKTI see the website: www.uktradeinvest.gov.uk
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Annual Report and Accounts 2008-09
Strong progress
Improvement against 3 out of 5 indicators
Indicator 1.1: Stakeholder perceptions of BERR’s understanding of, influence
over and performance in improving the business and enterprise environment
No improvement shown
The annual survey of BERR customers in a range of business areas (supported by
other key surveys) has delivered broadly comparable results to that of 2007 but
with a significant improvement in both business feeling towards, and
understanding of, BERR’s role. In view of the serious difficulties that businesses
are facing in the present economic climate, it was not surprising that the same.
survey also showed a small reduction in their perception of the Department's
ability to make a positive difference for business.
Indicator 1.2: Delivery of RDA outcomes taken from new sponsorship
framework
Improvement shown
A major independent evaluation of the impact of most of the past RDA
programme spend has recently been completed“. This shows that the RDAs
collectively have exceeded their targets, particularly for businesses created and
people assisted in skills development.
Indicator 1.3: RDA organisational capability - to be drawn from Independent
Performance Assessment (IPA) or successor
Improvement shown
The independent evaluation of RDA programme spend concluded RDA
programmes generate at least £4.50 GVA for every £1 spent over the
programmes' lifetimes.
Indicator 1.4: Delivery of publicly-funded business support simplification
Not yet assessed
In October 2008, the Government announced Solutions for Business, its simplified
framework for publicly-funded business support. Products will be in place by March
2010. Progress against the indicator will be monitored via the Business Support
Simplification Programme governance processes in line with the Programme's
Performance Management Framework and Benefits Realisation Plan.
“8 For further information, including copies of the report see:
www.berr.gov.uk/whatwedo/regional/regional-dev-agencies/Regional %20Development% 20
Agency % 20Impact% 20Evaluation/page50725.htm!
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Indicator 1.5: Delivery of UKTI’s performance management framework:
Improvement shown
In 2008-09:
e UKTI delivered 600 involved successes (against a target of 525)" of which 260
were provisionally classified as high value projects (target 125) and 244
provisionally classed as good quality products (target 285). 74% agreed UKTI
or its RDA delivery partner had had a significant favourable influence (target
70%). The overall position has improved on the previous year.
e UKTI assisted 20,700 UK businesses (target 20,000)°° of which 17,300 were
innovative (target 12,000)*' and 51% improved their business performance as
a result of UKTI support (target 50%). Overall this has shown some
improvement over previous years, despite the challenging economic
conditions.
* 1,860 businesses reported increased R&D as a result of UKTI trade support
(target 1,000). 105 were foreign direct investment (FDI) R&D projects (target
70). This is significantly above target.
* The UK's reputation as the international business partner of choice is holding
up well, according to the first annual survey and the benchmarking survey,*?
despite the economic downturn.
* Current operational performance is 76% and 75% respectively for quality
(target 80%) and satisfaction (target 80%). This is slightly below target but
maintains UKTI’s position against previous years, despite a substantial increase
in the number of businesses assisted.
* Charging revenues for the financial year are provisionally £4.57 million (target
£2.5 million). This is significantly ahead of target.
For a more comprehensive explanation of UKTI’s performance see UKTI Annual
Report and Accounts 2008-09."
*° ‘Involved successes’ are foreign companies that have invested in the UK with UKTI assistance.
°° According to the most recent PIMS estimates.
PIMS respondents are asked about characteristics of their business including R&D activity and
other key indicators of innovation, and are classified as innovative if they report such
characteristics. Full details are published on the UKTI web site:
www.uktradeinvest.gov.uk
* The annual reputation survey measures UK reputation in the US, China and India, in the financial
services, ICT, life science and energy sectors. Further information is available in the UKTI Annual
Report and Accounts 2008-09.
Quality of and satisfaction with UKTI's service. Full details are provided in PIMS reports available
from the UKTI website:
www.uktradeinvest.gov.uk.
°* For further information about UKTI, including UKTI Annual Report and Accounts 2008-09 see:
www.uktradeinvest.gov.uk
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Creation and growth of business: forward look
2.56 Key plans for creation and growth of business over the next six months for the
Department for Business, Innovation and Skills include:
@ providing early warning of sectors and businesses in distress, co-ordination of
related analytical activity across Whitehall and management of key interventions
to help business through the economic downturn;
@ automotive sector: delivering funding to companies and their supply chains from
the £2.3 billion Automotive Assistance Programme and making available grants
to consumers to scrap old cars for new under the Vehicle Scrappage Scheme
announced in Budget 2009;
e ensuring access to finance, advice and help for viable SMEs and supporting
business start-ups during the current economic downturn;
@ continuing to work with stakeholders to develop a Low Carbon Industrial
Strategy™ building on our vision for the transition to a low carbon economy and
the programme of targeted investment announced in Budget 2009. This includes
the £250 million element of the Strategic Investment Fund and an additional £100
million of support to help SMEs improve their energy efficiency;
@ progressive implementation of the Manufacturing Strategy; all of the 24 policy
commitments will be delivered by 2010, with the majority in place this year
including Manufacturing Insight, an office to raise the profile of manufacturing,
particularly at school and university level, and to ensure that UK manufacturing
has the right people and skills to secure future success;
@ taking forward actions from the Digital Britain Final Report;
e alignment of business support delivery with Business Link through the face to
face Business Link channel and RDA websites; and
e developing the RDAs’ role in building a strategic vision for supporting the
economic recovery and providing them with a clearer national framework for their
activity, as part of guidance on new regional strategies in autumn 2009.
2.57 In direct response to the recession, UKTI has reconfigured its delivery programme.
New measures include:
@ the Fiscal Compass Programme providing help for UK companies to access
opportunities arising from new fiscal stimulus packages in overseas markets;
@ anew package, Gateway to Global Growth, to help experienced exporters
diversify into new overseas markets;
@ amarketing push, ‘Take it to the World’, to encourage more UK businesses to
explore opportunities overseas with courage and confidence;
e simplified funding rules for the Tradeshow Access Programme;
°° Low Carbon Industrial Strategy: A vision (BERR/DECC, 2009):
www.berr.gov.uk/files/file50373.pdf
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@ a targeted marketing campaign to encourage UK companies to diversify their
export markets by exploring opportunities in emerging markets predicted to
maintain faster growth than others; and
e a clearer focus on inward investment activity in markets with the highest
investment potential by volume and value.
Expenditure on promoting the creation and growth of business
Regional Development Agencies 423673, 482.833 385,553, 401.484 © 379,844 371,403
Support for the Automotive Industry 0 0 0 0 300,000 0
Regional Innovation Funds (including University Innovation Centres) 388 426 164 58 0 0
‘Waste Electronic and Electrical Equipment Directive and 3081 32777 10.660 4,360 3781 0
Sustainable Development
Capital for Enterprise Ltd 0 0 0 2,098 2545 2.545
Enterprise Finance Guarantee 0 0 0 4517 0 )
Launch Investments 338 582 65 148-8465 -11,138
Enterprise Funds including Small Firms Loan Guarantee Scheme 94909 28,804 $7,880, 172,342, 105,820 104,531
UK Trade & Investment 49034 46,837 46,014 43,434 44,032, 42,447
British Shipbuilders 81,974 3727, 37,722, ‘19,807 3,769 3,837
OFCOM 2201 2361 1.485 244 3,240 3,240
Support for Small Firms and Enterprise 12,664 15,241 12,331 11,263 7.618 5,000
Other Business Support Programmes 78,345 27,879 «22.376 ~——«10.871 8786 16,739
Total Resource Expenditure in DEL 747,167 640,303 574,120 670,630 852.970 538,604
Resource Expenditure in AME
Regional Development Agencies 37147 70,018 31,056, 184,738 114410 39,172
Total Resource Expenditure 784314 710,321 605,176 855,368 967,380 577,776
Capital Expenditure in DEL
Regional Selective Assistance/Selective Finance for Investment in 49.007 27,684 «10.698,» 12379 «28,800, 28,800
England
Strategic Investment Fund f) 0 0 0 370,000 320,000
Regional Development Agencies 133,758, 133,639 «123,902, 70,086 = 74,552, 82.494
Regional Innovation Funds (including University Innovation Centres) 6,558 3,603 123 0 0 0
Launch Investments 146,490 -154,118,-153,723 128,159 -120,000 184,500
Enterprise Funds including Small Firms Loan Guarantee Scheme 2708 13,711 «20633-20878 62,500 «86,000
UK Trade & Investment Ey 16 2 0 0 0
OFCOM “17810 5,186 5,186 0 0 0
Support for Small Firms and Enterprise 6,056 748 fy 0 f) 0
British Shipbuilders 0 0 0 0 0 0
Other Business Support Programmes 2,683 464 7.488 616 900, 0
Total Capital Expenditure 55462 20,561 -17,459 —-24,500 416,752 302,794
Total Expenditure 839,776 730,882 587,717 830,868 1,384,132 880,570
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Annual Report and Accounts 2008-09
Section 2.5
Better regulation
Introduction
2.58 The Better Regulation Executive®® works with Government and regulators to
implement an extensive programme of regulatory reform. The overall aim is to
minimise the cost to business, charities and public sector organisations, whilst
ensuring that the necessary protections stay in place.
2.59 Regulation can play a vital role in supporting the productivity and flexibility of the
British economy. We are working to ensure we have an effective and responsive
regulatory framework, now and when we emerge from the global economic
downturn.
2.60 The UK has one of the most ambitious, wide-ranging and respected regulatory
reform agendas in the world — the World Bank's Doing Business 2009 report ranks
the UK sixth out of 181 economies for ‘ease of doing business”.
2.61 The Better Regulation Executive has three strategic aims:
e to work with departments and regulators to simplify and modernise existing
regulations;
@ to work with departments to improve the design of new regulations and how
they are communicated; and
e to work with regulators (including local authorities) and government departments.
to change attitudes and approaches to regulation to become more risk-based.
SIMPLE
AS POSSIBLE
°® The Better Regulation Executive was part of BERR in 2008-09, and subsequently became part of
the Department for Business, Innovation and Skills on 5 June 2009.
°’ Doing Business 2009 (World Bank, 2008):
www.doingbusiness.org/ExploreEconomies/?economyid=196
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Key Achievements 2008-09
e@ By December 2008, Government had delivered a 14% reduction in the
administrative burdens it imposes on business: annual savings of £1.9 billion;
equivalent to £5 million a day, every day, for business. Government has set out
plans to meet its target of a 25% reduction by 2010.
@ Government has ensured that new regulatory burdens on business are kept
to a minimum in an economic climate in which businesses would find it very
difficult to absorb any additional costs.
Government has delivered projects to simplify key areas of regulation:
@ a review on improving outcomes from health and safety” generated
recommendations designed to save £300 million a year for businesses where
overall risk of injury or ill health is relatively low; and
e a review of planning processes” generated recommendations that should save
businesses up to £300 million a year.
Government has made it easier for businesses to understand what regulations affect
them and how:
e@ Government continues to introduce new regulations that impact on business
on only two dates each year, so businesses know when to look out for change;
@ anew Code of Practice on Guidance on Regulation’: has helped to ensure
guidance on regulations is clear, consistent and accessible; and
© areview of guidance to business” generated recommendations to ensure that
Government's guidance on regulation can be followed by businesses with certainty.
Government has continued to work with national and local regulators to ensure that
their enforcement activity is risk-based, proportionate and consistent:
e the Regulatory Enforcement and Sanctions Act 2008 established the Local
Better Regulation Office and the Primary Authority Principle to promote
consistency of enforcement amongst local authorities;
e the Better Regulation Executive has continued to work with the National Audit
Office (NAO) on a programme of independent reviews of national regulators
to ensure they are minimising regulatory burdens on business and encouraging
economic progress; and
@ the Regulators’ Compliance Code® came into force on 1 April 2008. It requires
national and local regulators to take a risk-based approach to enforcement.
5
For further information, including 2008 Simplification Plans see: www.berr.gov.uk/whatwedo/bre/
policy/simplifying-existing-regulation/simplification-plans/page44063.htm!
Improving outcomes from health and safety: a report to Government by the Better Regulation
Executive (BERR, 2008): www.berr.gov.uk/files/file47324. pdf
The Killian Pretty Final Report — Planning applications: A faster and more responsive system
(CLG, 2008): www.berr.gov.uk/files/file49103.pdf
Code of Practice on Guidance on Regulation (BERR, 2008): www.berr.gov.uk/files/file46950.pdf
The Anderson Review - The Good Guidance Guide (BERR, 2009): www.berr.gov.uk/files/file49881.pdf
Regulators’ Compliance Code, Statutory Code of Practice for Regulators (BERR, 2007):
www.berr.gov.uk/files/file45019.pdf
5s
6
6
6
6
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Simplifying and modernising existing regulations
Reducing the burden of complying with regulations (private and third sectors)
2.62 The Government is committed to simplifying the administrative burden of complying
with regulations, and has set a target of reducing the burden on business by 25%
(excluding tax administration and financial services for which there are separate
arrangements). By the end of 2008, the Government had delivered over 240
measures to simplify regulation, taking the total savings to about £1.9 billon annually.
Government is on track to achieve its target to reduce the burdens faced by
business, public and the third sectors by £3.4 billion annually by 2010. Along with the
benefits already delivered we are seeing a culture change across Government in the
way we regulate and engage with business and service providers. The Government
will adopt new simplification targets for 2010-15 which will address all regulatory
costs to business.
2.63 In July 2008, the Better
7 ° . Improvements to health and safety risk
Regulation Executive published
assessments have helped numerous businesses
‘Improving outcomes from to protect staff and customers while reducing
Health and Safety, a review the time and paperwork involved in complying
that considered how the health —_ with regulations. “The new service simplifies
and safety regulatory regime the whole thing so much, it's actually improved
affects workplaces where the the industry standard. It’s that simple,” says Bill
overall risk of injury or ill health Bennett, Health and Safety Manager for
is relatively low. This aimed to Ladbrokes bookmakers.
reduce unnecessary burdens
on those businesses while
reducing injury and ill health,
and increasing public
confidence in the UK's health
and safety regime as a whole.
The review's recommendations
are being taken forward by the
Health and Safety Executive.
2.64 In November 2008, an independent review (led by Joanna Killian and David Pretty)*
made a series of recommendations to simplify the planning application process,
including removing 40% of minor, mainly commercial, planning applications, such as
for small scale alterations and extensions, from the planning system altogether. This
will help small businesses and councils save up to £300 million a year. The
Government welcomed the recommendations in March 2009 and work has already
begun on implementation. For example, in summer 2009 Communities and Local
Government plan to consult on draft proposals to extend permitted development
rights for businesses and public services, which will make it easier for them to make
some small scale alterations or extensions to buildings.
®* Improving outcomes from health and safety: a report to Government by the Better Regulation
Executive (BERR, 2008): www.berr.gov.uk/files/file47324.pdf
® The Killian Pretty Final Report — Planning applications: A faster and more responsive system
(CLG, 2008): www.berr.gov.uk/files/file49103.pdf
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Reducing the burden of complying with regulations (public sector)
2.65 Public sector internal control processes play an important role in accountability for
the use of public funds and in delivering improvements to services. However, front-
line public sector workers are often concerned that time spent on unnecessary
bureaucracy gets in the way of service delivery. To address these concerns
Government has committed to a 30% reduction in data stream requirements made
by central Government to front-line public sector workers by 2010. This will help
public sector workers spend less time reporting back to central Government and
more time responding to public service users.
Improving the design and communication of new regulations
Considering the impact on small businesses
2.66 In March 2008 we published an Enterprise Strategy, committing to a new approach
to the way that new and existing regulation applies to firms employing fewer than 20
people. Consideration will now be given to simplified or more flexible approaches to
find the most effective way to meet intended outcomes and minimise burdens
without affecting essential protections. From Parliamentary Session 2008-09 all
secondary legislation Statutory Instruments laid before parliament will explain impact
on, and consideration given, to small business.
Managing the costs of new regulations
2.67 The Better Regulation Executive continues to work with individual government
departments to ensure that full Impact Assessments are carried out on proposed
legislation and that the potential burdens on business are taken into account during
policy formation. In late 2008, Government consulted on a proposed system of
regulatory budgets that would place a cap on the amount of regulatory costs
imposed by regulation. After careful consideration of the responses, and in light of
the economic downturn, the Government decided not to proceed with such a
system at this stage. The Government feels that focusing on helping businesses
now by reducing costs of regulation, whilst strengthening the ongoing management
of regulation, will provide better help to business in the current economic climate.
2.68 In April 2009, the Government announced that it will establish two new bodies to
look at the impact, costs and benefits of regulatory proposals. A sub-committee of
the National Economic Council will scrutinise planned regulation and proposals for
new regulation that will impact on business. More broadly, and external to
Government, the new Regulatory Policy Committee will advise Government on
whether it is doing all it can to accurately assess the costs and benefits of regulation
and, building on the work of Philip Hampton, advise whether regulators are taking an
appropriate risk-based approach in their work.
Consulting on regulatory proposals
2.69 In November 2008 Government introduced a new Code of Practice on Consultation’®
to improve the way it consults. All government departments should comply with the
Code when running formal, written consultation exercises. The code sets out when
°° Code of Practice on Consultation (HM Government, 2008):
www.berr.gov.uk/files/file47158.pdf
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
to consult, the length of consultation exercises, how to make impact assessment an
integral part of consultation exercises, how to reduce the burden of consultation, and
how to make consultation exercises more responsive.
Improving communication
of regulatory changes
Improvements to the system of regulating and
reporting changes to medicines have helped
pharmaceutical companies save time and
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2.70 Almost half of all businesses
pay for external advice to help money, and get new products to market more
them follow regulations, quickly. Johnson & Johnson, for example, can
. take advantage of a faster approval system
costing them at least thanks to the Better Regulation of Medicines
£1.4 billion a year. In an Initiative. As Gill Peckham, Head of Regulatory
attempt to reduce these costs, affairs, puts it “we self certify, so now we have
the Government commissioned _ jot more control over our timings - and when
an independent review (led by we can get out to market. For example, we had
Sarah Anderson CBE) into how a bottle label that needed to be changed in its
small businesses can have shape. In the past, it would have taken three to
greater certainty around five months to get this change approved. But
government guidance. The because we now self certify, we could change
Review's final report”, it immediately. For us, last year, speeding up
published in February 2009, that one label saved us 8,000 Euros in line
features a set of efficiency.”
recommendations to improve
the clarity, consistency and
accessibility of guidance, giving
SMEs a better understanding
of how to comply with the law.
The recommendations were
accepted by the Government
in March 2009.
2.71 A key recommendation was
the provision of an insured
helpline to provide businesses with advice on how to comply with health and safety
regulations. The details of a pilot scheme to deliver this will be announced shortly.
Actions that the Government will take to ensure that businesses can follow
government guidance with confidence, by removing disclaimers of liability for
example, will be included in a revised Code of Practice on Guidance which will be
published in summer 2009. By the end of 2009 government departments and
agencies will produce a list of their most frequently used guidance and their plans to
update it in line with the revised Code of Practice.
2.72. The Government is also improving communication of regulatory changes and helping
businesses manage the introduction of new regulations. Since 2005, departments
have been bringing into force new regulations that impact on business on only two
dates a year: 1 October and 6 April.
°” The Anderson Review — The Good Guidance Guide (BERR, 2009):
www.berr.gov.uk/files/file49881 .pdf
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Changing attitudes and approaches to regulation to become more
risk-based
Consistent and proportionate enforcement
2.73. The Regulatory Enforcement and Sanctions Act 2008 came into force on 1 October
2008. It addresses three distinct but related areas vital to delivering better regulation:
e establishing the Local Better Regulation Office (LBRO) and the Primary Authority
Principle to promote consistency of enforcement amongst local authorities;
e setting a framework for a range of new civil sanctions, which will allow regulators
to respond to non-compliance transparently, flexibly, and proportionately; and
@ introducing powers that allow Ministers to impose a duty on regulators to assist
them in meeting the requirements of the Government's better regulation agenda.
2.74 These changes result in an overall net benefit of £164 million, including®*:
@ benefits for businesses through greater consistency and coordination of local
authority regulatory enforcement and reduced regulatory burdens for compliant
businesses;
e savings for local authorities due to more effective distribution of regulatory
responsibilities and greater strategic knowledge of the businesses that they
regulate;
@ a more proportionate and effective sanctioning regime to tackle regulatory non-
compliance; and
@ the public will benefit from more efficient markets as a result of better targeting
of local authority resources in dealing with rogue businesses.
2.75 The LBRO received its statutory powers on 1 October 2008. It will improve the
coordination and consistency of regulatory functions and enforcement. The LBRO
provides advice to Ministers on key issues affecting local authority enforcement and
encourages good practice. It will also be responsible for refreshing the national
enforcement priorities, which have enabled local authority regulatory services to
focus on areas presenting the greatest risk.
Merging regulators and inspectorates
2.76 The Hampton Review of inspection and enforcement of regulation’ identified a need
to merge regulators and inspectorates to avoid overlapping regulatory frameworks
and reduce the costs for businesses. To date, 23 of the 63 regulators covered by the
report have merged which represents a significant simplification in the central
regulatory structure.
°® All figures are based on the estimated costs and benefits associated with the provisions in the
Act. They are annual figures based on full take-up of the civil sanctions and Primary Authority
Principle. All net figures are based on the overall savings less the costs associated with the new
provisions.
°° Reducing administrative burdens: effective inspection and enforcement (HM Treasury, 2005):
www.berr.gov.uk/files/file22988.pdf
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Assessing regulatory performance
2.77 The Better Regulation Executive and the NAO, working with regulators and business,
have developed an assessment framework which looks at the extent to which
regulators are performing in line with the principles set out in the Hampton Review.
Reports on five major regulators (the Health and Safety Executive, Environment
Agency, Food Standards Agency, Office of Fair Trading and Financial Services
Authority) were published in March 2008, and a second phase of the reviews has
been underway in 2008-09, extending the programme to a further 31 national
regulatory bodies. As at 5 June 2009, just over half (sixteen) of these national
regulators had been reviewed”’. Reports from this second phase are published as
they are completed and the review process will be complete by the end of 2009.
Ensuring risk based enforcement
“We gained sales last year that we wouldn't
by regulators
have had,” says Nicholas Smalley, Regulatory
Projects Manager at Perrigo, a leading supplier
of own-label, over-the-counter medicines based
in Barnsley. Until recently the regulation of the
industry placed a heavy administrative burden
on companies. Improvements to over-the-
counter medicines registration has meant, in
Nicholas’ words, “we were able to supply a new
2.78 Government asks regulators to
perform their duties in a
business-friendly manner, by
ensuring that the approach to
regulation causes minimum
disruption. The Regulators’
Compliance Code’', which
came into force on 1 April
2008, sets out the principles of
good enforcement practice for
hay fever product in the middle of the season in
June. Having just one more product on the
shelves for an extra ten weeks earns an extra
£20,000 a week.”
regulators to improve the
efficiency and effectiveness of
their work. The Better
Regulation Executive works
closely with regulators at a
national and local level to help
improve their enforcement
practices. For example, the
Better Regulation Executive
and other groups within the
Department have been working with BERR delivery partners, including the Office of
Fair Trading, on the recent Review of Consumer Law. The Review's call for evidence
closed in summer 2008 and the Department published a white paper in summer
2009”.
”° For further information about the Hampton Implementation Reviews see:
www.berr.gov.uk/whatwedo/bre/inspection-enforcement/implementing-principles/reviewing-
regulators/page44054.html
7 Regulators’ Compliance Code, Statutory Code of Practice for Regulators (BERR, 2007):
www.berr.gov.uk/files/file45019.pdf
” A Better Deal for Consumers: Delivering Real Help Now and Change for the Future (HMG, 2009)
www.berr.gov.uk/files/file52072.pdf
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Strong progress
Improvement against 4 out of 7 indicators
Indicator 2.1: Administrative burdens reduction across 19 government
departments, consisting of a 25% reduction for the majority of departments
by 2010. Includes BERR target to deliver 25% reduction in measured admin
burdens by 2010
Improvement shown
Baseline measurement at May 2005 showed the administrative costs to business
of complying with regulations (‘administrative burdens’) to be £13.2 billion
(excluding tax administration and financial services for which there are separate
arrangements). Simplification Plans published by departments in December 2008
showed that £1.9 billion net savings have already been delivered (14% reduction
against the baseline), and set out initiatives that will deliver a further £1.5 billion
savings by 2010. The Government is therefore on track to meet its target of a
25% net reduction.
Indicator 2.2: Proportion of businesses (and voluntary sector organisations)
who believe that ‘most regulation is fair and proportionate’ in five policy
areas - employment law, tax law, health and safety, planning law and
company law
Improvement shown
In October 2008, the NAO published the results of their latest survey’® of the
perceptions of regulation of 2,000 businesses. The survey results show that the
number of businesses that believe that ‘most regulation is fair and proportionate’
has increased from 40% in 2007 to 46% in 2008.
Indicator 2.3: Flow of regulation: total benefit/cost ratio of regulations
coming forward over time
Not yet assessed
The Government is currently calculating the total benefit/cost ratio of all
regulations enacted in the 2008-09 financial year (on the basis of Impact
Assessments published between 1 April 2008 and 31 March 2009). The ratio will
be published later this year, and will be reported annually thereafter.
® The Administrative Burdens Reduction Programme 2008 (NAO, 2008):
www.nao.org.uk/publications/0708/administrative_burdens.aspx
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Indicator 2.4: Performance of local authority regulatory services as measured
by the national indicator
Not yet assessed
The indicator, ‘Satisfaction of business with local authority regulatory services’ National
Indicator 182, has been agreed and included in the new local authority performance
framework. This indicator will help provide an indication of the performance of local
authority regulatory services. Data will be available from mid 2009.
Indicator 2.5: Overall performance in the World Bank Doing Business survey
and OECD surveys of the policy environment
Position maintained
In the World Bank survey Doing Business 2009” (published in September 2008)
the UK came sixth out of 181 countries, and second in the EU behind Denmark,
for ease of doing business, maintaining its ranking as reported in the Doing
Business 2008 survey’®.
The OECD has not published any new comparative data relevant to the better
regulation agenda since this DSO was established. However, work is underway in
the OECD on indicators to measure regulatory management in OECD member
countries. Over the next two years the OECD will publish reports on the better
regulation agendas of 15 EU countries, including the UK.
Indicator 2.6: Proportion of bureaucracy which the public sector front line
believes to be unnecessary
Not yet assessed
The Better Regulation Executive works closely with other government
departments to reduce unnecessary bureaucracy on front-line public sector
workers. For head teachers, surveys from 2008 have been used to establish a
baseline for their perceptions of bureaucracy. Changes in perceptions will be
measured in 2009 and again in 2010. For health and policing, the Department of
Health (DH) and the Home Office have led work to test perceptions, which will
inform an improvement framework against which progress will be measured.
Indicator 2.7: Reduction in data stream requirements from central
government to the public sector front line by 2010. Includes 30%
cross-Government target to reduce burdens on front line public sector staff
Improvement shown
Nine government departments are reducing the number of data requests they
make on the public sector front line. To date, a 28% reduction in data requests has
been delivered across these departments.
Two departments have measured the data ‘burdens’ they impose on public sector
front-line staff and are reducing them through a mixture of removing requests,
reducing the frequency of requests or making data returns more efficient and
streamlined. To date, the Department for Children, Schools and Families (DCSF)
has achieved a 26% reduction; and DH has achieved a 30% reduction in social care
and a 13% reduction in health care.
™ Doing Business 2009 (World Bank, 2008): www.doingbusiness.org/features/DB2009Report.aspx
7’ Doing Business 2008 (Overview) (World Bank, 2007):
www.doingbusiness.org/documents/DB-2008-overview.pdf
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Better regulation: forward look
2.79 During the rest of 2009 we will deliver measures to provide greater rigour to the
Government's regulatory reform processes during the recession and with a view to
the economic recovery, as well as continuing to deliver key existing programmes and
projects. We will:
@ establish a new better regulation sub-committee of the National Economic
Council which will scrutinise planned regulation and proposals for new regulation
that will impact on business;
e@ work closely with the European Commission and Member States to further
embed the EU’s better regulation agenda, ensuring current pressures on
business are taken into account when new regulation is being considered;
@ publish a forward regulatory programme, starting this summer. Businesses will
be able to plan better as the programme will include existing and possible future
regulatory proposals;
@ set up a new external Regulatory Policy Committee whose role will be to
advise Government on whether it is doing all it can to accurately assess the costs
and benefits of regulation;
@ work with government departments to deliver their 2009 Simplification Plans.
These will show how departments will continue to deliver a net reduction of 25%
in administrative burdens and a reduction of 30% in the total amount of data that
is requested from public sector front-line workers by 2010;
e work with government departments to adopt new simplification targets for
2010-15 which will address all regulatory costs to business;
@ improve businesses’ experience of regulation by continuing to work with
national and local regulators to introduce the Primary Authority Scheme,
extend the Regulators’ Compliance Code, and sponsor the LBRO;
@ continue reviewing independent regulators under the Hampton
Implementation Reviews programme; and
@ in the new Parliamentary session starting 2009-10, all primary legislation
Statutory Instruments laid before parliament will explain the impact on and
consideration given to small business.
Expenditure on ensuring better regulation
Resource Expenditure in DEL 5,364 6,384 2.272 4,557 4137 4,400
Capital Expenditure in DEL 0 0 197 70 0 0
Total Expenditure 5,364 6,384 2,469 4,487 4,737 4,400
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Section 2.6
Free and fair markets
Introduction
2.80
2.82
2.84
2.86
The Department works to shape a framework for free and fair markets nationally and
internationally which help businesses, consumers and employees meet the
challenges of globalisation. Markets work best within clear rules. Government has a
role to help markets work and ensure they are fair.
The Department is committed to maintaining and regulating free and open markets
in which businesses can enter and trade fairly and competitively.
The current economic climate has brought with it the threat of protectionism. We are
working to help ensure markets remain open and prevent abuses of state aid so that
British businesses can benefit from the liberalisation of global markets. Increased
globalisation may, however, impact more acutely on the most vulnerable members of
society, and the Government aims to minimize such impacts. Our aim is to improve
the quality of working life for individuals and create the conditions for business
success in the UK.
The Department's employment responsibilities are to achieve fair and flexible labour
markets which help businesses succeed even in the current economic conditions,
whilst protecting workers, especially the most vulnerable.
We work to ensure that UK consumers are treated fairly, know their rights and can
use them effectively, and that consumer law is fair to both consumers and
businesses.
We are also responsible for ensuring that the UK's company law and corporate
governance regime remain at the level of the world’s best. A fair, modern and
effective company law framework promotes enterprise, growth and the right
conditions for investment and employment. This ensures businesses have the
confidence to trade with each other, encouraging firms to set up and do business,
shareholders to invest, and the economy to grow.
BERR’s Departmental
Strategic Objective (DSO)
3 ‘Deliver free and fair
markets, with greater
competition, for
businesses, consumers
and employees’ and PSA
6’ Deliver the conditions
for business success in
the UK’ are assessed in
this section.
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Key achievements 2008-09
@ Continued to make significant progress in implementing the Companies Act
2006, providing a reduction in the administrative burdens faced by business by
approximately £300 million per year.
e@ Made significant improvements to guidance for business on employment law,
saving firms over £400 million this year through cutting out duplication and
introducing online tools, which led to increased use of available help.
e Changed the dispute resolution system to lighten the regulatory burden on
business, delivering estimated savings of over £175 million for business.
@ Introduction of rules for the fair treatment of credit and store card customers.
This agreement with industry puts in place some principles about how they make
changes to the standard interest rates on customers’ accounts.
Reduced administrative burdens on business by delivering two thirds of the
BERR target of a 25% net reduction in burdens.
e Secured G20 commitment to resist protectionist measures at the November
2008 Washington Summit. BERR worked closely with stakeholders across
Whitehall and internationally and built on this to obtain further G20 commitments.
on trade at the London Summit in April 2009.
e Creation of Consumer Focus, the new statutory consumer advocacy body.
e Amendment of the Consumer Credit Act. This removed anomalies from the
1974 Consumer Credit Act, for example by making buy-to-let agreements exempt
from the regulations.
e@ Agreement with other Member States and the European Parliament on the
Agency Workers Directive, and successfully retained the right to opt out of the
maximum 48 hour week in negotiations on the Working Time Directive.
e Successful roll out of the programme to combat illegal money lending, securing
over 60 prosecutions since November 2007 and saving over £14 million for
consumers.
e Strengthened the enforcement of Employment Law by toughening up penalties
for employers (through the Employment Act), improved awareness of the
National Minimum Wage and doubled the number of Employment Agency
Standards Inspectors to help improve protection for vulnerable workers.
Consumer policy
2.87 Confident, empowered consumers are key to successful competition between firms.
The Department's policy is to ensure consumers are aware of, and exercise, their
rights and to protect those who are vulnerable, particularly in the current economic
climate. Key achievements and activities on consumer policy, supporting delivery
of DSO 3 are discussed below.
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2.88 Consumer debt: The recession has led to increased levels of consumer debt and
more people encountering difficulties. The Department is helping consumers
manage their debts through the following measures:
e Industry-wide rules for the fair treatment of credit and store card customers
came into force on 1 January 2009. The rules put in place some principles (to
which all credit card companies agree) about how changes are made to standard
interest rates on customers’ accounts.
e BERR led negotiations with both the credit card and the debt collector sectors
and secured agreement that debtors facing payment problems will be offered a
minimum 30 day breathing space to reach an agreement of how to repay the
debt, once they have engaged with a debt advice agency.
e BERR launched a consultation on the European Consumer Credit Directive’’.
The Directive aims to protect consumers, offering new rights and setting out
common standards across the EU in relation to a range of unsecured credit
products to promote responsible lending and borrowing.
e The Legislative Reform (Consumer Credit) Order 2008”’ came into force in
October 2008. This removed anomalies from the 1974 Consumer Credit Act, for
example by exempting buy-to-let agreements from the regulations.
2.89 Illegal Money Lending Enforcement Project: BERR continued to roll out the project
throughout Great Britain and introduced a national confidential hotline to report loan
sharks. The project has secured over 60 prosecutions since its roll out in November
2007 and has helped over 6,000 victims to date.
2.90 Scambusters: Following successful pilots, the project was rolled out to the rest of
Britain. To date the teams have brought 19 successful prosecutions, securing prison
sentences totalling more than 19 years.
2.91 Consumer Rights Directive: BERR consulted on the proposals for a new EU
Consumer Rights Directive which seeks to simplify and modernise consumer rights
across the Single Market. Negotiation of the Directive began in late 2008.
2.92 Consumer Law Review: BERR issued a Call for Evidence on whether we could
pursue new approaches on consumer protection to deliver better outcomes for
consumers, while reducing unnecessary burdens for business.
2.93 Estate agents: From 1 October 2008, all estate agents in the UK, engaged in
residential estate agency work must belong to an approved redress scheme”.
’® For further information about the Consultation on the implementation of the Consumer Credit
Directive (2008/48/EC) see: www.berr.gov.uk/consultations/page50814.html
7” The Legislative Reform (Consumer Credit) Order 2008 (BERR, 2008):
www.berr.gov.uk/files/file46551 .pdf
’® For further information about the Consumers, Estate Agents and Redress Act (CEARA 07) see:
www.berr.gov.uk/whatwedo/consumers/business/estate-agents/index.htm!
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2.94 Consumer Focus’’ came into being on 1 October 2008,
replacing three predecessor bodies — National Consumer Focus
Consumer
Cernig for fo deo
Council, Postwatch and Energywatch. It champions the
interests of consumers across England, Wales, Scotland, and, for post,
Northern Ireland. New statutory redress schemes for gas, electricity, and
postal services consumers were also set up to resolve complaints not
addressed by a service provider to the consumer's satisfaction. Consumer
Focus will play an important role in this new consumer protection and
redress system alongside Consumer Direct®’, the energy and postal
regulators, the ombudsman and business itself.
Competition policy
2.95 The UK is recognised as having a world class competition regime which promotes
business creation and growth. Key achievements and activities on competition policy,
supporting DSO 3 and PSA 6, are discussed below.
2.96 Competition law and financial stability On 31 October 2008, the Secretary of State
for Business cleared the merger between Lloyds TSB and HBOS concluding it was in
the public interest. The merger was cleared in light of the extraordinary conditions in
the financial markets that potentially threatened the stability of the banking system.
It followed consideration of a report from the Office of Fair Tradirig and other
representations on related public interest issues.
2.97 State aid: BERR was very active in providing advice and guidance on the use
of European state aid in the current financial crisis. This has included notifying three
schemes under the Commission's Temporary Framework for state aid to allow
additional flexibility for companies facing difficulties. We have also handled around
200 cases under the normal rules.
2.98 Sky/ITV Case - Appeal Proceedings Following the acquisition by British Sky
Broadcasting Group plc of 17.9% of the shares in ITV plc, the Secretary of State issued
an intervention notice. Separate appeals were made to the Competition Appeal Tribunal
by Sky and Virgin Media, Inc. against the decisions of both the Competition
Commission and the Secretary of State in this case. The Competition Appeal Tribunal
upheld the Secretary of State’s decisions and proposed remedies.
”° For further information about Consumer Focus see the website:
www.consumerfocus.org.uk
®° Consumer Direct provides information and advice to consumers about their rights.
®' Anticipated acquisition by Lloyds TSB pic of HBOS pic Report to the Secretary of State for
Business Enterprise and Regulatory Reform (Office of Fair Trading, 2008):
www.oft.gov.uk/shared_oft/press_release_attachments/LLloydstsb.pdf
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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2.99 Government responses to market investigations/market studiesBERR issued
the government response to Competition Commission market investigations and
Office of Fair Trading market studies, including: the supply of groceries in the UK
medicines distributior?; sale and rent back’; and homebuilding in the UK®.
COMPETITION 25 COMMISSION
2.100 The Competition Commission plays a key
role in the UK's competition regime. It carries out investigations into
mergers, markets and the regulation of the major regulated industries,
following referrals by the OFT and sector regulators. Independent reviews
rank it as one of the world’s leading competition authorities. During 2008 the
Competition Commission celebrated its 60th anniversary**.
2.101 The 2009 Global Competition Review included the Competition Commission
in its ‘Elite’ category alongside the US Federal Trade Commission and the
European Commission's Directorate General for Competition’.
Employment strategy
2.102 Our work on employment continues to be at the forefront of achieving the
Department's objectives for flexible, fair labour markets that help businesses
succeed, even in the current difficult economic conditions, whilst protecting workers,
in particular the most vulnerable. Some key achievements from the last year,
supporting DSO 3 and PSA 6, are outlined below.
2.103 The Employment Act 2008 received Royal Assent on 13 November 2008. It will
improve the dispute resolution system to lighten the load on business and give more
help to settle workplace disputes at an earlier stage.
2.104 The Employment Law Guidance Programme”. BERR has significantly reduced the
amount of time and money that employers spend meeting their employment law
obligations through improving and promoting guidance on the Business Link website.
A 2008 survey” showed an estimated reduction of over £400 million per annum in
® For further information about the government response to the groceries market investigation see:
www.berr.gov.uk/whatwedo/businesslaw/competition/market-studies/supplyofgroceries/index.html
® Government Response to Office of Fair Trading (OFT) Medicines Distribution Study (BERR,
2008): www.berr.gov.uk/files/file45998. pdf
** Government response to Office of Fair Trading (OFT) Sale and Rent Back Market Study (BERR,
2008): www.berr.gov.uk/files/file48478. pdf
®° Government Response to the Office of Fair Trading (OFT) Market Study on Homebuilding in the
UK (BERR, 2009): www.berr.gov.uk/files/file50464.pdf
*° For further information about the Competition Commission see the website:
‘www.competition-commission.org.uk
For further information about the Global Competition Review see:
www.globalcompetitionreview.com/shop/issues/issue/150/april-2009
The Employment Act 2008: www.opsi.gov.uk/acts/acts2008/ukpga_20080024_en_1
For further information about the Employment Law Guidance Programme see:
www.berr.gov.uk/whatwedo/employment/employment-legislation/employ-law-guidance/index.htm!
Employment Law Admin Burdens Survey 2008 Final Report (BERR, 2008):
www.berr.gov.uk/files/file49 199.pdf
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the costs to business and found that perceptions of employment law are improving:
74% of respondents found compliance easy compared to 51% in 2005*"; and only
8% found compliance difficult.
2.105 The Walsh Review recommended the right to request flexible working to be
extended to all parents of children 16 and under. This came into force on 6 April 2009.
2.106 Employment Agency Standards Inspectors. The Department doubled the number
of inspectors this year. They will help increase compliance with legal obligations by
employment agencies, in particular through taking action against rogue agencies and
protecting vulnerable workers.
2.107 Helping vulnerable workers. In August 2008,the Department published its
strategy” for improving the enforcement of workplace rights and protection of
vulnerable workers. Since publication of the report, BERR has:
e delivered a £1.2 million campaign to raise awareness of employment rights
among vulnerable agency workers; and
e launched a third round of the Union
Modernisation Fund, focused on
vulnerable workers.
2.108 A high profile publicity campaign for the
National Minimum Wage was undertaken
to raise awareness amongst employers,
young people and migrant workers.
2.109 BERR secured agreement with other EU
Member States to a more flexible approach
to working hours. The Agency Workers
Directive was implemented on the basis of
the CBI and TUC's June 2008 agreement of
a 12-week qualifying period for equal
treatment for agency workers.
° Department of Trade and Industry Administrative Burdens Measurement Exercise (PwC, 2006):
www.berr.gov.uk/files/file35841 .pdf
2 Vulnerable Worker Enforcement Forum — Final Report and Government Conclusions (BERR,
2008) www.berr.gov.uk/files/file47317.pdf
Department for Business, Enterprise and Regulatory Reform
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2.110 Acas is an independent statutory body funded by BERR
which aims to improve working life through better
employment relations. Casework has risen significantly
with increased redundancy and dispute activity arising due to the impact of
the recession.
2.111 During 2008-09 Acas:
e dealt with around 720,000 calls to the Acas National Helpline; and
@ conciliated in 900 collective disputes, delivered 200 workplace projects to
improve workplace relations and conciliated resolution in around 190,000
actual and potential tribunal claims, saving 76% of potential Tribunal
Hearing days’.
Trade policy
2.112 The Department works jointly with the Department for International Development
(DfID) on trade policy, to ensure open and fair international markets. Our
achievements in this area support DSO 3. Highlights in 2008-09 included
e Securing G20 commitment
at the Washington Summit
in November 2008 to
resist protectionist trade
measures, and making
good progress towards
building on this in the
communiqué from April's
London Summit**.
e Securing a UK contribution
of at least £200 million for
trade finance.
e Following the WTO Ministerial meeting in July further progress on the Doha
Development Round was captured in the revised WTO negotiating texts issued
in December.
e Launching the first Aid for Trade Strategy and formalising our commitment to
the Enhanced Integrated Framework for Trade Related Assistance. This will be
worth up to £38 million over five years and be up to 20% of the multi-donor trust
fund. The first £8 million contribution was paid in December 2008.
®* For further information about Acas see the website:
www.acas.org.uk
°%* For further information, including the London Summit Communiqué see:
www.g20.org
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e Resolving a number of key issues in the preparation of an ambitious Free Trade
Agreement (FTA) between the EU and South Korea. The FTA is now close to
conclusion.
e Working to ensure that UK market access priorities are taken forward under the
EU Market Access Strategy.
e Working to ensure EU decision-making on Import Policy and Trade Defence
issues took full account of free and fair market objectives.
e Working with others, including the World Bank, to develop options to provide
trade finance to address the substantial shortfall that emerged in 2008.
2.113 BERR has been influential in shaping a co-ordinated European response to the
economic downturn, promoting SMEs access to finance and balancing the need for
immediate action with the creation of a solid long-term competition and regulatory
framework for the future.
2.114 We are making it easier to do business in Europe. Having widely screened UK
legislation to remove discriminatory barriers to trade, BERR is currently on track for a
timely and consistent implementation of the EU Services Directive through both
practical measures and new legislation due to come into force in December 2009.
Export Control Organisation
2.115 Through its Export Control Organisation,
the Department is responsible for
legislating, assessing and issuing export
licences for specific categories of
‘controlled’ goods. This helps prevent
the proliferation of arms and other
strategic goods while minimising the
burdens on legitimate UK businesses.
2.116 The outcome of the Review of Export
Control Legislation in April 2009
significantly strengthened controls in a
number of areas including that of trading
activities by UK citizens anywhere in the
world. Licensing has exceeded targets in spite of substantial increases in the volume
of applications. We continue to engage with businesses on their export control
responsibilities and have also taken steps to raise the levels of compliance with
Open Licences”.
°° For further information about the types of licenses offered see:
www.berr.gov.uk/whatwedo/europeandtrade/strategic-export-control/licences/index.html
For further information about the Export Control Organisation see:
www.berr.gov.uk/whatwedo/europeandtrade/strategic-export-control/index.htm!
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Corporate law and governance
2.117 The Department works to keep the UK corporate governance environment at the
level of the world’s best in order to promote enterprise, growth and the conditions
for investment and employment. Achievements below support DSO 3 and PSA 6.
2.118 BERR continued phased implementation of the Companies Act 2006. Major
provisions came into force in April and October 2008 which will reduce administrative
burdens to business by approximately £110 million. These provisions include new,
simplified requirements for accounts and reports, removal of the requirement for
private companies to have a company secretary and a simplified route for the
reduction of company share capital.
2.119 BERR continued working to implement EU Directives. Amendments have been
made to the Audit and Accounting Directives. Amendments to the Capital
Maintenance Directive will come into force by October 2009.
2.120 Audit: BERR worked with the Financial Reporting Council to provide guidance to
companies and their auditors on how to handle the judgement that the company is a
‘Going Concern’ during the current reporting season.
Insolvency Service
2.121 Ata time of economic uncertainty a key priority for
The Insolvency Service has been maintaining confidence in
the insolvency regime. Responding to concerns about the
use of so called ‘pre-packs’ in administration, new rules were introduced
requiring administrators to reveal to creditors the name of the buyer and the
price paid. The new rules increase transparency and give creditors better access
to information about the new owners of a troubled business. The new rules also
ensure that any abuse is spotted and dealt with effectively”.
2.122 Despite significant increases in mandatory redundancy payments, all complete
submissions for payment have been paid within the target timescales.
Companies House
2.123 Companies House has successfully delivered a number
of measures under the Companies Act 2006, reducing
burdens on business. All major development work for the
final implementation of the Companies Act 2006 has
been completed and a new late filing penalty regime
introduced, aimed at improving the timely availability of data. Take-up of
e-filing continues to rise: Companies House now receive over 90% of
incorporations, and over 87% of annual returns electronically, with
companies benefiting from lower fees, higher security, and faster more
user-friendly services®’.
°° For further information about The Insolvency Service see the website:
www.insolvency.gov.uk
*” For further information about Companies House see the website:
www.companieshouse.gov.uk
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Strong progress
Improvement against 4 out of 7 indicators
Indicator 3.1 Progress on market opening in the EU and internationally in
line with UK objectives of improving EU competitiveness and promoting
development and poverty reduction in poorer countries
Improvement shown
Europe
Together with EU partners, in 2008 we revised the regime for free movement of
goods within the EU through the Mutual Recognition Regulation, making it easier
for firms to trade non-harmonised goods across other Member States. This
legislation came into effect across all Member States in May 2009.
International
The impact of the economic crisis is likely to be significant. Nevertheless, the UK
worked very hard to make headway to ensure the operation and development of
open and fair global markets. The UK secured G20 commitment to resist
protectionist trade measures and to conclude the Doha Round of the WTO talks,
building on the good progress made in July 2008 towards securing a deal.
We initialled the EU-Kuwait Investment Promotion and Protection Agreement and
made good progress through the EU in other areas, including on the EU-Korea
Free Trade Agreement, which is now near to completion. We ensured EU
decision-making on Import Policy and Trade Defence issues took account of the
objectives of free and fair markets and that UK market access priorities are taken
forward under the EU Market Access Strategy.
We have contributed towards further integrating developing countries into the
global economy, through key achievements including the Cariform Economic
Partnership Agreement” signed on 15 October 2008. The Government's Aid for
Trade Strategy’? (joint BERR/DfID) was launched in December 2008 and we made
our first payment to the Enhanced Integrated Framework in Geneva that will help
build developing countries’ capacity to trade. With widespread concern about the
substantial shortfall in trade finance and with trade volumes falling, the UK is
working alongside partners such as the World Bank and International Monetary
Fund (IMF) to develop options to provide additional support on trade finance.
°° For further information about the Cariform Economic Partnership Agreement see:
www.delguy.ec.europa.eu/en/Press % 20Releases/EPAPressRelease.htm
°° For further information about the UK’s Aid for Trade policy see:
www.dfid.gov.uk/documents/publications/aid_for_trade_strategy.pdf and www.berr.gov.uk/
whatwedo/europeandtrade/Trade % 20Policy % 20Unit/Aid % 20for % 20 Trade/page42808.htm!
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Indicator 3.2: UK framework for competition at level of world’s best
Position Maintained.
The latest Peer Review of Competition Policy'’® was carried out by KPMG in
2006-07. Like the 2004 Review, it ranked the UK regime third behind the United
States and Germany, although the gap was narrower than previous years.
The most recent Global Competition Review (2009)'”' also found that the UK
competition bodies are among the best in the world. The Competition Commission
shared the ‘Elite’ category with the US Federal Trade Commission and the
European Commission's Directorate General for Competition, and the Office of
Fair Trading (OFT) was ranked one of the world's top ten anti-trust authorities.
The recession accentuates the pressures on the UK and other member states to
tow back from pro-active competition policy. Competition advocacy is, however
increasing, especially by the OFT, and further engagement with other government
departments is planned to ensure that competition is kept high on the agenda
across Government. The UK will maintain an effective dialogue with the European
Commission's Directorate General for Competition and build relationships with like
minded states to argue against policies that distort competition.
Indicator 3.3: UK corporate governance environment at level of world’s best
Not yet assessed
Implementation of the Companies Act 2006 is progressing’. The World Bank
Report on the Observance of Standards and Codes (ROSC) assessment is
expected shortly and will provide a thorough and up to date overview of the UK
regime relative to the agreed OECD Principle of Corporate Governance.
The latest World Economic Forum Global Competitiveness Report (October
2008)'** shows that the UK ranking on the three corporate governance measures
(Efficacy of Corporate Boards, Strength of Auditing and Reporting Standards, and
Protection of Minority Shareholders’ Interests) has fallen outside the top ten and
that the UK’s scores have fallen slightly (on average by three decimal points).
The UK is still ranked in the top 20 (of 134) for all three measures.
Indicator 3.4: Regulatory environment for business fully reflecting the
Government's better regulation principles
Improvement shown
BERR has a target to reduce by 25% the administrative burdens imposed on
business by its own regulations by 2010. Net savings of 17%, two thirds of the
25% target, had been delivered by April 2009.
10° Peer Review of Competition Policy 2006-07 (DTI, 2007):
www.berr.gov.uk/files/file39863.pdf
‘For further information about the Global Competition Review see:
www.globalcompetitionreview.com/shop/issues/issue/150/april-2009
‘°? For further information see section on corporate law and governance above.
*°. The Global Competitiveness Report 2008-09 (World Economic Forum, 2008):
www.weforum.org/pdf/GCR08/GCRO8.pdf
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Indicator 3.5: Labour market flexibility
Not yet assessed
The Index of Labour Market Adaptability is used to measure this indicator.
It includes a number of components that cover the range of areas that are affected
by policies and institutions in the labour market and also broader outcomes
including wage and employment changes. The broader measure is still being
developed so both measures are used. There has been a recent small decline in
both indices. However, this is likely to be largely due to cyclical factors and they
will remain within the agreed 10% tolerance margin for the success measure.
Further work is needed to identify the cyclical and structural elements in the index.
Indicator 3.6: Awareness and enforcement of employment rights
Not yet assessed
A baseline figure of 65% awareness was taken from the Employment Rights at
Work survey 2005. The update to the baseline from the new Fair Treatment at
Work survey 2008 will report in late 2009. This will provide more robust figures
based on a larger sample.
Indicator 3.7: UK framework for consumer empowerment and support at
level of world’s best
Position Maintained
BERR published an independent study conducted by the University of East Anglia
to benchmark the performance of the UK consumer empowerment framework in
late 2008". The study found that the UK was on par with the world’s best in
terms of legal framework, consumer interface (i.e. the provision of information,
advice and consumer advocacy) and public enforcement, but that further progress
needs to be made on redress mechanisms.
In addition BERR has made its own assessment, based on the EU’s Consumer
Scoreboard, which also suggests that the UK’s overall performance is at the level
of the best.
*°* Benchmarking the performance of the UK framework supporting consumer empowerment
through comparison against relevant international comparator countries (ESRC Centre for
Competition Policy, 2008): www.berr.gov.uk/files/file50027.pdf
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Some progress
Improvement against 3 out of 6 indicators
Indicator 1: UK framework for competition at the level of the best
Position maintained
The UK's competition regime is also measured by BERR’s DSO indicator 3.2 ‘UK
framework for competition at level of world's best’. The data statement for both
the PSA and DSO indicators can be found under DSO 3.
Indicator 2: Effective corporate governance regime
Not yet assessed
The UK's corporate governance regime is also measured by BERR’s DSO indicator
3.3, ‘UK corporate governance environment at level of world’s best’. The data
statement for both the PSA and DSO indicators can be found under DSO 3.
Indicator 3: UK labour market flexibility
Not yet assessed
The UK's labour market flexibility is also measured by BERR’s DSO indicator 3.5,
‘Labour market flexibility’. The data statement for both the PSA and DSO
indicators can be found under DSO 3.
Indicator 4: Maintenance of competitively-priced energy markets
Position maintained
Gas: UK industrial customers pay significantly less for their gas than the EU-15
median. Small users pay 19% below the EU-15 median level, medium users 9%
below and large users 7% below.
Electricity Prices: Industrial customers pay slightly more for their electricity than
the EU-15 median. Small users pay 1% above the EU-15 median level, medium
users 4% above and large users 10% above.
Figure 8: Proportional difference in UK energy retail prices relative to EU-15 median
40%
I
2
os
BS ton
5a I
So on - s a
a8
Sz sy
a2
$3 30% Change in data ‘Average
5 = methodology price
& 40% from July 2007 difference
csr
SES ES ae
SF oF of Co
HF OP 9 Sw
gs Se Sy Se
—m— Electricity large consumer =~ Gas, large consumer
a Electricity, medium consumer —-— Gas, medium consumer
a Electricity, small consumer == Gas, small consumer
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Indicator 5: Deliver better regulation that works for everyone (benefit
exceeds costs)
Not yet assessed
The benefit/cost ratio of regulations is also measured by BERR’s DSO indicator
2.3, ‘Flow of regulation: total benefit/cost ratio of regulations coming forward over
time’ The data statement for both the PSA and DSO indicators can be found in the
previous section under DSO 2.
Indicator 6a: Deliver commitments to administrative burdens reductions -
Better Regulation Executive
Improvement shown
Reductions in administrative burdens are also measured by BERR’s DSO indicator
1, ‘Administrative burdens reduction across 19 government departments’. The
data statement for both the PSA and DSO indicators can be found in the previous
section under DSO 2.
Indicator 6b: Deliver commitments to administrative burdens reductions —
HMRC
Improvement shown
At Budget 2009%**, HM Revenue and Customs (HMRC) reported further significant
progress in reducing administrative burdens. Since 2006, HMRC have
implemented or committed to new measures that will deliver administrative
savings to business of around £540 million per annum, made up of:
* £330 million from reducing the burden of forms and returns;
¢ £43 million from reducing the burden of audits and inspections; and
* £168 million from wider administrative changes.
Highlights include the announcement that HMRC are raising the Self Assessment
‘Three Line Account’ turnover limit to permanently align with the VAT registration
threshold from 2009-10 tax returns. This means a significant majority of the Self
Assessment business population will be able to benefit from simplified reporting.
This change will deliver administrative burden savings to business of an estimated
£54 million per annum (included in the forms and returns total above).
*°5 For information and documentation relating to Budget 2009 see:
www.hm-treasury.gov.uk/bud_bud09_index.htm
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Annual Report and Accounts 2008-09
Free and fair markets: forward look
2.124 During the rest of 2009, the Department for Business, Innovation and Skills will:
@ continue to build a co-ordinated, constructive European response to the global
economic downturn which combines the immediate need for action with the
creation of a solid long term competition and regulatory framework, ensuring the
state aid temporary framework is not abused;
e work to ensure commitment to resisting protectionism and keeping markets
open and working;
@ continue to react to the pressures on businesses and employees in the
downturn, including by providing accessible, helpful advice and guidance and
improved helplines to give practical help on disputes and strengthen
enforcement of rights for vulnerable workers;
@ continue working to ensure the EU employment agenda is consistent with UK
flexible labour market objectives, particularly protecting the right to opt out of
the Working Time Directive's maximum 48-hour week and pursuing UK interests
in relation to the Pregnant Workers Directive;
@ continue to deliver our commitments to the administrative burdens reduction
programme;
@ take forward commitments in the Consumer White Paper'’® on modernised
consumer rights law to give people a fairer deal, building on responses to the
Consumer Law Review consultation on streamlining and improving the
effectiveness of the UK’s consumer protection regime and initiate a debate on
the long term vision for consumer credit in the UK;
e complete the implementation of the Companies Act 2006 by October 2009; and
e implement the Shareholder Rights Directive by August 2009.
16 A Better Deal for Consumers: Delivering Real Help Now and Change for the Future (HMG, 2009)
www. berr.gov.uk/files/file52072.pdf
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ins
Resource Expenditure
Insolvency Service - - - 11,442, 34,223 35,800 42,902 54421, 58,976
ACAS 87,242 47,977 43,366 46,161 40,762, 40,762
Employment Relations 11879 10,748 11537 17,827, 40,703 39,450
Investor Protection (including Companies House) 14,098 (2.958 7.010 7,766 8573, 9,402
Trade Promotion including Subscription to WTO and SITPRO 8289 5,543 5470 9.589 «10,905 9,004
Financial Inclusion Fund (including Face to Face Debt Advice) 0 16,613 29,037 30,504 36,215 29,860
Consumer Protection and Competition (including Citizens Advice) 75814 51,930 36833 38.927 64.672 66,440
Other Free and Fair Markets Activities 513 87 23.997 35,902 3973, 4,220
Total Resource Expenditure in DEL 178251 170,077 193,050 229.578 260.224 250,114
Resource Expenditure in AME
Statutory Redundancy Payments 252,733 204,643 17372, -391,918 422.782, 382,782
Patemity Pay 50,000 6.692 42.800 44,477 43,600, -75,100
Other Free and Fair Markets Activities 0 0 0 0 oO 0
Total Resource Expenditure in AME 302,733 211,335 216572 436,395 «466,382 457,882
Total Resource Expenditure 480,984 381,412 409.622 665,973 726,606 715,996,
Capital Expenditure in DEL
Insolvency Service 1,501 228 5818 8.627 2,000, 2,000
ACAS 1108 1.013 16a! 8711 3.035 1,035
Companies House 385) -385 0 4500 3.500 2,000
Consumer Protection 883 543 4a 827 806 (806
Other Free and Fair Markets Activities 839 174 161 317 0 0
Total Capital Expenditure 3906 1.570 8097 19,842 230 5,841
Total Expenditure 484,930 382,982 417,719 685,815 728,947 721,837
*2007-08 outturns have been restated
70
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Section 2.7
Government as a shareholder
Introduction
2.125 The principal role of the Shareholder Executive"’’”, is to work with government
departments and management teams to help its portfolio businesses perform
better. Its aim is to create a climate of ownership that, while challenging, is
genuinely supportive and provides the framework for the businesses to be
successful. To achieve this, the Shareholder Executive works with the boards and
management teams of the Government-owned businesses to create long-term
shareholder value.
2.126 The Shareholder Executive either advises Ministers directly on their shareholder
interests in those businesses, or supports departmental shareholder teams. It is
accountable to the respective departmental Ministers and senior officials for its
advice on individual businesses. The Non-Executive Chairman of the Shareholder
Executive is Philip Remnant. The Chief Executive is Stephen Lovegrove'’®.
2.127 The Shareholder Executive currently has a portfolio of 27 businesses ranging from
large well known organisations such as the Royal Mail to smaller trading funds like
the UK Hydrographic Office, and is responsible to 12 different government
departments. In 2007-08, the portfolio had a combined turnover of around £24 billion,
equivalent to around 1.8% of UK GDP.
2.128 This portfolio of businesses is forever evolving to reflect new circumstances and
challenges. For example, in the autumn of 2008, the Shareholder Executive took on an
advisory role to HM Treasury on Northern Rock and Bradford & Bingley. Also, following
the successful sales of Government shares in QinetiO and British Energy iSeptember
2008, the role of the Shareholder Executive in both businesses has reduced.
2.129 With the creation of the Department for Energy and Climate Change (DECC) in
October 2008, policy responsibility for some of the energy businesses moved to the
new department but the businesses remain in the Shareholder Executive's portfolio.
2.130 After this change in 2008-09 the Shareholder Executive continued to report directly
to BERR Ministers on Royal Mail Holdings plc and the Export Credits Guarantee
Department. A list of businesses in the Shareholder Executive's portfolio, and the
government department with which policy responsibility resides, is available from the
Shareholder Executive's website".
2.131 The Shareholder Executive also provides corporate finance advice to BERR and other
government departments. For BERR, it appraises and negotiates grants awarded to
*°’ The Shareholder Executive was part of BERR in 2008-09, and subsequently became part of the
Department for Business, Innovation and Skills on 5 June 2009.
"°° For further information see the Shareholder Executive's website:
www.shareholderexecutive.gov.uk
The Shareholder Executive's portfolio of businesses:
www.shareholderexecutive.gov.uk/portfolio/index.asp
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non-government owned businesses including Launch Investment, Rescue Aid and
Grants in Business.
2.132 The Shareholder Executive is also managing and implementing the Operational
Efficiency Programme (OEP) asset workstream. The Programme's objective is to
consider the potential for alternative business models, commercialisation, new
market opportunities and, where appropriate, alternatives to public ownership.
Key achievements 2008-09
e Sale of British Energy. In September 2008, the Shareholder Executive played
a key role in negotiations leading up to EDF's announcement of a £12.5 billion
takeover offer for British Energy. We reached agreement with EDF to sell the
Government's stake in British Energy for £4.4 billion to fund future
decommissioning costs, and negotiated an agreement with EDF for the release
of certain sites to meet the Government's nuclear policy objectives.
Sale of QinetiQ. In September 2008 the Shareholder Executive was involved in
the sale of the Government's remaining ordinary shares in QinetiQ Group plc,
raising over £254 million for the taxpayer.
The Post Office Network Change Programme. Post Office Ltd has achieved
the Government's target of up to 2,500 post office closures (partially offset by at
least 500 new Outreach services), to put the network on a sustainable footing.
It is also on target to achieve £45 million in financial benefits from the programme
as part of its overall target to deliver £298 million in financial benefits by 2010-11.
e Royal Mail. The Shareholder Executive
played a significant role in developing the
legislation proposed by the Government in
February 2009, aimed at ensuring the
maintenance of a universal postal service
and securing the future of a healthy,
publicly owned Royal Mail.
e The Corporate Finance Practice team
within the Shareholder Executive advised
on the structuring of the £60 million
Launch Investment support for GKN
(announced in September 2008) and a
£134 million support package for
Bombardier, which included £113 million of
Launch Investment, announced in July 2008. Also announced in September 2008
was a £50 million Research and Technology (R&T) support package for Airbus.
72
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Enhancing the value of the Shareholder Executive's portfolio of
businesses
2.133 In line with the PAC recommendations", the Shareholder Executive announced in
its 2007-08 Annual Report that it intends valuing the entire portfolio over a two year
cycle. These individual valuations will be used to highlight the impact of policy on
shareholder value.
Corporate Finance Practice
2.134 Shareholder Executive’s Corporate Finance Practice provides advice regarding
government investment in private sector projects. We have led on the value for
money assessment of large regional investment projects and launch investment in
the aerospace sector. In the current economic climate we also have an important role
to play advising on the provision of support to companies in difficulties.
Operational Efficiency Programme
2.135 The Operational Efficiency Programme (OEP) was launched by the Chief Secretary
to the Treasury on 3 July 2008. It builds on the SR04 Efficiency Programme which
delivered over £23 billion in savings, and on existing plans to deliver another £30
billion in savings as part of the CSRO7 value for money programme". This savings
target was increased to £35 billion at Budget 2009""*.
2.136 On 21 April 2009, the Government announced the Final Report of the OEP. This
Report was also included in the budget documentation on 22 April 2009. The asset
management strand of this programme updated on progress made in relation to the
previously named nine assets, listed below. The Shareholder Executive will continue
to lead each review with the support of HM Treasury and report on progress on a six
monthly basis. The assets under review include: British Waterways, Land Registry,
Met Office, Dartford Crossing, Royal Mint, Ordnance Survey, QEII Conference
Centre, and MoD assets (Oil and Pipeline Agency and the Defence Storage and
Distribution Agency).
2.137 The aim of the reviews is to identify efficiency savings which may result from
improvements to existing business models and strategies.
™ Progress on outstanding PAC recommendations is discussed in annex 6. For the 42nd Report of
2006-07: The Shareholder Executive and Public Sector Businesses (HC409) see:
www.publications. parliament.uk/pa/cm200607/cmselect/cmpubacc/409/409. pdf
™ For further information about BERR’s CSRO07 value for money programme see section 3.3
For information and documentation relating to Budget 2009 see:
www.hm-treasury.gov.uk/bud_bud09_index.htm
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Royal Mail
2.138 On 26 February 2009 the Government published legislation (the Postal Services
Bill’’) aimed at ensuring the maintenance of a universal postal service and securing
the future of a healthy, publicly-owned Royal Mail. In tandem the Government
published and laid before Parliament a Command Paper, The Future of the Universal
Postal Service'™*, which set out government policy in detail. The policy has been
informed by recommendations contained in Richard Hooper's independent review of
the postal services sector’'®, which reported to Government on the 16 December
2008 and highlighted the depth of challenges facing Royal Mail, concluding that the
status quo was not tenable.
2.139 On 1 July 2009 the Secretary of State made the following statement concerning the
Bill in the House of Lords:
“Market conditions have made it impossible to conclude the process to identify a
partner for the Royal Mail on terms that we can be confident would secure value for
the taxpayer.
There is therefore no prospect in current circumstances of achieving the objectives
of the Postal Services Bill. When market conditions change we will return to the
issue.
We remain convinced that Hooper's combined package offers the best chance of
securing the universal postal service while protecting Royal Mail pensions.”
2.140 On 28 January 2009 the Department announced the appointment of a new Chairman
of Royal Mail, Donald Brydon, to replace Allan Leighton, who stood down in March
2009. Donald joined the Board of Royal Mail Holdings as a non-executive Director on
28 January 2009 and took over as Chairman on 26 March 2009, for a three year term.
He has a proven track record as a strong Chairman in companies that have been
successfully turned around and expanded. His commercial skills and experience will
help Royal Mail modernise and tackle the huge challenges it is facing.
Post Office Network
2.141 The Network Change Programme has been successfully implemented. As at 31
March 2009 Post Office Ltd had made 2,383 compensated closures (out of the 2,435
which will take place) and established 433 of at least 500 new Outreach services
(such as mobile post offices) which will be introduced under the programme. Post
Office Ltd is on target to achieve £45 million in financial benefits from the
programme as part of its overall target to deliver £298 million in financial benefits by
2010-11. The network now stands at just under 12,000 branches.
"For further information about the Postal Services Bill 2008-09 see:
http://services.parliament.uk/bills/2008-09/postalservices.html
‘The Future of the Universal Postal Service in the UK (BERR, 2009):
www.berr.gov.uk/files/file50274.pdf
"8 Modernise or decline — Policies to maintain the universal postal service in the United Kingdom
(Hooper Review) (Hooper, Hutton and Smith, 2008): www.berr.gov.uk/files/file49389.pdf
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Annual Report and Accounts 2008-09
Strong progress
Improvement against 4 out of 4 indicators
Indicator 4.1: Individual company targets aimed at increasing value’’
Improvement shown
A revised valuation methodology has been agreed, incorporating economic profit,
to ensure that all portfolio businesses are covering their cost of capital. Bespoke
performance targets relating to drivers of value, in order to ensure longer term
value creation across the portfolio, are also being established.
Individual company targets are being developed and agreed with each business
and other government departments where appropriate.
Indicator 4.2: idend payments from portfolio businesses or agreed
Dividend policies'*
Improvement shown
Work is continuing to ensure that each portfolio business has an agreed dividend
target, except where public policy does not require or enable this.
Indicator 4.3: Stakeholder satisfaction with the discharge of the Shareholder
Executive's responsibilities
Improvement shown
Recent feedback has been positive, indicating stakeholder satisfaction with the
Shareholder Executive. The Shareholder Executive has attracted work from across
Whitehall, for example advising HM Treasury on Northern Rock, Bradford &
Bingley and the future of financial services; and has received approaches from
other government departments to assist with property assets. The high quality of
the Shareholder Executive’s work has been consistently commented upon and
there has been stakeholder (including Ministerial) recognition for the Shareholder
Executive's pivotal involvement in recent deals including the sale of the remaining
Government shares in QinetiQ; the sale of British Energy (including the
Government's 35% shareholding), and the conclusion of deals for Launch Aid
support to Airbus and GKN. Regular meetings are also held about the quality of
service and advice being offered by the Shareholder Executive between the
Shareholder Executive's Chairman and senior stakeholders at HM Treasury and the
Cabinet Office.
"This DSO was previously numbered DSO 6, prior to the October 2008 Machinery of Government
changes.
‘This indicator has been revised since its original publication. For a full explanation see the BERR
Autumn Performance Report 2008: www.berr.gov.uk/files/file49263.doc or the BERR website:
www.berr.gov.uk/aboutus/corporate/performance/performance_Framework/page43603.html
"8 This indicator has also been revised since its original publication, as explained above.
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In May 2008 a new Advisory Group to the Shareholder Executive was created.
The Group exercises guidance over the work of the Shareholder Executive to
assist it in the fulfilment of its mission. This includes scrutiny of the Shareholder
Executive's objectives, the monitoring of the Shareholder Executive's impact on
its relationship with its portfolio businesses, other government departments and
external constituencies, and suggesting improvements in the way the Shareholder
Executive operates.
Indicator 4.4: Expand the Shareholder Executive's offer to greater proportion
of HMG businesses and corporate finance situations
Improvement shown
The Shareholder Executive has been asked to work on an increasing number of
corporate finance issues, such as work with the Ministry of Justice on the Courts
estate and with HM Treasury on the financial services sector, and is managing the
asset management stream of HM Treasury's Operational Efficiency Programme.
In addition, the Shareholder Executive is becoming increasingly involved in
advising on corporate failure and the potential for restructuring or rescue aid.
The Shareholder Executive seeks to identify projects or businesses where it can
add value and provide the necessary resources to do so.
The Shareholder Executive's Senior Management Team has presented the
Shareholder Executive's offer to the Cabinet Secretary and Permanent Secretaries.
One-to-ones continue to be held with senior stakeholders across Government to
assess where the Shareholder Executive can offer advice and value.
The Royal Mint - one of the Shareholder Executive's 27 portfolio businesses.
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Annual Report and Accounts 2008-09
Shareholder Executive: forward look
2.142 Over the next six months the Shareholder Executive will:
e successfully manage the asset management workstream of the Operational
Efficiency Programme and consider the potential for alternative business
models, commercialisation, new market opportunities and, where appropriate,
alternatives to public ownership;
@ provide clear and concise advice on Launch Investment, Rescue Aid and
Grants in Business;
e accelerate the modernisation of Royal Mail to enable it to become a more
commercially effective operation;
@ ensure a stable and sustainable Post Office Ltd and Post Office network;
e help the Nuclear Decommissioning Authority to deliver improved value for
money in decommissioning and clean-up, and minimise the cost of
decommissioning to the taxpayer;
e secure state aid clearances for Northern Rock and Bradford & Bingley and
transfer businesses to UK Financial Investments Limited; and
e establish value creation plans, biennial valuations, dividend targets and bespoke
performance targets for each portfolio business.
Expenditure on ensuring Government acts as an effective and
intelligent shareholder
Resource Expenditure in DEL
Royal Mail and Postal Services 14,199) 79,234 458,213, 294,420I 165,850 150,000
Shareholder Executive 3,950, 4,093 goo 10049, 9,104 8882
United Kingdom Atomic Energy Authority 5365 10,308 4,435 2.077, 16,387 14,112
Total Resource Expenditure in DEL 23514 93,633 463,548 302,392 191,141 172,994
Resource Expenditure in AME
United Kingdom Atomic Energy Authority 16186 6.986 1,976 -19.473 ©6687 -16.641,
Interest received for the Post Office Working Capital Loan Facility 0 0 0 -7.459 a 0
BNFL/Magnox Decommissioning 0-22.24 0 ) 0 0
Total Resource Expenditure in AME 16186-29227 1,976 -26932 6,687 -16,641
Total Resource Expenditure 39,700 64,406 465,528 275,460 184,454 156,353
Capital Expenditure in DEL
United Kingdom Atomic Energy Authority 7.923 0 0 987 360 300
Total Capital Expenditure in DEL 1,929 0 f) 987 350 300
Capital Expenditure in AME
BNFL/Magnox Decommissioning 0, -880,153,-260,000 632,000 0 0
Royal Mail Equity purchase 0 430,273 0 0 0 0
Post Office Working Capital Loan Facility 120,000 0-10.00 -193,000, 550,000 50,000
Royal Mail Shareholder Loan 0 0 0 300,000 0 0
Total Capital Expenditure in AME -120,000 -119,880 270,000 -525,000 550,000 50,000
Total Capital Expenditure 127,929 -119,880 270,000 -524,013 550,350 50,300
Total Expenditure 88,229 55,474 195,524 -248,553 734,804 206,653
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Section 2.8
Providing professional support, capability and
infrastructure
DSO 5: Provide the professional support, capability and infrastructure to
enable BERR’s objectives and programmes to be successfully delivered’
Strong progress
Improvement against 1 out of 1 indicator
Indicator 1: Progress in building the capability of the department to meet
future challenges
Improvement shown
The 2008 Capability Review found that BERR had improved significantly since the
review of DTI’? in 2006, despite facing greater expectations and challenges.
The Department uses an annual staff survey as a further indicator of capability,
supported by survey data from stakeholders and delivery partners. The 2008 BERR
staff survey showed significant progress on key indicators for skills development,
understanding of the Department's role, and the ability of the Department to
manage change - at a time when BERR was managing its second major Machinery
of Government change in 15 months.
BERR's work to support this DSO is examined more fully in the next chapter.
™°This DSO was previously numbered DSO 7, prior to the 3 October 2008 Machinery of
Government changes.
©° BERR took on some of the functions of the former DTI and the Cabinet Office when DTI ceased
to exist on 28 June 2007.
Department for Bu:
Annual Report and Accounts 2008-09
—
a
Enterprise and Regulato
y Reform
Expenditure on providing professional support, capability and
infrastructure
Departmental administration and miscellaneous central programmes I 230,950
Export Credit Guarantee Department Restructuring Fund — 5,022
“National Dock Labour Board - - 0
Enemy Property Scheme - I 1912
External Legal Fees and OME Consultancy _ 3,683
‘Total Resource Expenditure in DEL 241,567
‘Resource Expenditure in AME - - - oo
Bulk transfer of pension liabilities to the PCSPS 9.066
‘Total Resource Expenditure in AME - - 9,066
Total Resource Expenditure 250,633
Capital Expenditure in DEL 7 - 7
Departmental administration and miscellaneous central programmes I 11.511
‘Total Capital ExpendiureinDEL ST
TotalCapital Expenditure AST.
262,144
262.210
5,000
=e
n
2.253
269,391
0
0
269,391
13,804
13.80
1380414
152.6508)
oO
8,800
44
0
[)
164,177
13,714
13,714
13,714
2733
164177
221,607 215,619
0
0
785
2317
0
a)
785
2328
224,709 218,730
0)
a
0
[)
224,109 218,730
11,250I
11250)
11250,
9,750
_9780
9,750
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Chapter 2
Performance Report
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Chapter 3
Managing the Department
Section 3.1
Introduction
3.1
3.2
The Department needs
effective and efficient services to
support delivery of its objectives.
Over 2008-09 BERR was at the heart
of the Government's response to the
recession and, in order to meet this
challenge, it has been vital to continue
to improve the effectiveness and
efficiency of our services and increase
value for money.
This chapter covers aspects of how
BERR was managed and our
performance over the year. It refers to
BERR during 2008-09, prior to the
merger with DIUS on 5 June 2009 to
create the Department for Business,
Innovation and Skills. The table below
shows the structure of the chapter by
reporting theme.
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oe Professional support, capability and infrastructure 82
og Value for money programmes 91
3.4 Better BERR regulation 94
3.0) Promoting equality of opportunity 98
3.6 Corporate governance arrangements 105
ERE Remuneration report
110
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Section 3.2
Professional support, capability and infrastructure
3.3. BERR’s DSO 5 was to ‘Provide the professional support, capability and infrastructure
to enable BERR’s objectives and programmes to be successfully delivered’”". In
order to achieve this objective BERR required a skilled and committed workforce,
specialist advice, and a reliable infrastructure in which to operate.
3.4 This section explains how BERR further developed its capability to enable staff to
respond to the challenges thrown up by the current recession. For example, we
have a new People Strategy incorporating feedback from Capability Reviews and
staff surveys. We also have specialist units supplying legal, financial, analytical,
communications, human resources, IT and estates management expertise in
support of BERR’s work.
3.5 BERR successfully achieved Investors in People (liP) re-accreditation for the fourth
time in March 2009, this time demonstrating a performance exceeding requirements
— level two of the Investors in People Profile. Furthermore, against a number of the
indicators, the Department was assessed as achieving level three or four,
demonstrating outstanding or exemplary performance.
BERR’s People Strategy and values
3.6 The aim of BERR’s People Strategy was to have highly skilled people who
understand business; are well led; and who live by our values and are proud to work
for BERR. The strategy was designed to help improve our capability by providing a
framework for developing and reinforcing the skills our staff need. The focus of our
People Strategy over the next three years has been on four key themes:
e@ leading our people;
@ growing our skills and capabilities;
e delivering a workforce of the future; and
@ improving our performance management and reward.
3.7 Key activities in 2008-09 in support of these themes were:
@ Leadership: improved development programmes for New Leaders to the Senior
Civil Service and an increased focus on leadership skills on promotion.
e@ Skills and capability: improved on-line learning, mentoring and coaching networks,
and an increased emphasis on professional and specialist skills. The effectiveness
of these actions is shown by the achievement of level two of the Investors in
People Profile.
e Future workforce: more flexible deployment of staff through an improved
recruitment and selection process. Our new diversity strategy will help us to
develop a more diverse workforce in the future.
"For the assessment of this DSO see chapter 2, section 2.8.
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e@ Performance management and reward: training for managers in giving effective
feedback, and a review of the grading structure which will help to simplify our
systems and processes.
3.8 In order to help our staff act as a ‘voice for business’, we encouraged them to spend
time working in business, whether for a ‘week in business’ or on a longer
secondment. This helped them understand the way businesses operate and the
challenges they face. We also offered a regular programme of talks hosting external
speakers from businesses and other stakeholders. This was in addition to internal
events informing staff of the work of BERR and its delivery partners.
3.9 BERR also had a set of values which supported effective listening, influencing and
successful achievement of our objectives as the voice for business in Whitehall.
Making a difference Working together It starts with me
We take the lead; we We work with openness — I. am confident and
influence others, having and respect. We listen to, committed to getting it
an impact on the real learn from and value right. I am professional
world. others. and take pride in what
Ido.
Capability Review
3.10 Capability Reviews were launched by the Cabinet Secretary, Sir Gus
O'Donnell, in 2005 as part of a wider Civil Service reform agenda. The
reviews seek to improve the capability of the Civil Service to meet current
and future delivery challenges.
3.11. The Capability Review Team returned to BERR in October and November
2008, very shortly after the 3 October Machinery of Government changes.
The Review Team commended BERR both for its speed and flexibility in
responding to the challenges of this re-organisation and in maintaining its
focus on the difficult economic situation. The strength of the leadership
team and the very highly regarded analytical capability the Department had
developed are seen as critical to this success”. The reviewers observed
that BERR faced greater challenges and expectations in 2008 than the
former DTI did in 2006 in the first Capability Review'*. In response to these
challenges the Department is continuing to focus on strengthening key
skills that support our work with business and others to make a difference
to the economy.
™ Department for Business, Enterprise and Regulatory Reform: Progress and next steps
(Cabinet Office, 2008): http://beta.civilservice.gov.uk/Assets/BERR-progress_tcm6-6185.pdf
™ Capability Review of the DTI (Cabinet Office, 2006)
http://beta.civilservice .gov.uk/Assets/Capability_Review_DTI_tcm6-1060.pdf
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3.12 The annual staff survey provided an opportunity for staff to inform BERR’s
senior management about what it was like to work for BERR and the way
the Department was led and managed. The results of the 2008 survey
presented an encouraging picture of the Department, as well as areas for
development. The comprehensive survey took place in October 2008,
sixteen months after the creation of BERR. The results showed that staff
have a clear sense of purpose, and that their understanding of BERR’s role
as the voice for business across Government had increased significantly.
3.13 The results for BERR exceeded central Government averages for all but two
of the 34 benchmarks. 43 of the 71 attitudinal questions showed a statistical
improvement on the results for BERR in 2007 across a range of issues,
with an increased overall satisfaction and pride in working for BERR, and
improved perceptions of leadership.
3.14 In response to concerns from the survey, we will continue to consult with
staff on ways we can build pride in the new Department, manage increasing
workloads and further improve the working environment.
Diversity within BERR
3.15 We remain committed to improving diversity in the Department and to embedding
diversity considerations throughout the Department's work. BERR launched a
refreshed Diversity Strategy in the autumn of 2008". This included a revised
Diversity Statement, targets for representation at senior levels and priorities for the
coming year including action on the four key themes identified across the Civil
Service: representation; leadership and accountability; culture change; and talent
management.
3.16 BERR complied with the Disability Discrimination Act 1995 and the Disability
Discrimination (Employment) Regulations 1996, which introduced important rights
for disabled staff and extra protection against discrimination in the workplace.
Our Disability Equality Scheme and the Secretary of State Report on Disability
Equality’ provide further information.
3.17. The table below shows BERR's performance against Cabinet Office diversity targets
for the Senior Civil Service (SCS).
BERR Diversity Strategy and Diversity Statement:
www.berr.gov.uk/aboutus/corporate/performance/how-we-work/diversity/page49826.html
” Revised DTI Disability Equality Scheme for the Department for Business, Enterprise and
Regulatory Reform (BERR, 2007): www.berr.gov.uk/files/file42734.pdf
6 Secretary of State Report on Disability Equality (BERR, 2008):
www.berr.gov.uk/files/file49041 .pdf
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Figure 9: Senior Il Service diversity representation and targets
1 April 2011 targets
‘SCS who are women
Top SCS posts occupied by women
SCS from ethnic minority 4%
backgrounds
SCS with disabilities 5% 9 137 ™% 5% 6%
Flexible deployment and project management
3.18 The Project Pool develops staff skills in project and programme
management, and deploys them quickly on assignments of varying duration
across the Department's top priority projects. This flexible way of working
achieves two primary objectives: it resources priorities in a changing
environment, and it embeds and enhances programme and project
management principles across the Department, both in terms of approach
and practice. It is regarded as an exemplar of flexible resourcing in Whitehall.
3.19 The Project Centre bolsters and protects the success of projects and
programmes across the Department and its delivery partners. It is accredited
by the Office of Government Commerce (OGC) to conduct Gateway
Reviews on medium-risk in-house projects. It provides a highly-regarded
assurance function, supplemented by the provision of a range of
mechanisms supporting project management within the Department.
Sickness absence
3.20 BERR had a well developed absence management policy. This included a
comprehensive Health and Well Being Programme providing, for example,
awareness events and support for staff; and a policy that managers follow-up the
reasons for any sickness absence. 61% of BERR staff too no sick leave in 2008-09
and the average number of working days lost was 5.4. This compares favourably
with the public sector average of nine days per annum per employee.
Legal support
3.21 BERR’s Legal Services Group has ensured that: Ministers and colleagues have
received the highest quality advice which is essential to the successful delivery of
the Department's objectives; legislation has been developed and delivered efficiently;
and investigations and prosecutions were timely and effective.
3.22 By providing timely advice, our Legal Services Group has contributed to some of the
Department's key policy areas, including a strategy to help businesses through the
recession, Digital Britain and Royal Mail. The Group will help business realise
reduced administrative burdens of approximately £300 million through
implementation of the Companies Act 2006 and help to make it easier to do business
in Europe through implementation of the EU Services Directive. The Group will also
continue to provide support on the competition, consumer, insolvency and
employment frameworks.
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3.23 Through its effective enforcement of the insolvency and companies regimes, BERR
supported legitimate business and protected consumers from rogue business
practices. The investigation of offences arising mainly from insolvency has uncovered
increasingly complex criminality including high levels of fraud. The successful
prosecution of such offences, at a conviction rate of 85%, has resulted in custodial
sentences, heavy fines and significant confiscation of assets. BERR worked with the
National Fraud Strategic Authority to shape fraud strategy, taking account of the
impact of the recession on trends in fraud.
3.24 BERR'’s Legislative Board procedures for coordinating and prioritising the
Department's bids for legislation have been emulated across Government and are
regarded as an example of good practice.
Analytical support
3.25 Analysts across the Department continue to drive
policy development and provide the professional
support and capability to enable the successful
delivery of the Department's objectives. BERR
had a strong commitment to evidence-based
policy making, acknowledged by the green rating
the Department achieved for ‘base choices on
evidence’ in the 2008 Cabinet Office Capability
Review’. This rating indicates that the
Department has good capability in place for basing choices on evidence when
delivering strategy.
3.26 This year it has been particularly important to use statistical and economic analysis to
underpin our understanding of the current economic conditions and how we can
respond to business concerns. Developing a sound evidence base is critical to
supporting the Department in setting policy and strategic direction. Analysts also
work to ensure that appropriate systems and processes are in place to achieve an
efficient allocation of resources.
3.27. During 2008-09 BERR analysts worked on key projects with other government
departments, including developing a strategic vision for Britain's recovery”; the
Manufacturing Strategy (with DIUS)”; the simplification of business support
"” Department for Business, Enterprise and Regulatory Reform: Progress and next steps
(Cabinet Office, 2008): www.civilservice.gov.uk/Assets/BERR-progress_tcm6-6185.pdf
° New Industry, New Jobs (HM Government, 2009):
www.berr.gov.uk/files/file51023.pdf
"° Five Dynamics of Change in Global Manufacturing Supporting Analysis for ‘Manufacturing
Strategy: New Challenges, New Opportunities www.berr.gov.uk/files/file47663.pdf
Further information:
www.berr.gov.uk/whatwedo/sectors/manufacturing/strategyreview2008/page4527 1.htmi
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products (with a range of government departments including HM Treasury, DIUS,
Export Credit Guarantee Department and Defra)"®’; and Digital Britain (with DCMS)".
3.28 Other work undertaken by BERR analysts this year included understanding high
growth firms in the UK™, the impact of regulation on productivity’, supporting the
Risk and Regulation Advisory Council in delivering a programme of workshops to
help foster a more considered approach to public risk and how to respond to it,
leading the cross-Whitehall Group on the Economics of Regulation and jointly-leading
the Government Economic Service Focus Group on Evaluation.
Communications
3.29 In 2008-09 we continued to communicate with multiple audiences about BERR’s
work, using a range of innovative tactics as well as more traditional communications
channels. In the worsening economic climate we worked in particular to make the
business community better aware of the range of support available
Media relations and marketing
3.30 BERR achieved widespread print, broadcast and online media coverage for our
policies and communicated our key messages through an enhanced programme of
targeted engagement with stakeholders and staff.
Notable examples included communications regarding
business support packages, including the ‘Real Help for
Businesses Now’ campaign. Communications activities A
helped direct 286,000 visits to the campaign webpage by 4
April 2009. = =
3.31 BERR also ran a number of significant marketing g
communication campaigns on a range of issues,
particularly around employment rights and advice. The
awareness rate of the National Minimum Wage is now
91% amongst workers and 100% amongst businesses.
The campaign used a range of traditional and innovative communications channels
including a campaign bus that travelled the country to reach vulnerable audiences
(such as those in less stable employment) who are amongst the National Minimum
Wage's main beneficiaries.
3.32 BERR’s Employing People campaign contributed to the reduction in administrative
burdens to UK businesses by promoting advice on how to save time and money as
part of the Employment Law Guidance Programme. The campaign resulted in a
record 500,000 visits to the guidance website in January 2009 alone. Elsewhere, our
“For further information about the Business Support Simplification Programme see:
www.berr.gov.uk/whatwedo/enterprise/simplifyingbusinesssupport/page44802.html
'' Digital Britain: The Interim Report (BERR/DCMS, 2009):
www.culture.gov.uk/images/publications/digital_britain_interimreportjanO9. pdf
'® High growth firms in the UK: Lessons from an analysis of comparative UK performance (BERR,
2009): www.berr.gov.uk/files/file49042.pdf. For further information about the Enterprise Strategy
see: www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/enterprise-framework/index.html
"8 Impact of Regulation on Productivity (BERR, 2008):
www.berr.gov.uk/files/file48147.pdf
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Firework Safety campaign reached over 32 million people through TV
advertisements, and our Consumer Protection Regulations campaign resulted in over
300,000 businesses receiving direct mail with information on new regulations
relevant to them.
3.33. In the past year, BERR expanded its commitment to digital initiatives. September
2008 saw the launch of our new corporate website which has a useful email alert
service. A BERR YouTube channel —- BERRTube™ — launched in early 2009 and had
received over 10,000 visits by the end of March 2009. Both services allow users to
subscribe to receive updates.
3.34 In response to stakeholder feedback we have also worked to deepen staff
understanding of the wider business context and the Department's work. Surveys
we have conducted in the last year to evaluate the effectiveness of staff
communication have shown a 10 percentage point increase in the number of staff
who say they feel well informed. We have also used focus groups to consult staff
about our communication channels.
Correspondence and Enquiry Handling
3.35 In 2008 BERR responded to 59% of MPs’ correspondence within 15 days against a
target of 80%. This compares to 74% for 2007 and 71% for 2006. This below-target
performance was primarily due to technical difficulties with a new correspondence
management system in the first half of the year, and a heavy correspondence load
stemming from BERR’s role in the Government's response to the economic
downturn in the final quarter. The Department's correspondence management
process is being reviewed to cope with hugely increased volumes (over 50% higher
year on year) and complexity (up some 25% from 2007-08).
3.36 BERR answered 93% of all calls from the public within 15 seconds, meeting internal
targets.
Information and workplace services
Estates management
3.37. Effective management of the
Department's estate and workplace
services is important to help achieve
cost savings and reduce our
environmental impact’.
Achievements over 2008-09 included:
@ relocating the Defence and Security
Organisation to Kingsgate House;
and
‘ BERRTube www.youtube.com/berrtube
™° For further information about the BERR estate and our commitment to the environment see
annex 4.
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@ holding a property conference for the BERR and DIUS families and benchmarking
the whole office estate, helping embed the Office of Government Commerce
136
(OGC) High Performing Property programme’.
Sustainable development
3.38 The Department is committed to sustainable development, and reducing our
environmental impact. During 2008-09 we
@ obtained Carbon Trust Standard’ certification for BERR’s headquarters
estate;
@ improved recycling facilities;
installed an Automatic Metering and Targeting system to monitor, identify
and reduce the use of all utilities;
e installed solar photovoltaics on the roof of 1 Victoria Street; and
@ installed LED lighting in the reception, conference centre, lift lobby and
lifts in 1 Victoria Street to reduce energy consumption.
Security and resilience
3.39 The Department has ongoing business continuity capability and this year ran a range
of successful training events and workshops. These have engaged specific response
teams and have strengthened planning in response to a range of risks: building and
IT incidents, flooding, and pandemic flu. BERR also secured assurance on its
business continuity management though its Audit and Risk Committee’.
Data handling and security
3.40 BERR made good progress in implementing the requirements in the Government's
review of data handling and security and completed the required actions:
e a Senior Information Risk Owner has been appointed, personal data identified,
and the PROTECT — PERSONAL DATA security marking and encrypted removable
media introduced;
@ by 1 July 2008 information risk policy and information asset owners were in
place, an information charter published, and protective measures rolled out
through delivery chains; and
@ actions being completed now and on an ongoing basis include: the accreditation of
new systems containing protected personal data; the inclusion of OGC model
clauses in new contracts; carrying out privacy impact assessments (a BERR template
is in place); penetration testing; and regularised corporate risk assessments.
*°Eor further information about the OGC's High Performing Property Programme see:
www.ogc.gov.uk/better_asset_management_efficiency_in_property_asset_management.asp
"For further information about the Carbon Trust Standard see:
www.carbontruststandard.com/Aboutus/TheStandard/tabid/1 50/language/en-GB/Default.aspx
™ For further information about BERR’s Audit and Risk Committee see section 3.6,
Corporate governance.
3.41
3.42
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From April 2009 we are introducing mandatory training for data users, as Cabinet
Office sponsored e-learning packages are released by the National School of
Government. BERR also worked to ensure communications on data handling are
easily understood. This includes poster and BERR TV campaigns emphasising the
importance of the correct procedures for handling information and research into
attitudes towards information security to enable effective influencing.
The Department's security and information management teams continue to work
together to ensure the requirements (and associated guidance issued by the Cabinet
Office) are clearly understood by users and key stakeholders (e.g. Information Asset
Owners). A network of Management Group Data Champions has been established to
provide the BERR family with key data security information and maintain effective
communication channels.
Reporting of personal data related incidents
3.43
3.44
BERR reported no incidents of the loss of ‘protected personal data’ to the
Information Commissioner's Office in 2008-09. The Department did not centrally
record any protected personal data related incidents which were not formally
reported to the Information Commissioner's Office in 2008-09.
In August 2008 a laptop containing sensitive information about named individuals
was stolen from the Manchester office of the Insolvency Service. The laptop
contained information on 385 company directors, including names, addresses, dates
of birth and occupation of each director of a given company. This information was
already available on the register of companies at Companies House. In addition there
was also information relating to any concerns around potential misconduct of
directors in the run up to insolvency, and there was also information on associated
creditors, complainants and employees relating to around 150 individuals. This
included names, addresses and in a small number of cases, bank details, NI numbers
and mobile phone numbers. The Insolvency Service wrote to all the individuals
affected informing them of the data loss and apologising for any inconvenience
caused. The Service also established dedicated communication channels for those
who may have been concerned about the loss of personal data. Meetings with all
staff were subsequently held to reiterate and re-enforce the Service's policy on the
secure use and storage of portable media. All unencrypted media devices were
recalled for encryption or destruction and Corporate Governance Section has
increased its testing of data security compliance during office visits.
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Section 3.3
Value for money programmes
Introduction
3.45 The Department has a strong track record in delivering value for money from its
budgets. Over 2005-08 BERR (and the former DTI) delivered £358 million in
efficiency savings against a target of £209 million. BERR has plans to build on these
achievements over the CSRO7 period, delivering £148 million (£121 million agreed at
the beginning of the CSRO7 period and a further £27 million announced in Budget
2009) in value for money savings to be delivered from budgets by 2011.
3.46 Value for money savings are calculated by comparing actual spend against a
‘counterfactual spend’. This counterfactual is what spending would have been, based
on a ‘do nothing’ approach. For example, if BERR took no action to improve value for
money, spending on programmes would rise in line with inflation. Reported savings
are all cash-releasing against these counterfactuals. More detail on savings targets
and counterfactuals can be found in BERR’s Value for Money Delivery Agreement'®.
Impact of October 2008 Machinery of Government changes
3.47. On 3 October 2008, BERR’s Energy Group and associated delivery partners were
transferred to the newly created Department of Energy and Climate Change, and
BERR's 2008-09 budget reduced from £3.2 billion to £1.4 billion. BERR’s value for
money targets have been updated to reflect this. The three year savings targets for
BERR have been reduced from £125 to £64 million in 2008-09; £221 to £93 million in
2009-10; and £307 to £121 million in 2010-11. Since these changes, the delivery
target has been increased from £121 million to £148 million in 2010-11, reflecting the
extra £27 million savings announced in Budget 2009.
Value for money achievements to date
3.48 BERR has delivered £69.5 million of value for money savings in 2008-09 against a
target of £64 million. These savings are cash-releasing, allowing BERR's budgets to
reduce by over 3% in real terms from 2007-08 to 2008-09. These savings are also
net of costs and projected to be sustained into future years. No over-delivery from
the SR04 efficiency programme has been included.
3.49 Savings were identified across BERR’s major programmes and budget areas through
a process of zero-based reviews aimed at getting greater value for money from
BERR's budgets. Examples of savings delivered in 2008-09 are outlined and grouped
by DSO below.
*° For further information including BERR’s Value for Money Delivery Agreement see:
www.berr.gov.uk/aboutus/corporate/performance/Value % 20for% 20Money % 20Delivery% 20
Agreements/page43140.htm!
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3.50 DSO 1: Promote the creation and growth of business and a strong enterprise
economy across all regions — £30.8 million, including:
e@ Business Support Best Practice - £9.6 million
Timely exit from the Support to Implement Best Practice scheme.
e Effective Relationships with Business — £5.7 million
Getting better value for money out of engagement with business across
all sectors.
e Regional Selective Assistance/Selected Financial Investment England in Capital
Grants — £6.8 million
The previous Regional Selective Assistance scheme provided finance mainly in
the form of grant for capital investment projects in assisted areas. The new
Selected Financial Investment in England scheme focuses on higher quality
projects providing better value for money.
e National Business Link marketing - £3.1 million
Continued activity to promote a national brand for Business Link has been
demonstrated at a lower funding level.
e Business Support Legacy Schemes — £1.8 million
Ensuring BERR exits legacy business support schemes efficiently and on
schedule.
3.51 DSO 3: Deliver free and fair markets, with greater competition, for businesses,
consumers and employees — £24.1 million, including:
e Insolvency Service - £14.5 million
Some £10 million of savings have been delivered by moving investigation work
carried out by Official Receivers, previously funded by the taxpayer, to a fee
based system. Remaining savings were delivered through increased efficiency.
e Acas — £6.5 million
Delivering operationally within a reduced budget for example, making savings
from accommodation through their ‘one-roof’ strategy and better use of ICT.
e@ Competition Commission - £2.1 million
Savings were delivered via the Competition Commission Council's fundamental
review of the Competition Commission, aiming to: reduce the burden on
business; make more effective use of all staff; make more effective use of
Members; and improve team working.
3.52. Administrative savings ~ £14.6 million
e Delivered through outsourcing pensions administration, centralising back-office
finance functions, optimising use of buildings and e-enabling research resources.
Value for money plans
3.53 BERR planned to build on these achievements in 2009-10 targeting value for money
savings against counterfactuals of £35 million value for money savings from DSO 1,
£32 million from DSO 3 and £25 million from administration budgets. Plans included
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making extra savings from exiting business support legacy schemes; further
efficiencies by delivery partners such as The Insolvency Service, Acas and the
Competition Commission; and further administration savings from the improved use
of accommodation and ICT.
RDAs’ value for money settlement
3.54 As part of the RDAs’ CSRO7 settlement, the nine RDAs were tasked with delivering
5% savings a year. The RDAs will also deliver a 5% real reduction in their
administration budgets. These savings accrue to the RDAs and did not form part of
BERR’s value for money savings over the CSRO7 period.
RDAs’ value for money achievements
3.55 The RDAs have been working towards achieving output targets utilising the budgets
they were allocated in the CSRO7 settlement. However, economic factors now
coming to bear on national and regional economies are making it challenging to
achieve these output targets, while at the same time RDAs are playing an important
role in delivering help and support to businesses through the economic downturn.
3.56 The RDAs have reported progress towards their value for money savings targets, and
over the first three quarters of 2008-09 delivered £41 million in recyclable savings
The majority are working within their reduced budgets and are on course to meet
their performance targets as outlined in their corporate plans™’. On administration
savings targets, the RDAs have recorded good progress and are on course to meet
their full year targets.
3.57. The RDAs have made value for money savings in a number of areas including within
Business Link and from improving contract performance through the Business
Support Simplification Programme. Administrative savings will be made through
restructuring, pay review, productivity improvements, and eliminating unnecessary
spend and improving procurement. The RDAs will be reporting on their value for
money savings in more detail in their own individual annual reports.
Lyons relocations
3.58 Against a target of 527 posts to be relocated out of London and the South East by
March 2010, BERR had relocated 425 posts as of end-March 2009. Areas to which
posts have been relocated include Belfast, Leeds, Newport, Birmingham,
Manchester and Swindon.
“The RDAs’ corporate plans and annual reports are available from their websites, a list of which is
provided in annex 3.
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Section 3.4
Better BERR regulation
3.59 The Department leads the regulatory reform agenda across Government through the
work of the Better Regulation Executive (discussed in section 2.5), and is also a
major regulating department in its own right. Better policy making principles are
therefore at the heart of the Department's approach to policy development,
particularly since minimising administrative and regulatory burdens on businesses is
one way we can help them through the economic downturn.
3.60 This section reports how BERR worked to minimise the burdens of its policies on
business. However, there are situations where regulation is needed, and, where this
is the case, we want to make sure that we understand the costs and benefits, and
that regulation is not unnecessarily burdensome.
3.61 BERR had a target to reduce the administrative burdens imposed on business by its
regulations by a net 25% by May 2010. Over the last year BERR continued to make
considerable progress, with net savings of 17% delivered by April 2009. This means
that two thirds of the 25% target of around £1 billion has now been achieved. The
key measures which will deliver the target are outlined below: more detail can be
found in BERR’s 2008 Simplification Plan™’.
3.62 The Department is also committed to reducing regulatory burdens on the public and
the third sectors, and has implemented its obligations under the Hampton Review’,
which recommended ways to streamline and modernise the regulatory system in
order to reduce administrative burdens.
Culture change
3.63. BERR attached a high priority to promoting and maintaining the right attitude towards
regulation. We did this primarily through our Better Policy Making Culture Change
Programme. The programme promoted good quality impact assessments (IAs),
effective use of Programme and project management principles, awareness of
light-touch approaches where appropriate, and better regulation ‘Champions’ within
the Department. We also engaged with stakeholders, in particular through our highly
regarded Ministerial Challenge Panel, which opened BERR policy development up to
external challenge.
3.64 All these activities had the strong support of the BERR senior management team,
whose own performance and personal remuneration continued to include links to
successful delivery of this agenda in 2008-09.
“" Simplification Plan 2008 Supporting business through better regulation (BERR, 2008):
www.berr.gov.uk/files/file49272.pdf
™ Reducing administrative burdens: effective inspection and enforcement (BERR, 2005):
www.berr.gov.uk/files/file22988.pdf
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Impact Assessments
3.65 BERR helped develop the Government Impact Assessment (IA) template, rolled out
in 2007. IAs should accompany any new policy proposal that has an impact on
business, and demonstrate that the design of the proposal is informed by comparing
the benefits of each option with the costs. Since the introduction of the template,
over 200 officials have benefited from regular training workshops, held to help
improve the Department's capability in the preparation of IAs. Participants report
high levels of satisfaction with the quality of the training.
3.66 The Department's economists continue to lead on a number of cross-department
better regulation initiatives. In particular, the Impact Assessment Peer Review Group
ensures the ongoing engagement of the Department's economists in the
development of IAs. The Peer Review Group engages early in the policy
development process, advising on, scrutinising and challenging IAs to ensure they
meet the requirements of better policy making and are able to withstand wider
external scrutiny. A preliminary assessment of the effectiveness of the Peer Review
Group suggests broad agreement amongst Peer Review Group members that the
Group represents a credible mechanism for providing input into specific policy
developments from a broader better regulation perspective. This view has also
received support from policy teams who have come before the Group.
Consultation
3.67 The Department follows the Government's Code of Practice on Consultation,
as revised in 2008". BERR had a good reputation on consulting with stakeholders,
for example we engaged with key interested parties in the consultation process
concerning the application of the Companies Act 2006 to Limited Liability Partnerships
(LLPs). As part of the formal consultation, on both policy and draft regulations, a
working group made up of LLP representatives and intermediaries was set up.
The Group has met three times since the close of the formal consultation and has
helped shape the drafting of a complex and technical set of regulations.
emu
Total consultations 35
Lasted 12 weeks or more 29
Ministerial authorisation for shorter consultation 6
Compliant with the Department's consultation template 33
Two or more consultation methods used 35
"SHM Government Code of Practice on Consultation (HM Government, 2008):
www.berr.gov.uk/files/file47158.pdf
™ These figures include consultations relating to energy policy, prior to its transfer to DECC on
3 October 2008.
Department for B: Enterr
Annual Report and Accounts 2008-09
ise and Regulatory Reform
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Simplifying and reducing the administrative burden
3.68 BERR’s 2008 Simplification Plan’® charts our previous and planned measures to
achieve our target of a net reduction of 25% in administrative burdens by 2010.
Key measures are outlined below.
Key Simplification Plan measures delivered May 2006 - October 2008
3.69 Employment Law: £429 million of the projected £589 million savings in
administrative burdens reductions have been delivered. Through the Employment
Law Guidance Programme indicative savings of over £400 million have been
achieved through advising on how to save time and money when complying with
employment law obligations, for example by using online tools and proformas.
3.70 Company Law: £237 million of
the projected £300 million administrative
burdens savings have already been
delivered. Example of measures include:
e facilitating the use of electronic
communications by companies with
shareholders, saving £76 million per
year;
@ abolition of the requirement for
private companies to hold Annual
General Meetings, saving £45 million
per year;
@ abolition of complex capital
assistance rules, saving £68 million
per year; and
SMEs can face an administrative
burden disproportionate to their size.
Examples of measures specifically
designed to reduce burdens on SMEs.
include:
* a separate and simpler model
Articles of Association for private
companies, reflecting the way
small companies operate (from
October 2009); and
* a separate code of accounting and
reporting requirements for small
companies (from April 2008).
e simpler law for smaller firms, saving £44 million per year.
3.71 Consumer Law: The EU Unfair Commercial Practices Directive (UCPD) implemented
in May 2008, introduced a general duty on traders not to treat consumers unfairly.
Its estimated potential reductions of up to £260 million are currently subject to
validation.
Key Simplification Plan measure to be delivered April 2009 - May 2010
3.72 The Employment Act 2008 abolished costly statutory dispute resolution procedures,
delivering £115 million of savings from April 2009 onwards, with a projected further
£23 million of savings to come from the implementation of new dispute resolution
services by Acas.
“S Simplification Plan 2008 Supporting business through better regulation (BERR, 2008):
www.berr.gov.uk/files/file49272.pdf
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Validation
3.73 The most prominent simplification measures in the Plan implemented between May
2005 and May 2008 have been approved by a cross-Government External Validation
Panel to ensure that they have delivered and communicated real and meaningful
benefits to private and third sector organisations. The Panel includes key business
organisations, including the CBI and the British Chambers of Commerce. We are
therefore confident that the measures are of tangible benefit to stakeholders, and
tackle their key ‘irritants’ in areas such as employment law and company law. The
latest Plan also contains many case studies which help demonstrate the
programme's benefits.
Legislative Reform Orders
3.74 Legislative Reform Orders (LROs) make it quicker and easier to tackle unnecessary
or over-complicated legislation, and help bring about a risk-based approach to
regulation.
3.75 The Legislative Reform (Consumer Credit) Order 2008 amended the Consumer
Credit Act 1974 to ensure that changes made through the Consumer Credit Act 2006
effectively deliver the intentions of Parliament’.
3.76 The BERR/Insolvency Service Legislative Reform (Insolvency) (Advertising
Requirements) Order 2009 came into force on 6 April 2009. It will deliver a better
targeted regime for the advertising of insolvency events which, in combination with
parallel changes to the Insolvency Rules, is expected to deliver savings for creditors
of insolvent estates of at least £17 million a year from April 2009. An additional
BERR/Insolvency Service Legislative Reform (Insolvency) (Miscellaneous Provisions)
Order 2009 was laid before Parliament on the 13 May 2009 as part of a package
of measures to modernise insolvency processes. Those measures, again in
combination with parallel changes to the Insolvency Rules, will deliver further
savings for creditors of at least £25 million a year and are planned to be
implemented in April 2010.
“ Specifically, the Order amends the Consumer Credit Act 1974 to exempt buy-to-let lending from
regulation, clarify the position on the giving of statement for fixed-sum credit agreements and
provide definitions of “payments” for the purpose of issuing notices of sums and arrears.
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Section 3.5
Promoting equality of opportunity
3.77. The Department is committed to promoting equality of opportunity in all its functions,
and as a public sector organisation, is required by law to promote equality of
opportunity for race, gender and disability’. This section provides an update on
actions set out in the Department's Race, Disability and Gender Equality Schemes™.
3.78 In May 2008, we published a report on BERR’s compliance against its Race Equality
Scheme”. This assessed our performance to date and set out how we plan to
improve on promoting race equality and good race relations, as well as ensuring
there is no unlawful racial discrimination within the Department. In December 2008
we published a report on the Department's Disability Equality scheme™. This
illustrated some of the progress we have made within our policy areas towards
disability equality and improving the lives of disabled people. Key actions in these
areas are also outlined in the tables in this section.
3.79 All departmental policy proposals are screened for equality issues and the findings
reflected in an accompanying Impact Assessment or relevant documentation. Where
a proposal gives rise to substantive equality considerations, a separate Equality
Impact Assessment (EQIA) is produced. To help raise awareness of the need for
officials to consider equality issues when developing their policy proposals, a series
of training workshops were held over the year, and in September 2008 we hosted a
week of ‘equalities events’ which included speakers from the public and private
sectors. Looking forward, we have begun steps to harmonise our existing schemes
on race, gender and disability prior to the extension of the equality duty to include
sexual orientation, religion and belief, age, gender reassignment and pregnancy and
maternity. Section 3.2 discusses BERR’s work on diversity, including race, gender
and disability, with regard to BERR employees.
Commitments in race, disability and gender equality schemes
3.80 The tables on the following pages show the policy areas in which Equality Impact
Assessments have taken place, and their outcome.
™ The Race Relations Act 1976 (as amended by the Race Relations (Amendment) Act 2000); the
Disability Discrimination Act (as amended by the Disability Discrimination Act 2005) and the Sex
Discrimination Act 1975 (as amended by the Equality Act 2006). The Equality Bill (laid in
Parliament in April 2009) brings together existing equality legislation and extends the scope of the
duty to cover the additional areas of gender reassignment, pregnancy and maternity, sexual
orientation, religion and belief, and age.
“For further information about BERR’s Race, Disability and Gender Equality Schemes see:
www.berr.gov.uk/aboutus/corporate/performance/how-we-work/equality-schemes/page35704.html
“8 BERR Race Equality Scheme — Three Year Report (BERR, 2008):
www.berr.gov.uk/files/file46231 .pdf
"°° Secretary of State Report on Disability Equality (BERR, 2008):
www.berr.gov.uk/files/file49041 .pdf
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Equality Impact I Outcome
Assessments
(EQIA)
Extension of the An EQIA was conducted as part of the final Impact Assessment
right to request published as part of the Government response to the consultation
flexible working to on implementing the recommendations of Imelda Walsh's
carers of older independent review" in March 2009. The EQIA suggested that
children there would not be any disproportionate effects by gender, race or
disability.
Digital TV An EQIA was published jointly by BERR and DCMS assessing the
Switchover equity and fairness on groups particularly affected by the
switchover from analogue to digital television in the UK*”.
Pregnant Workers An EQIA was carried out on this proposal and published as part of
Directive the Government consultation in March 2009"°’. Overall the
evidence shows that there would not be a disproportionate impact,
as all employees would still be covered by the Sex Discrimination
Act. The EQIA suggested that neither would there be a
disproportionate effect by race or disability.
Debt Relief The equality screening of Debt Relief Orders (DROJ* shows no
Orders differential impact based on race or age. However, there is potential
for a positive impact on women and individuals with disabilities, as
such debtors are more likely to meet the entry criteria. The
Insolvency Service has ensured that equality data is collected
wherever possible, as part of the DRO application process, to enable
it to effectively monitor and review this policy’s impact.
Debtor's The initial equality screening of the debtor's petition process (which
Bankruptcy considers removing the process from court), showed no differential
Petition Process impact based on race or age’*’. However, there is potential for a
positive impact on women and individuals with disabilities.
Research shows that women are more likely to feel that there is a
stigma associated with bankruptcy, and are therefore more
reluctant to access it. Removal of the requirement to attend court
to file a bankruptcy petition could reduce this stigma, in addition to
benefiting people unable to travel to court due to disability.
"Extending the right to request flexible working to parents of older children: Government response
to consultation on implementing the recommendations of Imelda Walsh's independent review
(BERR, 2009): www.berr.gov.uk/files/file50447. pdf
' Equality Impact Assessment for Digital Switchover (DCMS, 2008):
www.culture.gov.uk/images/publications/ElA_digital_switchover.pdf
*® European Commission proposals to amend the Pregnant Workers Directive: a consultation
(BERR, 2009): www.berr.gov.uk/files/file50575. pdf
"* Explanatory Amendment to the Insolvency (Amendment) Rules 2009 No. 642:
www.opsi.gov.uk/si/si2009/em/uksiem_20090642_en.pdf
"The Impact Assessment of a Reform to the Debtor's Bankruptcy Petition Process:
www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/impactassessment.doc
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Other actions to increase equality
Information Services
Access to BERR's website’, re-launched in September 2008, meets level
Information double-A of the Web Content Accessibility Guidelines (WCAG). All
services web publishers are trained in the principles and practice of website
accessibility, and any breaches of the guidelines are quickly fixed.
The Department works closely with external accessibility specialists
to ensure its online content is made available to the widest possible
audience.
Enterprise and Business Group
Digital Television A quarterly ‘Switchover Tracker’ reports on understanding,
Switchover awareness and take-up of digital TV, including by gender, age and
disability, and is used to inform communication strategies”.
Enterprise The Enterprise Strategy published in 2008’** contained a range of
Strategy measures for women’s enterprise, which recognised the importance
of changing attitudes amongst women towards enterprise; taking
steps to increase female entrepreneurship rates; and providing advice
and support to women in starting and growing their businesses. The
RDAs made a commitment in the Enterprise Strategy to pilot
Women’s Business Centres, and BERR has facilitated the
development of the National Mentoring Network for women in
business. This is a strategic partnership between everywoman, the
British Chambers of Commerce, Prowess and RBS/NatWest. The
work of BERR’s partners Enterprise Insight and the National Council
for Graduate Entrepreneurship contains actions targeted at girls and
women. These include a range of enterprise awareness activities and
the further development of the women’s enterprise ambassadors
network (now with over 1,000 members) to inspire more girls and
women across all sections of society to consider entrepreneurship.
Ethnic Minority The Ethnic Minority Business Task Force’ was launched in June
Business Task 2007. The Task Force helps foster growth among ethnic minority
Force firms and boost economic participation by ethnic minority
entrepreneurs. James Caan (Dragons' Den) was appointed as
co-chair to the Task Force in January 2009. The Task Force is
expected to present their latest findings to Ministers later in 2009.
‘°° BERR website: www.berr.gov.uk
"7 Digital UK Quarterly Reports are available from:
www.digitaluk.co.uk/press_office/reports/quarterly_reports
“For further information about the Enterprise Strategy see:
www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/enterprise-framework/index.html
*® For further information about the Ethnic Minority Business Task Force see the website:
www.embtf.org.uk/index.php
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Enterprise and Business Group
London 2012 Olympic London won the bid to run the 2012 Games on the promise that
Games and the event would be truly multi-cultural. Regional events have
Paralympic Games been held in the South West, West Midlands and the North
West, Yorkshire and Humberside, London and the East of
England to help businesses owned by ethnic minorities and
women to compete for contracts related to the London 2012
Games.
Make Your Mark The Government is funding the Make Your Mark campaign'™ run
by Enterprise Insight. Enterprise Insight is building a network of
accessible champions and ambassadors who will act as role
models for young people in ethnic minority communities. The
opportunities enterprise offers for young people will be
communicated through existing Enterprise Insight events and
specific activities such as the ‘Black Boys into Business’ event
held in Tottenham in November 2008.
Prince's Trust The Prince’s Trust is a UK charity with a proven track record of
helping young people realise their potential and has strong and
established links with disadvantaged communities. Over 70% of
the ethnic minority community are based in disadvantaged
areas. A £1 million grant to enable the Trust to identify role
models and raise awareness of the benefits of enterprise
amongst some of our most disadvantaged young people was
announced on 15 May 2008. 100 Enterprise Ambassadors have
been appointed, including some from ethnic minority
backgrounds. The Prince's Trust held workshops between some
of these young entrepreneurs and leading business people
including James Caan and Deborah Meaden. These workshops
were filmed and placed on The Prince's Trust YouTube channel”
to raise awareness of the benefits of enterprise among young
people. This site has now received more than 200,000 hits.
Markets Group
Fair Treatment at This monitors the extent of employee discrimination, unfair
Work Survey treatment, bullying and sexual harassment. The first survey was
conducted in 2005 (by the former DTI)'” and the results helped
to inform the second survey, which was conducted in 2008. The
results of the second survey are expected to be published in
autumn 2009.
National Minimum BERR continues to raise awareness of the National Minimum
Wage Wage amongst vulnerable and migrant workers. Two thirds of
its beneficiaries continue to be women.
‘© For further information about Make your Mark see the website:
www.makeyourmark.org.uk
"'The Prince's Trust YouTube channel
www. youtube.com/profile?user=princestrust&view=videos&sort=v
The First Fair Treatment at Work Survey (DTI, 2007): www.berr.gov.uk/files/file38386.pdf
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Fair Markets Group
Face-to-face debt There is a dedicated Disability Project that employs 17 advisers in
advice projects a variety of Citizens Advice Bureaux and other agencies. The
project targets those with hearing, sight, mental health and other
disabilities. Other projects ensure services are targeted at a range
of social groups, including people from black and minority ethnic
(BME) backgrounds, and extra resource has been made available
to assist provision of advice to these groups, for example through
interpreters.
Doorstep selling Vulnerable groups may be particularly at risk from rogue traders
and bogus selling practices — not only where a trader has made a
cold call but also in situations where the consumer has requested
a visit by the trader. No consumer should be put at a disadvantage
when purchasing goods or services in their own home. In 2007
the Government introduced new regulations to extend the seven
day cooling off period and cancellation rights to include contracts
made as a result of a solicited visit by a trader to a consumer's
home.
Package Travel Over the last two years BERR has been working to raise the
awareness of British Muslims of their rights under the UK
Package Travel Regulations (which protect consumers in a number
of ways when they pay for certain travel arrangements) when they
book Hajj pilgrimages to Saudi Arabia. We continue to be engaged
in this area with the aim of reducing the number of complaints and
problems in the sector.
rade & Investment
Outreach UKTI undertakes a range of outreach initiatives involving minority
groups, including female entrepreneurs and ethnic minority
businesses. For example UKTI’s regional team in the South West
sponsored (with others) the ‘Enterprising Women Make A
Difference Conference 2008’, in addition to speaking and
displaying a stand at the event.
Ensuring UKTI seeks to ensure that its policies, practices and procedures —
compliance in terms of both staff and customers — are compliant with current
with equality legislation as it develops and follow best practice. We are
requirements currently commissioning external validation of our approach.
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UK Trade & Investment
Performance and —_ UKTI monitors the use of its services through its Performance
Impact Monitoring and Impact Monitoring Survey (PIMS), which is carried out by an
Survey (PIMS) independent specialist market research company. The PIMS survey
also obtains annual information about the use of UKTI services by
minority groups. This allows data to be collected on the percentage
of businesses using the services who are majority owned by, or have
one or more owner, partner, or director who are women, from ethnic
minority groups, or have any long-standing illness or disability. For
example, PIMS results for the survey carried out from April to June
2007 and from April to June 2008 show that 4% of the 1,641 firms
surveyed had owners, partners or directors who had a disability or
long-standing illness, 32% were female, and 12% were from an
ethnic minority community. PIMS results in future years will allow
UKTI to monitor the extent to which there is an increase in the
number of currently under-represented groups accessing its services.
BERR Delivery Partners
Insolvency Service The Insolvency Service has continued to undertake research to help
assess the relevance and impact of proposed policies on equality
and diversity (see EQIA section on Debt Relief Orders and Debtor's
Bankruptcy Petition Process). The Service is currently reviewing
research undertaken for the equality screening of its project to
modernise and consolidate the secondary legislation regarding
insolvency.
Acas. Acas is aware of the needs of ethnic minorities who may be
disadvantaged due to language. To help overcome this Acas have
introduced a translation facility as part of their employment relations
helpline. The facility can provide simultaneous translations in a wide
range of languages and since its inception at the end of 2006 has
been used in over 1,800 calls.
Companies Companies House continues to deliver diversity awareness training
House — Training covering the six strands of diversity to all staff. Bullying and
harassment workshops have been delivered to all managers in the
organisation that have direct line management responsibilites. An
e-learning tool is also being implemented to increase staff
awareness of diversity.
Companies Companies House are currently working through their IA action
House - EQIA plan to:
Action Plan
* engage the organisation in the review and assessment process
through briefing and communication notices;
© catalogue and prioritise the policies and projects according to
which need to be reviewed and assessed most urgently;
* determine which (if any) require a full IA; and
* report outcomes and recommend actions accordingly.
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ERR Delivery Partners
Companies A HR Senior Manager with at least seven years diversity experience
House — has a seat on major programme boards which relate to electronic
Electronic and and business transformation and Companies Act programme
business implementation. This gives Companies House the capacity not only
transformation to provide direct advice and input as the programme and supporting
projects develop, but also to highlight areas of concern in relation to
diversity related issues, ensure diversity issues are considered at
each stage, and assess and review each programme and project in
the light of Impact Assessments.
Companies House _ Information is available in alternative formats on request including
~ Service Delivery audio, large print and Braille. Information is also available in an
electronic format through the internet and the site is compliant with
WSC standards.
Companies House Companies House produces a comprehensive Diversity Statistical
— Monitoring Monitoring Report which covers all diversity related categories and
provides information on other areas such as recruitment, training
and work-life balance.
Social and community responsibility
3.81 The Department aims to integrate social and community responsibility in all it does,
whether in framing government policies or in its day to day operations. Further
information about our work to encourage sustainable development and limit our
environmental impact is in annex 4. Examples of policies aimed at particular groups,
such as protecting vulnerable workers and encouraging women into enterprise are
included above and in chapter 2
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Section 3.6
Corporate governance arrangements
3.82 This section describes the corporate governance arrangements for BERR during
2008-09, prior to the merger with DIUS on 5 June 2009 to create the Department for
Business, Innovation and Skills. Corporate governance arrangements for the new
Department are currently being finalised. New arrangements are being put in place
for a register of interests for the new Board of the Department for Business,
Innovation and Skills. Anyone wishing further information on Board interests can
contact the Department as follow:
e@ By e-mail to: mpst.fraser@ GRO
e By writing to: Private Office of the Permanent Secretary, Department for
Business Innovation and Skills, Room V8.27, 1 Victoria Street, London SW1H OET
3.83 BERR’s corporate governance structure comprised the Management Board and three
Committees: the Executive Committee, the Operating Committee and the Audit and
Risk Committee.
Appointments
3.84 Members of the Management Board and Committees are Senior Civil Servants
appointed in accordance with the Civil Service Management Code “’. The exceptions
are the Non-Executive Board Members who are recruited via fair and open competition.
The remuneration report in section 3.7 provides details of remuneration and fees.
3.85 Non-Executive Board Members provide a valuable external perspective to help
improve internal processes, service delivery and change management. As
independent members of the Management Board and Committees, they take on
important advisory and challenge functions. Biographies of the Non-Executive Board
Members can be found on the BERR website™.
3.86 Appointments to the boards of the Department's Non-Departmental Public Bodies
and agencies are made by Ministers in accordance with the Commissioner for Public
Appointments Code of Practice for Ministerial Appointments to Public Bodies’.
3.87 Simon Fraser was appointed as BERR’s Permanent Secretary from 5 May 2009.
In addition to Chair of the Management Board, he was Chair of the Executive Committee
and Accounting Officer for BERR. On 5 June 2009 Simon Fraser was appointed as
the Permanent Secretary for the Department for Business, Innovation and Skills.
BERR’s Management Board
3.88 BERR’s Management Board provided corporate strategic leadership to the
Department. This involved:
e working with Ministers to set the Department's Strategy and allocate resources;
e agreeing business plans and monitoring departmental performance;
"For further details about the Civil Service Management Code see:
www.civilservice.gov.uk/about/work/codes/csmc/index.aspx
'® Biographies of Non-Executive Board Members:
www.berr.gov.uk/aboutus/corporate/corpgov/non-exec/index.html
*® Code of Practice for Ministerial Appointments to Public Bodies:
www.publicappointmentscommissioner.org/Publications/publication,86855496500.htm!
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e assessing risks/issues which could undermine BERR's strategy or corporate plan;
@ assessing departmental capability and plans for the future; and
@ setting standards, values and controls.
3.89 The full terms of reference of the Management Board can be found on the websité®.
3.90 The Members of the Management Board as at 31 March 2009 were:
Sir Andrew Cahn, Acting Acting Permanent Secretary
Chair (from 28 March 2009)
John Alty Director General, Fair Markets Group
John Edwards Director General, Finance
(from 1 July 2008)
Hilary Douglas Chief Operating Officer
Philip Rutnam Director General, Enterprise and Business Group
(from 23 March 2009)
Jitinder Kohli Chief Executive, Better Regulation Executive
Vicky Pryce Chief Economic Adviser and Director General,
Economics
Rachel Sandby-Thomas Solicitor and Director General, Legal Services
Dominic Jermey Acting Chief Executive, UK Trade & Investment
(from 28 March 2009)
Professor Arnoud De Meyer Non-Executive Board Member
Roger Urwin CBE Non-Executive Board Member
Dr. Brian Woods-Scawen CBE Non-Executive Board Member
In addition, the following were Board members in 2008-09:
Sir Brian Bender, Chair Permanent Secretary
(until 27 March 2009)
Mark Gibson Director General, Enterprise and Business Group
(until 20 March 2009)
William Rickett Director General, Energy Group
(until 2 October 2008)
Mark Clarke Director General, Finance and Strategy Group
(until 19 June 2008)
Also attending in 2008-09 were:
Russell Grossman Director of Communications
Ceri Smith Director, Business Environment Unit
Professor Brian Collins Chief Scientific Adviser
(from 12 May 2008)
"Terms of reference for BERR Management Board are available from:
www.berr.gov.uk/aboutus/corporate/corpgov/management-board/page14179.html
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BERR’s Executive Committee
3.91 BERR’s Executive Committee made decisions on strategic, department-wide internal
management issues. These included:
@ broad decisions on resource allocation;
@ departmental honours list;
@ monitoring organisational capability;
@ internal management issues requiring endorsement by Directors-General; and
e Senior Civil Service performance, development and pay.
3.92 The members of the Executive Committee as at 31 March 2009 were:
Sir Andrew Cahn, Acting Acting Permanent Secretary
Chair (from 28 March 2009)
John Alty Director General, Fair Markets Group
John Edwards Director General, Finance
(from 1 July 2008)
Hilary Douglas Chief Operating Officer
Philip Rutnam Director General, Enterprise and Business Group
(from 23 March 2009)
Jitinder Kohli Chief Executive, Better Regulation Executive
Vicky Pryce Chief Economic Adviser and Director General,
Economics
Rachel Sandby-Thomas Solicitor and Director General, Legal Services
Dominic Jermey Acting Chief Executive, UK Trade & Investment
(from 28 March 2009)
Also attending when the Executive Committee convened as the Performance
and Development Committee in 2008-09 were:
Stephen Lovegrove Chief Executive, Shareholder Executive
Jean Irvine OBE Non-Executive Board Member
In addition, the following were Committee members in 2008-09:
Sir Brian Bender, Chair Permanent Secretary
(until 27 March 2009)
Mark Gibson Director General, Enterprise and Business Group
(until 20 March 2009)
William Rickett Director General, Energy Group
(until 2 October 2008)
Mark Clarke Director General, Finance and Strategy Group
{until 19 June 2008)
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BERR’s Operating Committee
3.93 BERR’s Operating Committee made decisions on BERR processes and resources
relating to people, planning, financial management, communication, project
management, IT and property. Its functions included looking at key enabler projects
and coordinating the implementation of change and efficiency initiatives. The members
of the Operating Committee as at 31 March 2009 were:
Jitinder Kohli Chief Executive, Better Regulation Executive
John Edwards Director General, Finance
(from 1 July 2008)
John Dodds Director, Regulatory Reform Directorate and Head,
Priority Projects Directorate
Hilary Douglas Chief Operating Officer
Claire Durkin Director, Europe, International Trade and Development
(from 10 July 2008)
Russell Grossman Director of Communications
Susan Haird Deputy Chief Executive, UK Trade & Investment
David Hendon Director, Business Relations
Susanna McGibbon Director, Legal Services
(from 8 April 2008)
Karen Pile Director, Information and Workplace Services
(from 10 July 2008)
Ceri Smith Director, Business Environment Unit
(from 7 May 2008)
Tom Smith Director of Customer Services, Companies House
(from 10 July 2008)
Stephen Speed Inspector General and Chief Executive, Insolvency Service
Ken Warwick Deputy Chief Economic Adviser
Susan Young Director, Human Resources
Claire Ighodaro CBE Non-Executive Board Member
Jean Irvine OBE Non-Executive Board Member
Tim Walton Non-Executive Board Member
In addition, the following were Committee members in 2008-09:
Mark Clarke Director General, Finance and Strategy Group
(until 19 June 2008)
Geoff Dart Director, Corporate Law and Governance
(until 2 June 2008)
Peter Lowe Director, Information and Workplace Services
{until 2 June 2008)
Simon Virley Director, Renewal Energy and Innovation Unit
(until 2 October 2008)
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BERR’s Audit and Risk Committee
3.94 BERR’s Audit and Risk Committee's overall objective was to support the Board and
the Accounting Officer by ensuring the overall governance arrangements were
appropriate and operating effectively, overseeing the work of the internal and
external auditors and reviewing the annual financial accounts. It was comprised
entirely of Non-Executive Members. The full terms of reference of the Audit and Risk
Committee can be found on the BERR website”. The scope of the objectives
covered all of BERR’s activities including those of its Executive Agencies and
Non-Departmental Public Bodies.
3.95 The members of the Audit and Risk Committee as at 31 March 2009 were:
Dr. Brian Woods-Scawen CBE, Chair Non-Executive Board Member
Bryan Jackson OBE Non-Executive Member
Hunada Nouss Non-Executive Member
Barry Rourke Non-Executive Member
Darrel Sheinman Non-Executive Member
3.96 The Permanent Secretary (as the Accounting Officer), Director General, Finance,
Head of Internal Audit and a Director of the NAO also attended meetings of the
Committee.
BERR’s Secretariat
3.97 BERR's Secretariat ensured the smooth running of the Board and the Committees.
The Secretariat was comprised of two civil servants and was part of the Permanent
Secretary's Private Office. The main activities of the Secretariat were:
e working with the Board and Committee Chairs on agenda setting and forward
planning;
@ ensuring that the Board and Committees were properly constituted and provided
with clear terms of reference;
e reviewing changes in governance requirements that might affect the organisation
or the way the Board and Committees operate;
@ ensuring that the standards and disclosures required of the organisation were
observed;
supporting the Non-Executive Board Members; and
partnering with the Cabinet Office on best practice for departmental boards
across Whitehall.
"’The terms of reference for BERR’s Audit and Risk Committee are available from:
www.berr.gov.uk/files/file42437.pdf
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Section 3.7
Remuneration report
Remuneration policy
3.98 The remuneration of Senior Civil Servants is set by the Prime Minister following
independent advice from the Review Body on Senior Salaries.
3.99 The Review Body also advises the Prime Minister from time to time on the pay and
pensions of Members of Parliament and their allowances; on Peers’ allowances; and
on the pay, pensions and allowances of Ministers and others whose pay is
determined by the Ministerial and Other Salaries Act 1975.
3.100 In reaching its recommendations, the Review Body is to have regard to the following
considerations:
@ the need to recruit, retain and motivate suitably able and qualified people to
exercise their different responsibilities;
@ regional/local variations in labour markets and their effects on the recruitment and
retention of staff;
e@ Government policies for improving the public services including the requirement
on departments to meet the output targets for the delivery of departmental
services;
@ the funds available to departments as set out in the Government's departmental
expenditure limits; and
@ the Government's inflation target.
3.101 The Review Body takes account of the evidence it receives about wider economic
considerations and the affordability of its recommendations”.
Performance and reward
3.102 The Senior Civil Service (SCS) pay system consists of relative performance
assessments. Individuals are assessed as being in Group 1, 2, 3 or 4 of their pay
band. All individuals in Groups 1 and 2 and a small proportion of the individuals in
Group 3 receive a non-consolidated performance related award for in-year
performance against objectives. These awards vary in amount within an overall cost
envelope set by the Senior Salaries Review Body and approved by the
Government.
*® Further information about the work of the Review Body can be found on the website:
www.ome.uk.com
*° Eurther information about the performance and reward arrangement for Senior Civil Servants can
be found at: http://beta.civilservice.gov.uk/people/pay_and_reward/scs_pay.aspx
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3.103 The table below shows the number of Senior Civil Service (SCS) staff in BERR by pay
range as at 31.03.09. Bonuses are not included and salary ranges represent full time
equivalent rates. These pay ranges cover those staff employed on open-ended and
fixed term contracts.
Figure 10: Senior Civil Service Salaries
Pay Range No. of BERR SCS staff
the range as at
31.03.2009
Below £56,000 0
£55,000-£59,999 8
££60,000-£64,999 33
£65,000-£69,999 23
£70,000-£74,999 2
£75,000-£79,999 B
££80,000-£84,999 18
££85,000-£89,999 4
££90,000-£94,999 2
£95,000-£99, 999 4
£100,000-£104,999 4
£105,000-£109,999 1
£110,000-£114,999 3
£115,000-£119,999 "
£120,000-£124,999 2
£125,000-£129,999 0
£130,000-£134,999 2
£135,000-£139,999 0
£140,000-£144,999 3
£145,000-£149,999 0
£150,000-£154,999 1
£155,000-£159,999 0
£160,000-£164,999 QO
£165,000-£169,999 0
£170,000-£174,999 0
£175,000-£179,999 3
£180,000-£184,999 1
£185,000-£189,999 0
£190,000-£194,999 0
£195,000-£199,999 0
£200,000-£204,999 1
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Service contracts
3.104 Civil Service appointments are made in accordance with the Civil Service
Commissioners’ Recruitment Principles, which require appointments to be on merit
on the basis of fair and open competition but also include the circumstances when
appointments may otherwise be made”.
3.105 Unless otherwise stated below, the officials covered by this report hold
appointments which are open-ended until they reach the normal retiring age.
Early termination, other than misconduct, would result in the individual receiving
compensation as set out in the Civil Service Compensation Scheme.
e@ Andrew Cahn was appointed on a four year contract commencing 27 March
2006. His contract was extended until 26 March 2011 during 2008-09. The notice
period for the employee is three months. For the employer the notice period is
six months or a period, if less, equal to the unexpired part of the fixed term
contract.
@ Mark Clarke was appointed on a three year contract commencing 5 June 2006.
The notice period for the employee was three months. For the employer the
notice period was six months or a period, if less, equal to the unexpired part of
the fixed term contract. Mark Clarke resigned and left the Department on 19 June
2008.
e Vicky Pryce was re-appointed on a three year contract commencing 10 March
2005. Her contract was extended until 26 August 2009 during 2007-08. Her
contract was extended until 26 August 2010 during 2008-09. The notice period
for the employee and employer is three months.
e@ John Edwards was appointed on a three year contract commencing 1 July 2008.
The notice period for the employee is three months. For the employer the notice
period is six months or a period, if less, equal to the unexpired part of the fixed
term contract.
@ Philip Rutnam was appointed on a three year contract commencing 23 March
2009. The notice period for the employee is three months. For the employer the
notice period is six months or a period, if less, equal to the unexpired part of the
fixed term contract.
° Further information about the work of the Civil Service Commissioners can be found at
www.civilservicecommissioners.org.
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Salary and pension entitlements for Ministers of the Department:
3.106 The remainder of this Remuneration Report contains audited information. The
remuneration of Ministers is determined in accordance with the provisions of the
Ministerial and Other Salaries Act 1975 (as amended by the Ministerial and Other
Salaries Order 1996) and the Ministerial and Other Pensions and Salaries Act 1991.
The salary and pension entitlements of the Ministers of the Department for
Business, Enterprise and Regulatory Reform for the year ending 31 March 2009 are
shown on the following page.
3.107 This report is based on payments made by the Department and thus recorded in
these accounts. In respect of ministers in the House of Commons, departments bear
only the cost of the additional ministerial remuneration; the salary for their services
as a MP (£63,291 FROM 1 April 2008), and various allowances to which they are
entitled are borne centrally. However, the arrangement for ministers in the House of
Lords is different in that they do not receive a salary but rather an additional
remuneration, which cannot be quantified separately from their ministerial salaries.
This total remuneration, as well as the allowances to which they are entitled, is paid
by the department and is therefore shown in full in the figures below.
Department for Bus! Ent id
Annual Report and Accounts 2008-09
Accrued Real Increase Real Ministerial Ministerial
pension at 65 in pension at increase in salary salary
at 31/03/09 ‘age 65 CETV! received ~—_ received
2008-09 2007-08
(restated)
£000 2000 £000 £000
Secretary of State
Rt Hon Lord Mandelson, (from 3 5-10
October 2008F
ft Hon John Hutton, MP (from 2 10418
July 2007 to 2 October 2008}
Ft Hon Alistair Darling, MP (to 29 -
June 2007
Ministers of State
Lord Jones (from 4 July 2007 to 2 - - - - - - -
October 2008 -
Lord Drayson (from 2 July 2007 to 7 -
November 2007}
Pat McFadden, MP (from 2 July 05
2007) - it
Gareth Thomas, MP (from 2 July -
20077
Lord Davies of Abersoch CBE (fram - - - - - - -
14 January 2003
At Hon Stephen Timms, MP (from 2 - -I =I - - - 19,947
July 2007 to 25 January 2008?
ft Hon lan McCartney, MP (to 29 - =I =I - - - -
June 2007)"
At Hon Margaret Hodge MBE, MP - - - - - - 13,298
(to 29 June 2007)?
‘Malcolm Wicks, MP (to 2 October 5-10 025 155 138 4 31,089 40,400
2008)*
Parliamentary Under-
Baroness Vadera (from 24 January 05 255 6 4 7 72575 12,589
2008)" 7 I
Lord Carter of Bares (from 3 - - =I - - - -
October 2008}*
lan Pearson MP® - - - - - - -
Jim Ftapatrick, MP (to 28 June - - — - - - 7570
20077"
Lord Truscott, MP (from 13 - - - - - - -
November 2006 to 29 June 2007
10
i
12
13
15
16
7
18
‘The figure may be different from the closing figure in last year’s accounts. Ths is due to the CETV factors being updated to comply with The Occupational
Pension Schemes (Transfer Values} (Amendment) Regulations 2008.
Salary figure quoted is forthe period 3 October 2008 to 31 March 2009, the full year equivalent is £106,356.
Salary figure quoted is for the period 1 April 2008 to 2 October 2008, the full year equivalent is £78,575. CETV stated as ‘at 31/03/09 isin fact at 2 October
2008, Salary for 2007-08 restated to include basic pay adjustment, paid in 2008-09. 2007-08 full year equivalent is £77,044.
‘The 2007-08 salary figure quoted is for the period 1 April 2007 to 29 June 2007, full year equivalent is £77,367.
Salary and pension details can be found in the Departmental resource accounts for 2008-089 of the Foreign and Commonwealth Office,
Salaty and pension details can be found in the Departmental resource accounts for 2007-08 of the Ministry of Defence.
‘The 2007-08 salary igure quoted is for the period 2 July 2007 to 31 March 2008, full year equivalent is £41,446,
Salary and pension details can be found in the Departmental resource accounts for 2008-09 of the Department for Intemational Development.
Elected not to draw a Ministerial salary and is not a member of the Parliamentary Contribution Pension Fund.
The 2007-08 salary figure quoted is forthe period 2 July 2007 to 25 January 2008, full year equivalent is £39,821
Salary and pension details can be found in the Departmental resource accounts for 2007-08 of the Foreign and Commonwealth Office.
‘The 2007-08 salary figure quoted is for the period 1 April 2007 to 29 June 2007, full year equivalent is £40,112.
Salary figure quoted is forthe period 1 April 2008 to 2 October 2008, the full year equivalent is £50,921. CETV stated as ‘at 31/03/09" isin fact at 2 October
2008. Salary for 2007-08 has been restated to include pay adjustment, paid in 2008-08.
Salary for 2007-08 has been restated to include basic pay adjustment, paid in 2008-08, of which £757.68 is a payment relating to previous appointment at the
Department for Intemational Development (DFID). The 2007-08 salary figure quoted is for the period 24 January 2008 to 31 March 2008, full year equivalent is
£71,895,
Salary and pension details can be found in the Departmental resource accounts for 2008-09 of the Department for Culture, Media and Sport.
Salary and pension details can be found in the Departmental resource accounts for 2008-08 of HM Treasury.
‘The 2007-08 salary figure quoted is for the period 1 April 2007 to 29 June 2007, full year equivalent is £30,446,
Elected not to draw a Ministerial salary and is not a member of the Parliamentary Contribution Pension Fund,
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Salary and pension entitlements for the senior managers of the
Department
3.108 The salary and pension entitlements of the most senior members of the Department
for Business, Enterprise and Regulatory Reform were as follows:
‘Acerued pension Real increase —-CETV at Real Salary including
atage 60at inpensionand 31/03/09 increase in performance pay
31/03/09 and related lump sum CETV
related lump sum atage 60
£000. £000 £000
Sir Brian Bender 75-80 plus 230-235, 0-2.5 plus 0-25 190-195
(to 6 April 2009) lump sum lump sum
John Alty 45-50 plus 140-145 0-25 plus 25-5 } 15 130-135
lump sum lump sum
Sir Andrew Cahr? 40-45, 025 824 740 15 245-250
Dominic Jermey (rom 28 March 2008} : :
Mark Clarke (to 19 June 2008) 05 025 87 59 9 65-70
(205-210 full year
7 7 I equivalent)
Hilary Douglas 50-55 plus 160-165, 0-28 plus 0-25 1.215 1,128 7 150-195
lump sum lump sum
Mark Gibson (to 20 March 2003) 50-55 plus 160-165, 0-25 plus 0-25 1.158 1.075 2135-140 (140-145 full
_ lump sum lump sum year equivalent)
Stephen Lovegrove 025 025 7 : 4 215-220
Vicky Pryce 5-10 plus 20-30 0-25 plus 25-5 206 164 28 200-205
lump sum lump sum
William Rickett (to 2 October 2008) 65-60 plus 175-180, 0-25 plus 0-2.5 1.242 1.191 3) 85-90 (155-160 full
tump sum lump sum _ - year equivalent)
Rachel Sandby-Thomas 20-25 255 332 286 46 120-125
plus plus
65-70 75-10
lump sum
Philip Rutnam (fram 23 March 2003) - - - - -I 0-5 (180-185 full
- I I i - I____year equivatent)
John Edwards (fram 1 July 2008) 08 025 B : 49° 105-110 (140-145 full
year equivalent)
Jitinder Kohli 15-20 plus 50-55, 0-25 plus 25-5 204 176 1 120-125
lump sum lump sum
‘The figure may be different from the closing figure in last year’s accounts. This is due to the CETV factors being updated to comply with The Occupational
Pension Schemes (Transfer Values) (Amendment) Regulations 2008.
2008-089 salary figure quoted includes salary earned in the period as Acting Permanent Secretary from 28 March to 31 March 2009,
Salary and pension details can be found in the resource accounts for 2008-09 of UK Trade & Investment (UKTI)
CETV stated as ‘at 31/03/08" is in fact at 19 June 2008.
CETV stated as ‘at 31/03/09" is in fact at 20 March 2009,
CETV stated as ‘at 31/03/09" is in fact at 2 October 2008.
Departrr
Ent
Annual Report and Accounts 2008-09
Sir Brian Bender
John Alty
‘Martin Bryant (to 1 July 2007}
Sir Andrew Cahn
‘Mark Clarke
Hilary Douglas
Mark Gibson
‘Anthony Inglese (to 3 March 2008)
‘Stephen Lovegrove (from 2 July 2007)
Scott Milligan (to 23 March 2008)
Vicky Pryce
William Rickett
Rachel Sandby-Thomas (from 31 March
2008F
Jitinder Kohli (from 1 April 2007)
period CETV for 2007-08
contractual rights
Opted out of the Pension Scheme.
payroll until 1 April 2008,
Notes
‘Accrued pension
atage 60 at
31/03/08 and
related lump sum
£000
70-75 plus 220-225
ump sum
40-45 plus 130-135
‘ump sum
5-10
40-45
05
50-55 plus 155-160
Jump sum
50-55 plus 155-160
‘ump sum
50-55 plus 160-165,
lump sum
40-45 plus 120-125
ump sum
5-10 plus 20-25
‘ump sum
55-60 plus 170-175
ump sum
15-20 plus 45-50
lump sum
CETV stated as ‘at 31/03/08’ is in fact at 3 March 2008.
Real increase
in pension and
related lump sum
at age 60.
£000
0-25 plus 5-75
lump sum
0-25 plus 25-5
lump sum
025
025
025
0-25 plus 2.5-5
lump sum
0.25 plus 8-75
lump sum
0.25 plus6-75,
lump sum
0-25 plus 0-2.5
lump sum
0-2.5 plus 2.5-5
lump sum
0-2.5 plus 5-7.5
{ump sum
0-25 plus 2.5-5
lump sum
Reform
Real
increase in
CETV
£000
Salary including
performance pay
£000
185-190
130-135
1155-160 (180-185 full
year equivalent)
225-230
195-200
150-155
140-145
130-135 (140-145 full
year equivalent)
+ 145-180 (170-175 full
a7 80 "
860 720 2B
62 Ey 2B
1.196 1,030 34
1.149 961 51
1226 1,046 37
961 949 9
7 128 30
1.260 1.063 47
199 186 10
CETV stated as ‘at 31/03/07’ isin fact at 4 March 2008 and CETV stated as ‘at 31/03/08" is in fact at 29 March 2008.
Joined the Department on 31 March 2008 and was paid by HMRC, her former employer to 31 March 2008. This officer will not appear an the Departments
year equivalent)
5-10 (115-120 full
year equivalent)
185-190
150-155
115-120
Due to certain factors being incorrect in last years CETV calculator there may be a slight difference between the final period CETV for 2006-07 and the start of
CCETV stated as ‘at 31/03/08" in fact at 1 July 2007. The salary amount excludes compensation but includes payments made in accordance with his
@ The information relates only to the most senior managers of the core department.
Similar information relating to the Chief Executives and most senior managers of
the executive agencies and other bodies of the BERR family is given in the
separate accounts of those bodies.
e “Salary” includes gross salary; performance pay or bonuses; overtime; reserved
rights to London weighting or London allowances; recruitment and retention
allowances; private office allowances and any other allowance to the extent that
it is subject to UK taxation.
e@ None of the most senior managers of the Department received any benefits in
kind during the
year.
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Ministerial pensions
3.109 Pension benefits for Ministers are provided by the Parliamentary Contributory
Pension Fund (PCPF). The scheme is made under statute (the regulations are set out
in Statutory Instrument SI 1993 No 3253, as amended).
3.110 Those Ministers who are Members of Parliament may also accrue an MP's pension
under the PCPF (details of which are not included in this report). The arrangements
for Ministers provide benefits on an ‘average salary’ basis, taking account of all
service as a Minister. The accrual rate has been 1/40th since 15 July 2002 (or 5 July
2001 for those that chose to backdate the change) but Ministers, in common with all
other employees of the PCPF, can opt for a 1/50th accrual rate and the lower rate of
employee contribution
3.111 Benefits for Ministers are payable at the same time as MP’s benefits become
payable under the PCPF or, for those who are not MPs, on retirement from
ministerial office from age 65. Pensions are increased annually in line with changes
in the Retail Prices Index (RPI). Members pay contributions of 6% of their ministerial
salary if they have opted for the 1/50th accrual rate or 10% of salary if they opted for
the 1/40th accrual rate. There is also an employer contribution paid by the Exchequer
representing the balance of cost as advised by the Government Actuary. This is
currently 26.8% of the ministerial salary.
3.112 The accrued pension quoted is the pension the Minister is entitled to receive when
they reach 65, or immediately on ceasing to be an active member of the scheme if
they are already 65.
Civil Service pensions
3.113 Pension benefits are provided through the Civil Service Pension (CSP)
arrangements". From 30 July 2007, civil servants may be in one of four defined
benefit schemes; either a ‘final salary’ scheme (classic, premium or classic plus); or a
‘whole career’ scheme (nuvos). The statutory arrangements are unfunded with the
cost of benefits met by monies voted by Parliament each year. Pensions payable
under classic, premium, classic plus and nuvos are increased annually in line with
changes in the RPI. Members joining from October 2002 may opt for either the
appropriate defined benefit arrangement or a good quality “money purchase”
stakeholder arrangement with a significant employer contribution (partnership
pension account).
3.114 Employee contributions are set at the rate of 1.5% of pensionable earnings for
classic and 3.5% for premium, classic plus and nuvos. Benefits in classic accrue at
the rate of 1/80th of pensionable salary for each year of service. In addition, a lump
sum equivalent to three years’ pension is payable on retirement. For premium,
benefits accrue at the rate of 1/60th of final pensionable earnings for each year of
service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a
hybrid with benefits in respect of service before 1 October 2002 calculated broadly
as per classic and benefits for service from October 2002 calculated as in premium.
"Further details about the CSP arrangements can be found at the website:
www.civilservice-pensions.gov.uk
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In nuvos a member builds up a pension based on the pensionable earnings during
the period of scheme membership. At the end of the Scheme year (31 March) the
member's earned pension account is credited with 2.3% of their pensionable
earnings in that scheme year and the accrued pension is updated in line with the RPI.
In all cases members may opt to give up (commute) pension for lump sum up to the
limits set by the Finance Act 2004.
3.115 The partnership pension account is a stakeholder pension arrangement. The
employer makes a basic contribution of between 3% and 12.5% (depending on the
age of the member) into a stakeholder pension product chosen by the employee
from a selection of approved products. The employee does not have to contribute
but where they do make contributions, the employer will match these up to a limit
of 3% of pensionable salary (in addition to the employer's basic contribution).
Employers also contribute a further 0.8% of pensionable salary to cover the cost
of centrally-provided risk benefit cover (death in service and ill health retirement).
There were no employer contributions by the most Senior Managers to partnership
pension accounts during the year.
3.116 The accrued pension quoted is the pension the member is entitled to receive when
they reach pension age, or immediately on ceasing to be an active member of the
scheme if they are already at or over pension age. Pension age is 60 for members of
classic, premium and classic plus and 65 for members of nuvos.
The Cash Equivalent Transfer Value
3.117 A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value
of the pension scheme benefits accrued by a member at a particular point in time.
The benefits valued are the member's accrued benefits and any contingent spouse's
pension payable from the scheme. A CETV is a payment made by a pension scheme
or arrangement to secure pension benefits in another pension scheme or
arrangement when the member leaves a scheme and chooses to transfer the
benefits accrued in their former scheme. The pension figures shown relate to the
benefits that the individual has accrued as a consequence of their total membership
of the pension scheme, not just their service in a senior capacity to which disclosure
applies. The figures include the value of any pension benefit in another scheme or
arrangement which the individual has transferred to the Civil Service Pension
arrangements. They also include any additional pension benefit accrued to the
member as a result of their purchasing additional years of pension benefits at their
own cost. CETVs are calculated in accordance with The Occupational Pension
Schemes (Transfer Values) (Amendment) Regulations and do not take account of any
actual or potential reduction to benefits resulting from Lifetime Allowance Tax which
may be due when pension benefits are taken.
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Real increase in CETV
3.118 This reflects the increase in CETV effectively funded by the employer. In the case of
ministerial pensions, this is effectively the element of the increase in accrued
pension funded by the Exchequer. It does not include the increase in accrued
pension due to inflation, contributions paid by the employee (including the value of
any benefits transferred from another pension scheme or arrangement) and uses
common market valuation factors for the start and end of the period.
Fees paid to Non-Executive Board Members
3.119 Below are the fees paid to the Non-Executive Board Members of BERR’s
Management Board. The total payments for the year to each person were in the
following ranges:
Dr. Brian Woods-Scawen CBE! aye) 5740)
Fields Wicker-Miurin OBE? 6-10 6-10:
Arnoud De Meyer (from July 2007)? 5-10 0-5
Roger Urwin CBE (from July 2007)? 5-10 0-5
Crawford Gillies (to June 2007)? 0-5
1 Fees paid for independent membership of the Management Board and chair of the Audit and Risk Committee
2 Fees paid for independent membership of the Management Board
3 Fees paid for independent membership of the Management Board and ex-officio Chair of the Audit and Risk Committee until the appointment ended
in June 2007
GRO
Simon Fraser
Principal Accounting Officer and Permanent Secretary
10 July 2009
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Financial Overview
Section 4.1
About the financial information in this Report
4.1 The financial information in this Report’” is shown from two different perspectives:
@ the budgeting boundary, which is the budgetary spend of the ‘Departmental
family’ (i.e. the Department and its delivery partners as described in annex 3); and
@ the Accounting boundary, which comprises the core Department and those of its
delivery partners that are consolidated in the Resource Accounts.
4.2 HM Treasury is aiming to align these boundaries and is making good progress
with its ‘Clear Line of Sight’ Project. The stated objective of this Project is "to
create a single, coherent financial regime, that is effective, efficient and transparent,
enhances accountability to Parliament and the public, and underpins the
Government's fiscal framework, incentivises good value for money and supports
delivery of excellent public services by allowing managers to manage”. BERR is
represented on the Expert Working Group supporting the Project. Implementation
of the new framework is planned to take place in 2010-11 (Budgets) and 2011-12
(Accounts).
4.3 The Departmental family delivers on its objectives through its budgets.
The Department is ultimately responsible for these resources and the bodies
who spend them. The financial tables at the end of sections in chapter 2, and
in annex 8 of this Report set out the total spend of all bodies within the
Departmental family. The budgetary spend shown here is published by HM
Treasury in the 2009 Public Expenditure Outturn White Paper (PEOWP).
? The financial information in this Report covers the accounting period 2008-09, prior to the creation
of the Department for Business, Innovation and Skills. All reference to ‘the Department’ or
‘Departmental’ should therefore be understood to refer to BERR
ee ee
47
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
4.4 The Department's audited Consolidated Resource Accounts in chapter 5
include only the following: the Department; the Department's elements of
the administration expenditure of UKTI, a joint BERR/FCO operation which
also includes the administration expenditure of the former Defence Export
Services Organisation which transferred to UKTI! with effect from 1 April
2008 under a Machinery of Government change from the Ministry of
Defence (since renamed the Defence & Security Organisation); the
Insolvency Service’”’ - an Executive Agency of the Department; and Acas
which is a Crown Executive Non Departmental Public Body (NDPB).
45 The other delivery partners within the Departmental family are not included
in the Consolidated Resource Accounts, although the cash funding of these
bodies is represented as Grant-in-Aid.
46 In common with other central Government bodies, the Department's
Consolidated Resource Accounts are audited by the NAO on behalf of the
Comptroller and Auditor General. Most of the Department's delivery partners
that sit outside the Accounting boundary produce their own Annual Report
and Resource Accounts which are available from their websites listed in
annex 3.
Other financial information
@ Section 4.2 provides the background to the way in which Accounting and
Budgeting in Government is managed and controlled, and explains how
this applies to BERR.
@ Section 4.3 looks specifically at the relationship between the
Department's Estimates, Budgets and Resource Accounts.
@ Section 4.4 provides a Financial Review of the year, including further
analysis of some of the key information in the Consolidated Resource
Accounts.
In October 2008, the work and staff associated with energy programmes were
transferred to the Department of Energy and Climate Change (DECC) through a
Machinery of Government change. The transfer also included the sponsorship
responsibility for the following NDPBs and Agencies: the Nuclear Decommissioning
Authority, the Coal Authority and the Civil Nuclear Police Authority. The transfer was
back dated to 1 April 2008.
° The Insolvency Service also receives monies, under the Insolvency Service Act 1986, which are
excluded from these accounts because they are subject to a different financial control
framework. Under Section 403 of the Act, sums are received from the realisation of assets from
bankruptcies and company liquidations. The monies are held by the Secretary of State and
interest earned on balances is surrendered to HM Treasury in accordance with Section 405 of the
Act. Further details are available in the published accounts of the Insolvency Service, which can
be obtained from www. insolvency.gov.uk
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Section 4.2
The resources available to the Department
4.8 The resources available to the Department, and how it reports on and is held
accountable for these resources, must be seen within the context of the wider
Government financial environment. This section sets out the broad principles of
Budgeting and Accounting in Government, explains some of the key terms which are
used and describes how the Department manages its resources in this context.
The Comprehensive Spending Review process
4.9 Comprehensive Spending Reviews (CSR) or Spending Reviews (SR) are the processes
by which the Government sets spending plans, usually for the coming three years.
They determine the overall Control Total (i.e. the Total Managed Expenditure (TME)).
TME is made up of two components, the Departmental Expenditure Limit (DEL) and
Annually Managed Expenditure (AME). The DEL is set annually within the context of
the Department's three-year CSR Settlement and AME is set in consultation with HM
Treasury through twice yearly reviews. DEL budgets for the three-year period 2008-09,
2009-10 and 2010-11 were set in CSRO7.
4.10 BERR’s CSRO7 Settlement gave the Department an approximately flat cash allocation
across the three CSR years, and, as with all Departments, directed that BERR must
meet or surpass the following cross-Government benchmarks:
@ at least three per cent net cashable value for money gains per annum; and
e five per cent annual real reductions in administration budgets.
Additionally, following an announcement in the Pre Budget Report (in November 2008),
BERR has to find value for money savings amounting to £27 million during 2010-11.
4.11 As part of the CSR process each Department has to publish an Asset Management
a4
Strategy’.
Fiscal Stimulus Programmes”
4.12, During 2008-09, BERR has announced, in outline through the Pre Budget Report (in
November 2008) a number of new programmes which are to be funded within the
CSRO7 Settlement and through the use of End Year Flexibilit° (EYF). These were as
follows:
@ the Enterprise Finance Guarantee;
e the Capital for Enterprise Fund; and
@ the Working Capital Scheme.
"The Asset Management Strategy document includes reference to energy-related assets as this
was published prior to the October 2008 Machinery of Government change. It is available at:
www.berr.gov.uk/files/file27454.pdf.
"° For further information see Notes 25.2 and 39 to the Accounts.
® See paragraph 4.29 for an explanation of End Year Flexibility.
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4.13 On 14 January 2009, the Secretary of State for Business announced a support
package designed to leverage £22 billion of lending — made up of the Enterprise
Finance Guarantee (£1.3 billion), the Capital for Enterprise Fund (£75 million), and
the Working Capital Scheme (£20 billion) — to help companies struggling to access
finance for working capital and investment in the current economic climate. The
Schemes are intended to support viable businesses that have been impacted
through a combination of the credit crunch and economic downturn, during which
lending conditions have tightened and payment periods extended.
4.14 On 27 January 2009, the Secretary of State announced a further £2.3 billion package
of loan guarantees to Britain's automotive manufacturers and large suppliers;
primarily to support investment in low carbon plant and research and development.
The guarantees to be made through this Automotive Assistance Programme will
unlock loans of up to £1.3 billion from the European Investment Bank and BERR will
offer guarantees to support up to a further £1 billion of lending, or loans where
appropriate, to cover worthwhile investments not eligible for European Investment
Bank support or which will bring special value to Britain.
4.15 As agreed with HM Treasury when designing the Schemes, during 2008-09, BERR
made Non Cash Calls on the Reserve of £21 million to fund a provision for the new
Enterprise Finance Guarantee and £25 million to fund potential defaults under the
new Automotive Assistance Programme.
4.16 A Trade Credit Insurance Scheme, one of the package of measures announced in
Budget 2009 was introduced on 1 May 2009 to help companies affected by
reductions in their credit insurance. The Scheme provides up to £5 billion of top-up
trade credit insurance to businesses who have suffered reductions in their level of
cover. This will be delivered as part of the Working Capital Scheme and will help
mitigate the cash flow constraints caused by the withdrawal of trade credit insurance
cover and constraints on the provision of working capital that this withdrawal has
created. From 1 May 2009 until 31 December 2009, UK businesses will be able
to purchase six months’ ‘top-up’ insurance from the Government if credit limits
on their UK customers are reduced.
4.17 Budget 2009 included further programmes designed to assist industry for which
additional funding was provided.
4.18 A Vehicle Scrappage Scheme for which additional funding amounting to £300 million
has been provided for 2009-10. This Scheme provides a £2,000 discount on new
vehicles bought by consumers scrapping a ten year old (or more) vehicle and which
they have owned for more than 12 months. The £2,000 discount is co-funded;
£1,000 will be from Government with the remainder coming from the manufacturer.
The Scheme, which was launched on 18 May 2009, will cease when the funding has
been fully utilised or at the beginning of March 2010, whichever is earlier.
4.19 Budget 2009 also established a £750 million Strategic Investment Fund (SIF), of
which:
e@ £250 million is ring-fenced to support a range of projects on renewable energy
and low-carbon business opportunities;
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e £50 million is for the Technology Strategy Board to support business innovation in
areas of UK capability with opportunities for future growth: and
e@ £10 million is for UK Trade & Investment (UKTI), to support a package of major
trade and investment events.
From Budgets to Estimates to Resource Accounts
4.20 The following paragraphs explain the process that BERR, in common with other
government departments, goes through to obtain the resources that are ultimately
reported on in its Resource Accounts, as well as explaining the differences between
budgets, Estimates and the Resource Accounts
The Department's Budget
4.21. The Departmental family measures and manages its expenditure through budgets.
The Department has two types of budgets, which are described below:
e DEL, which the Department can largely control, though some elements may be
demand-led. It is set annually within the context of the Department's three-year
financial Settlement determined in the CSR.
e AME, which is demand-led and volatile and, therefore, difficult to predict. AME
budgets are set in consultation with HM Treasury through twice-yearly reviews.
The majority of the Department's AME expenditure relates to the Post Office
Working Capital loan and the Redundancy Payments Service.
4.22 Within DEL and AME there are resource budgets (which are further broken down
into administration and programme budgets) and capital budgets.
4.23 Following the creation of DECC in October 2008 through a Machinery of Government
change, the Department's DEL budget for 2008-09 was reduced to £1,462 million
(2007-08"’: £1,606 million) and the AME budget to £824 million (2007-08: £20 million).
4.24 Some of the Department's DEL budgets are ring-fenced by HM Treasury. This means
that the budgets are allocated for specific purposes and any underspends generated
cannot be used in aid of other activities. 33% of the 2008-09 DEL was ring-fenced,
leaving £977 million available for discretionary allocation by the Department.
4.25 There are further classifications of expenditure within resource budgets termed ‘near
cash’ and ‘non cash’:
e Near cash items are transactions that result in real cash flows in the near future,
@.g. pay costs, the procurement of goods and services, and grants. Importantly
‘near cash’ also includes cash expenditure against provisions.
e@ Non cash items are components of Departments’ budgets that are included to
reflect the full economic cost of activities and the usage of long-term assets.
Non cash items include depreciation, impairments, cost of capital charges,
the profit or loss on disposal of assets and changes in provisions.
"” The 2007-08 figures have been restated to account for Machinery of Government changes.
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4.26 Capital within resource budgets includes expenditure of a capital nature which
does not result in capital assets owned by the Department or its delivery partners.
In Estimate and Resource Accounting terms the funding for this type of expenditure
is termed ‘Grants’ and treated as resource expenditure
4.27 BERR is responsible for all of the resources allocated to the Departmental family.
The Department has put in place a strong budgetary control process to effectively
discharge this responsibility.
4.28 The Department allocates annual budgets in March each year and monitors them on
a monthly basis. Forecasts of expenditure are reviewed monthly and updated where
appropriate. More in-depth reviews of forecasts are carried out quarterly with
particular emphasis on December reviews (as these are used by HM Treasury as a
basis for total spend across Government for the year) and February reviews (to
identify changes to be made through the Spring Supplementary Estimate). The
Director General, Finance delivers a corporate financial report to the monthly
Management Board, highlighting emerging issues and advising where action may be
required, and provides regular financial updates to the Secretary of State. During
2008-09, financial reports have also focused on how best to fund the new Fiscal
Stimulus Programmes and how to make savings to enable BERR to live within its
reduced budgets in 2009-10 and 2010-11
4.29 Budgets are usually amended via the Winter and Spring Supplementary Estimates
(see the following paragraph for an explanation of the Estimates process). Under
normal circumstances, the Supplementary Estimates provide access to savings in
DEL budgets achieved in previous years (a process known as End Year Flexibility) in
addition to other changes. However, due to the tight fiscal position, very limited
access to such savings has been possible.
The Estimates process
4.30 The Department's budgets are agreed in the CSR/SR process, but additionally
Parliamentary approval must be sought annually for the issue of public funds. Main
Estimates are the means by which Departments seek Parliamentary authority for
their spending each year. Since the Main Estimates are not voted by Parliament until
July each year, funding for the period from April to the end of July is voted alongside
the Winter Supplementary Estimate (known as the ‘Vote on Account’).
4.31 The detailed Estimates include DEL and AME expenditure of the consolidated
Department (as described in paragraph 4.21 above), and the Grant-in-Aid paid to the
other delivery partners that are not consolidated into the Accounts. This Grant-in-Aid
is essentially the provision of cash financing and is designated ‘non-budget’
expenditure.
4.32 Notes to the Estimates demonstrate the relationship between the Estimates total,
and the total budget for the Department, including its delivery partners. All changes
to the Department's budget are approved as part of the Estimates process.
4.33 The Department seeks approval from Parliament for its Main Estimates for the year
in April. Supplementary Estimates can then be submitted in the summer, winter and
spring. The Estimates follow a standard format, comprising a Request for Resources
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(RfR), which sets a limit on the resources required for the main Departmental activity,
a request for capital funding and a Net Cash Requirement (NCR), which represents
the actual cash made available by the Exchequer to fund the Department's activities.
4.34 Each Estimate is accompanied by a formal description (or ambit) of the services to be
financed under it. Funds voted by Parliament can only be used to finance services
that fall within the ambit of the Estimate.
The Resource Accounts
4.35 The Department's Estimate has a single RfR, entitled ‘To help ensure success in an
increasingly competitive world’. The Department also has a separate Estimate and
RfR for the effective management of the UKAEA pension schemes. These are
separate from the Consolidated Resource Accounts contained in this publication"”.
At the end of the year, the Department is required to report actual expenditure
against Estimates in its Consolidated Resource Accounts.
® Copies of the UKAEA Pension Accounts are available at from: www.ukaea.org.uk
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Section 4.3
Reconciling Estimates, Budgets and Resource
Accounts
4.36 As explained above, there are different boundaries for the Department's Estimates,
Budgets and Resource Accounts. This section explains their relationship and includes
the following reconciliations:
e Estimates to Resource Accounts: this shows how the Net Resource Outturn
(voted by Parliament), shown in the Statement of Parliamentary Supply on page
150 is reconciled to the Net Operating Cost which is shown in the Operating Cost
Statement in the Resource Accounts on page 151; and
e Resource Accounts to Budgets: this shows how the Net Operating Cost is
reconciled to the resource Budget Outturn shown on page 248.
Estimates to Resource Accounts
4.37 The Department's Estimate is reconciled to the Net Operating Cost through
three adjustments:
e The first adjustment adds expenditure that is included in the Operating
Cost Statement, but does not require formal approval by Parliament in
the Supply Estimates. For the Department, this comprises expenditure
on Statutory Redundancy Payments funded by the National Insurance
Fund, the cost of capital credit on the net liabilities of Royal Mail Holdings
ple and the cost of capital charge on the net assets of BNFL plc. Further
details are provided in Note 4 to the Resource Accounts.
e The second adjustment adds any Consolidated Fund Extra Receipts
(CFERs) which are classified as operating income and therefore included
in Net Operating Cost. These CFERs arise from the operating activities of
the Department, but are not classified as income for Estimates purposes.
The receipts are paid directly to HM Treasury.
e The third adjustment shows the difference between the amount of
operating income received and that authorised to be Appropriated-in-Aid
of expenditure.
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Resource Accounts to Budgets
4.38 There are four main types of adjustment required to reconcile resource
expenditure in the Operating Cost Statement in the Resource Accounts to
the resource expenditure of the Departmental family in the Department's
Budgets:
@ The first adjustment removes capital grants, which are classed as
resource items in the Resource Accounts, but as capital items in the
budgeting framework.
@ The second adjustment removes the cash Grant-in-Aid to the
Department's delivery partners, which, as explained at 4.31, is not
counted as budgetary expenditure.
@ The third adjustment adds the income and expenditure of these delivery
partners on an accruals basis.
@ The fourth adjustment removes those CFERs that are classed as being
outside of the budgeting boundary. There are usually other adjustments
depending on particular circumstances.
Reconciliation of Estimates to Resource Accounts to Budgets
Net Resource Outturn (Estimates) 1 1,503,843 1,915,239
Adjustment in respect of
‘Non Supply expenditure in the Operating Costs Statement (OCS) 2 246,318 155,852
Consolidated Fund Extra Receipts (CFERs) in the OCS 643,156 274,407
Excess Appropriations in Aid 3 -260 213,663
Net Operating Cost (Accounts) 1,106,745 1,583,021
‘Adjustment in respect of
Capital Grants treated as Resource in Accounts, but Capital in Budgets 4 163,136 210619
Expenditure in OCS not included in Budgets (GiA) 5 “1,917,113 1.864.671
Resource consumption of delivery partners 2,145,594 2,042,391
OtherCFERS not inBudgets —sSSC G8 870
Budgeting classification differences 6 638,900 267.400
Other 7 147,086 13,508
Resource Budget Outturn (Budget) a {tt 1,965,535 «1,849,600
DEL 1,371,384 1,599,996
‘AME — I _ 594,201 249,604
Notes:
1. Disclosed in the Statement of Parliamentary Supply on page 180 of the Accounts
2, See note 3.1 to the Resource Accounts
3. The amount of operating income received in excess of that authorised to be Appropriated-in-Aid
4. Capital grant receipts in excess of expenditure
5. Mainly grant in aid payments to delivery partners
6. This covers two items: the Special dividend fram BNFL is treated as Resource in Accounts, but Capital in Budgets, and payments to British Shipbuilders
are treated as Capital in Accounts, but Resource in Budgets
7. Mainly relates to adjustments to Accounts after PEOWP deadline for budgeting outtuns
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Section 4.4
Financial Review
4.39 This section reviews the Department's results for 2008-09. It analyses the
performance of the consolidated Department in the context of the Resource
Accounts, and compares the Department's Outturn to its final Estimate.
The Primary Statements in the Consolidated Resource Accounts
4.40 The primary statements in the Consolidated Resource Accounts comprise:
e the Statement of Parliamentary Supply;
@ the Operating Cost Statement;
@ the Statement of Recognised Gains and Losses;
e the Balance Sheet;
e the Consolidated Cash Flow Statement; and
e the Consolidated Statement of Operating Costs by Departmental Strategic
Objectives.
Statement of Parliamentary Supply
4.41 This is the accountability statement for parliamentary reporting purposes. It records
the Net Resource Outturn compared to Estimate and only includes expenditure and
income (Appropriations-in-Aid) allowable against the Estimate. Explanation of why the
Outturn in 2008-09 was different from the Estimate is given in paragraph 4.44. This
statement also includes a comparison of non-operating cost Appropriations-in-Aid
with the amount voted by Parliament in the Estimate and discloses amounts payable
to the Consolidated Fund as Extra Receipts (CFERs).
4.42 Non-operating Cost Appropriations-in-Aid reduced by £657 million, from £6,483
million in 2007-08" to £5,826 million in 2008-09 mainly due to a reduction in
payment levels under the Post Office Working Capital loan offset by a £232 million
redemption in the NLF loans, lent on to Royal Mail Holdings Plc.
4.43 CFERs increased by 8% from £842 million in 2007-08 to £906 million in 2008-09.
4.44 The Net Resource Outturn for 2008-09 (as shown in the Statement of Parliamentary
Supply) was £1,504 million. This is a decrease of £411 million compared to the
Outturn for 2007-08 of £1,915 million. This compares to a final Estimate of £1,519
million, giving an underspend of £15 million. The most significant reasons (where the
variance is greater than £0.5 million and 10% of the Estimate) for the underspend are
given below. (The disclosure here is based on Note 2 to the Resource Accounts, on
page 163.) Analysis of net Outturns from the budgeting perspective is included in
section 5.5 and in annex 8.
’° All 2007-08 figures have been restated to account for Machinery of Government changes.
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e Providing the professional support, capability and infrastructure to enable BERR’s
objectives and programmes to be successfully delivered (Estimate Function AG)
— Net Outturn was £61 million (26.6%) less than the Estimate mainly as a result
of a reduction in an onerous lease provision.
Delivering free and fair markets, with greater competition for businesses,
consumers and employees (Estimate Function Al) — Net Outturn was £4 million
(11.2%) more than the Estimate. This was due to Paternity Pay and Adoption Pay
take-up being more than the forecast modelling had predicted.
e Ensuring that the Government acts as an effective and intelligent shareholder,
and providing a source of excellent corporate finance expertise within
Government (Estimate Function AK) — Net Outturn was £13 million (223%) less
than the Estimate due to an overall reduction in the level of the provisions for
UKAEA's decommissioning and restructuring.
e Delivering free and fair markets, with greater competition for businesses,
consumers and employees (Estimate Function Y) —- Net Outturn was £15 million
(30.2%) less than the Estimate due to Consumer Focus setup costs not being
realised until later than expected. The organisation did not come into existence
until 1 October 2008.
e Ensuring that the Government acts as an effective and intelligent shareholder, and
providing a source of excellent corporate finance expertise within Government
(Estimate Function AM) - Net Outturn was £2 million less than the Estimate due
to UKAEA's Grant-in-Aid requirement being less than originally estimated.
Operating Cost Statement
4.45 The Operating Cost Statement is similar to an Income and Expenditure Account in
not-for-profit bodies and includes all operating income and expenditure relating to the
consolidated bodies on an accruals accounting basis, including that which sits
outside the Estimate. The Net Operating Cost for 2008-09 was £1,107 million, a
decrease of £476 million compared to the restated figures (reflecting the MoG
change), for 2007-08 of £1,583 million.
4.46 The differences between Net Operating Cost and Net Resource Outturn are
disclosed in Note 3 to the Resource Accounts. The main differences relate to
expenditure on Redundancy Payments funded from the National Insurance Fund,
the cost of capital charge on the net assets and liabilities of BNFL ple and Royal Mail
Holdings plc, which are not included in Estimates; and any income payable to the
Consolidated Fund (including excess Appropriations in Aid) which is included in the
Operating Cost Statement.
4.47 Operating income includes dividends declared by Companies House and BNFL plc.
The Companies House dividend, at £2.2 million, represents the return on investment
of Public Dividend Capital (PDC). It is calculated as a return of 3.5% on the
Companies House average capital employed. The special dividend from BNFL plc,
amounting to £632 million, represents a further interim amount agreed by the BNFL
Board to be paid to the Department as the company continues with its sale of
various areas of its business.
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4.48 Grant-in-Aid and other grants represented 81% of gross expenditure for programmes
in 2008-09 — this ratio was 89% in 2007-08.
4.49 Total expenditure on consultancy (including BERR’s consolidated bodies),
according to definitions issued by the Office of Government Commerce (OGC),
amounted to £21.7 million in 2008-09. The majority of Departmental expenditure on
consultancy (89%) is recorded under administration costs.
4.50 The consolidated spend on staff substitution/interim management amounted to
£5 million.
4.51 Research and Development costs are shown in Notes 10 and 11 to the Resource
Accounts.
Statement of Recognised Gains and Losses
4.52 This Statement reflects the unrealised element of revaluations to fixed assets and
investments. These gains have not been reflected in the Operating Cost Statement.
Balance Sheet
4.53 The Balance Sheet discloses the assets and liabilities of the Department at the
Balance Sheet date. The main changes in the Department's assets and liabilities
during the year are described below. The Consolidated Department had total Net
Assets of £2,018 million in 2008-09 compared to £2,046 million in 2007-08. The main
reasons for this change relate to movements in the value of the Launch Investment
portfolio and the increase in the Small Firms Loan Guarantee Scheme liabilities.
4.54 Tangible fixed assets increased by £14.5 million resulting from an increase in assets
under construction including work on improvements to leasehold buildings on the
BERR estate and expenditure on major IT projects.
Royal Mail Holdings Plc
4.55 Royal Mail Holdings pic is wholly owned by Government. Its core operating
subsidiary is Royal Mail Group Limited (mails business). Post Office Limited (POL)
is the subsidiary of the Group that provides the post office network arm of the
business. The Government has provided financial support to the Royal Mail Group
of companies via debt financing and subsidy payment.
Debt Financing
4.56 On 26 March 2007, the Department announced finalisation of a new financing
framework for Royal Mail. Part of this framework included borrowing facilities of
£1.2 billion (£900 million of National Loan Fund — NLF facilities and a £300 million
Shareholder Loan). These were put in place to assist Royal Mail with implementation
of its existing business transformation plan. The new facilities replaced the
£1.044 billion of borrowing facilities made available to Royal Mail from 2003 to 2007.
Royal Mail utilised the Shareholder Loan in full on the 17 March 2009.
4.57 On 6 February 2001, Royal Mail utilised in full a £500 million NLF loan facility that
was made available to it, to assist with the company’s international acquisitions,
primarily German Parcel, which now forms Royal Mail's European parcels business —
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GLS. This facility comprises twenty separate tranches of £25 million each, the first
tranches of which do not begin to mature until 20 March 2021. Royal Mail makes
bi-annual interest payments on the loan amounting to £29 million per annum.
4.58 The Department has also made available to POL, through an agreement reached on
17 October 2003, a revolving loan facility based on commercial terms of up to
£1.15 billion. This is to help the company fund its working capital cash requirements
in branch. POL began utilising this facility on 1 December 2003. The facility matures
on 31 March 2011 and the outstanding balance as at 31 March 2009 was £19imillion.
Post Office Network Support
4.59 The Government has demonstrated its continuing commitment to a sustainable
future for the Post Office by the scale of its investment of up to £1.7 billion in the
network. This funding includes an annual subsidy of £150 million to support some
7,500 non-commercial branches which might not survive without Government
subsidy. These non-commercial branches are in urban as well as rural communities.
Payments of £77 million and £75 million were also made to POL under section 8 of
the Industrial Development Act 1982. These payments assisted POL in covering its
losses as it implemented its transformation plan. All these payments are made
under the terms of the current funding package, which runs until March 2011.
Launch Investments
4.60 The Department provides support to the aerospace industry in the form of
investments in the development of aerospace products covered by the Department's
portfolio of Launch Investment contracts. The investments are repayable to the
Department at a real rate of return, usually via levies on subsequent sales of the
products developed. The expected cash flow from levies is discounted, and forecasts
of sales and the resulting levies determine the value of the portfolio.
4.61 During 2008-09, the value of the investment fell by £35 million from £1,508 million at
the end of 2007-08 to £1,473 million at the end of 2008-09, as a result of levy income
ie. the repayment of the investment offset by amortisation and an increase in the
revaluation.
Capital for Enterprise Limited
4.62 Capital for Enterprise Limited (CfEL) was established in 2007-08 to manage the
Department's equity investment fund and loan guarantee programmes. CfEL
commenced full business activity on 1 April 2008. The Department owns 49,901
shares and provides cash funding as Grant-in-Aid. The Small Firms Loan Guarantee
Scheme, one of the loan guarantee programmes, was closed to new applications
during 2008-09 and has been replaced by the Enterprise Finance Guarantee which is
also managed by CfEL. In February 2009 CfEL created two wholly owned
subsidiaries: Capital for Enterprise GP Ltd (CfE GP) and the Capital for Enterprise Fund
Managers Ltd (CfE FM Ltd) to facilitate co-investment with the private sector in the
new Capital for Enterprise Fund.
Department for Busin Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Nuclear Provisions
4.63. The Department has retained the liability to cover the costs of the decommissioning
of the United Kingdom Atomic Energy Authority (UKAEA) Culham site. In 2008-09
this amounted to £154 million.
British Shipbuilders
4.64 The Department has taken on responsibility for providing funds to the British
Shipbuilders Corporation for liabilities arising from personal injury to former
employees as a result of exposure to asbestos, to the extent that these liabilities
cannot be met from residual funds of the Corporation.
4.65 The total liability increased by £2 million from £116 million at the end of 2007-08 to
£118 million at the end of 2008-09. There was a £9 million increase in the provision
as a result of a transfer of liabilities from DWP offset by a discharge of liabilities in
year amounting to £7 million. The £9 million increase reflects the transfer of
responsibility for funding initial payments made to mesothelioma sufferers by DWP.
In future, BERR will fund reimbursements to DWP from the provision for British
Shipbuilders’ Liabilities, where a claimant has entitlement to compensation for
mesothelioma and DWP has already made some payment of benefit to the claimants.
New provisions
4.66 During 2008-09 it was announced that the Department would be running a new
Icelandic Water Trawlermen Compensation Scheme following a report of the
ombudsman in 2007, and an announcement in the Commons in December 2008. As a
result the Department created a new provision amounting to £7 million to cover the
forecast of future compensation payments. In addition, the Department created a new
provision for asbestos related claims from former dockers, regulated by the National
Dock Labour Board (NDLB). The undiscounted liability is estimated to be £9 million.
Further information about both of these provisions is provided in Note 24.
Other provisions
4.67 Other provisions have decreased by £61 million from £268 million to £207 million.
This was mainly due to a combination of changes in the provision for the Early
Retirement liabilities based on the actuarial assumptions and the cost of index
linking and a reduction in the onerous lease provision on properties that are
determined surplus to existing and future requirements under the Department's
accommodation strategy.
Revaluation reserve
4.68 The Revaluation Reserve, which records gains/losses on the revaluation of assets in
the period, stands at £57 million at 31 March 2009, compared to £108 million at
31 March 2008. The reduction is largely due to net changes to the value of the
Launch Investment portfolio.
Cash Flow Statement
4.69 The Cash Flow Statement includes the net cash outflow from operating activities,
capital expenditure and financial investment, receipts and payments to the
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Consolidated Fund and financing, resulting in the net increase or decrease in the
Department's cash in-year. The notes supporting the working of the Cash Flow
Statement may be found on page 153. The Department also has to estimate how
much cash it is going to need in the year, which is called the Net Cash Requirement
(NCR). The amount of cash required to fund the Department's activities during
2008-09 was £1,475 million compared to an Estimate of £2,463 million, an
underspend of £988 million.
4.70 The underspend was mainly due to:
@ the decrease (rather than the forecast increase) in Debtors; and
@ the estimated cash requirement for the Post Office working capital loan (£610
million) which is set to cover the maximum possible cash call allowable in year
under the loan arrangements; outturns for 2008-09 meant that only £197 million
of this was required at year end.
Statement of Operating Cost by Departmental Strategic Objectives
4.71 The Statement of Operating Costs by Departmental Strategic Objectives (DSOs)
shows how resources, as set out in the Operating Cost Statement, have been
deployed to each DSO. These are outlined in chapter 1 and assessed in chapter 2
Financial Reporting Standards 25, 26 and 29
4.72 The Consolidated Resource Accounts include, for the first time, the affects of
adopting Financial Reporting Standards (FRS) 25, 26 and 29 — the standards relating
to financial instruments. These Standards are intended to enhance financial
statement users’ understanding of the significance of financial instruments to a
Department's financial position, performance and cash flows and the nature and
extent of risks arising from financial instruments, to which there is exposure during
the period and at the reporting date, and how the Department manages those risks.
4.73 The Consolidated financial statements contain prior period adjustments to reflect: (a)
a change in the fair value of the Insolvency Service's debtors, as they are discounted
for the first time, leading to an interest charge of £2.6 million being taken to
reserves; (b) the first-time recognition of a financial guarantee of the core
Department — previously a contingent liability — in relation to the High Technology
Fund, which resulted in an adjustment of £672,000; and (c) the classification of the
SFLGS and EFG as financial guarantees, with each guarantee valued initially at fair
value and subsequently measured at the higher of fair value and the amount
determined in accordance with FRS 12 (Provisions, Contingent Liabilities and
Contingent Assets), resulting in an increase in liabilities of £30 million and a
corresponding increase in debtors to reflect premium income unearned at
1 April 2008.
Department for Busin: Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Risks and uncertainties that might affect the Department's long-term position
4.74 The Management Board reviews each month (except August) the Department's
principal risks that might impact on the organisation's position either in the
immediate or long term future. These risks are based upon the following strategic
themes:
@ changing environment;
e influencing; and
@ organisational capacity.
Pension liabilities
4.75 The Department's staff can become members of one of the Principal Civil Service
Pension Schemes (PCSPS). The Department's employer's contributions into the
Schemes are reflected in the Resource Accounts within Staff Costs.
4.76 The PCSPS are unfunded multi-employer defined benefit schemes and the
Department is consequently unable to identify its share of the underlying assets and
liabilities. There is therefore no reflection of the Schemes on the Department's
Balance Sheet. Further details can be found in Note 9 to the Resource Accounts.
Payment of suppliers
4.77. The Department's policy is to comply with the Institute of Credit Management's
Prompt Payment Code, and in February 2009 the Department became an approved
signatory to the Code. Whilst the Department's standard terms and conditions for
the supply of goods or services specify payment within 30 days of receipt of a valid
invoice the Department has, since October 2008, aimed to pay all valid invoices
within ten days of receipt. This is in line with the commitment made by the Prime
Minister on 8 October 2008.
4.78 In 2008-09, the core Department paid 99.6% of undisputed invoices within the
30 day target (100% in 2007-08), and the consolidated Department paid 99.2% of
undisputed invoices (99.1% in 2007-08). Since November 2008, the first full month
of recording achievement against the ten day target, the core Department paid
96.1% of undisputed invoices within ten working days.
Charging Policy
4.79 BERR provides only a limited number of services within the core Department for
which it charges fees. Any such fees are set to comply with the cost allocation and
charging requirements set out in HM Treasury and Office of Public Sector
Information guidance. The Insolvency Service sets its fees to recover costs. It has a
range of fees covering three areas: case administration where fees reflect the
average costs of administering bankruptcy cases and compulsory company
liquidation cases; insolvency practitioner regulation where fees include the cost of
authorising and monitoring insolvency practitioners and registering individual
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voluntary arrangements; and estate accounting where fees reflect the cost of
financial transactions on insolvency cases using the Insolvency Services Account.
Post balance sheet events
4.80 Fora list of Post Balance Sheet Events see Note 39 to the Resource Accounts.
Auditors
4.81 These financial statements have been audited, under the Government Resources
and Accounts Act 2000, by the Comptroller and Auditor General (C&AG), who is
appointed under statute and reports to Parliament. The audit opinion is on pages 147
to 149. The notional cost to the Department of the external audit of the core Account
by the National Audit Office for the C&AG was £220,000 (2007-08 — £240,000). The
total cost of work on the Consolidated Account was £299,500 (2007-08 — £309,000).
4.82 In addition the notional cost of the review of the restatement of balances under
International Financial Reporting Standards (IFRS), was £13,500 for the core
Department. The total cost of the review of the restatement of balances for the
Consolidated Account was £32,500.
4.83 Drawing upon an NAO report, the Committee of Public Accounts published two.
reports focused on the Department's work in 2008-09:
e@ Government Preparations for Digital Switchover (28th Report of 2007-08, HC 416,
26th June 2008).
e Reducing the cost of complying with regulations: the delivery of the
Administrative Burdens Reduction programme 2007 (32nd Report of 2007-08,
HC 363, 2nd June 2008).
4.84 The NAO also published reports on:
The Administrative Burdens Reduction Programme, 2008. The Report examined the
progress reported at the end of 2007 by departments in reducing the administrative
burdens on businesses of complying with regulations. It found that initiatives to
reduce such burdens have helped improve business perceptions of the Government's
approach to regulation but businesses have not reported a reduction in the time
taken to comply with regulations. The Programme had provided an impetus across
departments to reducing burdens. In 2007 departments had implemented over 150
specific measures to reduce administrative burdens and the majority predicted that
they will meet their reduction target by 2010. There had also been a small positive
shift in businesses’ perceptions about regulation. However, the report concluded that
the total reported in-year savings of £800 million should be treated with caution, as
they were indicative estimates and have been subject to only limited independent
validation. And only 1% of businesses believed that complying with regulation had
become less time consuming in 2007 and 40% said it has become more time
consuming. (HC 944, Session 2007-08, published 7 October 2008).
Delivering High Quality Impact Assessments. This report examined the work of the
the Better Regulation Executive to improve the quality of departments’ assessments
of the likely impact of new regulations. The Report concluded that the introduction of
ee ee
4.85
artment for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
new processes had strengthened scrutiny and improved the quality of impact
assessments in several respects. There was a sharper presentation of results, better
planning for post-implementation review and a greater incidence of quantification of
costs and benefits. But there remained a wide variation between the best and worst
impact assessments and fewer presented an analysis of the costs and benefits for a
range of options or summarised an implementation plan. It recommended that
further improvements were needed for impact assessments to fully play their part in
helping to ensure that new regulations deliver the intended benefits in a cost-
effective manner. (HC128, Session 2008-09, published 30 January 2009.)
UK Trade & Investment: Trade Support. The report examined whether UK Trade &
Investment is delivering successfully its trade support strategy. The report concluded
that it was close to achieving its targets of assisting 20,000 businesses in a
12-month period, delivering high quality and satisfaction ratings and improving
business performance. UK Trade & Investment, however, lacked sufficiently robust
measures of the costs of delivering specific services. It was therefore not in a
position to gauge reliably the efficiency of its different activities, the contribution of
different parts of the organisation to these services, nor the relative costs and
benefits of the different services it provides. The Report recommended that UK
Trade & Investment should improve its limited costing model to estimate the unit
cost of each of its services and use this information to review the range of services;
and target resources on those which are most cost effective. (HC297, Session
2008-09, published 3 April 2009.)
After the end of the financial year, on 5 June 2009, the NAO published an additional
report relating to the Department:
BERR's oversight of the Post Office Network Change Programme. Due to threats to
the viability of the Post Office network, BERR agreed to a programme to reduce the
total number of post office outlets to approximately 12,000, compared with some
14,000 when the Programme began in 2007. The closures were part of a larger plan
aimed at returning Post Office Ltd to profitability by 2010-11 (net of regular subsidy
payments). The plan also included action to improve efficiency and Post Office Ltd's
financial performance, and to sustain and increase revenues. The plan was supported
by funding from the Department of up to £1.7 billion over five years, including a
subsidy from the taxpayer of £150 million a year, reflecting the role Post Offices play
in the local community. The report found that the Department evaluated the social
and economic value of supporting the reduced network, and had asked Postcomm to
commission further research, but did not plan ongoing monitoring of the social or
economic benefits. The programme had largely met its targets and complied with
the undertakings given by the Departmental at its start. The programme was forecast
to be under-budget — at March 2009, the projected final costs for the programme
were £161 million, down from the original estimate of £176 million. After completion
of the programme, Post Office Ltd planned to deliver savings of £45 million a year.
The ongoing benefits of the programme would exceed the one-off costs of the
programme, notably the cost of compensating sub postmasters, from 2011-12
onwards. However, Post Office Limited's handling of some closures suffered from
poor communication, causing resentment among some local customers. The
programme of putting in place at least 500 new Outreach services, such as mobile
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post offices, was planned to be complete by late 2008 but at March 2009, 433 of the
minimum 500 planned services were open. Planned refurbishments to nearly 700
existing post offices expected to take more business as a result of closures have
been completed in only 447 post offices. (HC 558, Session 2008-09, published 5
June 2009.)
4.86 In addition, the NAO is currently engaged on work in the following main areas:
e Support for small business: access to equity finance; and
@ The sale of British Energy.
Disclosure of audit information
4.87 As Accounting Officer, as far as I am aware there is no relevant audit information of
which the Department's auditors are unaware. I have taken all of the steps that I
ought to have taken to make myself aware of any relevant audit information and to
establish that the Department's auditors are aware of that information.
Simon Fraser
Principal Accounting Officer and Permanent Secretary
10 July 2009
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Section 5.1
Statement of Accounting Officer’s responsibilities
5.1. Under the Government Resources and Accounts Act 2000, HM Treasury has directed
the Department for Business, Enterprise and Regulatory Reform (BERR) to prepare,
for each financial year, Resource Accounts detailing the resources acquired, held or
disposed of during the year and the use of resources by the Department during the
year. The Accounts are prepared on an accruals basis and must give a true and fair
view of the state of affairs of the Department and of its net resource outturn,
resources applied to objectives, recognised gains and losses and cash flows for the
financial year.
5.2 In preparing the Accounts, the Accounting Officer is required to comply with the
requirements of the Government Financial Reporting Manual and in particular to:
@ observe the Accounts Direction issued by HM Treasury including the relevant
accounting and disclosure requirements, and apply suitable accounting policies on
a consistent basis;
@ make judgements and estimates on a reasonable basis;
@ state whether applicable accounting standards, as set out in the Government
Financial Reporting Manual have been followed, and disclose and explain any
material departures in the Accounts; and
@ prepare the Accounts on a going concern basis.
5.3. HM Treasury has appointed the Permanent Secretary of the Department as
Accounting Officer of the Department. The responsibilities of an Accounting Officer,
including responsibility for the propriety and regularity of the public finances for
which the Accounting Officer is answerable, for keeping proper records and for
safeguarding the Department for Business, Enterprise and Regulatory Reform’'s
assets, are set out in Managing Public Money as published by HM Treasury.
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Section 5.2
Statement on internal control
Introduction
5.4
This is the last Statement on Internal Control for the Department for Business,
Enterprise and Regulatory Reform (the Department). It ceased to operate on 5 June
2009 following the creation of the new Department for Business, Innovation and
Skills (BIS), which merged the work of BERR with the work of the former
Department for Innovation, Universities and Skills (DIUS). References made in the
document about planned actions to improve the system of internal control within the
Department will be relevant for BIS.
Scope of responsibility
5.5
5.6
5.7
5.8
As Accounting Officer, my predecessor had responsibility for maintaining a sound
system of internal control that supported the achievement of the Department for
Business, Enterprise and Regulatory Reform’s policies, aims and objectives, whilst
safeguarding the public funds and departmental assets for which he was personally
responsible, in accordance with the responsibilities assigned to him in Managing
Public Money.
Although I was not in post during the accounting period for the 2008-09 Statement
on Internal Control, my predecessor, Chairman of the Audit Committee and Head of
Internal Audit advised me about the control environment that operated in the
Department up to the approval of the Annual Report and Accounts.
The Department's role was to help to ensure business success in an increasingly
competitive world by:
® promoting the creation and growth of business and a strong enterprise economy
across all regions;
@ ensuring that all Government Departments and agencies deliver better regulation
for the private, public and third sectors;
e delivering free and fair markets, with greater competition, for businesses,
consumers and employees;
@ ensuring that Government acts as an effective and intelligent shareholder and
provides a source of excellent corporate finance expertise within Government;
and
@ providing the professional support, capability and infrastructure to enable BERR’s
objectives and programmes to be successfully delivered.
In supporting Ministers in pursuit of this, my predecessor was supported by:
e@ The Department's Management Board which he chaired. It comprised the core
operational Directors General; Chief Executive UKTI; and three Non-Executives.
The Director of Communications and the Director of Business Environment Unit
both attended the Management Board. The Board met monthly, except August,
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and worked with Ministers to set the Department's strategy and allocate
resources, agree business plans and monitor Departmental performance, assess
risks/issues which could undermine the Department's strategy/business plan,
assess Departmental capability and plans for the future and set standards, values
and controls.
@ The following three Committees supported the role of the Management Board:
— Audit and Risk Committee
— Executive Committee
- Operating Committee
@ The Secretariat, who proactively managed the governance of Board and
Committee agendas and provided strategic input, took minutes, and recorded
follow up on decisions and action points.
5.9 My predecessor worked with Ministers and the Department's top management
through the Management Board, other meetings and correspondence. He involved
Ministers in the management of risk at a strategic level, considering major factors
that could prevent Departmental objectives being achieved.
The purpose of the system of internal control
5.10 The system of internal control was designed to manage risk to a reasonable level
rather than to eliminate all risk of failure to achieve policies, aims and objectives; it
could therefore only provide reasonable and not absolute assurance of effectiveness.
The system of internal control was based on an ongoing process designed to identify
and prioritise the risks to the achievement of departmental policies, aims and
objectives, to evaluate the likelihood of those risks being realised and the impact
should they be realised, and to manage them efficiently, effectively and
economically. The system of internal control was in place in the Department for
Business, Enterprise and Regulatory Reform for the year ended 31 March 2009 and
up to the date of approval of the Annual Report and Accounts, and accords with
Treasury guidance.
Capacity to handle risk
5.11 The Management Board took the lead in embedding risk management in the
organisation and reviewed each month the key risks facing the Department. During
the year, the Board decided to revise its list of key risks to reflect the changing risk
environment facing the Department as a result of the economic downturn. An
exercise was undertaken with the Board to determine the key strategic themes for
the Department and the main risks associated with these in the current climate. The
new set of risks was approved by the Board in January 2009.
5.12. The Board also reviewed twice during the year the long term risks that may pose a
significant threat to the Department in the future. As part of performance reporting,
the Board also received each quarter, a register of emerging risks that had been
identified at Group level for potential escalation to the Board.
5.14
The
5.15
5.16
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
During 2009-10, a new risk management framework will be developed to take
account of the merger between BERR and DIUS. The risk management policy will be
updated to reflect the new arrangements and endorsement sought from the Audit
and Risk Committee.
Guidance was available to all staff on risk management through the Risk Management
Intranet site, which was revised and updated each month. In addition to a risk
management policy, specific guidance was available on undertaking risk self
assessment which included guidance on applying risk management as an integral part
of the Department's business planning process. Risk management workshops were
available to all staff and practical guidance on its application was incorporated into a
wide range of training courses. These courses covered all ranges of staff in the
Department and were tailored to be appropriate to their authority and duties. The
National School of Government prepared an e-learning package on risk management
which was made available to BERR staff in May 2009.
risk and control framework
The risk management framework for the Department operated through the initial
identification of risks, as part of the business planning process, which threatened the
achievement of the Department's objectives. These risks were then evaluated in
terms of impact and probability. Consideration was then given to the actions required
to effectively manage each risk. This process established the level of residual risk
against which the Department was exposed and which was monitored over time as
part of performance management. Ownership for each risk was assigned to a named
individual. Assurance that risk mitigation activities are appropriate was obtained
through regular management reviews and Internal Audits of the key activities
undertaken in the Department.
Throughout 2008-09 the Department's Risk Support Team continued to work with
colleagues to embed risk identification and assessment into the early stages of key
decision making processes such as business planning and performance
management, policy-making and project management. The Risk Support Team
worked in partnership with a number of policy and project teams to help embed risk
management within their activities.
Review of effectiveness
5.17
As the current Accounting Officer, I have responsibility for reviewing the
effectiveness of the system of internal control. My review of the effectiveness of the
system of internal control was informed by the work of the internal auditors and the
executive managers within the Department who had responsibility for the
development and maintenance of the internal control framework, and comments.
made by the external auditors in their management letter and other reports. I had
been advised on the implications of the results of my review of the effectiveness of
internal control by the Management Board and, the Audit and Risk Committee, and a
plan to address weaknesses and ensure continuous improvement of the system was
in place.
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5.18 The effectiveness of the system of internal control was reviewed by my Directors
General who each provided a Statement on Risk Management, Internal Control and
Corporate Governance for their Group, informed by returns or opinions they
themselves received from their Heads of Management Units. The Chairman of the
Audit and Risk Committee and the Director of Internal Audit reviewed each
Statement and Representation with the relevant Director General and discussed the
key findings with me.
5.19 The Department's Agencies and consolidated delivery partners also conducted a
review of the effectiveness of internal control in preparing a Statement on Internal
Control for their Annual Accounts. A similar process was applied to that in the
Department and the signed statements from each Chief Executive formed part of
the Department's overall assurance on internal control.
5.20 The Department also had arrangements, tailored to each particular situation, for
monitoring those sponsored bodies which were not consolidated into the
Departmental Resource Accounts but where these bodies participated in the delivery
of Departmental objectives. Monitoring arrangements were in place as needed for
other bodies where the Department had policy lead within Government.
5.21. The Audit and Risk Committee provided independent advice to give assurance to the
Management Board on internal control issues, the Internal Audit work programme
and the progress being made in embedding risk management within the
organisation. My predecessor and then I attended the Committee and maintained a
dialogue with the Chairman. The Chairman also sat as a Non-Executive Board
Member on the Management Board. The Audit and Risk Committee undertook a
review of performance against its terms of reference during 2008-09.
5.22 Internal Audit operated to requirements defined in the Government Internal Audit
Standards. Their audit programme was focused around the Department's key risks and
regular reports were submitted on the adequacy and effectiveness of internal control
together with recommendations for improvement. Where weaknesses in the control
environment were identified, action to strengthen control was taken or was planned.
The Director of Internal Audit provided me with an Annual Report which recorded his
opinion that during 2008-09 the system of internal control that operated within BERR
was satisfactory.
Other matters relevant to my statement
5.23 Following the Cabinet Office’s review of data handling and security, BERR made
good progress in implementing the requirements expected of it. BERR’s security and
information management teams worked together to ensure the requirements and
associated guidance issued by Cabinet Office were clearly understood by users and
key stakeholders. A network of Management Group Data Champions was
established to get key data security information out to BERR’s delivery partners and
maintain effective communication channels.
5.24 BERR put effort into ensuring communications to staff on data handling was
digestible and understood. Poster and BERR TV campaigns were run in an effort to
secure high and sustained levels of personal compliance across the organisation. In
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a
May 2009, BERR introduced mandatory training for data users, and key stakeholders
as Cabinet Office sponsored e-learning packages were released by the National
School of Government.
5.25 There were no significant internal control problems in the Department's Agencies
and delivery partners that impacted on the Department's Resource Accounts.
GRO
Simon Fraser
Principal Accounting Officer and Permanent Secretary
10 July 2009
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Section 5.3
The Certificate and Report of the Comptroller and
Auditor General to the House of Commons
5.26 I certify that I have audited the financial statements of the Department for Business,
Enterprise and Regulatory Reform for the year ended 31 March 2009 under the
Government Resources and Accounts Act 2000. These comprise the Statement of
Parliamentary Supply, the Operating Cost Statement and Statement of Recognised
Gains and Losses, the Balance Sheet, the Consolidated Cash Flow Statement and
the Consolidated Statement of Net Operating Costs by Departmental Strategic
Objectives and the related notes. These financial statements have been prepared
under the accounting policies set out within them. I have also audited the information
in the Remuneration Report that is described in that report as having been audited.
Respective responsibilities of the Accounting Officer and auditor
5.27. The Accounting Officer is responsible for preparing the Annual Report, which
includes the Remuneration Report, and the financial statements in accordance with
the Government Resources and Accounts Act 2000 and HM Treasury directions
made thereunder and for ensuring the regularity of financial transactions. These
responsibilities are set out in the Statement of Accounting Officer's Responsibilities.
5.28 My responsibility is to audit the financial statements and the part of the
Remuneration Report to be audited in accordance with relevant legal and regulatory
requirements, and with International Standards on Auditing (UK and Ireland).
5.29 I report to you my opinion as to whether the financial statements give a true and fair
view and whether the financial statements and the part of the Remuneration Report to
be audited have been properly prepared in accordance with HM Treasury directions
issued under the Government Resources and Accounts Act 2000. I report to you
whether, in my opinion, the information which comprises the sections 3.6, 4.1, 4.4,
annex 2, annex 3 and annex 4, included in the Annual Report, is consistent with the
financial statements. I also report whether in all material respects the expenditure and
income have been applied to the purposes intended by Parliament and the financial
transactions conform to the authorities which govern them.
5.30 In addition, I report to you if the Department has not kept proper accounting records,
if I have not received all the information and explanations I require for my audit, or if
information specified by HM Treasury regarding remuneration and other transactions
is not disclosed.
5.31 I review whether the Statement on Internal Control reflects the Department's
compliance with HM Treasury's guidance, and I report if it does not. I am not required to
consider whether this statement covers all risks and controls, or to form an opinion on
the effectiveness of the Department's corporate governance procedures or its risk and
control procedures.
5.32 I read the other information contained in the Annual Report and consider whether it
is consistent with the audited financial statements. This other information comprises
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
the remaining sections of the Annual Report and the unaudited part of the
Remuneration Report. I consider the implications for my certificate if I become aware
of any apparent misstatements or material inconsistencies with the financial
statements. My responsibilities do not extend to any other information.
Basis of audit opinions
5.33
5.34
I conducted my audit in accordance with International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board. My audit includes examination, on a
test basis, of evidence relevant to the amounts, disclosures and regularity of financial
transactions included in the financial statements and the part of the Remuneration
Report to be audited. It also includes an assessment of the significant estimates and
judgments made by the Accounting Officer in the preparation of the financial
statements, and of whether the accounting policies are most appropriate to the
Department's circumstances, consistently applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and explanations
which I considered necessary in order to provide me with sufficient evidence to give
reasonable assurance that the financial statements and the part of the Remuneration
Report to be audited are free from material misstatement, whether caused by fraud or
error, and that in all material respects the expenditure and income have been applied to
the purposes intended by Parliament and the financial transactions conform to the
authorities which govern them. In forming my opinion I also evaluated the overall
adequacy of the presentation of information in the financial statements and the part of
the Remuneration Report to be audited.
Opinions
5.35
In my opinion:
@ the financial statements give a true and fair view, in accordance with the
Government Resources and Accounts Act 2000 and directions made thereunder
by HM Treasury, of the state of the Department's affairs as at 31 March 2009,
and the net cash requirement, net resource outturn, net operating cost,
consolidated net operating costs applied to departmental strategic objectives,
recognised gains and losses and consolidated cash flows for the year then ended;
e@ the financial statements and the part of the Remuneration Report to be audited
have been properly prepared in accordance with HM Treasury directions issued
under the Government Resources and Accounts Act 2000; and
@ information which comprises sections 3.6, 4.1, 4.4, annex 2, annex 3 and annex 4
included within the Annual Report, is consistent with the financial statements.
Opinion on Regularity
5.36 In my opinion, in all material respects, the expenditure and income have been applied
to the purposes intended by Parliament and the financial transactions conform to the
authorities which govern them.
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Report
I have no observations to make on these financial statements.
Amyas C E Morse
Comptroller and Auditor General
National Audit Office
151, Buckingham Palace Road
Victoria
London SW1W 9SS
15 July 2009
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Section 5.4
Primary Statements
Statement of Parliamentary Supply
Summary of Resource Outturn 2008-09
Request for Resources Net Total
RR 1 Ensuring business success 3,557,276 (2,038,475) 1,518.01, 3,542,318 (2,038,475) 1,503.843I 14,958 1,915,239
14.958 1,915,239
Total resources
Non-operating cost
AinA 7 6,450,000 5,825,751 624,249 6,483,180
Net Cash Requirement 2008-09
Net cash requirement 4 2,462,936 1,475,225 987,711 1,987,633
The prior year figures have been restated to reflect the Machinery of Government changes described in
Note 41
Summary of income payable to the Consolidated Fund
(In addition to Appropriations in Aid (A in A), the following income relates to the Department and is payable to the Consolidated Fund (cash receipts being
shown in italics)
‘Outturn 2008-09
£000
Income Receipts
Total 854,611 854,611 905,796 914,510
Further detail and explanation of the variation between Estimate and Outturn are given in Note 2 and in the
Financial Review on page 130
The Notes on pages 155 to 209 form part of these Accounts.
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Operating Cost Statement
for the year ended 31 March 2009
(restated)
2007-08
£000
Core Consolidated
Department
Administration Costs
Staff costs Ow ona eS 128,622 133,084
Other administration costs 10 117,240 339,258 346,846
Operating income . es : (34,065) (42.319). (32,260) (41,009)
Programme Costs
Staff costs ee De 815 103,681
Other Programme costs au 3,402,777 3,443,476 3,350,500 3,371,650
Income ; — tterszon] aaz.o80) (1.933.254) (2,071,231)
Special dividend {BNFL pic} 13 {632,000} (632,000) {260,000} (260,000)
Totals 135,195 3,520,017 (2,541,272) 250,154 3,567,970 (2,711,379) 1,593,681 1,583,021
Net Operating Cost 34 1,113,940 1,106,745, 1,593,681 1,583,021
All income and expenditure is derived from continuing operations.
Statement of Recognised Gains and Losses
for the year ended 31 March 2009
(restated)
2007-08
£000
Core Department Consolidated
Net gains and losses an revaluation of tangible fixed
assets 2 (196) 40
Net gain on revaluation of investments a ee 64,248 64,248
Recognised gains and losses for the financial year a 46,022 46,180 64,052 64,288
The prior year figures have been restated to reflect the Machinery of Government changes described in Note 41
The Notes on pages 155 to 209 form part of these Accounts.
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Annual Report and Accounts 2008-09
Balance Sheet
as at 31 March 2009
(restated)
£000
Core
Department id
Fixed Assets:
Tangible assets ab ee eapoeae oe fae 95,043 ‘ 69,17 80,503
Intangible assets 16 = 907 - 1.612
Investment and Loans in Public Bodies = I 47281408 iste 948,312 948,312
Other financial assets 18 1,836,954 1,538,954 1,564,385 1,564,385,
Vee ae 2861291 886,012 2.581.878 7,594,812
Debtors {amounts falling due after more than
‘one year) 20 63,422 18511 9,734 396
Current Assets: a Ss
Stocks 19 = 8 - A
Debtors MO Sard cody cs ABE 428,252 515,630
Investments and loans in Public Bodies a 199,000 199,000 390,000 390,000
Cash at bank and in hand 2 1092682 1105546 s 837,308 867,887
1,620,276 1,785,905 1,955,560 1,768,542
Creditors (amounts falling due within one Cee Ba
year) 23 (1,303,087) . (1,350,182) (1,059,669) __ (1,110,627)
Net Current Assets 317,223 405,723 595,891 657,915,
Total Assets less Current Liabilities = 32mg 3,810,286 3.187,501 3,253,128
Creditors {amounts falling due after more
than one year) 2B (637,503) (838717) (538,406) (640,827)
Provisions for liabilities and os * eh
charges i) 188,123) ___ (496.571) (541,635) (852,236)
Financial guarantees 25 (256,812) (256812) (114,367) __(114,367)
1,959,500 2,018,146 1,993,093 2,045,693
Taxpayers’ Equity:
General fund as 1,908,218 1,981,222 1,886,027 1,937,945
Revaluation reserves 2 56,286 56,924 107,066 107,748
1959508 2,018,146 1,993,093 2,045,693
The prior year balances have been restated to reflect the Machinery of Government changes as described in
Note 41.
GRO
Simon Fraser
Principal Accounting Officer and Permanent Secretary
10 July 2009
The Notes on pages 155 to 209 form part of these Accounts.
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EEE “== “““““ “== “= ———
Consolidated Cash Flow Statement
for the year ended 31 March 2009
(restated)
2007-08
£000
Net cash outflow from operating activities (1,498,103)
Capital expenditure and financial investment (1,506)
Receipts due to the Consolidated Fund which are outside the scope of the Department's activities 363,586
Payments of amounts due to the Consolidated Fund (1,117,006)
Financing 284 2,601,353
Increase in cash in the period 22,285 348,324
The increase in cash comprises the movement in the Cash Note and the movement in the overdraft disclosed
in Note 23.
The prior year movements have been restated to reflect the Machinery of Government changes described in
Note 47.
The Notes on pages 155 to 209 form part of these Accounts.
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id Regulatory Reform
Annual Report and Accounts 2008-09
saa suet aera
Consolidated Statement of Net Operating Costs by Departmental
Strategic Objectives
for the year ended 31 March 2009
The Department's aim is to ensure business success in an increasingly competitive world.
In pursuance of its aim, the Department has the following strategic objectives:
(restated)
2007-08
£7000
Objectis Gross > Net Gross Income Net
Promoting the creation and growth of business 2.597.213 (1,793,623) 803590 2,511,714 (1,875,326) 636,388
Ensuring better regulation 11385 - 11,385 9,140 a) 9,139
Delivering free and fair markets 891,401 (205,546) 685,855 586,818 (158,286) 428,532
Ensuring that Government acts as an effective oe 5S
shareholder 188,805 (684, 195,473) 488,168 (311,643) 176,525
Professional support, capability and Infrastructure 129,320 (27,932) 101,388 359,421 (26,984) 332,437
3818124 (2,711,379) 1,106,745 -3.985,261 (2,372,240) 1,583,021
Net operating costs
The Department changed its objectives in 2008-09 following the Machinery of Government change in October
2008. See Note 29.
The prior year costs have been restated to reflect the Machinery of Government changes as described in
Note 41.
The Notes on pages 155 to 209 form part of these Accounts.
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Section 5.5
Notes
1. Statement of accounting policies
These financial statements have been prepared in accordance with the 2008-09
Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting
policies contained in the FReM follow UK Generally Accepted Accounting Practice for
companies (UK GAAP) to the extent that it is meaningful and appropriate to the public
sector.
In addition to the primary statements prepared under UK GAAP, the FReM also requires
the Department to prepare two additional primary statements. The Statement of
Parliamentary Supply and supporting notes show Outturn against Estimate in terms of the
Net Resource Requirement and the Net Cash Requirement. The consolidated Statement of
Net Operating Costs by Departmental Strategic Objectives and supporting notes analyse
the Department's income and expenditure by the objectives agreed with Ministers.
Where the FReM permits a choice of accounting policy, the accounting policy which has
been judged to be most appropriate to the particular circumstances of the Department for
the purpose of giving a true and fair view has been selected. The Department's accounting
policies have been applied consistently in dealing with items considered material in relation
to the accounts.
1.1. Accounting convention
These accounts have been prepared under the historical cost convention modified to
account for the revaluation of fixed assets, stocks and financial instruments, as described
in paragraphs 1.3, 1.4, 1.6 and 1.7.
1.2 Basis of consolidation
These accounts comprise a consolidation of the core Department and those entities which
fall within the Departmental boundary as defined in the FReM (Chapter 2.4) issued by HM
Treasury and include non-voted expenditure in relation to the Redundancy Payments
Scheme. Transactions between entities included in the consolidation are eliminated.
A list of all those entities within the Departmental boundary is contained in annex 3 of the
Report to these accounts.
1.3 Tangible fixed assets
Title to freehold land and buildings shown in the accounts is held by the Department for
Communities and Local Government, in the name of the Secretary of State.
Freehold land and buildings are re-stated at current cost using professional valuations
every five years and prior to 1 April 2008, where appropriate, using indices in the
intervening years.
In accordance with the FReM, the core Department has opted to value all other tangible
fixed assets on a depreciated historical cost basis, as a proxy for current cost. Therefore,
with effect from 1 April 2008, the Department ceased to use indices to restate tangible
Department for Busin Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
fixed assets to current cost and the brought forward balances as at 1 April 2008 are used
as a proxy for historic cost.
The consolidated bodies, however, continue to restate tangible fixed assets to current cost
using appropriate indices. The differences arising because of this are not material to the
Accounts.
The core Department's capitalisation threshold for tangible fixed assets is £1,000, except
for furniture assets, where all expenditure in one financial year is pooled and capitalised,
and IT hardware where a ‘pack’ of equipment purchased under the Department's Flexible
Computing Programme (FCP), with a cost in excess of £1,000 is capitalised as one asset.
The capitalisation thresholds for the consolidated bodies range from £1,000 to £3,000,
except for leasehold improvements where one of the bodies has a capitalisation threshold
of £300,000.
1.4 Intangible fixed assets
Where computer software licences are purchased and have a useful life in excess of one
year, they are capitalised as intangible fixed assets. These are revalued each year using
relevant published indices. Software licences are amortised over the shorter of the term of
the licence and the useful economic life. The useful economic life is usually between five
to twelve years. All intangible fixed assets are held by the consolidated bodies. Those held
by The Insolvency Service are classified as tangible fixed assets in their accounts.
1.5 Depreciation
Freehold land is not depreciated.
Assets under Construction are not depreciated until the asset is brought into use.
Tangible fixed assets are depreciated at rates calculated to write them down to their
estimated residual value on a straight line basis over their estimated useful lives. Assets
are normally depreciated over the following periods:
Freehold buildings 50 years or estimated useful economic life if
shorter
Leasehold improvements Shorter of estimated remaining useful
economic life or outstanding term of lease
Office machinery and equipment 5 years
Computer equipment 3-5 years
Telecommunication equipment 5-10 years
Furniture, fixtures and fittings 7 years
Plant and machinery 7-10 years
For furniture, fixtures and fittings, an asset pool is maintained. Replacements on a one-to-
one basis for assets in the pool are charged directly to the Operating Cost Statement in the
year of replacement. Major enhancements or additions to the pool are capitalised as
assets.
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1.6 Financial Instruments
The Department classifies its financial instruments into the following four categories: fair
value through the Operating Cost Statement; held to maturity; loans and receivables; and
available for sale.
The Department determines the classification of its financial instruments at initial
recognition and re-evaluates this designation at each financial year-end.
When financial instruments are recognised initially, they are measured at fair value based
on quoted market prices for instruments traded in active markets and valuation techniques
for other instruments. The subsequent measurement, by the Department, of financial
instruments, falls into the classifications as follows:
e Financial assets at fair value through the Operating Cost Statement (held for
trading): Financial assets are classified as held at fair value if they are acquired for
sale in the short term. Assets are carried in the Balance Sheet at fair value with
gains and losses recognised in the Operating Cost Statement. The Department
does not currently hold any financial assets in this category.
e@ Held to maturity: Non-derivative financial assets with fixed or determinable
payments and fixed maturity that an entity has the positive intention and ability to
hold to maturity. The Department does not currently hold any financial assets in
this category.
e Loans and receivables: Non-derivative financial assets with fixed or determinable
payments that are not quoted on an active market, do not qualify as trading
assets and have not been designated as either ‘fair value through the Operating
Cost Statement’ or available for sale.
The Department's assets in this category include: cash at bank and in hand,
debtors and loans.
The Department carries loans and receivables relating to other public bodies at
historical cost in accordance with the FReM. All other loans and receivables are
carried at amortised cost using the effective interest rate method if the time
value of money is significant. Gains and losses are recognised in the Operating
Cost Statement when the loans and receivables are derecognised or impaired, as
well as through the amortisation process.
Available for sale financial assets: ‘Available for sale assets’ are non-derivative
financial assets that are designated as such or are not classified in any of the
three preceding categories. The Department's assets in this category include:
Launch Investments, Venture Capital Funds and ordinary shares.
The Department carries ordinary shares in other public bodies at historical cost in
accordance with the FReM. All other ‘available for sale assets’ are measured at
their fair value. Gains and losses are recognised directly in equity until the
investment is derecognised, or until the investment is deemed to be impaired at
which time the cumulative gain or loss previously reported in equity is included in
the Operating Cost Statement.
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e Financial liabilities at fair value through the Operating Cost Statement: Derivative
liabilities are classified as held for trading unless they are designated as hedging
instruments. They are carried in the Balance Sheet at fair value with gains and
losses recognised in the Operating Cost Statement. The Department does not
currently hold any financial liabilities in this category.
e Financial liabilities measured at amortised cost: all non-derivative financial
liabilities are classified as financial liabilities measured at amortised cost. The
Department's liabilities in this category are: creditors.
Non-derivative financial liabilities are initially recognised at the fair value of the
consideration received, less directly attributable issue costs. After initial
recognition, non-derivative financial liabilities are subsequently measured at
amortised cost using the effective interest method. Gains and losses are
recognised in the Operating Cost Statement when the liabilities are derecognised
or impaired, as well as through the amortisation process.
The Department carries creditors within other public bodies at historical cost in
accordance with the FReM.
Financial Guarantees
Financial guarantee contracts are contracts that require the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payments when due in accordance with the terms of a debt instrument.
Financial guarantees are initially recognised in the financial statements at fair value on the
date that the guarantee was given. At each Balance Sheet date they are subsequently
measured at the higher of the amount determined in accordance with FRS 12 ‘Provisions
Contingent Liabilities and Contingent Assets’, and the amount initially recognised, less
when appropriate cumulative amortisation.
The Department currently has a number of financial guarantees provided under the Small
Firms Loan Guarantee Scheme; the Enterprise Finance Guarantee; and guarantees given in
relation to the UK High Technology Fund.
1.7. Stocks and work in progress
Stocks and work in progress are valued as follows:
e Stocks of finished goods and goods for resale are valued at cost or, where
materially different, current replacement cost. A net realisable valuation is used
only when they either cannot or will not be used; and
e@ Work in progress is valued at the lower of cost and net realisable value.
1.8 Provisions
In accordance with FRS12, the Department makes provision for liabilities and charges
where, at the Balance Sheet date, a legal or constructive obligation exists (i.e. a present
obligation arising from past events), where the transfer of economic benefits is probable
and a reasonable estimate can be made.
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Where the time value of money is material, the Department discounts the provision to its
present value using a discount rate of 2.2%, the Government's standard rate. Each year
the financing charges in the Operating Cost Statement include the adjustments to
amortise one year's discount so that liabilities are shown at current price levels.
1.9 Research and development
Expenditure on research and development is charged to the Operating Cost Statement in
the year in which it is incurred. Fixed assets acquired for use in research and development
are depreciated over the life of the associated research project, or according to the asset
category if the asset is to be used for subsequent production work.
1.10 Operating income
Operating income is income that relates directly to the operating activities of the
Department and its consolidated bodies. It comprises, principally, fees and charges for
services provided, on a full cost basis, to external customers and public sector repayment
work, dividends and special dividends. It also includes other income such as that from
investments. It includes both income Appropriated-in-Aid and income collected by the
Department on behalf of HM Treasury on an agency basis and payable to the Consolidated
Fund. This income is known as Consolidated Fund Extra Receipts (CFERs).
The Department is required to identify those CFERs that are negative public expenditure
(amounts used to reduce the amount of expenditure the Department would otherwise
have to spend) and those revenue CFERs that relate to the recovery of costs recorded in
the Operating Cost Statement, or to returns on investments. These types of CFERs are
credited to the Operating Cost Statement as income to the Department. The remaining
CFERs are not included in the Department's Operating Cost Statement and are accounted
for through the Balance Sheet accounts of cash and creditors.
1.11 Administration and programme expenditure and income
The Operating Cost Statement is analysed between administration and programme
income and expenditure. Administration costs reflect the costs of running the Department,
as defined under the administration cost-control regime, together with the associated
operating income. Income is analysed in the Notes between that which, under the regime,
is allowed to be offset against gross administration costs in determining the outturn
against the administration cost limit, and that operating income which is not. Programme
costs reflect non-administration costs, including payments of grants-in-aid, grants and
other disbursements by the Department, in support of policy initiatives.
1.12 Grants payable
Grants payable are recognised in the period in which the grant recipient carries out the
activity that creates an entitlement to grant. Recognition of entitlement varies according to
the details of individual schemes and the terms of the offers made. Unpaid and unclaimed
grants are charged to the Operating Cost Statement on the basis of estimates of claims
not received and are included in accruals in the Balance Sheet.
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1.13 Capital charge
Acharge, reflecting the cost of capital utilised by the Department, is included in operating
costs. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the
average carrying amount of all assets less liabilities, except for:
a) tangible and intangible fixed assets, where the cost of capital charge is based on
opening values, adjusted pro rata for in-year:
e additions at cost;
@ disposals as valued in the opening Balance Sheets (plus any subsequent capital
expenditure prior to disposal);
@ impairments at the amount of the reduction of the opening Balance Sheet value
(plus any subsequent capital expenditure); and
e depreciation of tangible and amortisation of intangible fixed assets;
b) donated assets, and cash balances with the Office of the Paymaster General (OPG),
where the charge is nil;
c) the Department's investments in its trading fund (Companies House) and the public
corporation, British Shipbuilders, where the charge is equal to 3.5% of the trading
fund's underlying net assets, and the public corporations (BNFL and Royal Mail)
where the charge is equal to 8% of the public corporation's underlying net assets.
1.14 Foreign exchange
Transactions that are denominated in a foreign currency are translated into sterling at the
rate of exchange ruling on the date of each transaction, except where rates do not
fluctuate significantly in which case an average rate for a period is used. Monetary assets
and liabilities denominated in foreign currency at the Balance Sheet date are translated at
the rates ruling at that date. These translation differences are dealt with in the Operating
Cost Statement.
1.15 Pensions
Past and present employees are covered by the provisions of the Principal Civil Service
Pension Schemes (PCSPS) as described at Note 9. The defined benefit Schemes are
unfunded and are non-contributory except in respect of dependants’ benefits. The
Department recognises the expected cost of these elements on a systematic and rational
basis over the period during which it benefits from employees’ services by payment to the
PCSPS of amounts calculated on an accruing basis. Liability for payment of future benefits
is a charge on the PCSPS. In respect of the defined contribution elements of the Schemes,
the Department recognises the contributions payable for the year.
1.16 Early departure costs
The Department is required to meet the additional cost of benefits beyond the normal
PCSPS benefits in respect of employees who retire early. The Department provides in full
for this cost when an early retirement programme has been announced and is binding on
the Department. The Department may, in certain circumstances, settle some or all of its
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liability in advance by making a payment to the Civil Service Superannuation Vote. The
amount provided in these accounts is shown gross of any such payments.
1.17 Taxation
The Department is exempt from income and corporation tax by way of its Crown
exemption.
Value Added Tax (VAT) is accounted for in the accounts, in that amounts are shown net of
VAT except:
@ irrecoverable VAT is charged to the Operating Cost Statement, and included under
the heading relevant to the type of expenditure; and
@ irrecoverable VAT on the purchase of an asset is included in the capitalised
purchase cost of the asset.
The net amount due to, or from, HM Revenue and Customs in respect of VAT is included
within debtors and creditors within the Balance Sheet.
1.18 Statement of Parliamentary Supply and the Consolidated Statement of Net
Operating Costs by Departmental Strategic Objectives
The information contained in the Statement of Parliamentary Supply and associated Notes
are based on the Request for Resources information that forms part of the Parliamentary
approval processes.
The Consolidated Statement of Net Operating Costs by Departmental Strategic Objectives
reports expenditure and income for each of the Department's objectives. The differences
between the Net Resource Outturn, as disclosed in the Statement of Parliamentary Supply
and the Net Operating Costs, as disclosed in the Operating Cost Statement and the
Statement of Net Operating Costs by Departmental Strategic Objectives, are disclosed in
Note 3 to the accounts.
1.19 Leases
Rentals due under operating leases are charged to the Operating Cost Statement over the
lease term on a straight-line basis, or on the basis of actual rentals payable where this fairly
reflects the usage. Future payments, disclosed at Note 31.1, are not discounted.
Where assets are financed by leasing agreements that give rights approximating to
ownership ("finance leases"), the assets are treated as if they had been purchased
outright at the present value of the total rentals payable during the primary period of the
lease. The corresponding leasing commitments are shown as obligations to the lessor.
The core Department currently has no Finance leases, however, The Insolvency Service,
the Department's Agency, does have finance leases. Charges are made to the Operating
Cost Statement in respect of:
@ depreciation, which is charged on a straight line basis over the useful economic
life of the asset; and
@ the total finance charge, which is allocated over the primary period of the lease
using the sum of digits method.
162
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Annual Report and Accounts 2008-09
Where the Department is the lessor of an operating lease, amounts due under the
operating lease are treated as amounts receivable and reported as debtors.
1.20 Inter-Departmental transfers of functions: Restatement of prior year
comparators
Machinery of Government changes, which involve the merger or the transfer of functions
or responsibility of one part of the public service sector to another, are accounted for using
merger accounting in accordance with Financial Reporting Standard (FRS) 6. This requires
the restatement of the opening Balance Sheet and prior year's Operating Cost Statement,
Cash Flow Statement, Statement of Net Operating Costs by Departmental Strategic
Objectives and associated Notes to the Accounts.
The restatement of the opening Balance Sheet and the prior year comparatives for the
2008-09 Machinery of Government changes are disclosed in Note 41 to the accounts.
1.21 Private Finance Initiative (PFI) transactions
PFI transactions have been accounted for in accordance with FRS 5 Technical Note No. 1
(Revised), entitled ‘How to Account for PFI Transactions’ as required by the FReM. Where
the balance of risks and rewards of ownership of the PFI property are borne by the PFI
operator, the PFl payments are recorded as an operating cost.
1.22 Contingent Assets and Liabilities
The contingent liabilities of the core Department and the consolidated bodies are included
in these accounts.
In addition to contingent liabilities or assets disclosed in accordance with FRS 12, the
Department discloses for parliamentary reporting and accountability purposes certain
statutory and non-statutory contingent liabilities where the likelihood of a transfer of
economic benefits is remote. These comprise:
@ items over £250,000 (or lower, where required by specific statute) that do not
arise in the normal course of business and which are reported to Parliament by
Departmental Minute prior to the Department entering into the arrangement; and
all items (whether or not they arise in the normal course of business) over
£250,000 (or lower, where required by specific statute or where material in the
context of the accounts), which are required by the FReM to be noted in the
Accounts.
Where the time value of money is material, contingent liabilities which are required to be
disclosed under FRS 12 are stated at discounted amounts and the amount reported to
Parliament separately noted. Contingent liabilities that are not required to be disclosed by
FRS 12 are stated at the amounts reported to Parliament.
In accordance with the FReM, the Department does not disclose any contingent liabilities
of its delivery partners that arise in the normal course of business.
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1.23 Third-party assets
The Department holds, as custodian or trustee, certain cash balances at commercial banks.
belonging to third parties. These balances are not recognised in the accounts since neither
the Department nor Government more generally has a direct beneficial interest in them.
2. Analysis of net resource outturn by section
(restated)
RIR 1 Ensuring business success
Spending in Departmental
Expenditure Limits (DEL)
Central Government
spending ’
AB Business Creation and Growth 43,825 100,957 220,663 365,445 (1,793,541) (1,428,096) (1,473,334) (45,238). (1,087,933)
AC Free and Fair Markets : 290706 91,577 392,767 (202,555) 190,212 204862 14,650 143,716
AF Government as shareholder 16,596 - 301,720 318,316 (13,851) 304,465) 314,034 9,569 459,113
AG Professional Support and : : : — aS. : ae
Infrastucture 192341 (3,339) 7.687 —=—*196,668 (28578) 168,141] 229082 60.941 387.427
Support for Local Authorities
‘AH Business Creation and Growth nee Oe 346,297 346,297 = 346,297; 346,318 2 101,070
Spending in Annually
Managed Expenditure (AME)
Central Government ©
spending oe ee 2 os :
Al Free and Fair Markets ce = 44,477 44,477 i 44,477 40,000 (4,477) 42,800
AK Government as shareholder : = (6585) (12151) (18,738) = (18736)] (791) 129452112
Support for Local Authorities
AL Business Creation and Growth = ee no eid STO: ON CR S510 070) © = 2,263
Non-Budget
W Business Creation and Growth =I = 151,094 1.851094 = _—*1,851,094I 1,800,388 (60,706) 1.816.242
X Better Regulation = = 4,400 4,400 os 4,400 4,400 = 1794
Y_ Free and Fair Markets : oe - 3434434344 84.844) 49,205 14,861 41,181
AM Government as shareholder = = 5,275 5,275 oe 5,275 7,667 2,392 5.454
Resource Outturn _ 263,286 381,739 2,897,333 3,542,318 (2,098,475) 1,503,043] 1.518.001 14958 1,915239
Key to RFR 1
To help ensure business success in an increasingly competitive world
Explanations of the variation between Estimate and Outturn are given in the Financial Overview in Chapter 4
of the Report to these Accounts
Department for Busin nterprise and Regulatory Reform
Annual Report and Accounts 2008-09
3. Reconciliation of outturn to net operating cost and against
Administration Budget
3.1 Reconciliation of net resource outturn to net operating cost
(restated)
2007-08
£7000
Outturn
Net Resource Outturn 2 1808843 1,518,801 (14,958) 1,915,239
Non-supply income (CFERs) 5 (643,416) (7.036) (636,380) (488,070)
Non-supply Expenditure ~ National Insurance Fund expenditure (RPS}11,284 31,918 ©» 369,280 «32,638 173,772
Royal Mail and BNFL Cost of Capital credit (145,600) a. (145,600) (17,920)
*Net Operating Cost 06.745 1.871.085 (764,300) 1.583.021
* Net Funding
NLF loans to Royal Mail income ee Se ease (29.172)
NLF loans to Royal Mail expenditure 29,488 29,172
The Redundancy Payments Service (RPS)
The Department is responsible for the approval and processing of claims under the
Redundancy Payment Scheme, which is financed from the National Insurance Fund.
Claims processed under the Scheme fall into two categories: RP1 (which covers
redundancy pay, holiday pay and arrears of pay) and RP2 (pay in lieu of notice). The average
payment for RP1 during 2008-09 was £2,660 (2007-08: £1,370). An average amount of
£1,877 was paid during 2008-09 for RP2 (2007-08: £676).
There is associated income related to this Scheme arising from two sources:
e solvent Recovery — where monies are recovered over a period of up to three
years from companies, setting up a standing order, that are continuing to trade
but would not be able to do so if they had to meet the full costs of redundancy
payments at that time; and
e insolvent Recovery — the Department becomes a creditor receiving a dividend if
there are sufficient funds on the winding up of the company.
Expenditure in 2008-09 totalled £428 million (2007-08: £213 million) against income of
£36 million (2007-08: £39 million), the net of which is disclosed in Note 11.
3.2 Outturn against final Administration Budget
(restated)
2007-08
£000
Budget Outturn Outturn
Gross Administration Budget eee 783,286 479,929
Income allowable against the administration budget 13 (37,990) (42,319) (41,009)
Net outturn against final Administration Budget Se meaty zane 438,920
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Chapter 5
Resource Accounts
4. Reconciliation of net resource outturn to net cash requirement
Resource Outtumn 2 1,518,801 1,503,843 14,958
Capital: ees ay oN
Acquisition of fixed assets 15,16 - 28,639 (28,639)
investments 17s821283 7,119,715 (5,993,602 1,186,083
Non-operating A in A
Proceeds of fixed asset disposals
Investments
Accruals adjustments:
145,600
Royal Mail and BNFL cost of capital credit - - (145,600)
Non-cash items Ci ee aoe (140,235)
Adjustment for non-cash income = 3711 (3.711)
Changes in working capital other than cash 402,652 (89,063) 49715
Changes in creditors falling due after more than one year - 3,591 (3,591)
Royal Mail Interest capitalised SCAT. ae 296 ~ (296)
Use of provision 2 58,298 24,152 34,146
Use of Financial guarantee ae ee ee (84,070)
Net cash requirement 2,462,936. 1,475,225 987,711
5. Analysis of income payable to the Consolidated Fund
In addition to Appropriations-in-Aid, the following income relates to the Department and is
payable to the Consolidated Fund (cash receipts being shown in italics):
Operating income and receipts ~ excess A in A = . 260 260
Other operating income and receipts not classified as A in A “413 7038 s7,036.—=—« 3,158 641,575
6 7,036 643,416 641,835
Non-operating income and receipts ~ excess A in A Se oo = oS
Other Non-operating income and receipts not classified as Ain A ‘757,575 757,575 = <
Other amounts collectable on behalf ofthe Consolidated Fund == (9,000 90.000 262,380 22675
Total income payable to the Consolidated Fund 854,611 854,611 905,796 914,510
The forecast is an estimate of the CFERs the Department expected to collect in 2008-09.
However, CFERs do not form part of the Departmental Supply Estimate and are not
disclosed in the Statement of Parliamentary Supply.
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Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
A breakdown of other amounts payable to the Consolidated Fund is as follows:
(restated)
2007-08
£000
Launch Investment levies received 96,457 128,114
Universal banking contributions 1,525, 34,625
Companies House late filing penalties 50.167 42,800
OFCOM Wireless Telegraphy Act 107,493 106,165
Royal Mail! 6,640 6,320
UKAEA! See 34,900
Other 98 1479
Total 262,380 354,403
6. Reconciliation of income recorded within the Operating Cost Statement
to operating income payable to the Consolidated Fund
(restated)
2007-08
£000
Operating income 13 (2711.379) (2,372,240)
Income outside of the supply process 3 29,488 29,172
Gross income (2,681,891) (2,343,068)
Less: Income authorised to be Appropriated-in-Ai ys 1,854,998
Operating income payable to the Consolidated Fund 5 (643,416) (488,070)
7. Non-operating income
2007-08
£000
Post Office Limited working capital loan (5:562,000) (6,450,000)
Other investment income (282,153) (5,784)
Launch Investment income (31,702) (25,608)
Movement in Launch Investment debtors 104 (1,787)
Non-operating income (5,825,751) (6,483,180)
8. Non-operating income not classified as Appropriations in Aid (A in A)
There is no non-operating income not classified as A in A for 2008-09, nor was there any
for 2007-08.
The results of these bodies are not consolidated into the BERR Accounts
This figure comes from the Departmental Estimate and is disclosed in the Statement of
Parliamentary Supply.
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9. Staff numbers and related costs
(restated)
2007-08
£7000
Staff costs comprise:
Permanently Special
employed staff Others Ministers Advisers Total Total
Wages and salaries 187,767 8,865 21 163 «197,062 187,088
Social security costs 15,323 45 2B 5 16411 14,725
Other pension costs ay BBB on Ba ee 38,321 35,967
Total 201,385 8,975 296 178 250,794 237,780
Less recoveries in respect of outward a: A Son
secondments ae (640) = = (640) (1,015)
Total net costs 201,345 8,335 296 178 250,154 736,765
Of which: Core Department e 131,829 2,892 286 ee 135,195 129,437
The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined
benefit Scheme but the Department for Business, Enterprise and Regulatory Reform is
unable to identify its share of the underlying assets and liabilities. A full actuarial valuation
was carried out as at 31 March 2007. Details can be found in the Resource Accounts of
the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk).
For 2008-09, employers’ contributions of £38,225,722 were payable to the PCSPS (2007-
08: £37,660,984) at one of four rates in the range 17.1% to 25.5% of pensionable pay,
based on salary bands (the rates in 2007-08 were also between 17.1% and 25.5%). The
Scheme's Actuary reviews employer contributions usually every four years following a full
Scheme valuation. From 2009-10, the rates will be in the range 16.7% to 24.3%. The
contribution rates are set to meet the cost of the benefits accruing during 2008-09 to be
paid when the member retires and not the benefits paid during this period to existing
pensioners.
Employees can opt to open a partnership pension account, a stakeholder pension with an
employer contribution. Employer's contributions of £87,023 (2007-08: £137,845) were paid
to one or more of a panel of three appointed stakeholder pension providers. Employer
contributions are age-related and range from 3% to 12.5% (the rates in 2007-08 were also
between 3% and 12.5%) of pensionable pay. Employers also match employee
contributions up to 3% of pensionable pay. In addition, employer contributions of 0.8%
(2007-08: also 0.8%) of pensionable pay, were payable to the PCSPS to cover the cost of
the future provision of lump sum benefits on death in service and ill health retirement of
these employees. There were £8,003 of contributions due to the partnership pension
providers at the Balance Sheet date, but there were no contributions prepaid at that date.
In 2008-09, 4 persons (2007-08: 3 persons) retired early on ill-health grounds; the total
additional accrued pension liabilities in the year amounted to £8,908 (2007-08 £18,727).
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Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Average number of persons employed
The average number of whole-time equivalent persons employed during the year was as
follows. These figures include those working in the Department as well as in Agencies and
other bodies included within the Consolidated Departmental Resource Accounts.
(restated)
2007-08
Number
Objective Total
Promoting the creation and growth of
business 1,033.7
Ensuring better regulation 88.0
Delivering free and fair markets 41078
Ensuring that Government acts as an
effective shareholder 35
Professional support, capability and
infrastructure 4.0181 1,126.6
Total : 8 : : : oe 6.4396
Of which: Core Department 2,563.8 2005 51 30 2776.4 2,665.6
Staff Debtors
At 31 March 2009: 1,070 (31 March 2008: 1,405) employees of the Department and its
consolidated bodies were in receipt of advances of travel and housing loans, repayable to
the employer. The staff debtor amount is disclosed in Note 20.
10. Other administration costs
Other administration costs comprise:
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(restated)
2007-08
£7000
Core
Department Consolidated
Rentals under operating leases
Plant and Machinery “101 4,131 1,018 1,029
Other 30,671 35,695 36,644
Interest charges toa 3 3
PFI service charge 32 28,778 26822 26822
Research and Development Ge eee 2 2
Travel and subsistence 8,174 8,706 6,752 7127
IT support ee aug 6219 5737 5,738
Training and other staff costs 8,066 8,142 8,686 8,924
Professional services = 34,390 33,872, 23,309 23,704
Accommodation 22,293 24,018 2.735 23,868
Other ote 4,885 9371
144,401 135,444 143,032
Non-Cash Items: ic
Depreciation 7M man
Revaluation / impairment (12) (12)
{Profit/Loss on disposal of fixed assets 37 37
Notional cost of capital charges/{credit) (2,408) (2,408)
‘Auditors’ remuneration 240 240
Specific had debt write off 18 18
Provision for bad debts (241) (241)
Provisions provided for in year A 199,103 199,103
Unwinding of discount on provisions 24,25 (34) (34)
Total non-cash ae 203,814 203,814
Total other administration costs 339,258 346,846
The auditors’ remuneration represents the notional cost of the audit of the financial
statements, which was £220,000 and the cost of the review of the restatement of
balances under International Financial Reporting Standards (IFRS), which was £13,500,
carried out by the Comptroller and Auditor General. There were no fees in respect of
non-audit work.
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Annual Report and Accounts 2008-09
11. Programme costs
(restated)
2007-08
£7000
Core
Department Consolidated
Grant in Aid 2074382 —-2027.070 +—-2.019.662 1974538
Other grants “721.480 580 940,267 994,702
Interest on NLF loans on-lent to Royal Mail Holdings ple 29,488 23.488 23,172 29,172
Interest on Bank loans and overdraft ; Eo a a
PFI Service Charges 897 6,128
Net loss (gain) on foreign exchange (23) (23)
Rentals under operating leases ~ plant and machinery 5 721
Charges under finance lease Re ie. - 192
Research and development 1,380 1811 694 907
Redundancy Payments Service — National Insurance Fund eo eSB gare 173,772 173,772
Other 135,576 200,673 112435 154,781
Auditors’ remuneration See 40. - 32
3,354,539 3,370,020 3,276,590 3,274,952
Non-cash items &
= 2,641 - 2.455
Depreciation — tangible fixed assets
Amortisation — intangible fixed assets 524 - 446
Revaluation / impairment : S 37 - 109
Loss on disposal of fixed assets be oS ee ek ~ 36
investment impairment 23,516 31,154 31,154
Specific bad debt write off 21,638 65 15,879
Bad Debt Provision ~ Financial Guarantee 3,770 - -
Notional cost of capital charges/(redt) (116,469) 12,985 13,734
Auditors’ remuneration = 54 - 37
Provisions: = : ae
Provided for in year 180,560 181,164 73.629 76,734
Unwinding of discount on provisions “245 asta 10,097 10,134
Premium income debtor unwinding of discount (636) (636) - -
Launch investment ~ unwinding of discount (3b arg e279) (54,020) (54,020)
Total non-cash 48,238 73,456 73,910 96,698
3802777 3,443,476. 3,350,500 3,371,650
Total programme expenditure
The auditors remuneration of £40,000 for Acas represents the cost of the audit of their
financial statements (£36,000) and the cost of the review of balances as at 1 April 2008
under International Financial Reporting Standards (£4,000), carried out by the Comptroller
and Auditor General.
The auditors’ remuneration for The Insolvency Service is notional and represents the cost
of the audit of their financial statements (£39,500) and the cost of the review of balances
as at 1 April 2008 under International Financial Reporting Standards (£15,000), carried out
by the Comptroller and Auditor General.
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12. Administration and Programme non-cash costs summary
The total for non cash costs in Note 10 (other administration costs) and Note 11
(programme costs) is as follows:
(restated)
2007-08
£000
Core
Department Consolidated
Auditors’ remuneration 234 288 240 am
Depreciation / amortisation NSIS 15 080 7M 10,012
Loss / (profit) on the disposal of fixed assets 4 2 37 B
Revaluation / impairments TO aaRipe 2 aed 31,142 31,251
Bad debt provision movement (138) (138) (24) (21)
Bad debt provision ~ Premium debtor 3770 — 3,770 - ~
Specific bad debt write off 1854 21,646 83 15297
Notional cost of capital charge/credit (120,531) (119313) 10577 11,326
Premium income debtor unwinding of discount (636) (636) - -
Launch Investment — unwinding of discount (52779) (82,779) (64,020) (64,020)
Movement on provisions 153,868 154,442 282,795 285,937
Total Pages ar: 16,295 271,724 300,512
13. Income
(restated)
2007-08
£7000
Core
Department Consolidated
‘Administration Income:
Fees and charges received from external customers 11,088 19,322 15,867 24,616
Recovery/rent/rates/services 22,882 22,882 14797 14.797
Other allowable within the Administration cost fimit “15 a5 1,896 1596
Total Administration Income (A in A) 065 42319 32,260 41,009
Programme Income: z .
Funding from Other Government Departments for
Regional Development Agencies/London Development Agency 4,711,510 4,711,510 1,746,174 1,746,174
Other income from Other Government Departments a eS es 16 16
European Union Funding 153 153 67 61
Other tae9 “281,042 143.418 281,395
Amortisation of premium income 37 37M - -
Programme Income (A in A) 1,834,563 ‘1,996,416 1,889,675 2,027,652
Programme Income outside of the supply process
Interest on NLF loans on-lent to Royal Mail Holdings ple “79888 23,888. 29,172 2,72
Consolidated Fund Extra Receipts (CFERs} 11.186 14407 14,407
Special Dividend (BNFL plc} 632,000 260,000 260,000
Total Programme Income 2507207 2193254 2,331,231
Total Operating Income n 2225514 2,372,240
Total income allowable against the Estimate, as shown in the Statement of Parliamentary
Supply, amounted to £2,038,475.
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Annual Report and Accounts 2008-09
14. Analysis of net operating cost by spending body
(restated)
2007-08
£000
Outturn
Spending body:
Core Department 118.256.016.608 1.501.439
Advisory, Conciliation and Arbitration Service 41,062 45893 42.797
Insolvency Service ‘ 59.83 44,204 38,785
Net operating cost 1,518,801 1,106,745, 1,583,021
15. Tangible fixed assets
Cost or valuation
(restated) = . <
AUT April 2008 1.651 $3,786 1887 13,895 10,550 1,970 34049 117,258
Additions - 2,260 ea 272 -24,488 28,331
Disposals = (13) (425) (242) (28) = (833)
Reclassifications ee Gaal 13,178 293 Se (19,392) 410
Revaluation a7), 516 4 (395) 16 1 = "
‘At31 March 2009 1480 62,880 2322 26367 10,768 2215 39145 145,177
Depreciation
(restated) .
At 1 April 2008 632 19,019 1,155 6,546 7,700 1,103 = 36,755
Charged in year 15 6391 245 6,285 itech — 14,556
Disposals = am) (124) (417) (231) (28) = (811)
Reclassifications = a SS - - - -
Revaluation (707) a (22) (58) 8 - - (866)
‘At31 March 2009 oe eae 125412358 8.888.828 = 50134
Net book value
at 31 March 2009 1,480 37,070 1,068 14,009 1,880 31 39,145 95,043
Net book value a : Pee ee Se
at 31 March 2008 1.019 34,767 702 6,849 2850 267 34,049 80,503.
Asset financing
Owned 1,480 37070 1068115271880 81 99,185 92,561
Finance leases - - - 2,482 - - = 2482
Net book value e 5 : q
at 31 March 2009 1,480 37,070 1,068 14,009 1,880 391 39,145 95,043
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Analysis of tangible fixed assets
The net book value of tangible fixed assets comprises:
Core Department March 2009 1,480 33,337 4g 11,564 1,458 21 23,220 71,229
Consolidated Bodies g . ee g ; x Sex
March 2009 SS ae lg a gi in aos aad
Core Department
March 2008 (restated) 1,019 32,024 65 3,833 2,448 168 29,622 69,179
Consolidated Bodies ee ee ; Ree es S 2
March 2008 = 2,783 837 3.016 402 99 4427 10,824
The total fixed asset additions as disclosed in Notes 15 and 16, amounting to, £28,639 can
be reconciled to the cash payments made during the year as follows:
Cash payments made to purchase fixed assets during 2008-09 for:
Tangible fixed assets pee ao race
lotangible fixed assets 282 308
Movement in creditors (288)
Accrued Expenditure oe se he00.
Additions in fixed asset notes 15,16 28,639
15.1 The net book value of land and buildings comprises:
31 March 2008
£000
Land and
Buildings
Freehold 1,480 1,019
Total a, 1919
The Department has one freehold property:
@ The Core Store at 36 Gilmerton Road, Edinburgh was revalued to £1.48 million in
March 2009 by DVS, the commercial arm of the Valuation Office Agency (VOA),
on an existing use basis. On 1 August 2005 the Core Store was leased to the
British Geological Survey (BGS) for the sum of £1 per annum for a term of ten
years. BGS is a research centre wholly owned by the Natural Environment
Research Council (NERC), which is funded by the Department for Innovation,
Universities and Skills (DIUS) through Grant-in-Aid.
All professional valuations have been made in accordance with the Royal Institute of
Chartered Surveyors guidance.
partment for Busi
sss, Enterpr
Annual Report and Accounts 2008-09
and Regulatory Reform
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16. Intangible Fixed Assets
2007-08
£000
Total
Cost or Valuation
Att April 1,623
Additions 1,688
Donations -
Disposals S ~
Transfers (409) -
Revaluation (29)
At31 March 3,282
Amortisation
At April 1,236
Charged in year 446,
Disposals -
Transfers -
Revaluation (12)
At31 March 1,670
Net Book Value
At31 March 1,612
Analysis of intangible fixed assets
The net book value of intangible fixed assets, all of which relate to the consolidated bodies,
comprise of software licences.
17. Fixed investments and loans in public bodies
Balance at
1 April 2007
953,448
Additions
Disposals
(5,186)
Repayments
Impairment
Balance at
31 March 2008
Balance at
1 April 2008
Additions
Disposals
Repayments
(232,000)
Interest capitalised
eas
Impairment
= (6,823)
(6,823)
Balance at
31 March 2009
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17.1 Ordinary Shares
Value at
1 April 2008
£000
BNEL plc shares 50 = e s 50
Royal Mail Holdings plc shares 430,323 I ee Ee 430,323
cre 50 = = se 50
Total 13043 ae RERUN: eye
In accordance with the FReM, ordinary shares are shown at historical cost less any
provision for impairment.
The Government holds 50,000 ordinary shares in BNFL plc at a nominal value of £1 each.
BNFL plc was set up to hold those parts of BNFL that did not pass to the Nuclear
Decommissioning Authority (NDA), including, inter alia, British Nuclear Group Sellafield
Limited (formerly British Nuclear Fuels). The Secretary of State for Business, Enterprise
and Regulatory Reform owns 49,999 ordinary shares and the Treasury Solicitor holds one
ordinary share.
The Government owns 100% of the shares in Royal Mail Holdings plc. The Secretary of
State for Business, Enterprise and Regulatory Reform owns 50,004 ordinary shares and
the Treasury Solicitor holds one ordinary share. The Secretary of State for Business,
Enterprise and Regulatory Reform also owns one Special Share, relating to certain areas
for which Special Shareholder's consent is required (see Note 17.4).
The independent Hooper review highlighted the need for significant changes to Royal Mail
in terms of regulatory reform, resolving the pension deficit and bringing in a strategic
partner. Government's stated policy is to implement those changes when market
conditions allow. The Department undertakes an annual review of the value of its holding
in Royal Mail, and has additionally this year sought valuations from investment banks and
potential buyers of a minority stake, as part of the response to the Hooper Review.
Capital for Enterprise Limited (CfEL) was established in 2007-08 to manage the
Department's equity investment fund and loan guarantee programmes. CfEL commenced
full business activity on 1 April 2008. The Department owns 49,901 shares and provides
cash funding as Grant-in-Aid. The Small Firms Loan Guarantee Scheme was closed to new
applications during 2008-09 and has been replaced by the Enterprise Finance Guarantee
Scheme (EFGS) which is also managed by CfEL. In February 2009 CfEL created two wholly
owned subsidiaries: Capital for Enterprise GP Ltd (CfE GP) and also the Capital for
Enterprise Fund Managers Ltd (CfE FM Ltd) to facilitate co-investment with the private
sector in the new Capital for Enterprise Fund.
17.2 Public Dividend Capital (PDC)
Value at
1 April 2008
£7000
British Shipbuilders - 6,823 - - (6,823) -
Companies House 16.889 ACh Rien ce ~ ee os) 15,889.
Total 15,889 6,823 - = (6.823) 15,889
Department for Busin Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
The British Shipbuilders Corporation requires equity injections to maintain its solvency. The
Department makes payments of Public Dividend Capital (PDC) to allow the Corporation to
discharge its liabilities under the Aircraft and Shipbuilding Industries Act 1977.
Consequently, the PDC has been fully impaired. The Department expects to continue to
make equity injections to maintain the Corporation's solvency, in accordance with the
statement to Parliament of July 1988. The historic cost of PDC payments made to 31
March 2009 is £1,617,562,000 (£1,610,739,000 at 31 March 2008).
17.3 Share of net assets and results of bodies outside the consolidation boundary
The Department is required to disclose, for each investment which represents an interest
in a subsidiary undertaking, an associate or joint venture which falls outside the
Departmental consolidation boundary, the Department's share of the net assets and
results of those bodies. This information is summarised below.
2008-09
Assets 3 69 1411 5915 0.35
Liabilities Sa (466) O71) (0.28)
Net assets/(liabilities) (121) 54 945 (4,656) 0.07
Turnover oe eG, 4.801 9410 2.00
Surplus/profit deficit/los) for the year @) 1 (127) (223) 0.02
2007-08
Assets 1 n 1,960 6,354
Liabilities Se OBL es SUN ees rsa oe oegsh
Net assets/(liabilities) (87) 69 1,225 (241)
Turnover a ee oe © os 8 ar
Surplus/profit (deficit/loss) for the year (9) 3 2225 135
Notes:
e For 2008-09, British Shipbuilders information is derived from their 2008-09 draft
annual accounts for audit. For 2007-08, the information was derived from the
2006-07 audited Annual Accounts, as their 2007-08 information was not available.
British Shipbuilder's Accounts were prepared in accordance with UK GAAP.
@ Companies House information is derived from their 2008-09 draft Annual
Accounts. For 2007-08, the information was derived from their audited annual
accounts for 2006-07, as their 2007-08 information was not available. Companies
House Accounts were prepared in accordance with the requirements of the
Government Financial Reporting Manual (FReM).
e British Nuclear Fuels Limited (BNFL) information is derived from their 2007-08
audited Annual Accounts, as their 2008-09 information was not available. For
2007-08, the information was derived from their 2006-07 audited Annual
Accounts, as their 2007-08 information was not available. BNFL’s Accounts were
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prepared in accordance with UK GAAP. BNFL's Accounts were prepared in
accordance with UK GAAP and on a break-up basis reflecting the impending
cessation of substantive trading of the Group within 12 months of the Balance
Sheet date.
@ Royal Mail Holdings plc information is derived from their 2008-09 audited Annual
Accounts. For 2007-08, the information was derived from their 2007-08 audited
Annual Accounts. Royal Mail's Accounts were prepared in accordance with
International Financial Reporting Standards (IFRS).
@ Capital for Enterprise Limited information is derived from their 2008-09 draft
Annual Accounts. Capital for Enterprise Limited commenced trading on 1 April
2008 and so there is no comparable accounting data for 2007-08. The accounts
were prepared in accordance with UK GAAP.
17.4 Special Shares
In addition, the Secretary of State holds one Special Share in each of the entities listed
below. The list is a summary and does not purport to be a comprehensive record of the
terms of each respective shareholding. Further details can be obtained from the annual
report and financial statements of each body.
The Department does not recognise the special or ‘golden’ shares on its Balance Sheet in
accordance with paragraph 7.4.45 (e) of the FReM.
Body in which Terms of Shareholding
Share is held
and type and
value of Share
Royal Mail ° created in January 2001;
Holaings ple * it may be redeemed at any time by the shareholder;
Hoe . the consent of the shareholder is required for a number of :
Preference decisions, including:
Share
= appointing the Chairman of the company, and the
remainder of the Board (after consulting the Chairman);
- setting (and approving any material changes in) the
remuneration packages of the Directors;
- borrowing in excess of certain pre-set limits (as agreed
with the HM Treasury);
= adopting and implementing the company’s strategic plan;
- disposing of substantial assets of the business or any
“relevant subsidiaries” or substantial parts of the
business of such subsidiaries;
= voluntary winding-up of any subsidiary; and
— varying certain of the company’s Articles of Association,
including the rights of the special shareholder.
Department for Busi Enterp and Regulatory Reform
Annual Report and Accounts 2008-09
Bodyin which Terms of Shareholding
Share is held
and type and
value of Share
British * created in 1985 (but subsequently amended);
Aerospace ple
£1 Special
Rights * provides for a 15% limit on any individual foreign shareholding, or
Preference group of foreign shareholders acting in concert, in the company;
Share
no time limit;
* requires a simple majority of the Board and the Chief Executive to
be British; and
* requires any Executive Chairman to be British and, if both the
Chairman and Deputy Chairman are non-executives, requires at
least one of them to be British.
Rolls Royce ¢ created in 1987 (but subsequently amended);
Group ple c oo
ee * no time limit;
£1 Special 5 ae cee
Rights Non- * provides for a 15% limit on any individual foreign shareholding, or
Voting group of foreign shareholders acting in concert, in the company;
Redeemable © requires a simple majority of the Board, including the Chief
oe Executive and any Executive Chairman, to be British;
hare
* allows the appointment of a non-British Non-Executive Chairman;
* provides for a veto over the material disposal of assets; and
* provides for a veto of any voluntary winding up.
Special shares in British Energy and the Nuclear Liabilities Fund Ltd transferred to the new
Department of Energy and Climate Change as a result of the Machinery of Government
change.
17.5 Other investments and loans
Value at
1 April 2008,
£7000
Companies House - 2500 - = = 2,500
Royal Mail Holdings plc NLF Loans 500000 232,000 -«=—s«(232,000) oe 500,000.
Royal Mail Shareholder Loan - 300,000. = 300,298
Other loans 2,000 ee os 2.000.
Total 502,000 534,500 (232,000) 296 - 804,796
Companies House loan
During 2008-09 BERR advanced the sum of £4.5 million to Companies House as an
interest bearing loan, repayable in full in six monthly instalments, by 2010-11, in
accordance with the loan repayment schedule. The loan was issued under the Companies
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House Trading Fund Order 1991 to assist Companies House's capital investment
programme. £2 million will be repaid during 2009-10 and is shown in Note 21.
Royal Mail shareholder loan
On 17 March 2009, the Department made available to Royal Mail a £300 million
shareholder loan, under the terms of the Subordinated Credit Facility Deed dated 19 March
2007. The loan has a maturity date of 19 March 2016. Until then interest accruing on the
loan will be capitalised once a year.
In accordance with the FReM, loans to Royal Mail are valued at historic cost. Further
details on the Royal Mail Holdings plc NLF loans facility can be found in the Financial
Overview section on page 133.
18. Other financial assets
Balance at
1 April 2007 1,543,433 44,759 1,588,192
Additions : - 21609 (21,669
Disposals : S =
Repayments ee (598) (598)
Income (153,723) us (153,723)
Revaluation Ee Seats SOR eS eae
Amortisation 64,020
Impairment <
Balance at
31 March 2008 1,507,978
Balance at
1 April 2008 1,507,978 56,407 1,564,385
Additions ie ae 21309-21809
Disposals = = ae
Repayments OE Se Ee s)
Income (128,159) (128,159)
Revaluation 40,705 4781 5,488
Amorisation be cere . 52,779.
impairment es (16,693) (16,693)
Balance at
31 March 2009 1,473,303 65,651 1,538,954
Coal Pension Investments, disclosed in the 2007-08 Accounts, were transferred to the
new Department of Energy and Climate Change as a result of a Machinery of Government
Change.
Repayable Launch Investments
The Department has determined in accordance with FRS 26 that Repayable Launch
Investments are to be classified as ‘available for sale financial assets’ and measured at fair
value.
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The Department, under the 1992 Civil Aviation Act, provides support to companies for a
proportion of eligible design and development costs on aerospace projects. This support is
by way of Repayable Launch Investments. Each project supported is covered by separate
contractual terms and conditions. Under these contracts, periodic repayments become due
when products are sold. The portfolio of existing investments is valued twice annually and
the valuations are based on estimated annual sales of the products over their estimated
marketable life. Sales forecasts are reviewed and revised when each investment valuation
is undertaken.
Measurement and carrying values
The Repayable Launch Investments are initially recognised at fair value, which is the
transaction price. After initial recognition, the value is the discounted forecast value of
future income streams. The value of the future income streams is based on the
Department's proportion of market forecasts of supported product sales. The estimates
are derived from production output information from the manufacturers; worldwide
aerospace industry statistics, provided by the Forum of European Aerospace Market
Analysts (FEAMA); and the Department's aerospace market analyst. The forecast income
streams are adjusted by inflation (2008-09: 2.75%, 2007-08: 2.5%) and are discounted for
the time value of money using HM Treasury's effective interest rate for financial assets of
3.5%. The Department adopts a conservative approach to its estimation of product sales
taking into account a wide range of risks that could delay production or sales, reduce the
marketability of the product, or delay, or reduce the value of, income to the Department.
The Department considers that the carrying value is a reasonable approximation of the fair
value of Repayable Launch Investments. The historic cost valuation of the portfolio at 31
March 2009 was £966 million (31 March 2008: £998 million).
Risks
The Department is subject to credit risk as the aerospace companies may not be able to
successfully market their products resulting in the Department not being able to recover
its investment. Delays in planned production or sales, could mean that the Department
may not recover its investment within the expected time period. The Department
minimises the risk, by carrying out a full evaluation of each business case submitted for
Launch Investment support. In addition, the Department monitors delivery statistics to
ensure that it receives the return on its investments when they are due.
The Department is also exposed to other market risks such as: downward movement in
the economy in general, or the aerospace industry in particular, exchange rate risks, oil
prices and pandemics such as SARS and Swine Flu. These risks could result in a decrease
in demand or delays in sales of the product, which may adversely impact the value of the
income received by the Department.
Further information on the Department's exposure to financial instrument risk is included
at Note 34.
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18.1 Other Investments and Loans
Value at
1 April 2008
£000
Regional Venture Capital Funds 21,511 675 me S (16,225) 5,961
Early Growth Funds 16,233 2641 . on S (1,082) 17,792
Community Development Venture Funds 8,103 697 (148) 4781 (2,114) 11,319
Enterprise Capital Funds 10.560 I) 47,296 2 ee 2728 30,579
Total 56,407 21,309 (153) 4781 (16,693) 65,651
Venture Capital Funds
The Department has determined in accordance with FRS 26 that the Venture Capital Funds
are to be classified as ‘available for sales financial assets’ and measured at fair value.
The Department's investment in the Venture Capital Funds supports private sector led
venture capital to stimulate private investment into early stage businesses as follows:
Regional Venture Capital Funds (RVCF)
RVCFs are an England-wide programme to provide risk capital in amounts up to £500,000
to small and medium size enterprises (SMEs) that demonstrate growth potential. The
funds are managed by experienced venture capital professionals, making commercial
returns. The objective was to have at least one viable commercial fund in each of the nine
English regions, which increase the amount of equity gap venture capital available to SMEs
and which does not displace any existing funding activity in this sector. All nine funds are
operational and making investments. The value of the funds at 31 March 2009 is £6 million
(31 March 2008: £22 million).
In the event of erosion in the fund's capital base the Department's investment suffers first.
Early Growth Funds (EGF)
This programme was developed to encourage risk funding for start-ups and growth firms,
to increase the availability of small amounts of risk capital of on average £50,000 for
innovative and knowledge intensive businesses and businesses in other growth areas.
Fund managers make all of the investment decisions and will be looking to make a
commercial return on investments. The maximum initial investment is £100,000 and most
will require a matched investment from a private sector investor. The value of the funds as.
at 31 March 2009 is £18 million (31 March 2008: £16 million)
Community Development Venture Funds (CDVF)
The CDVF, launched in 2002-03, is a £40 million venture capital fund aimed to widen and
deepen the provisions of venture capital finance and entrepreneurial support to viable
SMEs capable of growth that are located in, and have economic links with, the 25% most
disadvantaged wards in England. Of the £40 million capital investment available to the
fund, £20 million is Government investment, alongside private sector investors through
pound for pound matched funding. The funds range of investment can be from £100,000
up to £2 million. The investment period is due to end in May 2009 and the fund will be
wound up in May 2012 when all investments will be redeemed and the assets distributed
Department for Busin Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
to investors. The value of the funds as at 31 March 2009 is £11 million (31 March 2008: £8
million).
Enterprise Capital Funds (ECF)
The ECF, first launched in 2006-07, was established to address a market weakness in the
provision of equity finance to SMEs. Government funding is used alongside private sector
funds to create funds that operate within the equity gap, targeting investments up to
£2 million that have the potential to provide a commercial return. Eight funds have been
awarded ECF status, with an additional fund becoming available later in 2009. The value of
the funds at 31 March 2009 is £31 million (31 March 2008: £11 million).
Measurement and carrying amounts
The Venture Capital Funds are initially recognised at fair value, which is the transaction
price. After initial recognition the carrying value is based upon the valuations prepared by
the funds managers. They are taken from the most recent set of annual accounts for each
of the funds and, where available, updated with interim fund manager valuations.
The Regional Venture Capital Funds (RVCF) are valued in accordance with the International
Private Equity and Venture Capital Guidelines. The investments in the Early Growth Fund
(EGF), the Community Development Venture Fund (CDVF) and the Enterprise Capital Fund
(ECF) are valued by the fund managers. The fund managers are required to value the
investee companies of the EGF and ECF programmes using the European Venture Capital
Association valuation guidelines. The investments in the CDVF are valued using the British
Venture Capital Association Guidelines.
The Department considers that the carrying value is a reasonable approximation of the fair
value of these investments.
The Impairment of the Venture Capital Funds during 2008-09 of £17 million (2007-08:
£9 million), considered a permanent diminution, is based upon a downward revaluation
of the funds at 31 March 2009.
Risks
The Department is exposed to credit risk because the investee companies may not
perform as expected and the Department may not recover its investment. The Department
minimises the risk, by using Capital for Enterprise Limited (CfEL), an asset management
business, and a delivery partner of the Department, to carryout a full evaluation of each
business case submitted.
Further information on the Department's exposure to financial instrument risk is included in
Note 34.
19. Stocks and work in progress
2007-08
£000
Core
Department Consolidated
Stock = 8 - 3
Total oo - a
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20. Debtors
20.1 Analysis by type
(restated)
2007-08
£000
Core
Department Consolidated
Amounts falling due within one year:
Trade debtors pe aCe : 164,752 33,203 114,779
Other debtors 142,681 142,373 110,243 108,161
DECC/DIUS resulting from MOG change Mort, mesh 140,344 140,344
HM Revenue and Customs (VAT) 4,043 6711 7,904 9,592
CFER debtors 20,956 20,956 29,986 29,986
Staff debtors 1,352 2,057 1,305 2.105
Prepayments and accrued income 114,543 “113,231 105,287 110,683
328,594 451,351 428,252 515,630
Amounts falling due after more than one year: oe eee
Trade debtors 45,247 336 9,734 396
Other debtors ei “18,170 - -
Deposits and advances 5 5 - -
63a 18,511 9.734 396
Total Debtors at 31 March 392,016 469,862 437,986 516,026
20.2 Intra-Government Balances
(restated)
2007-08
£000
Balances with Other Central Government bodies 40,606 174,016 - -
Balances with Local Authorities 9375 10,063 = -
Balances with NHS Trusts 140 116 - -
Balances with Public Corporations and Trading Funds - $2578 32,776 -
Subtotal: Intra-Government balances 142,700 216,971 = -
Balances with bodies external to Government 308,651 29865918511. 396
Total debtors as at 31 March 451,351 515,630 18511 396
A prior period adjustment of £30 million has been made as an in year movement, which
has resulted in a new debtor being included for the SFLGS premium income. Under
FRS26, the SFLGS has been classified as a financial guarantee, which has required the
unearned premium income to be included as a fee debtor, for the first time.
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21. Current investments and loans in Public Bodies: current
Balance as at
1 April 2008
Companies House loan
Post Office Limited loan 390,000
Total 390,000 5,371,000 (5,562,000) = 199,000
Coal Pension Investments, disclosed in the 2007-08 Accounts, transferred to the new
Department of Energy and Climate Change as a result of the Machinery of Government
change.
21.1 Companies House
During 2008-09 BERR advanced the sum of £4.5 million to Companies House. £2.5 million
is due for repayment after more than one year. Further details are included in Note 17.
21.2 Post Office Limited
The Department has also made available to Post Office Limited (POL), through an
agreement reached on 17 October 2003, a revolving loan facility based on commercial
terms of up to £1.15 billion. This is to help the company fund its working capital
requirements in branches. The package was agreed against the background of the
migration of state benefits to a system of direct payment and the loss of pre-funding to
POL from the Department for Work and Pensions, alongside a Government commitment
that benefit recipients will still be able to collect their benefit, in cash and in full, from Post
Office branches. POL began utilising this facility on 1 December 2003. The facility matures
on 31 March 2011 by when any outstanding amounts will need to have been repaid. The
outstanding balance on 31 March 2009 was £197 million.
22. Cash at bank and in hand
(restated)
2007-08
£000
Core
Department Consolidated
Balance as at 1 April 837,304 862,883 471,528 514,559
Net change in cash balances 255,378 : 242,223 365,776 348,324
Balance as at 31 March 1,092,682 1,105,106 837,304 862,883
The following balances at 31 March were held at: = 2 = ss
Offices of HM Paymaster General 1,092,168 1,095,903 836,691 845,616
Cash in hand and commercial banks 514 9843 617 17.271
Balance as at31 March 1,092,682 1,105,546 837,308 862,887
Less overdraft E = (440) (4) (4)
Total 1,092,682 1,105,106 837,304 862,883
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23. Creditors
23.1 Analysis by type
(restated)
2007-08
£000
Core
Department Consolidated
Amounts falling due within one year:
Other taxation and social security = 63 63
Trade creditors 9,391 9391
Bank overdraft 4 4
Other ereditors 22,837 24814
Finance leases “ oe 56 - 739
Accruals and deferred income 150,756 198,270 134,525 182,767
Amounts issued from the Consolidated Fund for Supply but not spent. Se
at year end ae 977,68 977,168. 507,014 507,014
Consolidated Fund Extra Receipts due to be paid to the Consolidated
Fund:
Received : 349,860 349,860
Receivable 29,966 29,966
Other Consolidated Fund extra receipts 6.009 6.009
1,059,669 1,110,627
Amounts falling due after more than one year:
Trade creditors - = - 666
Accruals and deferred income 38,406 38,406
Finance leases - 1,785
NEF loans "00,000 500,000 500,000 500,000
Consolidated Fund Extra Receipts over one year due to be paid to
the Consolidated Fund 1481 1,481 - -
Ce 538,406 540,827
Total creditors at 31 March 1,840,550 1,888,899 1,598,075 1,651,454
23.2 Intra-Government Balances
(restated) (restated)
2008-09 2007-08 2008-09 2007-08
£000 £7000 £000 £7000
Balances with Other Central Government bodies 1.185.148 980,494 501,481 500,000
Balances with Local Authorities 10,992 11,253 = -
Balances with NHS Trusts & 36 45 ee -
Balances with Public Corporations and Trading Funds 64,887 1,865 - -
Subtotal: Intra-Government balances 1,261,059. 993,657 501,481 500,000
Balances with bodies external to Government 89,123 116,970 40,827
Total creditors at 31 March 1,350,182 4,110,627, 540,827
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24. Provisions for Liabilities and Charges
(Restated)
Balance as at 1 April 2008 29,326 166412 30071 115558 193,188 7,082—_541,635,
Amortisation of one year's discount 645 Seg BBE Oy es
Increase/(decrease) in provision (787) (15,670) (660) (101) (41,863) 15,223 (43,858)
Expenditure in year eam) ea i eee
Balance as at31 March 2009 26,421 154,403 20812 117999147399 21,389 488,123
(Restated)
Balance as at 1 April 2008 29326 166412 35,275 115558 193,186 12,479——582,236
Amortisation of one year’s discount. BAB URL aan tra aad
Increase/{decrease} in provision (787) (15,670) (660) (101) (41,863) 15878 (43,253)
Expenditure in year Spun ee uaa. = (e175) 2,322) (24.182)
Balance as at31 March 2009 26,121 154,403 24,734 117,999 147,399 25,915 496,571
24.1 United Kingdom Atomic Energy Authority (UKAEA) Restructuring
Restructuring costs cover the continuing annual payments for staff that took early
retirement primarily before the privatisation of AEA Technology in 1996 will continue until
they reach retirement age. In addition, where former staff are entitled to enhancements,
these will be paid for the duration of the pensioner’s life.
24.2 UKAEA Decommissioning Provisions
BERR retains the liability to cover the costs of the decommissioning of the UKAEA Culham.
site and the 31 March 2009 balance reflects the estimated and discounted future costs
for this.
Calculation of the liabilities is based on the technical assessments of the processes and
methods likely to be used in the future to carry out the work. Estimates are derived using
the latest technical knowledge and commercial information available and take account of
current legislation, regulations and Government policy. Summary figures are built up by
aggregating detailed estimates for individual liabilities. Allowance is also made for
infrastructure costs, which are an appropriate share of running costs and other overhead
costs attributable to plant and buildings. The calculation is re-assessed annually. Since
much of the work will not be done until well into the future, there is considerable
uncertainty as to the likely costs.
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The time scale, over which it is estimated the discounted costs will need to be incurred, is
as follows:
Within one year - -
Between two to five years ee 5
Beyond five years 154 161
Total 154 166
24.3 Early Departure Costs
The Early Retirement provision provides for the future costs of staff departing under
voluntary early retirement schemes.
The provision is required in order to meet pension enhancement and severance costs for
staff departing under these Schemes, with the liabilities extending for up to ten years.
24.4 British Shipbuilders
British Shipbuilders has liabilities arising from personal injury to former employees resulting
from exposure to asbestos during the course of their work. The Department has taken
responsibility for the liabilities of the British Shipbuilders Corporation to the extent that
they cannot be met from the residual funds of the Corporation. The undiscounted liability
is £149 million (2007-08: £147 million). The current estimate is that the liabilities will
extend for up to 20 years.
In the light of significant uncertainty associated with asbestos claims, there can be no
guarantee that the assumptions used to estimate the provisions for the cost of resolving
asbestos claims will be an accurate prediction of the actual cost that may be incurred and,
as a result, the provisions are reviewed bi-annually by an actuary. Further information can
be found in the British Shipbuilders’ Accounts.
The time scale over which the discounted costs will need to be incurred is as follows:
2007-08
fm
Within one year 7 7
Between two to five years . 38 26
Beyond five years 84 83
Total 1B 116
24.5 Onerous Leases
The Department, under its accommodation strategy, has determined that the 151
Buckingham Palace Road (BPR) and 10-18 Victoria Street (10VS) buildings are surplus to
existing and future operating requirements. The lease for BPR does not expire until 2021
and the lease for 10VS does not expire until 2026. The Administration Programme Board
oversaw the implementation of the strategy and also attempted to mitigate any potential
losses through subletting against the existing head leases for the buildings. However,
given market conditions at the time and future forecasts, neither the current nor future
potential subleases recover the full costs incurred by BERR. The provision has been made
for the discounted gross costs less the discounted expected income. A reduction in the
overall level of the provision has been made to reflect the reduction in costs arising, under
188
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Annual Report and Accounts 2008-09
some of the leases, due to the economic climate; to include an increase in income during
2009-10, due to the extension of existing tenancy arrangements; and to factor in that we
are one year closer to lease expiry.
24.6 Other
This relates to a range of liabilities arising from the Department's normal business.
It includes Agency provisions arising through consolidation and provisions for various
minor other Departmental Programmes and Administration costs.
Trawlermen Compensation Scheme
Following a report in February 2007 by the Ombudsman on the Trawlermen’s
Compensation Scheme set up in 2000, the Department agreed to review the scheme rules
and eligibility criteria. As a result of a judgement in the Court of Appeal (the Bradley case),
Ministers asked officials to look at possible options for re-running the Scheme.
At 31 March 2008, a contingent liability was disclosed in the Department's accounts,
in respect of compensation payments that may arise.
On completion of the review, the Minister for Employment and Postal Affairs stated in the
House of Commons on 11 December 2008 that the Department would be running a new
Icelandic Water Trawlermen Scheme. Consequently the Department has recorded a
provision as at 31 March 2009, to cover the forecast future compensation payments.
The undiscounted liability as at 31 March 2009 is estimated to be £7 million.
There is no specific legislative authority for these payments and the Department has been
advised that it cannot rely on the sole authority of the Appropriation Act, which it did when
running the previous Schemes. The Secretary of State has, therefore, directed the
Accounting Officer to proceed.
The National Dock Labour Board (NDLB)
The National Dock Labour Board (NDLB) was set up in 1948 to ensure a regular supply
of workers in the docks. Over time the system began to decline as working practices
changed, and after the decasualisation of dock labour in 1967 it was little used and was
finally abolished in 1989. Through a series of Machinery of Government changes
responsibility for the NDLB now rests with BERR. Over the past few years a number of
former dockers have developed diseases, mainly asbestos related, which they believe
arose as a result of their dock work. As many of the original companies no longer exist,
claims have been brought against the NDLB. In December 2008, Mr Justice Silber ruled
in the case known as Rice and Thompson, which was heard in the High Court of Justice,
Queen's Bench Division, that the NDLB did owe a duty of care to its registered dockers,
and that therefore claims against it were valid. As a result the Department has recorded
a provision in the 2008-09 accounts to cover future compensation payments.
The undiscounted liability as at 31 March 2009 is estimated to be £9 million.
Provisions for Coal and British Energy nuclear liabilities transferred to the new Department
of Energy and Climate Change as a result of the Machinery of Government Change.
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25. Financial Guarantees
(Restated)
Balance at 1 April 2008 114,367 - - 114,367
Prior period adjustment SS aa Pe 62 (30387
New opening balance 144,052 672 148,724
Amortisation er
Unwinding of one year's discount 2516 - = 2516
Increase/{decrease) in the year OH Bee Se Le tor ass
Expenditure in year (84,070) = = (84,070)
Balance at31 March 2009
6534 672 (256,812
All Financial Guarantees are held by the Core Department.
25.1 Small Firms Loan Guarantee Scheme (SFLGS)
In accordance with FRS 26, the SFLG Scheme has been classified as a financial guarantee.
The SFLGS is now a legacy scheme, as it was replaced by the new Enterprise Finance
Guarantee in January 2009. It was previously the Department's main instrument for
supporting debt finance for small businesses. By providing a Government backed
guarantee, the Scheme existed to enable lenders to assist small business, with viable
business proposals, to gain access to finance where they lacked security or a track record.
Measurement
Each SFLG guarantee is initially recognised at fair value, which is equal to the premium
income over the life of the guarantee. After initial recognition, the individual guarantees are
measured at the higher of:
a) the amount determined in accordance with FRS12, (Provisions, Contingent
Liabilities and Contingent Assets); and
b) the amount initially recognised, which for the Department is the value of the
premiums over the life of the guarantee.
The discounted premium income is also disclosed as a fee debtor.
Carrying values
Those guarantees that are not expected to default are carried at fair value and those
guarantees that are expected to default are carried at an amount determined in accordance
with FRS 12. The fair value is based upon the net present value of premium income. The
value of the amounts determined, under FRS 12, is based on the expected value of
defaults discounted using HM Treasury's effective interest rate, currently 2.2%.
The total value of loans outstanding as at 31 March 2009 is £619 million, however, BERR’s
total liability under the Scheme is limited to 75% of the total value of the loans outstanding
which is £464 million. The total value of the expected defaults is £215.5 million (2007-08:
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
£114.4 million), and the fair value of those guarantees not expected to default is £34.1
million. The amounts outstanding will be utilised over the next eight years.
Risks
Due to the nature of these guarantees, the Department is exposed to credit risk as the
recipient of the loan may default and the lending bank will call upon the Department to
honour its guarantee. The Department minimises the credit risk, by devolving responsibility
to the banks to determine whether any business applying for a loan is commercially viable.
The banks are required to apply normal commercial practices. To establish that this is the
case, the Department requires an independent audit of the lenders participating in the
Scheme. A sample of guarantees and a sample of defaults are examined annually. The
Department also shares the risk, setting its maximum exposure at 75% of the value of the
loan. The lenders bear the risk on the remaining 25%.
The Department is also exposed to interest rate risk, as the majority of the loan guarantees
are provided against variable rate loans. The banks usual lending practices mean that fixed
rate loans are usually available only for small value, short term loans. To minimise the risk
of default relating to a rise in interests rates, accompanied by a decline in the economic
environment, the Department relies on the lenders applying best commercial practice
when assessing the risk of default.
Further information on the Department's exposure to financial instrument risk is included
at Note 34.
25.2 Enterprise Finance Guarantee (EFG)
In accordance with FRS 26, the EFG has been classified as a financial guarantee.
The Enterprise Finance Guarantee (EFG) was introduced in January 2009. The EFG is a £1 billion
loan guarantee delivered through the banks that will enable up to an additional £1.3 billion of
lending to businesses. Applications will be approved up to the end of March 2010. The EFG
loan (either unsecured or partially secured) may be used as a new term loan specifically for
the purpose of transferring long term debt out of an overdraft or as refinancing of an existing
secured loan which would otherwise be withdrawn due to deterioration in the quality of the
security. The lending terms for the EFG are that a business meets an approved EFG lender's
commercial lending criteria, has an annual turnover of up to £25 million and is seeking a loan
of between £1,000 to £1 million. Theloans are repayable over a period of up to ten years.
The EFG is available for most business purposes and sectors. However, the EFG is subject
to certain sector restrictions arising from the EU De Minimis Aid rules, the Industrial
Development Act 1982, (which provides the statutory basis for EFG) and also national
policy reasons, which are detailed on the Department's website.
Measurement
Each EFG guarantee is initially recognised at fair value, which is equal to the premium
income over the life of the guarantee. After initial recognition, the individual guarantees are
measured at the higher of:
a) the amount determined in accordance with FRS12, (Provision Contingent
Liabilities and Contingent Assets); and
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b) the amount initially recognised, which for the Department is the value of the
premiums over the life of the guarantee.
The discounted premium income is also disclosed as a fee debtor.
Carrying values
Those guarantees that are not expected to default are carried at fair value and those
guarantees that are expected to default are carried at an amount determined in accordance
with FRS 12. The fair value is based upon the net present value of premium income.
The value of the amounts determined, under FRS 12, is based on the expected value of
defaults discounted using HM Treasury's effective interest rate, currently 2.2%.
BERR's total liability for the EFG is limited to 75% of the total value of the loans
outstanding and the total liability over the life of the guarantee is capped at 13% of this
limited value. The total value of the expected defaults is £4.5 million and the fair value of
those guarantees not expected to default is £2 million. The amounts outstanding will be
utilised over the next ten years.
Risks
Due to the nature of these guarantees the Department is exposed to credit risk as the
recipient of the loan may default and the lending bank will call upon the Department to
honour its guarantee. The Department minimises the credit risk, by devolving responsibility
to the banks to determine whether any business applying for a loan is commercially viable.
The banks are required to apply normal commercial practices. To establish that this is the
case, the Department requires an independent audit of the lenders participating in the
Scheme. A sample of guarantees and a sample of defaults are examined annually. For the
EFG, the cycle of audits has already started. The Department also shares the risk because
its exposure is capped at 13% of value of the guarantees, with the banks managing any
risks in excess of the cap.
In addition, the Department is exposed to interest rate risk, as the majority of the loan
guarantees are provided against variable rate loans. The banks usual lending practices
mean that fixed rate loans are usually available only for small value, short term loans. To
minimise the risk of default relating to a rise in interests rates, accompanied by a decline in
the economic environment, the Department relies on the lenders applying best
commercial practice when assessing the risk of default. At 31 March 2009, the proportion
of variable rate loans under the EFG was 9% by number and 5% by value.
Further information on the Department's exposure to financial instrument risk is included
at Note 34.
25.3 UK High Technology Fund Guarantee
The Department has issued a guarantee to investors in the UK High Technology Fund
which has been classified as a financial guarantee. In the event of the fund, not generating
sufficient income to meet the other investors’ guaranteed rates of return, the Fund
Manager would make a call on the Department's share of investment income, resulting in
the income being returned to the Fund Manager.
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Annual Report and Accounts 2008-09
Carrying value and measurement
The financial guarantee is measured at fair value through the Operating Cost Statement
and is carried at fair value. Fair value is calculated as being the product of the maximum
amount payable and the likely risk of a call on the guarantee being made. £672,000 has
been recognised in the Accounts for the first time, as the guarantee was previously
disclosed as a contingent liability under FRS 12, The value reflects the maximum possible
repayment of £1.12 million of income received from the UK High Technology Fund
combined with a 60 % likelihood of the repayment being made.
Risks
Due to the nature of this guarantee, the Department is exposed to other market risk,
which could trigger a call on the guarantee given if the fund underperforms due to market
conditions. The Department minimises the risk for the UK High Technology Fund through
its delivery partner, Capital for Enterprise Limited (CfEL), an asset management company.
CfEL monitor the overall performance of the UK High Technology Fund and, as appropriate,
will act to secure value for the Department as an investor in the Fund.
Further information on the Department's exposure to financial instrument risk is included
at Note 34.
26. General Fund
The General Fund represents the total assets less liabilities of each of the entities within
the accounting boundary, to the extent that the total is not represented by other reserves
and financing items.
(restated)
2007-08
£000
Core
Department Consolidated
Balance at 1 April 1,886,027 1,937,945 2,128,993 2,169,230
Prior period adjustment ek (672) (255) - -
New opening balance 1,885,355 1,934,690 2,128,993 2,169,230
Net parliamentary funding oe ee
Drawn down 1,945,377 1,945,377 2,156,652 2,156,652
Deemed 2S sono = sor0t4
Non supply expenditure funded by the National Insurance Fund 173,772 173,772
Supply (creditor/debtor ~ current year “(97.168) —__(977,168) (607,014) (607,014)
Net transfer from operating activities
Not operating cost 31 Win3g40) (106,745) 1.593.681) 11,583,021)
CFERs repayable to Consolidated Fund 5 (643,416) (643,416) (488,070) (488,070)
Inerease in RPS debtors : —2ap30 28,030 4,837 4,837
Non cash charges:
Cost of capital 32 tr0531) (119.313) 10577 11,326
Auditors’ remuneration 2 234 288 240 am
Transfer from revaluation reserve an Ba oar (123) 12
Transfer of assets/liabilities * = (156) (156)
Balance at 31 March : 1,903,218 1,961,222 1,886,027 1,937,945
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a
The prior period adjustments relate to the first time adoption of the Financial Instrument
Standards (FRS 25, 26 and 29). Further details for the core Departments are provided in
Note 25. The prior period adjustment for the consolidated body relates to The Insolvency
Service and further details can be found in its Annual Accounts.
27. Reserves
27.1 Revaluation Reserves
(restated)
2007-08
Core
Department Consolidated
Total Total
£000 £7000
Balance at 1 April 702 102211 4,153 107,066 1,384 102211 4153 107,748 171,005 171,686
Arising on revaluation os Leese ales
during the year (net) 936 40,705 4,781 46,022) 694 40,705 4.781 46,180 64,052 64,288
CFERs realised - (96457) — (96457), - (96,457) = (96,457) (128,114) (128,114)
Transfer to the General ee : Bus :
Fund of realised element of . -
Revaluation Reserve (see SSC = - ce
Note 26) SUSAR) SS ee BABY BAI Bay 123 (112)
Balance at 31 March 893 96,459 8,934 56,286 1,531 46,459 8,934 56,924 107,066 107,748
The Fixed Asset Revaluation Reserve reflects the unrealised element of the cumulative
balance of indexation and the revaluation adjustments of Fixed Assets (see Notes 15 and
16). In accordance with the FReM, other than for land and buildings, the core Department
has opted to value tangible fixed assets on a depreciated historical cost basis, as a proxy
for current cost. During 2008-09, £151,000 was transferred to the General Fund to reflect
this change.
The Launch Investment Revaluation Reserve reflects the unrealised element of the
cumulative balance of the revaluation adjustments to Launch Investment (see Note 18).
CDVF refers to the Community Development Venture Funds Further details are provided in
Note 18.
28. Notes to the Consolidated Cash Flow Statement
28.1 Reconciliation of operating cost to operating cash flows
(restated)
2007-08
£7000
Net Operating Costs 34 (1,106,745) (1,583,021)
Adjustment for non-cash transactions el 300,512
Adjustment for non-cash income 13 (3,711) ~
Decrease in stock Ea ae 1
Decrease in debtors 20 46,164 253,958
Less movements in Debtors relating to items not passing through the Operating Cost Statement Tp (486,491)
increase in Creditors 23 237,445 159,447
Less movements in Creditors relating to items not passing through the Operating Cost Statement t (234,627) (239,655)
Adjustment for capitalised interest on Royal Mail Shareholders Loan V7 (296)
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Use of financial guarantees 4 ~~ (84,070) -
Use of provision 4 (24,152) (96,626)
Non-cash expenditure funded by the National Insurance Fund 34 . See 391 918 173,772
Interest received from Royal Mail Holdings plc on NLF loans 31 (29,488) (29,172)
Interest paid to NLF on loans to Royal Mail Holdings plc er 29,172
Net Cash Outflow from Operating Activities (697,550) (1,498,103)
28.2 Analysis of capital expenditure and financial investment
(restated)
2007-08
£000
Intangible fixed asset additions 16 (308) (1,688)
Tangible fixed asset additions Ab 127 aa) (13,879)
Launch Investments receipts 7 31,598 27,396
Other assets redeemed 718 232,183 5,784
Loan redeemed from Post Office Limited a 5,562,000 6,450,000
Investments made to other bodies 171821 (564,632) (29.119)
Loan made to Post Office Limited 2 (5,369,000) (6,440,000)
Net Cash Outflow from Investing Activities
28.3 Analysis of capital expenditure and financial investment by Request for
Resources (RfRs)
Request for Resources 1 45,1621 (28,639) (5,933,632) 5,825,855 (136,416)
Net movement in debtors/creditors Se Sie
Total 2008-09 (5,933,632) 5,825,751 (135,543)
Total (restated) 2007-08 (155569) (6.469,119) 483,180,508)
28.4 Analysis of financing
2007-08
£000
From the Consolidated Fund (Supply) - current year 1,945,377 2,186,652
From the Consolidated Fund (Supply) ~ prior year ce 444,701
From the Consolidated Fund (non-supply) = -
NUF Loans ~ interest received from Royal Mail Holdings ple 29488 79.172
NLF Loans ~ interest paid to the NLF 281 (29,488) (29,172)
From the National Insurance Fund 1 301.918 173,772
Payment to National Insurance Fund = -
‘Advances from Contingency Fund
Repayment to Contingency Fund eS -
Capital element of payments in respect of finance leases and on balance sheet PFl contracts ]
Redundancy payments i (391,918) (173,772)
1,945,377 2,601,353
Net financing
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28.5 Reconciliation of Net Cash Requirement to increase in cash
(restated)
2007-08
£000
Net Cash Requirement 4 (1,475,225) (1,987,633)
From the Consolidated Fund (Supply) ~ current year eB 1,945,377 2,156,652
From the Consolidated Fund (Supply) ~ prior year 28.4 - 444,701
Amounts due to the Consolidated Fund ~ received in a prior year and paid over oe Bele (355,869) (621,265)
Amounts due to the Consolidated Fund ~ received and not paid over 23.1 127,940 355,869
Increase in cash 2 2223 348,324
29. Notes to the Consolidated Statement of Net Operating Costs by
Departmental Strategic Objectives
The Consolidated Statement of Net Operating Costs by Departmental Strategic Objectives
reports expenditure and income against each of the Department's five Objectives.
The costs comprise direct administration and programme costs derived from those front-
line Departmental Groups where activities are directly related to delivering the
Department's Strategic Objectives.
Following the announcement, by the Prime Minister on 3 October 2008, BERR’s Energy
Group was transferred to the new Department of Energy and Climate Change. As a
consequence of this change, the objectives relating to energy security and supply, and
managing energy liabilities, transferred to the new Department.
29.1 Programme grants and other current expenditures have been allocated as
follows:
mm (restated)
2007-08
£000
Promoting the creation and growth of business 2,520,929 2,453,425
Ensuring better regulation ys 2.532
Delivering free and fair markets 853,021 557,404
Ensuring that Government acts as an effective shareholder 172,147 481,133
Professional support, capability and infrastructure 4328 (19,163)
Total 3554878 3.475331
29.2 Capital employed by Departmental Strategic Objectives at 31 March 2009
(restated)
2007-08
£000
Promoting the creation and growth of business 705,000 1,266,431
Ensuring better regulation Sa) 2
Delivering free and fair markets, 127,891 127,507
Ensuring that Government acts as an effective shareholder 1,266,856. 718,109
Professional support, capability and infrastructure (81,285) (66,387)
Total 2,018,146 2,045,693
Where assets and liabilities relate to specific Objectives, they are attributed directly to that
Objective. The Department's administrative net liabilities are attributed to Objectives in
proportion to the gross expenditure for those Objectives.
rtment for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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30. Capital commitments
Core
Department Consolidated
Contracted capital commitments at 31 March for which no provision has
been made 2,208 4,208 2,852 10,852
31. Commitments under leases
31.1 Operating leases
Commitments under operating leases to pay rentals during the 2009-10 financial year are
given in the table below, analysed according to the period in which the lease expires.
(restated)
2007-08
£000
Core
Department Consolidated
Obligations under operating leases comprise:
Land and buildings
Expiry within one year 750
- 349,
Expiry after one year but not more than 5 years Pane Sie : 55 1,763
Expiry thereafter 34,018 41,696 39,444 47817
aiagg 51,352 39,499 49,929
Other:
Expiry within 1 year 661 29 3
Expiry after 1 year but not more than 5 years 225 8,544 189 5,845
Expiry thereafter S x 5 - -
253 9,210 218 5,918
31.2 Finance leases
Obligations under finance leases are as follows:
2007-08
£000
Core
Department
Obligations under finance leases comprise:
Rentals due within one year 1,089 - 976
Rentals due after one year but within 5 years 1.346 - 1.964
Rentals due thereafter : - -
= 2,435 - 2,940
Less interest element (264) - (360)
= 2171 - 2,580
All obligations under finance leases are with the Department's consolidated bodies.
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32. Commitments under PFI contracts
32.1 Off-Balance Sheet contract
During the 2008-09 financial year, the Department had one off-Balance Sheet PFI contract,
the ‘ELGAR Service PFl Agreement’. The contract operator is Fujitsu Services.
32.2 Charge to the Operating Cost Statement and future commitments
The total amount charged to operating costs in 2008-09 was £31 million (2007-08
£33 million restated); see Note 10 other administration costs and Note 11 programme
costs. The payments to which the Department is committed during 2009-10, analysed by
the period during which the commitments expire, are as follows.
(restated)
2007-08
£000
Core
Department Consolidated
Expiry within one year 2,644 ~ 4,066
Expiry within two to five years Se bao 26,432. 2.158 2.158
Expiry within six to ten years = = 25,580 25,580
29.076 (29,076 21,738 31,804
32.3 ELGAR contract details
Description of the contract
The ELGAR contract covers the provision of a wide range of information systems and
services to the Department, including infrastructure management, IT development,
business process re-engineering, consultancy advice and technology refresh.
Over the five remaining years of the contract, the payments are expected to amount to
around £106 million for the core Department.
Estimated capital value
The estimated cumulative capital value of the contract is £27.6 million.
Contract start and end dates
The contract was awarded in November 1998 for a period of ten years, extendable for up
to a further five years. The contract is now set to expire on 31 March 2014.
Other obligations
BERR has a responsibility to pay termination charges should the Department exercise its
break option before the agreed service end date. These amount to £25.5 million,
comprising £9.3 million for the core service, £14.7 million for the Department's electronic
records management system and an additional £1.5 million for other (extended) services.
The Insolvency Service, which is an Executive Agency whose results are consolidated into
these accounts, also had a contract with Fujitsu for the provision of IT services which
expired during 2008-09. Further details can be found in the separate resource accounts of
this body.
Department for Busin nterprise and Regulatory Reform
Annual Report and Accounts 2008-09
33. Other financial commitments
The Department has entered into non-cancellable contracts (which are not leases or PFI
contracts), for subscriptions to international bodies. The payments to which the
Department is committed during 2009-10, analysed by the period during which the
commitments expire are as follows:
(restated)
2007-08
£000
Expiry within one year = = - -
Expiry within two to five years Oe OS - -
Expiry thereafter 6.405 6,405 4,828 4,828
6405 6,405, 4,828 4,828
33.1 The amounts disclosed above are for subscriptions paid to the following
bodies:
Organisation a eS et
World Trade Organisation a a = 6,237 6,237
UNIDROIT oi rcs So Sig
Organisation for Economic Co-operation and Development Steel
Committee c - - 43 49
Total a er
Notes:
a) BERR is responsible for the payment of the UK's annual contribution to the World
Trade Organisation (WTO), which deals with the global rules of trade between
nations. Its main function is to ensure that international trade flows as smoothly,
predictably and freely as possible. As a member of the WTO the UK, like other
members, has a legal commitment to pay a contribution to the cost of running the
WTO Secretariat, which is based in Geneva. The UK's share is calculated on the
basis of our international trade in relation to the total international trade of all WTO
members.
b) — BERR pays an annual contribution towards the running of the International Institute
for the Unification of Private Law (UNIDROI!T). UNIDROIT is an independent
intergovernmental organisation with its seat in Rome. Its purpose is to study needs
and methods for modernising, harmonising and co-ordinating private and in particular
commercial law as between States and groups of States.
c) The Organisation for Economic Co-operation and Development (OECD) Steel
Committee is the international forum established to discuss steel industry issues
such as production trends, trade flows and issues, market developments and
environmental issues. BERR provides funding as a contribution to the work of the
Committee, which is attended by both OECD and non-OECD members.
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Due to the transfer of the Energy Group of BERR to the new Department of Energy and
Climate Change, the Department no longer subscribes to the following bodies:
@ International Atomic Energy Agency;
@ Organisation for the Prohibition of Chemical Weapons;
@ International Energy Agency;
e@ Nuclear Energy Agency;
e European Energy Charter; and
@ International Energy Forum Secretariat (IEFS).
34. Financial Instruments
The carrying amounts of financial instruments in each of the FRS 26 categories are as
follows:
(restated)
31 March 2008
£000
Core
Financial assets Department Consolidated
Loans and receivables:
Cash and cash equivalents cee : 837,308 862,887
Debtors 20 392,016 469,862 437,986 516,026
Loans — 1121 1,003,796 1,003,796 892,000 892,000
Public dividend capital 7 15,889 15,889 15,889 15,889
Total loans and receivables 2.508,983 2,595,093 2,183,183 2.286.802
Available for Si SS See
Launch Investments 18 1,473,303 1,473,303 1,507,978 1,507,978
Venture Capital Funds 18 BRS. BREST, 56,407 56,407
Ordinary Shares 7 430,423 430,423 430,423 430,423,
Total available for sale ce 1,969,377 1,969,377 «1,994,808 1,994,808
(restated)
31 March 2008
£7000
Core
Financial liabilities Department Consolidated
Financial Guarantees
Small Firms Loan Guarantee Scheme 2 209,806 249,608 114,367 114,367
Enterprise Finance Guarantee 8 6534 6,534 - -
UK High Technology Fund ei are - -
Total financial guarantees 256,812 256,812 114,367 114,367
At Amortised Cost
Creditors 23 1,840,550 (1,888,899 1,598,075 1,651,454
Total at amortised cost 1,840,550 1,888,899 1,598,075 1,651,454
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FRS 29 Financial Instruments: Disclosure requires the Department to disclose information
which will allow users of these financial statements to evaluate the significance of financial
instruments on the Department's financial performance and position and the nature and
extent of the Department's exposure to risks arising from financial instruments.
As the cash requirements of the Department are met through the Estimates process,
financial instruments play a more limited role in creating risk than would apply to a non-
public sector body of a similar size.
The Department is however exposed to some forms of credit, liquidity and market risk via
specific programmes / activities undertaken in pursuance of the Department's aim to help
ensure business success in an increasingly competitive world.
Credit risk
Credit Risk is the risk that one party to a financial instrument will cause a financial loss for
the other party by failing to discharge an obligation.
The Department is subject to credit risk in the areas of Launch Investments; Venture
Capital Funds and Financial Guarantees as follows:
e Launch Investments — Aerospace companies may not be able to successfully
market their products resulting in the Department not being able to recover its
investment, or there could be delays in planned production or sales, and the
Department may not recover its investment within the expected time period.
The Department minimises the risk, by carrying out a full evaluation of each
business case submitted for Launch Investment support. In addition, the
Department monitors delivery statistics to ensure that it receives the return on its
investment when it is due.
e@ Venture Capital Funds — Investee companies may not perform as expected and
the Department may not recover its initial investment. The Department
minimises the risk, by using Capital for Enterprise Limited (CfEL), an asset
management business, and a delivery partner of the Department. CfEL monitors
the overall performance of the Funds and will act to secure value for the
Department as an investor.
e Financial Guarantees — Through the Financial Guarantee schemes, the
Department is exposed to the risk that a recipient of the loan may default and
the lending bank will call upon the Department to honour its guarantee. The
Department minimises the credit risk, for the EFG and legacy SFLG Scheme by
using the participating banks to determine whether any business applying for a
loan is commercially viable.
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Market risk
Market Risk is the risk that fair values and future cash flows will fluctuate due to changes
in market prices. Market risk generally comprises of:
Foreign Currency risk
The Department's exposure to foreign currency risk during the year was insignificant.
Foreign currency income was negligible and foreign currency expenditure was a very
small percentage of total expenditure (less than 1%). All material assets and liabilities
are denominated in sterling.
Interest Rate risk
The Department does not invest or access funds from commercial sources, but it is
exposed to interest rate risk with respect the SFLGS and the EFG. To minimise the
risk of default due to interest rate rises, coupled with a downturn in the economy,
the Department relies on the lenders assessment using best commercial practice to
manage the risk of default.
Other Market risk
The Department is exposed to wider risks relating to the performance of the
economy as a whole. Any downward movement in the economy could result in
failures of investee companies under the Venture Capital Fund schemes and loan
defaults under the SFLG and EFG Schemes. In addition, a downturn in the economy
could result in a decrease in demand throughout the aerospace industry, potentially
impacting the valuation of the Department's Launch Investments.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations
associated with financial liabilities. In common with other government departments the
future financing of its liabilities is to be met by future grants of Supply, voted annually by
Parliament. There is no reason to believe that future approvals will not be forthcoming,
therefore on this basis the Department is not exposed to liquidity risks.
Information about the Department's objectives, policies and processes for managing and
measuring risk can be found in the Statement on Internal Control.
Department for Busin
Annual Report and Accounts 2008-09
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35. Contingent liabilities disclosed under FRS 12
Basis of
Recognition
Nuclear
Postal
Services Act
2000
British
Shipbuilders
Competition
Commission
Description
The Department has a range of civil nuclear liabilities arising through its
association with the United Kingdom Atomic Energy Authority and
British Nuclear Fuels Limited as well as ensuring that the Government
complies with its obligations under the various international nuclear
agreements and treaties. The amount and timing of this overarching
liability is not quantifiable.
The Department has made available to Post Office Limited, through an
agreement reached on 17 October 2003, a revolving loan facility based
on commercial terms of up to £1.15 billion. This is to help the company
fund its working capital cash requirements in branch. The package was
agreed against the background of the migration of State benefits
payments to a system of direct payment, alongside a Government
commitment that benefit recipients will still be able to collect their
benefit, in cash and in full, from Post Office branches. Post Office
Limited began utilising this facility on 1 December 2003. The Facility
matures on the 31 March 2011 by when any outstanding loans will need
to have been repaid. The outstanding balance on the revolving loan
facility is £197 million.
There are contingent liabilities that arise from the Department's
assurances and guarantees to British Shipbuilders.
Following a legal ruling in respect of pleural plaques claims (valued at
£22.5 million) on 17 October 2007, the House of Lords announced that
compensation cannot be made on pleural plaques. This is the current
position in England and Wales as the House of Lords judgement still
stands. However, the Scottish Executive passed a Bill that is now an Act
and appears on the statute book. The Scottish Ministers have made a
commencement order providing for the Act to come into force on 17
June 2009, but claims are being sisted (put on hold) until the outcome of
a judicial review of the Act.
In the past year there has been litigation before the Competition Appeal
Tribunal, between Sky and Virgin and BERR and the Competition
Commission following Sky's acquisition of a shareholding in ITV plc.
BERR may be required to meet certain third party legal costs. These
have not been finalised but if BERR is required to pay these, they are
estimated to be in the region of £175,000. The litigation continues as the
Court of Appeal has granted leave to appeal.
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36. Contingent liabilities not required to be disclosed under FRS 12, but
included for Parliamentary reporting and accountability purposes
36.1 Quantifiable
The Department has entered into the following quantifiable contingent liabilities by offering
guarantees or indemnities. None of these is a contingent liability within the meaning of
FRS 12 since the likelihood of a transfer of economic benefit in settlement is too remote.
All of these liabilities relate to the Core Department.
Statutory Guarantees
— Home Shipbuilding Credit Guarantee Scheme Reid ee = (4,000) 19,000
Statutory Indemnities
= Local Network Indemnities 27,451 Boss (18.078) 9375
Other
Callable capital subscription forthe Common Fund for. Se : SS 2 :
= Commodities Oe es es 1,960
Paid in capital subscription for the Common Fund for
= Commodities = - - 2240
Total = aad aes
1 - Obligations expired in year relates to cases closed and/or completed contracts.
36.2 Unquantifiable
The Department has entered into the following unquantifiable contingent liabilities by
offering guarantees, indemnities or by giving letters of comfort. None of these is a
contingent liability within the meaning of FRS 12 since the possibility of a transfer of
economic benefit in settlement is too remote.
Statutory Guarantees
@ A guarantee has been given to the Financial Reporting Council that if the amount
held in the Legal Costs Fund falls below £1 million in any year, an additional grant
will be made to cover legal costs subsequently incurred in that year;
@ Any liabilities imposed by section 68, Telecommunications Act 1984; and
@ Any liabilities imposed by section 9, British Aerospace Act 1980.
Statutory Indemnities
@ Indemnities given to UKAEA by the Secretary of State to cover certain
indemnities given by UKAEA to carriers and British Nuclear Fuels Pic against
certain claims for damage caused by nuclear matter in the course of carriage;
@ IIndemnities equivalent to those given to civil servants under the Civil Service
Management Code have been given to persons appointed to the Board of the
Office of Fair Trading, including the Chairman;
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e Indemnities given to Bankers of the Insolvency Service against certain liabilities
arising in respect of non-transferable "account payee" cheques due to insolvent
estates and paid into the Insolvency Service's account; {i) and
e The Police Information Technology Organisation (Home Office) provides BERR
with access to data from the Police National Computer (PNC). BERR has
indemnified the police against any liabilities which they might incur as a result of
providing that access.
Note: (i) - Only this contingent liability relates to an Agency. All other liabilities relate to the Core Department.
Other
e Further Incidents/Accidents Insurance claims for exposure to ionising radiation
pursued outside the existing UKAEA insurance scheme;
e@ Outstanding claims under the Enemy Property Claim Scheme are still being
considered; and
e There is a possibility that other liabilities exist in relation to nationalised, and
former nationalised, industries that, if they crystallised, may fall to the
Department.
These liabilities are unquantifiable due to the nature of the liability and the uncertainties
surrounding them.
37. Losses and special payments
The disclosures in this Note are in accordance with Managing Public Money. The purpose
of this Note is to report on losses and special payments of particular interest to Parliament.
(restated)
2007-08
£7000
Total 46 1,488
(157 cases) (104 cases}
37.1 Losses Statement
37.2 Special Payments
Special payments include extra-contractual, ex gratia and compensation payments.
(restated)
2007-08
£000
Total 107 230
(10 cases) ——_(20-cases)
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38. Related-party transactions
The Department is the parent of the Advisory, Conciliation and Arbitration Service (Acas)
and the Insolvency Service, and sponsor of the Non-Departmental Public Bodies as shown
in annex 3 page 227 to this Report, including Companies House (Trading Fund) and Royal
Mail Holdings plc, British Shipbuilders, BNFL plc and OFCOM.
The Department also has had various material transactions with other Government
departments and Government bodies. The most significant of these transactions have
been with the Department for Communities and Local Government; the Department for
Innovation Universities and Skills, the Department of Energy and Climate Change, and the
HM Treasury Consolidated Fund.
None of the Department's Ministers, Management Board members, key managerial staff
or other related parties has undertaken any material transaction with the Department
during the year.
The National Audit Office (NAO) have contracted with the Department to lease, at a market
value rent, 151 Buckingham Palace Road until 2009-10. Elements of the Home Office have
arranged with the Department to lease, at a market value rent, 10 Victoria Street until
2010-11.
39. Post Balance Sheet events
New Permanent Secretary and Accounting Officer
Following the retirement of Sir Brian Bender, Simon Fraser was appointed Permanent
Secretary and Accounting Officer of the Department on 5 May 2009.
Machinery of Government changes
Following an announcement by the Prime Minister on 5 June 2009, about the way that
Government is organised, the Department merged with the Department of Innovation,
Universities and Skills (DIUS) and ceased to operate as BERR. The Department of
Business, Innovation and Skills (BIS) was created and will take forward the work of the two
former Departments. Simon Fraser was appointed Permanent Secretary of the merged
Department and Accounting Officer of the former DIUS with effect from 5 June 2009. The
merger will be effective from 1 April 2009.
Introduction of International Financial Reporting Standards
International Financial Reporting Standards (IFRS) were adopted by the Department on
1 April 2009. In common with other Government Departments we will be adhering to the
HM Treasury ‘trigger point’ process which was introduced to manage the transition from
FRS based to IFRS compliant Resource Accounts. Trigger Points 1 and 2, related to the
preparation and audit of the Department's restated opening Balance Sheet as at 1 April
2008 and the results were reported to HM Treasury by end of January 2009. The treatment
of the Department's off Balance Sheet PFI contract is the only outstanding issue of
significance. This will be resolved for Trigger Points 3 and 4, which relate to the preparation
and audit of ‘shadow’ IFRS Resource Accounts for 2008-09. The Department is working
with DIUS with the aim of producing Accounts covering the different components of the
Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
new Department for Business, Innovation and Skills for audit by the 10 September 2009
deadline.
New Support for Business
The Department introduced the following support packages after the Balance Sheet date:
Working Capital Scheme
The Department introduced the new Working Capital Scheme on 30 April 2009. The
Scheme guarantees bank loans to enable a sufficient amount of regulatory capital to be
freed up to enable banks to make a corresponding amount of lending to business. The
Scheme has received State Aid clearance from the European Commission and comes
within the scope of the Banking Act 2009. The support will secure up to £20 billion of
working capital for companies with turnover up to £500 million. The first tranche of the
guarantee for a portfolio of £1 billion was agreed by April 2009. The scheme is planned to
run to, and with exposures not exceeding, 31 March 2011. The maximum expected
exposure of £10 billion, over the life of the Scheme, has been disclosed in the
Department's Main Estimate for 2009-10 as a contingent liability. The exposure is capped
at any point in time to the value of the guarantees in issue. Thus, for 2009-10, the
maximum exposure will be £1 billion arising from the first tranche.
Trade Credit Insurance Scheme
The Department introduced the Trade Credit Insurance Scheme on 1 May 2009. The
Scheme runs until December 2009 and initially allowed suppliers that have had their credit
insurance reduced, since 1 April 2009, to purchase government backed insurance to top it
up in accordance with the eligibility rules of the Scheme. On 9 June 2009 the Scheme was
changed to allow those suppliers that have had their credit insurance reduced since
October 2008 to be eligible to participate. The exposure is capped at £5 billion and top up
cover is limited to £1 million per eligible supplier. Exposures will not exceed 30 June 2009.
The Vehicle Scrappage Scheme
The Vehicle Scrappage Scheme, announced in the Budget 2009 on 22 April 2009, was
formally introduced on 18 May 2009. The Scheme, which runs until the beginning of March
2010 or until Government funding is used up, provides £300 million of Government
funding, to be matched by vehicle manufacturers, so that qualifying consumers scrapping
vehicles of ten years old or more, can be offered a discount of £2,000 off the cost of a new
vehicle, of which £1,000 will be from Government with the remainder coming from the
manufacturer.
Provision of an Overdraft Guarantee
On 14 May 2009 Ministers agreed that BERR should provide a facility of up to £5 million as
an overdraft guarantee to allow a UK business time to negotiate a possible take over by an
overseas company. In the event that a call should be made on the guarantee, the amount
paid by BERR is to be repaid (under a Standby Letter of Credit) by the overseas company’s
bank. In June 2009 the Department paid £1.5 million under the guarantee and repayment
has been requested from the guarantor.
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The Automotive Assistance Programme
On 27 January 2009, the Secretary of State announced support for the automotive sector,
including loan guarantees which could enable up to £2.3 billion in lending to Britain's
automotive manufacturers and suppliers. The guarantees could unlock loans of up to
£1.3 billion from the European Investment Bank (EIB) and BERR will offer guarantees to
support up to a further £1bn of lending to cover investments which may not be eligible for
EIB support or which will bring special value to Britain. As agreed with HM Treasury when
designing the scheme, a Non Cash Call on the Reserve has been made amounting to
£25 million to fund any potential defaults under the Automotive Assistance Programme in
2008-09. If the liability is called, provision for any payment will be sought through the
normal Supply procedure. Under state aid rules guarantees must be granted before
31 December 2010 and cannot exceed 90% of the loan. No guarantees had been
provided at the date of this publication.
The Capital for Enterprise Fund
The Capital for Enterprise Fund, which was announced on 14 January 2009, will provide
£75 million of equity, made up of £50 million of Government funds and an additional £25
million from Barclays, HSBC, Lloyds TSB and RBS. The purpose of the fund is to provide
equity and quasi equity of between £250,000 and £2 million for companies with a turnover
of up to €50 million who have viable business models and growth potential in need of long
term capital.
39.1 Date Accounts Authorised for Issue
The Accounting Officer of the Department has authorised these accounts to be issued on
15 July 2009.
40. Third-party assets
The following are balances on accounts held in BERR’s name at commercial banks but
which are not BERR monies. They are held or controlled for the benefit of third parties and
are not included in BERR’s Resource Accounts.
31 March 2008
£000
Bank balances 16,175 8.510
41. Restatement of Balance Sheet and Operating Cost Statement as a result
of Machinery of Government (MoG) changes
The Department had two Machinery of Government changes affecting its Estimates and
Resource Accounts where functions or responsibilities were transferred within
Government.
On 3 October 2008, the Prime Minister announced the creation of the new Department of
Energy and Climate Change, which brought together much of the Department for
Environment Food and Rural Affairs (Defra), Climate Change Group with the Energy Group
from BERR. The transfer of Energy Group also included the sponsorship responsibility for
the Nuclear Decommissioning Authority (NDA), the Civil Nuclear Police Authority (CNPA),
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and the Coal Authority. The Department's interests in British Energy and the Nuclear
Liabilities Fund also transferred to the new department.
On 1 April 2008 the Defence Export Service Organisation transferred to UK Trade and
investment from the Ministry of Defence and was renamed the Defence and Security
Organisation.
In accordance with the FReM, Machinery of Government Changes which involve the
merger or the transfer of functions or responsibility of one part of the public service sector
to another, are accounted for using merger accounting in accordance with Financial
Reporting Standard (FRS) 6. This requires the restatement of the Primary Statements and
associated Notes to the Accounts. The Balance Sheet and the Operating Cost Statement
were restated as follows:
Balance Sheet
‘Non-current assets:
Tangible assets ee Ss
Intangible assets 1612 Z 11612
Investments g 2512,697
Debtors 395 ie
Current assets:
Debtors 637,016 (121,386) 515,630
Investments ae #3 (1,000,283) «390,000
Cash 1,125,178 (262,231) 862,887
Creditors {amounts falling due within one year) (1,416,437) 305,810 (1.110.627)
Creditors {amounts falling due after more than one year) (640,827) = (540827)
Provisions (3815041) 3,148,498 (666,603)
Taxpayers’ equity:
General fund (1,071,925) 3,009,871 1,937,946
Revaluation reserve 3.916.456 (3,808,709) 107,747
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Resource Accounts
Operating Cost Statement
Administration costs:
Staff costs ane ean
Other administration costs 357,802 (10,956)
lacome 973
Programme costs:
Request for Resources 1 & oS
Staff costs 103,945 (264) 103,881
Programme costs 6750428 (3,378,778) 3,371,880
Income (3,628,120) 1,556,889 (2,071,231)
Special dividend (BNFL ple) (260,000) (260,000)
Net Operating Cost 3,434,904 (1,851,883) 1,583,021
42. Additional Entities
Information about the principal activities undertaken by the Insolvency Service and Acas,
together with a list of those bodies within the Departmental Boundary can be found in
chapter 2 of the Report to these Accounts.
Other bodies covered by these accounts by way of including in the reported results,
funds paid to them as grant or expenses are also listed in annex 3 of the Report to these
Accounts.
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~ Annex 1
"Quality of data systems used.
Section A1.1
Quality of data systems used for BERR’s DSOs
A.1 Chapter 2, the ‘Performance report’ sets out the indicator assessments for BERR’s
DSOs and the CSRO7 PSAs for which BERR led delivery. This annex contains
information on the quality of the data systems used to measure the indicators, for
example the methodology used to collect the data and the reliability of the results
obtained. In the interests of brevity, where this information is available elsewhere,
we have provided links to the source documents. Where performance is measured
using ONS data we do not provide further information on data quality, since the term
‘national statistic’ is only applied to data that the ONS believe to be sufficiently
reliable.
A.2_ Statements of data quality for the SRO4 PSAs can be found with the relevant PSA in
annex 2.
DSO 1: Promote the creation and growth of business and a strong enterprise
economy across all regions
Indicator 1.1: Stakeholder perceptions of BERR’s understanding of, influence
over and performance in improving the business and enterprise environment
The survey of BERR customers in a range of business areas has been undertaken
annually, since 2003, by nationally recognised surveying organisations and provides
a robust record of business opinion. The survey is currently based on 152
interviews of key companies and trade associations,
Indicator 1.2: Delivery of RDA outcomes taken from new sponsorship
framework
The PricewaterhouseCoopers report” (March 2009) on the Regional Development
Agencies (RDAs) used 277 evaluations which were robust and consistent with the
Government's impact evaluation framework".
Indicator 1.3: RDA organisational capability - to be drawn from Independent
Performance Assessment (IPA) or successor
The PricewaterhouseCoopers report (March 2009) on the RDAs used 277
evaluations which were robust and consistent with the Government's impact
evaluation framework.
*® For further information about the PwC report see:
www.berr.gov.uk/whatwedo/regional/regional-dev-agencies/Regional % 20Development %20
Agency %20Impact % 20Evaluation/page50725.htmi
"' Evaluating the Impact of England’s Regional Development Agencies (DTI, 2006):
www.berr.gov.uk/files/file21900.pdf
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Indicator 1.4: Delivery of publicly-funded business support simplification
Progress will be monitored via the BSSP Governance processes e.g. Regional
Transitional Management Boards and the Transition Management Board. Assessment
of the indicator will commence in 2009 in line with the Benefits Realisation Plan.
Indicator 1.5: Delivery of UKTI’s CSRO7 performance management framework
Raw data is obtained from UK Trade & Investment’s Customer Relationship
Management System, and forwarded to an independent market research
company. From the data, a large sample (approximately 4,000 companies) is
randomly selected for interview through UKTI's Performance and Impact
Monitoring Survey (PIMS)"”, a central monitoring survey of the users of UKTI’s
business services. Revenue figures are obtained from the MENTOR system
(UKTI's financial system) which is audited yearly by the NAO. The UK Reputation
Measurement Survey will measure the change in UK reputation against the
benchmark survey of 2008". This work will be carried out by an independent
market research company. Further information is available in UKTI Annual Report
and Accounts 2008-09".
DSO 2: Ensure that all government departments and agencies deliver better
regulation for the private, public and third sectors
Indicator 2.1: Administrative burdens reduction across 19 government
departments, consisting of a 25% reduction for the majority of departments
by 2010. Includes BERR target to deliver 25% reduction in measured admin
burdens by 2010
Government departments commissioned independent consultants to establish the
administrative burdens baseline in an extensive measurement exercise conducted
between September 2005 and May 2006. Data was gathered in over 8,500
interviews with businesses and over 200 expert panels of business representatives.
The final baseline figure was calculated using the internationally recognised
Standard Cost Model”.
Changes against the administrative burden baseline are calculated by departmental
economists using the Standard Cost Model and published in Impact Assessments
and Simplification Plans. Because of the nature of the Standard Cost Model, these
changes are indicative rather than statistically robust estimates. An external panel
comprising members of the CBI, British Chambers of Commerce, Institute of
Directors, Federation of Small Businesses and Trades Union Congress (TUC)
validated the gross savings set out in departments’ Simplification Plans of
December 2008, totalling around £1.5 billion.
* UKTI's Performance and Impact Monitoring Survey (PIMS), accessed via UKTI’s website
www.uktradeinvest.gov.uk
"5 Details of the benchmarking survey can be found at
www.uktradeinvest.gov.uk/ukti/ShowDoc/BEA+Repository/345/419278
"For further information about UKTI, including UKTI Annual Report and Accounts 2008-09, see
www.uktradeinvest.gov.uk
"5 Measuring Administrative Costs: UK Standard Cost Model (Cabinet Office, 2005):
www.berr.gov.uk/files/file44503.pdf
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Indicator 2.2: Proportion of businesses (and voluntary sector organisations)
who believe that “most regulation is fair and proportionate” in five policy
areas - employment law, tax law, health and safety, planning law and
company law
The full methodology for the survey of business perceptions of regulation can
be found in the NAO’s report The Administrative Burden Reduction Programme,
2008"**. The 2008 sample size of 2,000 matched the 2007 sample size. Results are
statistically significant to within +3 percentage points at the 95% confidence level.
Indicator 2.3: Flow of regulation: total benefit/cost ratio of regulations
coming forward over time
Departments work to ensure that the economic analysis in their Impact
Assessments is as rigorous as possible. All Impact Assessments are approved by
departmental economists and responsible Ministers before publication.
Indicator 2.4: Performance of local authority regulatory services as measured
by the national indicator
The full methodology used by local authorities can be found in National Indicators
for Local Authorities and Local Authority Partnerships: Handbook of definitions”.
It recommends local authorities conduct a monthly survey of businesses, with
annual reporting. The standard reporting year is the period 1 April to 31 March.
Based on a confidence level of +5%, each local authority aims for an annual target
number of responses that reflects the size of the sample's base (the number of
contacts with business each year).
Indicator 2.5: Overall performance in the World Bank “Doing business”
survey and OECD surveys of the policy environment
The World Bank Doing Business 2009 report is a comprehensive survey across
181 economies, compiled using a range of techniques™.
Indicator 2.6: Proportion of bureaucracy which the public sector front line
believes to be unnecessary
The basket of indicators will be informed by ‘The Teachers’ Workloads Diary Survey’
a respected annual survey carried out for DCSF. For policing, the recommendations
from the ‘Reducing Bureaucracy in Policing’ 2008 report’® will form the basis to
establish an improvement framework. Finally, for health, the imminent Providers
Advisory Group report for DH will provide recommendations to help establish a
framework for improvement.
* The Administrative Burden Reduction Programme, 2008 (NAO, 2008):
www.nao.org.uk//idoc.ashx?docld=5ae9fb95-9a16-442d-9518-d21c78c77fb5&version=-1
"® National Indicators for Local Authorities and Local Authority Partnerships: Handbook of definitions
(CLG/HMG, 2008): www.communities.gov.uk/documents/localgovernment/pdf/708685.pdf
"or further information about the methodology of the Doing Business surveys see:
www.doingbusiness.org/MethodologySurveys
*® Reducing Bureaucracy in Policing (Berry, 2009)
http://police.homeoffice.gov.uk/publications/police-reform/reducing-bureaucracy-report
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Indicator 2.7: Reduction in data stream requirements from central
government to the public sector front line by 2010. Includes 30% cross-
Government target to reduce burdens on front line public sector staff
Each department has established a measurement system to track data-stream
reductions. Most departments published a list of the data-streams they collect
from front-line organisations and have subsequently measured the number of
data-streams they have removed.
DH and DCSF have each undertaken specific projects to measure the burden of
data-streams, in terms of monetary cost or labour resource, and will report
reductions in burdens on that basis.
DSO 3: Deliver free and fair markets, with greater competition, for
businesses, consumers and employees
Indicator 3.1: Progress on market opening in the EU and internationally in
line with UK objectives of improving EU competitiveness and promoting
development and poverty reduction in poorer countries
Regular qualitative assessments are made in consultation with other government
departments.
Indicator 3.2: UK framework for competition at level of world’s best
The Peer Review of Competition Policy 2006-07" asked 301 experts from different
countries to rank the effectiveness of the UK competition regime against its peers.
The highest number of responses came from the US and the UK, but there was
also a reasonably good response from other countries. There were 25 follow up
face-to-face interviews to capture qualitative information about the performance
of the competition regime. The review is conducted every two to three years.
The Global Competition Review is an independent survey, published annually in a
leading competition law and policy journal, where the activities of enforcement
agencies are rated through a mixture of editorial opinion and a survey of 500 users
who have had cause to liaise with a competition authority. Whilst this remains a
useful secondary source of information, the Peer Review remains our primarysource.
Indicator 3.3: UK corporate governance environment at level of world’s best
World Bank assessments are used in addition to the annual World Economic
Forum Global Competitiveness Report" in order to provide a more comprehensive
assessment, as the coverage of the latter is limited and is based on subjective
measurement (interviews).
We are still awaiting the World Bank assessment (part of their UK Report on the
Observance of Standards and Codes) so uncertainty exists as to the precise format
and prevents an assessment of the indicator. BERR will update the World Bank
assessment annually using corporate governance experts.
"© Peer Review of Competition Policy 2006-07 (DTI, 2007)
www.berr.gov.uk/files/file39863.pdf
"For further information about the World Economic Forum Global Competitiveness Reports see:
www.weforum.org/en/initiatives/gcp/Global % 20Competitiveness % 20Report/index.htm
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Quality of data systems used
Indicator 3.4: Regulatory environment for business fully reflecting the
government's better regulation principles
The quantification of administrative burden simplification measures is based on
rigorous application of the internationally recognised Standard Cost Model"”.
Data on compliance with best practice is based on statistics collected by BERR
officials on the extent to which consultations comply with the 12 week
consultation period (or, if not, whether there is a Ministerial derogation), whether
there is a named consultation coordinator and whether they have included a
named policy official with contact details for public enquiries.
Indicator 3.5: Labour market flexibility
Maintaining and improving the overall level of labour market flexibility is measured
by the Index of Labour Market Adaptability. A refined and more robust index has
been developed and spans a period from 1994 to 2008; it is expected in late 2009.
The 2008 Index of Labour Market Adaptability is a combination of a number of
different statistics weighted in order to achieve an index. Many of the statistics are
taken from the ONS UK Labour Force Survey which is a survey of around 60,000
households’. The Labour Force Survey is the most comprehensive and robust
survey of the labour market available and it covers all aspects of employment,
unemployment and economic inactivity. The other statistics used have been
chosen because they are also generally well established, of good quality and
widely used.
Indicator 3.6: Awareness and enforcement of employment rights
The baseline for this indicator has been updated using the results from the
Employment Rights at Work - Survey of Employees 2005", and set at 65%. Data
from the Fair Treatment at Work Survey 2008 will be available in autumn 2009 to
measure progress against this indicator.
Indicator 3.7: UK framework for consumer empowerment and support at
level of world’s best
The benchmarking study’ was independent, carried out by a team of leading
lawyers and economists working in the field of consumer law.
The EU Consumer Scorecard’ brings together information mainly drawn from
the EU's Eurobarometer studies. Many of the measures are based on consumer
surveys with a sample size of 1,000 in each of the Member States.
'® Measuring Administrative Costs: UK Standard Cost Model (Cabinet Office, 2005)
www.berr.gov.uk/files/file44503.pdf
"3 For further information about the ONS Labour Force Survey see:
www.statistics.gov.uk/STATBASE/Source.asp?More=Y&vink=358
Employment Rights at Work - Survey of Employees 2005 (DTI, 2006):
www.berr.gov.uk/files/file27222.pdf
*8 Benchmarking the performance of the UK framework supporting consumer empowerment
through comparison against relevant international comparator countries (ESRC Centre for
Competition Policy, 2008): www.berr.gov.uk/files/file50027.pdf
*°6 The Consumer Markets Scoreboard: Monitoring Outcomes in the Single Market (European
Commission, 2008): http://ec.europa.eu/consumers/strategy/sec_2008_87_en.pdf
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DSO 4: Ensure that Government acts as an effective and intelligent
shareholder, and provide a source of excellent corporate finance expertise
within Government
Indicators 4.1: Individual company targets, including targets aimed at
increasing value and 4.2: Dividend payments from portfolio businesses
or agreed Dividend policies
Progress is being made on establishing business targets monitored through
regular Investment Reviews and through creating Value Creation Plans for each
business. Businesses’ financial performance is monitored on a monthly basis and
the strategic outlook is formally examined quarterly. Adherence to any agreed
business targets and dividend policies will also be monitored via these processes.
Indicator 4.3: Stakeholder satisfaction with the discharge of the Shareholder
Executive's responsibilities
Feedback and discussion with stakeholders at both senior and middle
management levels provide evidence to support the contention that key
stakeholders are satisfied with the Shareholder Executive's discharge of its
responsibilities.
Indicator 4.4: Expand the Shareholder Executive's offer to greater proportion
of HMG businesses and corporate finance situations
Progress is evidenced by an increasing number of approaches made by other
government departments seeking the Shareholder Executive's involvement.
Careful consideration is given to identifying businesses and projects where the
Executive can add real value and can provide the necessary resource.
DSO 5: Provide the professional support, capability and infrastructure to
enable BERR’s objectives and programmes to be successfully delivered
Indicator 5.1: Progress in building the capability of the department to meet
future challenges
Capability reviews are carried out by a team of external reviewers assembled
specifically for the department under review, and supported by the Capability
Review Team from the Cabinet Office. Reviewers are drawn from senior leaders
across the public, private and third sectors”.
BERR's staff survey is operated by ORC international, a contractor bound by the
Market Research Code of Conduct. The survey is carried out each autumn and all
responses are anonymous. The response rate in October 2008 was 77% (1,641
respondents from a population of 2,126).
**” For further information about Capability Reviews see:
www.civilservice.gov.uk/cross-government/capability/introduction.aspx
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Quality of data systems used
Section A1.2
Quality of data systems used for CSRO7 PSAs
for which BERR led delivery
PSA 1: Raise the productivity of the UK economy
The NAO judged the data systems for PSA 1 fit for purpose in their report
published in December 2007". The indicators for PSA 1 and the data used to
assess them are widely regarded to be the most appropriate measures of
productivity.
The UK productivity growth data to measure the PSA is taken from data published
by HM Treasury in the Budget and Pre-Budget Report. While updates give
important information, progress can only be finally assessed over a full business
cycle. A 0.1 percentage point increase (for example from 2.4 to 2.5) is the
minimum improvement over the economic cycle that would be considered
significant.
Annual International Comparisons of Productivity are estimated twice a year by the
ONS". Progress is assessed between two comparator years, usually chosen on
the basis that countries are at similar stages in their business cycles. ONS do not
consider changes in productivity gaps of a few percentage points to be significant.
PSA 6: Deliver the conditions for business success in the UK
Many of the PSA 6 indicators are also assessed by BERR’s DSO indicators.
Where this is the case we reference the relevant DSO indicator below, instead
of replicating the full statement of data quality.
Indicator 6.1: UK framework for competition at the level of the best
See BERR’s DSO indicator 3.2, ‘UK framework for competition at level of world’s
best’.
Indicator 6.2: Effective corporate governance regime
See BERR’s DSO indicator 3.3, ‘UK corporate governance environment at level
of world’s best’.
Indicator 6.3: UK labour market flexibility
See BERR’s DSO indicator 3.5, ‘Labour market flexibility’.
* Fourth Validation Compendium Report (NAO, 2007):
www.nao.org.uk/publications/0708/fourth_validation_compendium_r.aspx
*° Eor further information about ONS International Comparisons of Productivity see:
www.statistics.gov.uk/cci/nugget.asp?id=161
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Indicator 6.4: Maintenance of competitively-priced energy markets
The UK's data is collected by DECC and published quarterly in Quarterly Energy
Prices’. The data collection, processing and publication processes are consistent
with the National Statistics Code of Practice™’ and subject to regular audit. The
data series used to monitor this indicator are classified as National Statistics.
The quarterly data used are estimates produced by Energy Advice Ltd under
contract from DECC. This allows estimates to be produced before the end of the
relevant time period. For example, price estimates for the half year period July to
December 2008 were estimated by Energy Advice, and published by DECC on
23 December 2008. This data is revised once DECC has collected the data, and
in line with the code of practice is published as soon as the data is available.
The European data is collected in accordance with the Eurostat Directive 90/377/
EEC. The methodology for the collection of price data changed in 2007”. As a
result care needs to be taken when performing analysis of the back time series for
what look like similar size bands. Data for other countries are published on the
Eurostat web site. Data are collected and produced by the various countries in line
with the European Statistics Code of Practice”’.
As data collection has only just started with the new methodology (with most
countries only now collecting their third set of data), the series is likely to be prone
to revision, as countries improve their data collection and estimation methodologies.
Indicator 6.5: Deliver better regulation that works for everyone
(benefit exceeds costs)
See BERR’s DSO indicator 2.3, ‘Flow of regulation: total benefit/cost ratio
of regulation coming forward over time’.
Indicator 6.6a: Deliver commitments to administrative burdens
reductions — Better Regulation Executive
See BERR's DSO indicator 2.1, ‘Administrative burdens reduction across
19 Government departments’.
Indicator 6.6b: Deliver commitments to administrative burdens
reductions - HMRC
Administrative burdens savings are calculated on a consistent basis using the
Standard Cost Model’. HMRC has a detailed database and can specify a cost
for each data requirement within the information obligations, broken down by
different administrative requirements.
°° For further information about Quarterly Energy Prices see:
www.berr.gov.uk/whatwedo/energy/statistics/publications/prices/index.html
*" Code of Practice for Official Statistics (UK Statistics Authority, 2009):
www.statisticsauthority.gov.uk/assessment/code-of-practice/code-of-practice-for-official-statistics.pdf
?2 The changes to the methodology are outlined in Energy Trends (June 2008) (BERR, 2008):
www.berr.gov.uk/files/file46688.pdf
?°8 For further information about the code of practice for European statistics see
www.statistics.gov.uk/about/ons/Cop_EUStats.asp
°° Measuring Administrative Costs: UK Standard Cost Model (Cabinet Office, 2005):
www.berr.gov.uk/files/file44503.pdf
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PSA 7: Improve the economic performance of all English regions and
reduce the gap in economic growth rates between regions
The NAO Fourth Validation Compendium Report in 2007*” assessed the data
systems for the PSA as broadly appropriate but noted that the methodology to
produce real growth rates by region was still being developed by the ONS. The
report reflected on the findings of the Allsopp Review’ in 2004 which outlined
limitations in the current production of Gross Value Added (GVA) data, but GVA
remains the best overall measure of economic output in each region. The ONS
have undertaken to implement Allsopp’s recommendations.
The key to measuring this PSA target accurately is to capture as wide a range
of economic activities occurring within the regions as possible. GVA, by definition,
encapsulates a diverse range of outputs. To improve and develop regional
estimates, the ONS is involved in an ongoing quality assurance exercise of the
input data used to calculate estimates of regional GVA.
The ONS now has a regional presence in all the RDAs, which acts to quality assure
regional GVA statistics. Work is proceeding to strengthen regional GVA data,
including production of a real regional GVA series. In addition to the four headline
indicators, over 20 supporting indicators on the five drivers of productivity are used
to assess progress and inform action needed in support of this PSA.
?° Fourth Validation Compendium Report (NAO, 2007):
www.nao.org.uk/publications/0708/fourth_validation_compendium_r.aspx
29° For further information about the Review of Statistics for Economic Policymaking by Christopher
Allsopp see: www.hm-treasury.gov.uk/consult_allsopp_index.htm
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Annex 2.
PSAs remaining from previous”
‘spending reviews .
Performance report for SR04 PSAs
A3 The Department is still responsible for reporting progress against two older PSAs
remaining from the previous spending review (SR04), which covered the period
2005-08. A final assessment has not yet been made for these PSAs due to time lags
in the availability of data. A summary table showing the final assessments of all other
SRO04 PSAs can be found in the BERR Autumn Performance Report 2008””
SR04 PSA 6: Enterprise: Build an enterprise society in which small firms of all
kinds thrive and achieve their potential, with:
(i) an increase in the number of people considering going into business Not Met
(ii) an improvement in the overall productivity of small firms On Course
(iii) more enterprise in disadvantaged communities Vet
Overall assessment: On course
Although this Spending Review period (SRO4) has now ended, a number of new
initiatives were announced in the Enterprise Strategy (March 2008), the
Manufacturing Strategy (September 2008), and Real Help for Businesses Now
(January 2009), which are expected to impact on all these sub-targets in the
future. For more information on factors which will affect performance in the future,
please see ‘Enterprise policy’ in section 2.4.
Indicator (i) an increase in the number of people considering going into business
There has been no change in the proportion of adults considering going into business.
11.0% of adults were considering going into business in 2007, compared to 11.3%
in 2003. Although the most recently measured percentage is lower, this is not a
statistically significant change, as the data is based on a sample survey. However,
although the proportion of adults considering going into business was unchanged
over the period, there was an increase in the proportion of people actually starting a
business. The number of people starting a VAT registered business per 10,000 adults
increased from 40 in 2008 to 42 in 2007. This indicates that a greater proportion of
those considering going into business are subsequently doing so.
?°7 BERR Autumn Performance Report 2008 (BERR, 2008):
www.berr.gov.uk/files/file49263.doc
h_oaasa)
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Annex 2
ing from previous spending reviews
This was a challenging target, requiring a change in the intentions of over 300,000
people. The Government has focused its policy action on a range of interventions
to increase interest in entrepreneurship amongst young people and these
interventions will take time to have an effect. For more information see ‘Enterprise
policy’ in section 2.4.
Indicator (ii) an improvement in the overall productivity of small firms
The latest available data from the ONS Annual Business Inquiry show SME
productivity growth exceeded that of all firms by 5.1 percentage points over the
period 1999-2005. Methodological improvements in the 2006 Annual Business
Inquiry employment estimates have led to a discontinuity when comparing against
the 2005 Annual Business Inquiry estimates, therefore it is not possible to include
progress against this PSA sub-target between 2005 and 2006. As a result progress
is monitored in two periods: 1999-2005 and 2006-08. The target has been met
over the first period by 5.1 percentage points. Progress over the second period will
start to be monitored next year when 2007 data are available. As a baseline for the
new period, the 2006 data show that SMEs generate an average of £41,300 GVA
per employee compared with £43,400 GVA per employee for all firms.
Indicator (iii) more enterprise in disadvantaged communities
There was an increase in self-employment rates in the most deprived 15% of
wards in England over the SR04 period, taking into account the economic cycle.
The latest data shows that self-employment rates in the most deprived 15% of
wards in England stood at 6.3% (year ending September 2008). This is higher than
the comparable point in the previous economic cycle — year ending September
2001, when the rate was 6.0%. This is a statistically significant increase (at the
95% level) and therefore this target has been met.
Quality of data systems used
Indicator (i)
The data for this PSA measure comes from the BERR Household Survey of
Entrepreneurship“, managed by the BERR Enterprise Directorate Analytical Unit.
Each survey comprises telephone interviews in England by an external research
organisation, with 6,000 adults in 2001 and at least 10,000 in later years. It is not a
National Statistics product but results are weighted to reflect the adult population
in England, using Census of Population 2001 data.
2% For further information about the BERR Household Survey of Entrepreneurship and related
surveys see: www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/research-and-statistics/
research-evaluation/business-surveys/page38370.htm!
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Indicator (ii)
Productivity is measured using data from the ONS Annual Business Inquiff, a
survey of around 70,000 registered businesses in the UK conducted in two parts:
financial and employment. Businesses with more than 250 employees are surveyed
annually, with smaller businesses surveyed less frequently to reduce the
administrative burden on them. As with any sample survey, there will be sampling
errors around any estimates from the Annual Business Inquiry, however, sampling
errors are small for the aggregates of the main variables such as GVA and total
employees. The ONS published revised 2006 data in June 2008 and provisional 2007
data in November 2008. However, for financial variables, final 2007 data will not be
available until mid- 2009. The final assessment will be made in 2010, when 2008
data are available.
Indicator (iii)
The ONS Labour Force Survey’”’ is a quarterly sample survey involving over
120,000 people. The sample sizes are large enough to provide data for all the most
deprived wards in England collectively, which are identified using the 2000 indices
of deprivation*"', held by CLG. CLG have since published the 2004 indices of
deprivation which give a deprivation””* measure for each Super Output Area (SOA)
rather than for each ward. As the Labour Force Survey has only recently added
data for SOAs, and the target has now been finally assessed, we will not be
redefining disadvantaged areas using the 2004 indices.
In early 2008 ONS made new weightings available for Labour Force Survey micro
data analysis. The series has now been revised to take account of these new
weightings. Furthermore because seasonal data is not available under the new
Labour Force Survey weightings, the new data series is now produced entirely on
calendar quarters. Both these changes improve the reliability and comparability of
the data over the period. The changes have resulted in very little observable
difference to the data position (in most cases the change is less than 0.1
percentage points) over the period.
2° For further information about ONS Annual Business Inquiry see
www.statistics.gov.uk/abi
21° For further information about the quarterly ONS Labour Force Survey see:
www.statistics.gov.uk/StatBase/Source.asp?vink=358&More=Y
*" For further information about Indices of Deprivation 2000 see:
www.communities.gov.uk/archived/general-content/communities/indicesofdeprivation/
2” For further information about Indices of Deprivation 2004 see
www.communities.gov.uk/archived/general-content/communities/indicesofdeprivation/216309/
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PSAs remaining from previous spending reviews
SR04 PSA 1
Maximising potential in the workplace
By 2008, promote ethnic diversity, cooperative employment relations and greater
choice and commitment in the workplace, while maintaining a flexible labour
market.
Overall assessment: On course
Indicator (i): Raising the self-employment rate of under-represented ethnic
minorities, relative to that of other groups
Met
The difference in the self-employment rate between under-represented and other
groups reduced from 4.0 percentage points in the baseline period to 2.4
percentage points in the four quarters ending Q1 2008. The self-employment rate
of under-represented groups increased from 5.6% in the baseline period to 7.3%
in the four quarters ending Q1 2008. The increase in the self-employment rate of
the under represented groups since the baseline period is statistically significant at
the 99% level.
Indicator (ii): Reduction in the number of incidents of racial discrimination
at work
Slippage
The baseline for this indicator was originally set at 4.0% by data gathered in the
Fair Treatment at Work Survey 2005°™*. Following a NAO audit of the data system
in place, work has been undertaken to establish a more robust baseline and
progress is now measured using the Citizenship Survey, which is conducted
every two years. There was a decline from 9% to 8% of ethnic minority
employees that felt they had been refused a job for reasons of colour or race
between 2005 and 2007, and a decline from 12% to 11% of ethnic minority
employees that felt they had been treated unfairly with regards to promotion or
progression because of race in the same period. However, these results are not
statistically significant.
Indicator (iii): Maintain a flexible labour market
Not yet assessed
The baseline for the indicator to measure overall level of UK labour market
flexibility is set by a new Index of Labour Market Adaptability. This indicator has
been carried forward in CSRO7 DSO indicator 3.5.
*%8 The First Fair Treatment at Work Survey: Executive Summary - Updated (DTI, 2007)
www.berr.gov.uk/files/file38386.pdf
?"*For further information about the Citizenship Survey see:
www.communities.gov.uk/communities/racecohesionfaith/research/citizenshipsurvey/
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Indicator (iv): Increase in number of employees who have access to
information and consultation procedures
On course
The baseline has been updated using Workplace Employment Relations Survey
(WERS) 2004 data’”’. It was originally set at 43% and was revised in 2008 to 48%.
An interim assessment using data from the Work Life Balance Employee Survey
2007" suggests this target has been exceeded with 61% of employees having
access to information and consultation procedures. Because the 2004 and 2007
assessments were carried out using different surveys the final assessment of this
target will be replicated using the next WERS, to ensure direct compatibility with the
survey used for the 2004 assessment. WERS is expected to be carried out in 2011.
Indicator (v): Number of economically active people who are aware of their
rights at work
On course
The baseline for this indicator has been updated using the results from the
Employment Rights at Work Survey 2005°”, and set at 65%. Data from the Fair
Treatment at Work Survey 2008 will be available in late 2009 to measure progress
against this indicator.
BERR provides advice on rights at work to individuals through communications
channels such as the Acas website and helpline, the Employment Agency Standards
helpline, the Insolvency Service's Redundancy helpline and the employment franchise
‘on the Directgov website*”. BERR is developing a sustained awareness campaign
through to April 2011 to improve awareness of rights amongst vulnerable workers.
Quality of data systems used
Indicator (i)
The sub-target is measured through a rolling four quarters average of data from
the ONS Labour Force Survey*”.
In early 2008 the ONS made new weightings available for Labour Force Survey
micro data analysis. The series has now been revised to take account of these
new weightings. Furthermore because seasonal data is not available under the
new Labour Force Survey weightings, the final data series includes a change to the
baseline period from the four quarters ending spring 2005 to the four quarters ending
Q2 2005. Both these changes improve the reliability and comparability of the data
over the period. The changes have resulted in no observable difference to the data
position (as measured to the nearest 0.1 percentage point) at the baseline period.
* The Workplace Employment Relations Survey: An Introduction (DTI, 2004):
www.wers2004.info/pdf/An% 20Introduction % 20to % ZOWERS % 202004 % 20April07.pdf
2° The Third Work Life Balance Employee Survey: Main Findings (DTI, 2007):
www.berr.gov.uk/files/file38388.pdf
Employment Rights at Work - Survey of Employees 2005 (DTI, 2005)
www.berr.gov.uk/files/file27222.pdf
71° For further information see
www.acas.gov.uk and www.direct.gov.uk/en/Employment/Employees/index.htm
"8 For further information about the Labour Force Survey see
www.statistics.gov.uk/StatBase/Source.asp?vink=358&More=Y
27
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Annex 2
ing from previous spending reviews
Data for the PSA measure is only available on a consistent basis back to 2001. This
is not sufficient to allow assessment over the economic cycle, which would require
a much longer time series. The target has therefore been formally assessed against
the baseline period only.
Indicator (ii)
Data from the Citizenship Survey” is available for the baseline and final
assessment within the appropriate time frame. The data is statistically robust
(10,000 core sample and 4,000 ethnic boost). The question in this survey about
seeking a job is fielded in an identical format over the measurement period. The
question provides a suitable proxy for discrimination on the grounds of recruitment.
The race boost is based on random stratified sampling (as for the core sample)
allowing confidence intervals to be calculated.
Indicator (iii)
The Index of Labour Market Adaptability (developed by BERR) provides an
assessment of how well the labour market as a whole works and what
contribution it makes to business success. It includes a number of components
that cover the range of areas that are affected by policies and institutions in the
labour market and also broader outcomes including wage and employment
changes. The broader measure is still being developed so both measures are used
to measure labour market flexibility. Results are due to be published in late 2009,
when published information will be available for both the SRO4 and the CSRO7
periods. Many of the indicators use data drawn from the ONS Labour Force
Survey. Further work is needed to identify the cyclical and structural elements in
the index and BERR aims to develop a policy sub-index to identify the impact of
policy changes on labour market adaptability.
Indicator (iv)
The Workplace Employment Relations Survey 2004" involved face-to-face
interviews with 3,200 managers and 1,000 worker representatives, and self-
completion questionnaires from over 20,000 employees, covering both large and
small workplaces. The data is statistically robust and the survey is based on
random stratified sampling.
The Work Life Balance Employee Survey 2007 was conducted with a random
sample of 1,462 workplaces in Great Britain with five or more employees and
achieved a response rate of 39%. Workplaces were randomly selected from the
Inter-Departmental Business Register. The survey over-sampled larger workplaces
and certain industry sectors, but data reported have been weighted to produce
nationally representative estimates.
7° For further information about the Citizenship Survey see
www.communities.gov.uk/communities/racecohesionfaith/research/citizenshipsurvey/
221 Inside the workplace: First Findings from the 2004 Workplace Employment Relations Survey
(DTI, 2005): www.berr.gov.uk/files/file1 1423.pdf
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Indicator (v)
The Employment Rights at Work Survey 2005 used computer-assisted personal
interviewing. 1,038 interviews of employees were carried out, giving a response
tate of 58%. The indicator will be measured using the Fair Treatment at Work.
Survey 2008. The baseline is from the Employment Rights at Work Survey 2005,
parts of which were included in the new survey. More robust figures based on a
larger sample should emerge from this new survey in autumn 2009. This will result
in about 2,700 completed interviews compared with just over 1,000 interviews
achieved in the earlier 2005 survey. A new confidence interval will then be drawn
around the new indicator to check whether there has been a statistically significant
improvement from the baseline.
Terminology used
A4_ For SR0O4 PSAs where a final assessment has been made (including of individual
indicators), we use the following standard terminology, in line with HM Treasury
guidance to government departments.
pio 7 age 2
Met Target achieved by the target date
Partly met Target has two or more distinct elements, and some — but not all
— have been achieved by the target date
Not met Target was not met or met late
Not known Where it was not possible to assess progress against the target
during its lifetime or subsequently
A5 For SR04 PSAs where a final assessment has not yet been made, we make an
interim assessment, using the following standard terminology in line with HM
Treasury guidance to government departments.
ee
Met early Target has been met early, and there is no possibility of
subsequent slippage during the lifetime of the target
On course Progress in line with plans and expectations
Slippage Progress is slower than expected
Not yet Data is not yet available to make an assessment of the target
assessed
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A.6 Responsibility for the delivery partners listed below, along with delivery partners
which were previously sponsored by the Department for Innovation, Universities
and Skills (DIUS), has now transferred to the Department for Business, Innovation
and Skills (BIS). This annex includes only delivery partners sponsored by BERR
in 2008-09.
A.7 The Department delivers a wide range of products and services to diverse groups
by working with a network of delivery partners. This section provides an overview
of all bodies sponsored by BERR during the reporting year 2008-09, which formed
the ‘Departmental family’ of delivery partners. BERR’s Departmental family consisted
of a number of Executive Agencies and Non-Departmental Public Bodies (NDPBs)
which employed around 8,800 people and collectively spent about 60% (£840
million) of BERR’s total budget in 2008-09. Around 70 people (full-time equivalent),
within BERR have been involved in managing relationships with delivery partners.
Executive Agencies
A8& Executive Agencies are delivery bodies closely connected with the sponsoring
department. Although there is no typical agency model, common features of
agencies usually include a certain level of financial and human resource flexibility and
operating performance targets that are agreed with the parent department and
Minister. During 2008-09, BERR had the following agencies:
Executive Agency Wel
Non-Departmental Public Bodies
A. Non-Departmental Public Bodies (NDPBs) are delivery bodies that operate at arm's
length from Ministers and departments. In the reporting year 2008-09 following
the Machinery of Government changes on 3 October 2008, BERR sponsored 33
Non-Departmental Public Bodies, including the Regional Development Agencies
(RDAs), the Advisory, Conciliation and Arbitration Service (Acas) and the Low
Pay Commission.
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Executive NDPBs
A.10 Executive NDPBs are established by statute and carry out administrative, regulatory
and commercial functions. They employ their own staff and are allocated their own
budgets. All Executive NDPBs are audited by the NAO. During 2008-09", BERR had
the following Executive NDPBs:
ee ee ie
Advisory, Conciliation and Www.acas.org.uk
Arbitration Service (Acas)
Capital for Enterprise Ltd www.capitalforenterprise.gov.uk
Competition Commission www.competition-commission.org.uk
Competition Service www.catribunal.org.uk
Consumer Focus (established 1 www.consumerfocus.org.uk
October 2008)
Hearing Aid Council www.thehearingaidcouncil.org.uk
Local Better Regulation Office www. lbro.org.uk
(LBRO)
Simpler Trade Procedures Board www.sitpro.org.uk
(SITPRO)
United Kingdom Atomic Energy www.ukaea.org.uk
Authority
ee es bee
Advantage West Midlands www.advantagewm.co.uk
East Midlands Regional www.emda.org.uk
Development Agency
East of England Development www.eeda.org.uk
Agency
North West Development Agency www.nwda.co.uk.
One North East www.onenortheast.co.uk
South East England Development www.seeda.co.uk
Agency
South West of England www.southwestrda.org.uk
Development Agency
Yorkshire Forward www.yorkshire-forward.com.
#2 Following the 3 October 2008 Machinery of Government changes.
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Annex 3
Delivery partners
Advisory NDPBs
A.11 Advisory NDPBs differ from other NDPBs in that they are usually set up as ad-hoc
organisations. They are set up administratively by ministers without the need
for legislation. They do not usually have their own staff but are provided with
administrative support by their sponsoring department. Also, they do not usually
have a budget of their own as their costs are met from the sponsoring department's
expenditure. During 2008-09, BERR had the following Advisory NDPBs:
See Mee
Industrial Development www.berr.gov.uk/whatwedo/regional/regional-
Advisory Board development/indus-dev-advis-board/page 19309.
htm!
Low Pay Commission www.lowpay.gov.uk
Regional Industrial Not available
Development Boards
Union Modernisation Fund www.berr.gov.uk/whatwedo/employment/
Supervisory Board trade-union-rights/modernisation/supervisory-
board/page20780.htm!
Waste Electrical & Electronic www.berr.gov.uk/whatwedo/sectors/
Equipment Advisory Board sustainability/weee/wab/page43670.htm!
Tribunal NDPBs
A.12 Tribunal NDPBs have jurisdiction in a specialised field of law. They are usually
supported by staff from their sponsoring department and do not have their own
budgets. The Competition Appeal Tribunal however, was not supported by
BERR staff.
Central Arbitration Committee Www.cac.gov.uk
Competition Appeal Tribunal www.catribunal.org.uk
Insolvency Practioners’ Tribunal www.insolvency.gov.uk
Other Bodies
A.13 During 2008-09, BERR was also associated with a number of other bodies:
le Pitino I
London Development Agency www.lIda.gov.uk
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es
Pu
British Nuclear Fuel plc (BNEL) www.bnfl.com
British Shipbuilders Not available
Electronics Leadership Council??? www.electronicsleadershipcouncil.org
Ofcom www.ofcom.org.uk
Royal Mail Holdings plc?## www.royalmailgroup.com
Non-Ministerial Government Departments
A.14 The budgets of Non-Ministerial Government Departments (NMGDs) are usually
set by HM Treasury, not by the sponsoring department, and they are often funded
by licence fees paid by the industries which they regulate. They are set up under
legislation and draw their powers from that legislation. The head of the NMGD is
often appointed by a departmental Minister and the work of the NMGD is subject
to parliamentary scrutiny.
eS es
Postcomm WWW.PSC.goVv.uk
Office of Fair Trading www.oft.gov.uk
Independent Statutory Office Holders
Community Interest Companies www.cicregulator.gov.uk
Regulator
Task forces, ad-hoc advisory groups and reviews
A.15_ In contrast to NDPBs, which have a long-term activity to carry out, task forces,
ad-hoc advisory groups and reviews have a short-term focus, and when their work
comes to an end, they are disbanded. These groups are usually created to give
expert advice to the Government on a specific issue and are usually expected to
remain in operation for less than two years. Their recommendations are often taken
forward by other parts of Government.
3 Royal Mail Holdings plc and the Electronics Leadership Council are not the Department's delivery
partners, but are included in this annex as they fall within the departmental boundary as defined
in the FReM (chapter 2.4) issued by HM Treasury.
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Annex 3
Delivery partners
Advisory Panel on Management and www.berr.gov.uk/whatwedo/regional/
Leadership skills/management-and-leadership/
page10947.htm!
Aerospace Innovation and Growth www.berr.gov.uk/whatwedo/sectors/
Leadership Council aerospacemarinedefence/aerospaceagt/
page9104.html
Business Council for Britain www.berr.gov.uk/aboutus/corporate/bcb/
index.html
Capital for Enterprise Advisory Board www.berr.gov.uk/whatwedo/enterprise/
enterprisesmes/info-business-owners/
access-to-finance/enterprise-capital-
funds/page37667.htm!
Environmental Innovations Advisory Not available
Group
Ethnic Minority Business Task Force www.embtf.org.uk
Ministerial Advisory Body on www.berr.gov.uk/whatwedo/sectors/
Manufacturing manufacturing/MAGonmanufacturing/
page47668.htm!
Motorsport Development UK Advisory I www.berr.gov.uk/whatwedo/sectors/
Board automotive/index.htmlI
Risk and Regulatory Advisory Council www.berr.gov.uk/deliverypartners/list/
rrac/index.html
Vulnerable Workers Pilot Practitioners’ Not available
Panel
Women's Enterprise Task Force www.womensenterprisetaskforce.co.uk
in Fools
Citizens Advice www.citizensadvice.org.uk
Citizens Advice Scotland www.cas.org.uk
Financial Reporting Council (FRC) www-.frc.org.uk
A.16 The following units are part of the core Department rather than the wider
Departmental family: UK Trade & Investment; the Export Control Organisation; and
the Shareholder Executive.
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Changes during 2008-09
A.17 With effect from 3 October 2008, as part of Machinery of Government changes, the
sponsoring role for the following bodies moved from BERR to DECC:
Soe aes pie
Civil Nuclear Police Authority www.cnpa.police.uk
Coal Authority : www.coal.gov.uk
Nuclear Decommissioning Authority www.nda.gov.uk
cubed ede
Advisory Committee on Carbon www.berr.gov.uk/energy/sources/
Abatement Technologies sustainable/carbon-abatement-tech/
advisory-committee/page40400. htm!
Fuel Poverty Advisory Group. www.berr.gov.uk/energy/fuel-poverty/
index.html
Renewables Advisory Board www. berr.gov.uk/energy/sources/
renewables/policy/renewables-advisory-
board/page16101
UK Chemicals Weapons Convention Not available
National Authority Advisory Committee
(Office of Nuclear Development)
eee) eae aie]
Ofgem www.ofgem.gov.uk
ee
British Energy www.british-energy.com
oe ee ee
Nuclear Trust/Nuclear Liabilities Fund www.berr.gov.uk/energy/sources/
(NLF) nuclear/key-issues/british-energy/
: page35040.html
fees Sev ome ee
Pilot Task Force for Oil and Gas www. pilottaskforce.co.uk
UK Energy Research Practitioners’ Not available
Panel (UKERP)
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Annex 3
Delivery partners
Other Changes
A.18 On 30 September 2008, the following three Executive NDPBs were wound up: the
Consumer Council for Postal Services (Postwatch); the Gas and Electricity Consumer
Council (Energywatch); and the National Consumer Council. They were replaced by
the newly formed Consumer Focus (an executive NDPB) on 1 October 2008.
A.19_ UKAEA, the UK Atomic Energy Authority has completed a restructuring which has
resulted in the creation of two site license companies, DSRL (Dounreay Site Licence
Ltd) for the Dounreay site and RSRL (Research Sites Restoration Ltd) for the Harwell
and Winfrith sites and UKAEA Ltd, a limited company consisting of the commercial
business. The creation of the site license companies has allowed UKAEA Ltd to be
take its place as a fully fledged Parent Body Organisation for these entities. In
addition, the formation of the joint venture between UKAEA, the Science and
Technology Facilities Council and a leading commercial developer Goodman
International, was undertaken to accelerate the development of the Harwell Science
and Innovation Campus (HSIC). This joint venture agreement was completed in
August 2008. The Government has also announced in March 2009, a sale process
with respect to the Government's share capital in UKAEA Ltd.
A.20 For information about changes to Capital for Enterprise Limited see paragraph 4.62.
Performance reporting on agencies and NDPBs
A.21 The Performance Report in chapter 2 includes the contributions of delivery partners.
All agencies and most NDPBs, other than advisory and tribunal NDPBs, also publish
their own annual report and accounts, which provide details of the targets and
performance of the organisation, as well as financial information. These can be
obtained from their websites or The Stationery Office.
Entities consolidated and not consolidated
A.22 BERR’s audited Resource Accounts 2008-09 in chapter 5 are consolidated to include
the Insolvency Service, Acas, and BERR elements of administration expenditure for
UKTI, which is also sponsored by the FCO. With the exception of Acas, the financial
results of NDPBs are not consolidated in the Resource Accounts.
A.23 The Resource Accounts also show the money BERR has provided to NDPBs as
Grants in Aid, detailed in Note 11, section 5.4.
Relationship between the Department and delivery partners
A.24 Each NDPB is overseen by a sponsor team within BERR, which agrees the NDPB’s
remit and monitors performance. The sponsor teams work with the NDPBs,
providing support for their high level aims and challenges, to ensure adherence to
rules of regularity and propriety and for the purpose of budgetary control.
A.25 The Department is committed to integrating sustainability across its policy agenda to
support the UK Government's Sustainable Development Strategy’.
Sustainable Development
A.26 Sustainable development enables people to satisfy their basic needs and enjoy a
better quality of life without compromising the quality of life of future generations.
BERR’s achievements on sustainable development are published in the BERR
Sustainable Development Action Plan Progress Report 2008-09”°. Key successes
during 2008-09 are outlined below:
e@ Working with business: Development of initiatives with key sectors to deliver
improved environmental performance.
e@ Leadership: Embedding sustainable development principles throughout the
Department using the business planning process.
e Corporate Responsibility Report: An updated Corporate Responsibility Report
will be launched in 2009. This will seek to encourage business to address both
its own competitive interests and the interests of wider society.
e Creation of the Low Carbon Business Opportunities Unit: The Unit has
combined the work of the Corporate Responsibility, Sustainable Development
and Waste teams.
e BERR ran a corporate responsibility month in November 2008, with events
well supported by business.
A.27 BERR'’s Sustainable Development Action Plan 2009-10 will include the following
priorities for the year ahead. Key commitments include:
@ the Low Carbon Industrial Strategy, which aims to support companies to
decarbonise their operations and make the most of the growing markets for
new low carbon goods and services;
@ the Packaging and Packaging Waste Strategy, which we will work on with
Defra; and
@ raising awareness in small firms of the potential resource savings from
improved waste management.
4 Securing the future: The UK Government Sustainable Development Strategy (HMG, 2005):
www.defra.gov.uk/sustainable/government/publications/uk-strategy/index.htm
”° BERR Sustainable Development Action Plan for 2008-09 (BERR, 2008):
www.berr.gov.uk/files/file47243.pdf
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Annex 4
Environmental sustainability
Environmental Report
A.28 Resource consumption: BERR continued to rationalise its estate and accommodate
Machinery of Government changes. BERR improved utilisation of the building
spaces, however, this resulted in increased electricity, gas and water consumption at
the two main London sites, 1 Victoria Street and Kingsgate House
A.29 An Automatic Metering and Targeting system has now been installed across the
headquarters estate”® which will assist in monitoring and reducing consumption.
Electricity contracts have been renewed and 100% of the supply to the headquarters
estate is provided with a ‘green’ tariff, which is produced from a mix of landfill gas
(44%), small scale hydro (22%), off-shore wind (10%), sewage gas (8%), on-shore
wind (6%), biomass (6%) and ‘energy from waste’ (4%).
A.30 Energy efficiency: Our carbon footprint has been reduced by 31% over the past five
years and office space has fallen by 58%.
A.31 Waste and recycling: Waste arisings have increased slightly due to an increased
number of staff in Kingsgate House. However, the amount of waste recycled has
also increased. BERR rolled-out ‘Recycle plus’ (a ‘binless’ office scheme) across the
headquarters estate in December 2008, giving further improvements in waste
management and recycling.
Figure 11: BERR waste and recycling (kg) 2008-09
Glass —_______ Plastic
3,102 10,204
Hazardous Cans
738 12,024
Project
Waste
1,860
General Paper/
Waste Card
227,231 341,061
22° BERR’s headquarters estate comprised 1 Victoria Street, Kingsgate House, Westfield House,
St Mary's House and Atholl House.
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A.32 The Department is committed to being an exemplar of best practice, and considers
health and safety objectives to be of equal importance to other business objectives.
Under the Health and Safety Commission's Revitalising Health & Safety Strategy
Action Point 13”” all public bodies are required to summarise their health and safety
performance and plans in their annual reports.
A.33 We recognise that effective management of health and safety is essential in order
to deliver an efficient government service which minimises unnecessary losses and
liabilities.
A.34 Our staff are mainly office based, so the main risks arise from the workplaces that
we provide and staff working practices. We have procedures in place to ensure a
safe working environment is maintained, and operate an online assessment service
to identify and manage the risks from use of computer workstations. This year we
have again undertaken some significant refurbishment projects, and the effective
selection and management of contractors continues to play an important role in
ensuring our risk exposures are well managed.
A.35 Over the past year we have:
@ continued our on-going review of our policy and procedures;
@ presented our safety management process to the BERR Audit and Risk
Committee, receiving strong endorsement;
@ benchmarked our health and safety performance against the Health and Safety
Executive's (HSE) benchmarking tool CHaSPI, where we obtained an above
average score when benchmarked against our sector;
@ offered training to senior managers throughout the Department; and
@ conducted regular dialogue with the trade unions, in order to liaise and co-
ordinate safety issues, raise awareness and secure greater involvement from
staff on health and safety matters.
A36 In 2009-10 we will:
@ carry out a further benchmarking exercise on the performance of the Safety
Management System against HSE best practice to confirm continuing
improvement;
@ carry out a review of the Asbestos Management System, including the
development and implementation of a central asbestos database for the
departmental estate;
7 Revitalising Health and Safety Strategy Statement (Department of the Environment, Transport
and the Regions, 2000): www.hse.gov.uk/revitalising/strategy.pdf
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Annex 5
Health and safety report
@ audit the systems for the management of Legionella on the estate to ensure full
compliance with the COSHH Regulations and in line with the Approved Code of
Practice for the control of Legionella L8;
@ continue to offer training to senior managers throughout the Department so they
are better equipped to discharge their responsibilities with regard to health and
safety; and
© carry out fire audits on the estate to check legal compliance against the
Regulatory Reform (Fire Safety) Order 2005” in order to establish personnel and
property safety and ensure business continuity.
Figure 12: Accident rates per 100,000 employees
1400 5
1200 -I
1000 >
800 ~
600
400
—s Minor
200 —e Reportable
A.37 Our safety performance was again good, but the reportable accident rate” slightly
increased to one, above last year’s excellent zero record. Overall minor accident
rates*” have however fallen, and no enforcement action was taken against the
Department.
75 For further information about the Regulatory Reform (Fire Safety) Order 2005 see:
www.fire.gov.uk/Workplace+safety/WhatTheLawRequires/
7°The number of major and over three day injuries to employees that must be reported to HSE
under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 divided
by the average number of employees in the previous year, with the result multiplied by 100,000.
23° Minor accidents do not have to be reported to HSE and include those which do not result in
serious injury or staff absence.
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A.38 The Public Accounts Committee (PAC) is appointed by the House of Commons to
examine accounts showing the appropriation of the sums granted by Parliament to
meet public expenditure and of such other accounts laid before Parliament as the
Committee may think fit*". The PAC focuses on value for money by examining value
for money reports undertaken by the NAO.
A.39 In 2008-09 the PAC examined two NAO reports concerning BERR:
@ Government preparations for digital switchover (HC416) (28th Report of 2007-08,
26th June 2008)”; and
e@ Reducing the cost of complying with regulations: the delivery of the
Administrative Burdens Reduction programme 2007 (HC363) (32nd Report of
2007-08, 2nd June 2008)".
A.40 In addition two PAC committee reports from the 2006-07 and 2007-08 parliamentary
sessions have outstanding recommendations:
e The Shareholder Executive and Public Sector Businesses (HC409) (42nd Report
of 2006-07, 20th September 2007)**; and
e@ The Compensation Scheme for former Icelandic Water Trawlermen (HC71)
(11th Report of 2007-08, 26th February 2008)**.
*5" For further information about the Committee of Public Accounts see:
www.parliament.uk/parliamentary_committees/committee_of_public_accounts.cfm
* Government preparations for digital switchover (HC416) (2007-08):
www.publications.parliament.uk/pa/cm200708/cmselect/cmpubacc/416/416.pdf
Government response to Government Preparations for Digital Switchover.
www.0official-documents.gov.uk/document/cm74/7453/7453.pdf
53 Reducing the cost of complying with regulations: the delivery of the Administrative Burdens
Reduction programme 2007 (HC363( (2007-08):
www.publications.parliament.uk/pa/cm200708/cmselect/cmpubacc/363/363.pdf
Government Response to Reducing the cost of complying with regulations:
www.0official-documents.gov.uk/document/cm74/7453/7453.asp
* The Shareholder Executive and Public Sector Businesses (HC409)(2007):
www.publications.parliament.uk/pa/cm200607/cmselect/empubacc/409/409. pdf
Government Response to The Shareholder Executive and Public Sector Businesses:
www.official-documents.gov.uk/document/cm72/7275/7275.pdf
*5 The Compensation Scheme for former Icelandic Water Trawlermen (HC71) (2008):
www.publications.parliament.uk/pa/cm200708/cmselect/empubacc/7 1/71 .pdf
Government Response to The Compensation Scheme for former icelandic Water Trawlermen:
www.official-documents.gov.uk/document/cm73/7364/7364.pdf
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Annex 6
Public Accounts Committee reports
Public Accounts Committee recommendations
A.41 Actions taken in response to current and outstanding PAC recommendations are
reported below.
28' Report of 2007-08: Government preparations for digital switchover
(HC416): 26 June 2008
PAC conclusion (4):
A.42 Take up of the help scheme in Copeland, the first area to switch to digital, suggests
that demand for the scheme will be much lower than the Departments’ forecasts,
which look increasingly out of date. The Departments should review whether the
scheme is reaching enough people and achieving its objectives, based on what
happens in the Border region, which will be the first full region to switch. In the light
of this review, they should amend the design of the scheme and the funds available
as necessary before proceeding with switchover in the Granada region from
October 2009.
Action
A.43_ The Departments (BERR and DCMS), along with the BBC, will keep Help Scheme
funding under continuous review. The Government considers it to be too early to
take decisions on the appropriate level of funding based on the relatively small
switch in Copeland and Scottish Borders (0.3% of the whole population). Granada
will be the first large urban area to switch, in November 2009, and at that stage it
would be sensible to take stock on the appropriate level of resources ring-fenced for
the Help Scheme. In the meantime, the Chancellor announced in Budget 2009 that
the Government would be discussing with the BBC Trust potential ways that the
anticipated surplus could be used in relation to aspects of the Digital Britain agenda
The Help Scheme has recently been extended to all residents of care-homes
meaning more potentially vulnerable people can be helped in making the switch
to digital television. This extension of the Help Scheme will be funded within
the existing budget.
PAC conclusion (7)
A.44 The Departments’ reliance on voluntary labelling and the work of Digital UK to
protect consumers from potential mis-selling of analogue televisions in the run-up to
switchover has, so far, not worked. The ‘digital tick’ was introduced nearly four years
ago, but only half the staff in the two thirds of stores which use the ‘digital tick’ logo
understand what it means. Given reliance on the logo to protect consumers, the
Departments should set out how, by the end of 2008, they will try to secure take-up
of the logo by at least 90% of retailers (by sales), and at least 90% understanding of
the ‘digital tick’ among staff selling television equipment in retail stores. This should
substantially reduce the risk that consumers will unwittingly purchase televisions
with built-in obsolescence.
Department for Bus Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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Action
A45 By October 2008, nine out of ten TVs sold were digital and nearly three-quarters
(73%) of recorders were digital. Research in March 2008 showed that for consumers
who did buy analogue TVs, nine out of ten understood that they were buying a set
that would need converting for switchover. Major stores, such as John Lewis, Dixons
Stores Group and Comet, have committed publicly to stop selling analogue sets.
Digital UK has put in place a range of measures to support the retail trade since the
beginning of 2008, including appointing a field marketing agency, Gekko, to supply
retail support teams to visit stores, encourage sign-up to the ‘digital tick’ logo
scheme, and provide advice, training and materials.
A.46 Digital UK secured the take up of the ‘digital tick’ logo by 85% of retailers (by volume
of set top box and TV sales) by July 2008.
42" Report of 2006-07: The Shareholder Executive and Public Sector
Businesses (HC409) 20° September 2007
PAC Conclusion (5)
A.47 The target for increasing the value of six of its 27 businesses by £1 billion is not an
adequate test of the Executive's effectiveness. One or two of the larger businesses,
potentially affected by market conditions, can influence whether the Executive meets
its target, regardless of the Executive's underlying performance. Its performance
management regime needs to include wider measures that are based on the results
of individual businesses, alongside an aggregated portfolio-level target
Action
A48 The Shareholder Executive is working with each of its businesses to develop
bespoke performance targets which relate to drivers of value, thereby ensuring
longer term value creation across the portfolio. We will be reporting later this year
on the progress of each business’ performance in line with these criteria.
PAC conclusion (6)
A.49 The Executive operates within departmental pay and grading limits which may inhibit
recruitment of appropriately skilled staff. The quality of the Executive's staff is key to
its effectiveness. The Executive needs sufficient pay flexibility to continue to recruit
high calibre staff in a market for commercially related skills.
Action
A.50 Discussions are continuing with HM Treasury and other parties on the scope for
pay flexibility.
PAC conclusion (8)
A51 Between 2004 and 2006, the dividends paid have increased from £24.3 million to
£45.3 million, while operating profits have risen from £1.1 billion to £3.7 billion. The
Executive should set business level dividend targets, which take into account the
risks faced by businesses, the capital invested in them and a credible estimate of
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Annex 6
Public Accounts Committee reports
future investment needs, so that over time a greater flow of dividends could be
returned to the taxpayer.
Action
A.52 Work is underway to ensure each business will have an agreed dividend target,
except where public policy does not require or enable this.
PAC conclusion (9):
A.53 The Executive does not undertake valuations of all the businesses in its portfolio.
Although it is not cost-effective to conduct valuations of all its businesses on an
annual basis, the Executive should systematically undertake valuations of the
businesses in its portfolio every few years and use them to highlight the impact of
policy on shareholder value.
Action
A.54 The Shareholder Executive is valuing the entire portfolio of businesses over a two
year cycle. The individual valuations will be used, as recommended, to highlight the
impact of policy on shareholder value.
11% Report of 2007-08: The Compensation Scheme for former Icelandic
Water Trawlermen (HC71) 26" February 2008
A.55 The Government announced in December 2008 that it had decided to run a new
trawlermen compensation scheme. We issued a consultation document seeking
views on our detailed proposals in February 2009, and expect to launch the new
scheme in the summer of 2009.
Other PAC reports
A.56 In May 2008 HM Treasury directed departments to inspect the commitments they
had made in response to historic PAC reports to ensure that these commitments
had been honoured. BERR examined reports from the 2000-01 parliamentary session
onwards and found that the commitments it had made in response to the relevant
PAC reports had all been implemented.
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Dealing with complaints
A57 The Department is committed to providing a high quality, accessible and responsive
service to businesses and the community and takes all complaints very seriously.
Although in fact we receive few complaints, we give all our staff guidance on how
to deal with complaints in line with Cabinet Office guidance and the Freedom
of Information Act.
A58 The Department's policy on complaint handling is currently under review and will be
updated on the website shortly”.
A.59 For further details please contact The BIS Enquiry Unit o1
at enquiries@
Complaints to the Parliamentary Ombudsman
In hand Reported I Reported I Reported I Reported I In hand
at 1 April on: fully on: partly I on: not at 1 April
upheld upheld 2008
A.60 During 2007-08 period there were no complaints upheld by the Parliamentary
Ombudsman. Figures for 2008-09 are not yet available.
A.61 Further information can be found in the Parliamentary Ombudsman’s Annual Report
2007-2008"*.
** For further information about Service First - The Six Standards for Central Government see:
http://archive.cabinetoffice.gov.uk/servicefirst/2000/introduc/six.htm
The current guidance can be found at:
www.berr.gov.uk/administration/contact/complaints/index.htmI
58 Parliamentary and Health Service Ombudsman Annual Report 2007-08 and previous reports are
available from: www.ombudsman.org.uk/improving_services/annual_reports/index.htm!
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Introduction
A.61 These Tables present actual expenditure by the Department for the years 2003-04 to
2008-09, and planned expenditure for the years 2009-10 to 2010-11. With the
exception of Tables 7, 8 and 9 (which include budget data which transferred to DECC
as part of the 3 October 2008 Machinery of Government changes), the data relates
to the Department's expenditure within the budgeting boundary (see chapter 4
section 4.1 for an explanation).
A.62 The format of the Tables is determined by HM Treasury. The disclosure in Tables 2
and 3 is analysed by Departmental Strategic Objective (DSO). The data in the Tables
has been restated, compared to equivalent data in BERR’s Annual Report and
Accounts 2007-08, for the Machinery of Government changes in which energy-
related programmes transferred to the Department of Energy and Climate Change
(DECC). The exception is Table 4, Total Capital Employed, where only the 2007-08
outturn has been restated, to be consistent with the Department's Resource
Accounts.
Table 1: Total Departmental Spending
A.63 Table 1 summarises expenditure on functions now administered by the Department,
covering the period from 2003-04 to 2010-11. Consumption of Resources includes
programme and administration costs, analysed between DEL and AME expenditure.
Total departmental expenditure is analysed by Departmental Supply Estimates, and
any unallocated provision. Where there are significant changes from year to year,
explanations are included in the more detailed analyses in Tables 2 and 3.
Table 2: Resource Budget
A.64 Table 2 provides a more detailed analysis of the Resource Budget information
summarised in Table 1 and shows expenditure by DSO. The Table separates the DEL
and AME elements of the departmental resource expenditure, and illustrates the
trends across the years under review.
A.65 Explanatory notes provide further information as appropriate, including where
expenditure varies substantially from year to year. 2008-09 outturns are those used
for the 2009 Public Expenditure Outturn White Paper.
Table 3: Capital Budget
A.66 Table 3 provides a more detailed analysis of the Capital Budget information
summarised in Table 1. It shows expenditure by DSO. The Table separates the DEL
and AME elements of the Departmental Capital expenditure, and illustrates the
trends across the years under review.
Department for Bus Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
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A.67 Explanatory notes provide further information as appropriate, including where
expenditure varies substantially from year to year. 2008-09 outturns are those used
for the 2009 Public Expenditure Outturn White Paper.
Table 4: Capital Employed
A.68 Table 4 shows capital employed by the Department in balance sheet format (as
disclosed in the Department's Resource Accounts). It also shows as a separate line
the net capital employed by NDPBs, which are not included in the Department's
Resource Accounts, to give a total figure for capital employed by the Departmental
family.
Table 5: Administration Costs
A.69 Table 5 provides a more detailed analysis of the administration costs of the
Department. It retains the high level functional analysis used in Table 1. 2008-09
outturns are those used for the 2009 Public Expenditure Outturn White Paper, and
may differ to those in the Resource Accounts.
Table 6: Staff Numbers
A.70 Table 6 shows staff numbers employed by the main Department and its Agencies,
including the Trading Funds.
Tables 7, 8 and 9: Country and Regional Analysis Tables
A.71 Tables 7, 8 and 9 are consistent with the Pre-Budget Report. The tables include
spending that now forms a part of DECC. The Tables show analyses of the
Department's spending by country and region, and by function. The data presented in
these Tables is consistent with the country and regional analyses (CRA) published by
HM Treasury in Chapter 9 of the PESA 2009. The figures were taken from the HM
Treasury public spending database in December 2008 and the regional distributions
were completed in January and February 2009. Therefore the Tables may not show
the latest position and are not consistent with other Tables in this document.
A.72 The analyses are set within the overall framework of Total Expenditure on Services
(TES). TES broadly represents the current and capital expenditure of the public
sector, with some differences from the national accounts measure Total Managed
Expenditure. The Tables show the central Government and public corporation
elements of TES. They include current and capital spending by the Department and
its NDPBs, and public corporations’ capital expenditure, but do not include capital
finance to public corporations. They do not include payments to local authorities or
local authorities’ own expenditure.
A.73 TES is a near cash measure of public spending. The Tables do not include
depreciation, cost of capital charges, or movements in provisions that are in the
Department's budget. They do include pay, procurement, capital expenditure, and
grants and subsidies to individuals and private sector enterprises. Further information
on TES can be found in Appendix E of PESA 2009.
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Annex 8
Expenditure tables
A.74 The data is based on a subset of spending — identifiable expenditure on services-
which is capable of being analysed as being for the benefit of individual countries and
regions. Expenditure that is for the benefit of the UK as a whole is excluded.
A.75 Across government, most expenditure is not planned or allocated on a regional basis.
Social security payments, for example, are paid to eligible individuals irrespective of
where they live. Expenditure on other programmes is allocated by looking at how all
the projects across the Department's area of responsibility, usually England,
compare. So the analyses show the regional outcome of spending decisions that on
the whole have not been made primarily on a regional basis.
A.76 The Department's expenditure encompasses a wide range of programmes, and the
method of allocation by region will vary according to the nature of each programme.
Transfer payments to individuals are generally allocated to the region of the residence
of the recipient. Transfer payments to institutions are normally allocated on the basis
of the location of the recipient institution, as a proxy for the location which benefits
from the spending. Where directly measured data is unavailable, suitable formulae
determined in consultation with departmental statisticians have been used.
Table 7: Expenditure by Country and Region
A.77 Table 7 shows identifiable expenditure on services, i.e. expenditure which can be
shown as being for the benefit of specific countries and regions. It also includes, for
completeness, a line for non identifiable expenditure i.e. that which is deemed to be
on behalf of the United Kingdom as a whole. Notes to the Table provide further
information about specific regional spending.
Table 8: Expenditure per Head by Country and Region
A.78 Table 8 analyses the data identifiable expenditure underlying Table 6, per head of
population. The explanatory notes at the foot of Table 7 are also relevant to the
regional analysis shown in Table 8.
Table 9: Expenditure by Function/Programme by Country and Region
for 2007-08
A.79 Table 9 shows the outturns for 2007-08 in Table 6 analysed into functional categories.
These categories are the standard United Nations Functions of Government
(COFOG) categories, the international standard. The presentation of spending by
function is consistent with that used in chapter 9 of Public Expenditure Statistical
Analysis (PESA) 2009. These are not the same as Estimate Functions used in other
Tables in this report
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Department for Business, Enterprise and Regulatory Reform
Annual Report and Accounts 2008-09
Table 1: Total Departmental Spending
£000
2003-04 2004-05] 2005-06) 2006-07) 2007-08 2008-09 2009-10.
Outturn) Outturn} Outturn) Outturn} Outturn’ Estimated Plans
I Outturn
Resource budget
Resource DEL
To help ensure business success in an I 1,051,360) 1,082,471! 1,195,863I 1,179,788) 1,599,996. 1,371,334 1,533,781! 1,192,842
increasingly competitive world
Unallocated Provision : - 51,085, -46,507
‘Total resource budget DEL /11051,360) 7,082,471) 1,195,863) 1,179,788) 1,599,996 1.371.334 1/5e4ae6I 1,146,335
Of which: Near-cash 1,051,570, 919,808 1,021,758, 1,091,383, 1,345,654 1,223,637, 1.443.826 1,006,178
Resource AME “I Tf
To help ensure business success in an 303,723 263,215 365,132, 252,126, 249,604 = 594,201 574,105 480,413
increasingly competitive world
UKAEA pension schemes 237,090 246,036] 267.0131 238,533) 268,478, 286,033, 263,131 266,853)
‘Total resource budget AME "sao.813I 509.251 632,145) 490,659) 518,082) 880234 837,236, I 747,266,
Of which Neaccash 389,431 340,796 446,589) 256,559 799,360 547,899 623,595 631,990
Total resource budget 1,592,173 1,591,722 1,828,008 += 1,670,447 2,118,078 (2,251,568 2,422,102
Of which: depreciation 96,289 73.964, 51,289, 99,863, 44,254 205,981 187.999 109.638
Capital budget
Capital DEL _ _ —
Tohelp ensure business success inan I 462512) 181,622) 62,990 36,935, 5620 9.973, 430,693 318,685
increasingly competitive world
Unallocated Provision 92,639, _-16,860)
‘Total capital budget DEL 462512, 181,622I 62,990, 35,935I 5,620 9973, 338,054, 301,825,
Capital AME
To help ensure business success in an 50,000 520,000, -120,000, -119,880, I -270,000 525,000 550,000 ‘50,0001
increasingly competitive world
‘Total capital budget AME 50,000, 520,000 -120,000I 119,880, 270,000 -525,000 550,000 50,000,
‘Total capital budget (512.512 701,622, 57,010 -83,945, -264,380 © -515,027 888,054 351,825,
Total departmental spendingt _ _ _ _
‘To help ensure business success in an 1,771,306 1,973,344) 1,452,702, 1,308,106} 1,540,966) 1,245,127, 2,902,923, 1,945,317,
increasingly competitive world
Unallocated Provision : : : 43,837 _-76,582
UKAEA pension schemes 237,090, 246,036, 267,013, 238,533, 268,478, 286,033 263,131, 266,853
Total departmental spendingt ———-2,008,396, 2,219,380 1,719,715, 1,546,639, 1,809,444 1,531,160 3,122,217 2,135,588.
Of which:
“Total DEL 1,452,583, 1,225,129 1,242,570 1,175,860 1,566,495 1,358,694 1,847,421 1,375,524
Total AME 965813, 994,251 477,145) 370,779 242.949 «172,466. 1,274,796 760,064
+ Total departmental spending is the sum of the resource budget and the capital budget less depreciation. Similarly, total DEL is the sum of the resource budget
DEL and capital budget DEL less depreciation in DEL, and total AME is the sum of resource budget AME and capital budget AME less depreciation in AME
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Annex 8
Expenditure tables
Table 1: Total Departmental Spending (continued)
ce “£000 E
2003-04 2004-05 2006-07/ 2007-08] 2008-09 2009-10
Outturn) — Outturn) Outturn Outturn Outturn) Estimated Plans
Outturn
Spending by local authorities on functions relevant to the department —
Current spending 270438, 272.958 316,075 322,229 I 337,857I 363,400
OF which
financed by grants from budgets above, 346,492/ 384,026 387,395 383,052, 348,079 «281,158
I Capital spending 1,276) -496) 3,553 a2 347 116
OF which
financed by grants from budgets 506,979 550,643 547,258, I 578,043, I 567,319I 426,018
above
11 This includes loans written off by mutual consent that score within non-cash Resource Budgets and aren't included in the capital support to local authorities
Tine in Table 3
Department for Busine:
Enterprise
d Regul
Annual Report and Accounts 2008-09
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y Reform
Table 2: Resource Budget DEL and AME
2003-04
Outturn
Resource DEL
~ 2005-06
Outturn
2004-05
Outturn
£000
2006-07
Outturn
2010-11
Plans
2008-09)
Estimated
Outturn
2007-08
Outturn
2009-10
Plans
Tohelp ensure business success in 1,051,360 1,082,471, 1,195,863 1,179,788 1,599,996 1,371,334 1,533,781, 1,192,842
‘an increasingly competitive world
OF which: — __ es es
Business Creation and Growth 590,341, 557,648, 747.167 640,303 674,120 670,630 852,970) 538,604
Better Regulation - 5364 6.384 2,272 455747374400
Free and Fair Markets 141,322, 179,350, 178,251, «170,077, 193,050 229,578) 260,224) 258,114
Government as Shareholder [118740 102322, 23514) 93,633 463.548, 302,992, I—191.141 172,994
Professional support and infrastructure 200,957 243,151 241,567 269,391 367,006: 164,177) 224,709) 218,730)
Unallocated Provision : 4 : I -/ 51,085, -46,507
OF which: [_ [_ iz I i LL
To help ensure business success in an 51,085, -46,507
increasingly competitive world
Total resource budget DEL 1,051,360 1,082,471 I 1,195,863 1,179,788 1,599,996 1,371,334 1,584,866, 1,146,335
Of whieh: — iz I
Nearcash 1,051,570, 919.808, 1,021,758 1,091,383, 1,345,654 1,223,637 1,443,826 1,006,178
Of which:t TL es es
Pay 229,216 294,254 342,137 376,343 360,955 454,383 I
Procurement 609.028 436,232, 380,973 416.400 322.722, 254,268 309,010 317,070
Current grants and subsidies to the I 686,789 680,745, 727.661 747.395. 736,861. «758,097, 1,040,122) 710.920
private sector and abroad
"Current grants to local authorities «346,269. «380,047 385,248 «379,598 345,816 79,188, 396,301, 389,301
Depreciation 61,289 38,966 16,283, 99,863, 39,121 2613, 75.499) 72,636
Resource AME
To help ensure business success in 303,723 263,215 365,132 (252,126 249,604 594,201 574,105 480,413
an increasingly competitive world
Of which
“Business Creation and Growth 352 38979 37.147 70,018 31,056 184,738 «114410, 39.172,
Free and Fair Markets 268,500 224,236 302,733 211.335 216572, «436,395 466,382, 467,882
Government as Shareholder et 716,186, -29,227 1976-26932, 6.687, 16,641,
Professional support and infrastructure - 9,066 - - : -
UKAEA pension schemes 237,090 246,036 267,013 238,533 268,478 286,033, I 263,131 266,853
Of which:
UKAEA pension schemes 237,090 246,036 738,533, 268,478 286,033 263,131 266,853,
‘Total resource budget AME 540.813 509,251 490659 518,082 880.234 837,236, 747,256
Of which:
Near-cash 389,431, 340,736 446,589 256.559 299,360 547.899 623,595 631,990
Of which:t a [ I — L
Pay 8528
Procurement - I +] - - - -
Current grants and subsidies to the 260,072 224,236, 302,733 211,335. 216.572 «436,395, «466,382 457,882
private sector and abroad
Current grants to local authorities 7 3g7s 2.473.454 2.263.970) —.970, 1,970)
Depreciation 35000 36,000, 36,000 5133 182,768 112.440 37,202
‘Total resource budget 1,592,173 1,591,722) 1,828,008 1,670,447 2,118,078 2,251,568, 2,422,102 1,893,601,
t
The breakdown of near-cash in Resource DEL by economic category may exceed the total near-cash Resource DEL reported above because of other income and
receipts that score in near-cash Resource DEL but aren't included as pay, procurement, or current grants and subsidies to the private sector, abroad and local
authorities.
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Annex
Expenditure tables
Table 3: Capital Budget DEL and AME
£000
2003-04 2004-05 2005-06 2006-07I 2007-08 2008-09I 2009-10, 2010-11
Outturn) Outturn) Outturn) Qutturn) Outturn Estimated Plans Plans
Outturn
Tohelp ensure business success in I 462,512, 181,622, 62.990 35,935 5.620 9,973, 430,693, 318,685
an increasingly competitive world
OFwhiohs a a I
Business Creation and Growth I= 413,176 126.996, 5.462, «20.561, 17.459 ——-24.500I I 416,752, 302,794
Better Regulation : - EI 197 70 {
Free and Fair Markets 20018063 «3946 1.570, 8,097 19,842 2341
Government as Shareholder (13607) 28,100) -7,928) - 987/350) 300)
Professional Support and Infrastructure 13,728 18,463 11,511 13,804 14,785, 13,714 11,250) 9,750
- fT - pL =I 92,639, 16,860
OF which:
"To help ensure business success in an - : : : - -) 92,639) -16,860
increasingly competitive world I
“Total capital budget DEL =I 462,512I © 181,622I 62.990 35,935, 5620 9973, 338.054I 301,825
‘Of whieh: iz
Capital expenditure on fixed assets net) 245,531, 206,043, 98,367 83,190 98,109 212,804. 18.341/ 13,891
of salest
Capital grants tothe private sector and) 319,850) 529951, 700,986. 813.681 473,406. 1,049,228 568.616,
abroad
Net lending to private sector _ 322,787, 19593) 124,782, -145,198 I -155,464 112,397, 67,500, -128,500
Capital support to public corporations 41,105, 746 -18,195. 780, 15,447 4,352 -3,500 2,000
Capital support to local authoritiestt I 506,979 960,643 547.256 578,043, 567.319 426,018 517.862, 472,631
Capital AME
Tohelp ensure business success in I 50,000 20,000) 120,000 -119.880I © -270.000' -526,000I 550,000 50,000
an inet Lo Po Ie ee ee
Of which: iz
Government as Shareholder 50,000) 520,000 -120,000' -119880I 270.0001 525,000) 960,000) 0,000
50,000! 520,000 -120,000) 0 0 __ 525,000) 550,000
Total capi I 512,512 701,622 57,010 83,945, 264,380 -515,027 888,054
Of which:
Capital expenditure on fixed assets net 245,531 206,043 98,367, 83,190) 98,109) 212,804 18,341 13,891
of salest LL _ ee a _ _ I
Less depreciationt tt 96,289) 73,964 51,283 39,863 44,254 205,381, 187,939I 109,838
Net capital expenditure on tangible 149,242) 132,079) 47,084 123,053 53,855, 7,423; — -169,598) 95,947:
fixed assets
+ Expenditure by the department and NDPBs on land, buildings and equipment, net of sales. Excludes spending on financial assets and grants, and public
‘corporations’ capital expenditure
1 This does not include loans written off by mutual consent that score within non-cash Resource Budgets.
41 Included in Resource Budget.
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Department for Business, Enterprise and Regul: y Reform
Annual Report and Accounts 2008-09
Table 4: Capital Employed
Assets on Balance Sheet at end of year note! £000
2005-06) 2006-07, 2007-08, I 2008-09I 2009-10
Outturn) Outturn) RestatedI Outturn) Projected
Fixed Assets _ _ _ et
Intangible 1.293 387 1.612 907) 926
Tangible 195,824 69,111, 80,503) 95,043 96,101
of which I
Land and Buildings 153,801, 26,290, «35,786, «38,550, 39,242
Transport Equipment 7 0
Plant and Machinery 808. 969 1,489)
Information Technology note 2 9905 7.362, 6.849, ——14.009I 14.288
“Furniture and Fititngs 7065 4,242) 2,850, ‘1,880, 1,919)
Assets under Construction 24,238, 30,352, 34,049) «39,145, 39,163
Investments note3 4,536,733 5,630,627, 2,512,697) 2,790,062, 2,849,370
Debtors falling due after one year ee 1
Current Assets 6,495,881) 3,031,594) 1,768,542I 1,755,905! 1,755,711
2.97 1,110,627 0,182) -1,353,066
Creditors >1year_ $40,827, -538,717)_-850,177
Provisions Iz 4,484,470) -666,603) -753,383,_-704,597
Capital Employed within the Consolidated Department's Resource 7193277) 2,367,746) 2,045,693 ae ea
‘Accounts I oe
NDPB Net assets/liabilities -28,666,294 -36,224,441) 1,065,259) 875,529) 893,040)
‘Total Capital Employed in Departmental Family I -28,859,571I -33,856,695I 3,110,952) 2,893,675I 2,988,092,
Notes
(1) Outturns in 2005-06 include capital relating to activities under Science and Innovation objectives, transferred to the Department of Innovation, Universities and
Skills in 2007-08. Outturns from 2005-06 to 2006-07 include capital relating to activities under Energy objectives, transferred to the Department of Energy and
Climate Change (DECC) in 2008-09,
(2) The Department's IT infrastructure is supplied and managed by Fujitsu Services Ltd under an off balance sheet PFI contract
(3) Coal Pension Investments, disclosed in the 2007-08 Resource Accounts, transferred to DECC as a result of the Machinery of Government change.
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Annex
Expenditure tables
Table 5: Administration Costs
£000
2003-04 2004-05, 2005-06 2006-07, © 2007-08 2008-03] 2009-10) 2010-11
Outturn) Outturn) = Outturn, Outturn) Outturn’ Estimated) Plans Plans
Outturn)
‘Administration Expenditure
Paybill (133,368) 126,133 135,453, 137,840, 142.511 137,023 152,300 148,634,
Other 286,003I 195,993 178,112, 193,209 338,022) 127.175, 145,649] 141,832
Total administration expenditure I 419,371 322,126, 313,565, 331,049, 480.533, © 264,198I 297,949, 290,666
Administration income. 120,879 13,845 -2,928 -29,429) 44,548 -45,096) 25,000) 28,000
Total administration budget I 298,492) 308.281! 310637/ 301,620, 435,985 219,102I 272.9491 262,606,
Analysis by activity
Tohelp ensure business success inan I 298,492 308.281 310,637 301.620 435,985) 219,102 272.949I 262,666,
increasingly competitive world
Total administration budget I 298492I" 308,281) 310,637/ 301,620 435,985 © 219,102I I 272,949I 262,666I
Note
2008-09 outturns are those used for the 2009 Public Expenditure Qutturn White Paper, and may differ to those in the Resource Accounts.
Table 6: Staff in Post
2007-08" Actual 2008-09 Actus
Department for Business, Enterprise and Regulatory Reform (BERR)
(Gross Contral Area)
CS FTEs 25328 2563.8
Others Z _ _ oo 132.8 2126
Total i 2,665.6) 2716.4
UK Trade & Investment
(Gross Control Area) 4
CS FTEs 607 572
Others 43, 95
Total
The Insolvency Service
(Gross Control Area) — —_I
CS FTEs 384 2.534
Others 579) 544
Total 2,963) 3078
Companies House
(Gross Control Area)
CS FTEs 1,074 1,092
Others _
Total 1,074I 1,092)
Advisory, Conciliation and Arbitration Service (Acas)
(Gross Control Area)
CS FTEs
Others
Total
* 2007-06 figures have been restated for BERR and UKTI
IM. aa349)
Department for Business, Enterprise and Regul:
Annual Report and Accounts 2008-09
‘ory Reform
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Table 7: Expenditure by Country and Region
£000
2003-04] 2004-05I 2005-06 2006-07, 2007-08 2008-09] 2009-10
Outturn) Outturn Outturn, Outturn) Outturn Plans Plans
North East 2738 1905) 221.1 1877, 144.2 859) 236
North West 4u78, 4962, 497214614) 1,1898I 1.6208) 1.5629)
Yorkshire and The Humber 3708-3763. 3747,— 3807.1) 2987 21951373,
East Midlands 1344) 246) 1617, «1042
West Midlands 92.1 265 2040) 2158) 1885
East 102.0 175 134.9 147.3 183.3 149.1
‘London ig 2370 271 S71) 2888 244.0
South East 2327-3204 6 3190/4154 384.0) 367.7
South West 149.2 m7 175.4 83.9 281.8 309.1 322.0 320.2
{Total England 19940) 23379/ 25838 30628 32310I 3,4747—3,105.0I 3,062.1
Scotland 333.3 385.0 7517 443.5 418.6 4248 414.5 415.7
Wales 273) 4a 203.0358) IB 1214) 1336) 120.4)
Northern Ireland 18.3 20.5 18.6 20.5 32.8 29.2 229 19.7
‘Total UK identifiable expenditure I 2,592.9 2.9578) 3,597.0 3.8525 © -3,8542I 4050.1I 3,676.0I 3,617.9)
Outside UK nd 710 821 1083/1580 102.4 897 838
ntifiable expenditure 26645 30288 3.6792 3.9608 40122) 4525 3,765.7 3,701.7,
Non-identiiable expenditure 527 319 393 280 20.9 265 35.0 37
ITotal expenditure on ser 273) 30607/ 3.7185 3.9888 4,033.1 4,128.0 © -3,730.7I 3,670.1
Notes:
Tables 7,8 & 9 are consistent with the Pre-Budget Report. The tables all include spending that now forms a part ofthe Department of Energy and Climate Change
(DECC). This includes nuclear decommissioning activity which was the largest single component of BERR's budget (and which is now the largest single component
of DECC’s budget). The location of this activity produces comparatively high proportional expenditure in North West England, particularly, and also South East
England and Scotland
Tables 7, 8 and 9 show analyses of the Department's spending by country and region, and by function. The data presented in these tables is consistent with the
country and regional analyses (CRA) published by HM Treasury in Chapter 9 of Public Expenditure Statistical Analyses (PESA) 2009. The figures were taken from the
HM Treasury public spending database in December 2008 and the regional distributions were completed in January and February 2009. Therefore the tables may
‘ot show the latest position and are not consistent with ather tables in the Departmental Report. Totals may not sum due to rounding
Table 8: Expenditure per Head by Country and Region
£000
2008-09)
Plans
2008-05)
Outturn
2003-04
Outturn
2005-06
Outturn
2006-07
Outturn
2007-08
Outturn
2009-10
Plans
North East
North West
Yorkshire and The Humber
East Midlands
West Midlands
fast
London
South East
South West
‘Total England
Scotland
Wales
Norther Ireland _ I 12
[Total a; cy cy
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UKGI00043212
UKG100043212
Acas: Advisory, Conciliation and Arbitration Service
AME: Annually Managed Expenditure
BERR: Department for Business, Enterprise and Regulatory Reform
BIS: Department for Business, Innovation and Skills
BME: Black and Minority Ethnic
BNFL: British Nuclear Fuels Limited
BRE: Better Regulation Executive
BSSP: Business Support Simplification Programme
CBI: Confederation of British Industry
CETV: Cash Equivalent Transfer Value
CfEL: Capital for Enterprise Limited
CLG: Department for Communities and Local Government
COSHH: Control of substances hazardous to health
CSR: Comprehensive Spending Review
DCMS: Department for Culture, Media and Sport
DCSF: Department for Children, Schools and Families
DECC: Department of Energy and Climate Change
Defra: Department for Environment, Food and Rural Affairs
DEL: Departmental Expenditure Limit
DfID: Department for International Development
DfT: Department for Transport
DH: Department of Health
DIUS: Department for Innovation, Universities and Skills
DRO: Debt Relief Order
DSO: Departmental Strategic Objective
DTI: Department of Trade and Industry
DWP: Department for Work and Pensions
ECGD: Export Credit Guarantee Department
EQIA: Equality Impact Assessment
ESRC: Economic and Social Research Council
FCO: Foreign and Commonwealth Office
FDI: Foreign Direct Investment
FEC: Full Economic Cost
FTA: Free Trade Agreement
FRC: Financial Reporting Council
FReM: Government Financial Reporting Manual
FTE: Full Time Equivalent
GDP: Gross Domestic Product
GSE: Greater South East
GVA: Gross Value Added
HMG: HM Government
HMRC: HM Revenue and Customs
HMT: HM Treasury
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Acronyms
HSE: Health and Safety Executive
IA: Impact Assessment
liP: Investors in People
IMF: International Monetary Fund
IPA: Independent Performance Assessments
kWh: Kilowatt-hour
LBRO: Local Better Regulation Office
LDA: London Development Agency
LFS: Labour Force Survey
LRO: Legislative Reform Order
MoD: Ministry of Defence
MoG: Machinery of Government (change)
MoJ: Ministry of Justice
NAO: National Audit Office
NDA: Nuclear Decommissioning Authority
NDPB: Non-Departmental Public Body
NEBM: BERR Non-Executive Board Member
NEC: National Economic Council
NESTA: National Endowment for Science, Technology and the Arts
NMGD: Non-Ministerial Government Department
NMW: North, Midlands and West
OCPA: Office of the Commissioner for Public Appointments
OECD: Organisation for Economic Cooperation and Development
OEP: Operational Efficiency Programme
OFT: Office of Fair Trading
OGC: Office of Government Commerce
ONS: Office for National Statistics
PAC: Public Accounts Committee
PCPF: Parliamentary Contributory Pension Fund
PFI: Private Finance Initiative
PIMS: UKTI’s Performance and Impact Monitoring Survey
PSA: Public Service Agreement
RDA: Regional Development Agency
RfR: Request for Resources
SCS: Senior Civil Service
SFLGs: Small Firms Loan Guarantee scheme
SITPRO: Simpler Trade Procedures Board
SMEs: Small and Medium Enterprises
SOA: Super Output Area
SR: Spending Review
TES: Total Expenditure on Services
TUC: Trades Union Congress
UCPD: Unfair Commercial Practices Directive
UKAEA: United Kingdom Atomic Energy Authority
UKERP: UK Energy Research Partnership
UKTI: UK Trade & Investment
WCAG: Web Content Accessibility Guidelines
WERS: Workplace Employment Relations Survey
WTO: World Trade Organisation
Annually Managed Expenditure (AME): Includes expenditure which is generally less
predictable and/or controllable than expenditure within Departmental Expenditure Limits
(DEL). BERR’s AME expenditure is mainly concerned with the Redundancy Payments
Service, impairments to the property portfolio belonging to Regional Developments
Agencies, the Post Office working capital loan and dividend income received from
British Nuclear Fuels Ltd.
Appropriations in Aid: Income received by a department which it is authorised to retain
(rather than surrender to the Consolidated Fund) to finance related expenditure. Such
income is voted by Parliament and accounted for in departmental resource accounts.
Capital: Expenditure on tangible fixed assets (net of disposals and profit/ioss on disposal),
new investments and capital grants.
(Comprehensive) Spending Review: a process carried out by HM Treasury to set
firm and fixed three-year Departmental Expenditure Limits (DEL) and Public Service
Agreements (PSAs). Spending Reviews typically focus upon one or several aspects of
public spending while Comprehensive Spending Reviews focus upon each government
department's spending requirements from a zero base, without reference to past plans
or current expenditure.
Consolidated Department: This term includes the Core Department, Acas and the
Insolvency Service.
Core Department: This term excludes the Insolvency Service and Acas.
Departmental Expenditure Limits (DEL): The Department's three year budget, divided
into resource and capital budgets, set as part of the Spending Review process.
Departmental family: This term includes the Core Department (see above) and its
delivery partners outlined in annex 3.
Gross Domestic Product (GDP): Economic indicator measuring the value of all goods
and services produced by an economy within a specific period, usually a year.
Grant-in-aid: Cash payments made to bodies (normally NDPBs) to fund their activities.
Grant-in-aid is paid where the Government has decided, subject to parliamentary controls,
that the recipient body should operate at arm's length from the sponsoring Department.
Near cash: Transactions measured on an accruals basis which result in real cash flows
in the near future e.g. expenditure on pay, purchases and current grants, subsidies and
payments against provisions.
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Glossary
Non-Budget Expenditure: Expenditure approved in the Supply Estimates and included
in the Department's Resource Accounts which does not score against the Department's
DEL or AME budgets. Most commonly refers to the cash funding of NDPBs by grant-in-aid.
The actual expenditure by the NDPBs scores in budgets.
Non-cash: Transactions which are included to reflect the full economic cost of activities
and the usage of long-term assets e.g. depreciation, profit or loss on disposal of balance
sheet assets, cost of capital and movements in provisions.
Non-Departmental Public Bodies: A list of NDPBs for which the Department acts
as sponsor is included in annex 3
Real Terms: Amounts adjusted for the effect of general price inflation relative to a base
year, as measured by the Gross Domestic Product (GDP) market price deflator.
Resource Accounting: The accounting methodology used to record expenditure in
BERR’s accounts. It applies HM Treasury's Financial Reporting Manual (FReM), itself based
on UK Generally Accepted Accounting Practice (UK GAAP) used in private industry and
other Government departments. Spending is measured on an accruals basis.
Resource Budgeting: The budgeting regime adopted for spending plans set out in
Spending Reviews and Comprehensive Spending Reviews. A Resource Budget is the sum
of a department's resource Departmental Expenditure Limit (DEL) and resource Annually
Managed Expenditure (AME). It is the budget for current expenditure on an accruals basis.
Supply Estimates: The means by which Parliament grants formal approval for the
Department's annual expenditure plans. An Estimate can comprise one or more Request
for Resources (RfR). Requests for additional funds in-year are made in Supplementary
Estimates (normally in winter and spring).
Unallocated provision: The element of the total DEL settlement not initially allocation
to specific functions or objectives.
Voted and Non-voted Expenditure: Voted expenditure comprises expenditure by the
main Department and its executive agencies, as approved in the Supply Estimates.
Non-voted expenditure comprises expenditure by the NDPBs sponsored by the
Department. Supply Estimates authorise the issue of cash to NDPBs in the form of
grant in aid.
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About the financial information 121
About this report 9
Acas (Advisory, Conciliation and Arbitration Service)
60, 69, 92-93, 103, 122, 227, 228, 233, 251
Accounts 141-209
Acronyms 245-255
Additional Entities 209
‘Ad-hoc Advisory Groups 230-231
Administration and programme non-cash costs
summary 171
Administration costs 169, 244, 251
Administrative Burdens Reduction Programme 45,
46, 51, 55, 64, 67, 68
Advantage West Midlands 228
Advisory Committee on Carbon Abatement
Technologies 232
Advisory Non-Departmental Public Bodies 229
Advisory Panel on Management and Leadership 230
Aerospace Innovation and Growth Leadership
Council 231
Agency Workers Directive 55, 59
Aid for Trade Strategy 60, 63
Analysis of income payable to the Consolidated Fund
165
Analysis of net operating cost by spending body 172
Analysis of net resource outturn by section 163
Analytical support 86
Anderson Review 45, 48
Appointments 105
Audit and Risk Committee 109
Auditors 137, 169
Automotive Assistance Programme 30, 42, 124, 207
Balance Sheet 132, 208
BERR Secretariat 109
BERR Simplification Plan 96-97
Better BERR regulation 94-97
Better regulation 44-53
Better Regulation Executive 44
Better Regulation Simplification Plans 45, 46, 51 53
British Energy 232
British Nuclear Fuel ple (BNFL) 230
British Shipbuilders 230
Budgets 121, 125, 128-129
Business Council for Britain 15, 231
Business Link 16, 23, 28, 32, 42
Business relations 30
Business Support Simplification Programme/
Solutions for Business 28, 31, 40
Capability Review 8, 77, 83
Capital Budget 125, 243, 246
Capital commitments 195
Capital Employed 195, 243, 244, 250
Capital for Enterprise Advisory Board 231
Capital for Enterprise Fund 16, 29, 123-124, 133, 175,
207
Capital for Enterprise Ltd 228
Cash at bank and in hand 184
Cash Equivalent Transfer Value (CETV) 118-119
Cash Flow Statement 130, 134, 153
Central Arbitration Committee 229
Certificate and Report of the Comptroller and Auditor
General to the House of Commons 147-149
Changing attitudes and approaches to regulation 49-
59
Charging policy 136
Citizens Advice 231
Citizens Advice Scotland 231
Civil Nuclear Police Authority 232
Civil service pensions 117-119
Coal Authority 232
Code of Practice on Consultation 47-48.
Code of Practice on Guidance on Regulation 45
Commitments under leases 196
Commitments under PFI contracts 196
Communications 87-88
Community Interest Companies Regulator 230
Companies Act 2006 55, 62, 64, 68, 85
Companies House 14, 62, 103-104, 227, 251
Competition Appeal Tribunal 229
Competition Commission 58, 64, 92, 228
Competition policy 57-58, 64
Competition Service 228
Complaints to the Department 242
Comprehensive Spending Review 2007 (CSRO7) 13,
19 123, 256
Consolidated Department 122, 233 256
Construction 28, 30
Consultation 95
Consumer Council for Postal Services (Postwatch)
233
Consumer Credit Directive 56
Consumer debt 56
Consumer Focus 55, 57, 228, 233
Consumer Law Review 56, 68
Consumer policy 55-57, 65
Consumer White Paper 50, 68
Contingent liabilities disclosed under FRS 12 202
Contingent liabilities not required to be disclosed
under FRS 12 203-204
Core Department 122, 233 256
Corporate Finance Practice 72
Corporate governance 105-109
Corporate Law and Governance 62, 64.
Correspondence and enquiry handling 88
Country and regional analysis tables 244-5, 252-3
Creation and growth of business 27-43
Creditors 185
Culture change 94
Current investments and loans in Public Bodies:
current 184
Data handling and security 89
Debtors 183
Delivery Partners 14,108, 227-233
Department for Business, Innovation and Skills 5, 7,
9, 11-13, 105, 205
Department for Innovation, Universities and Skills 5,
7,9,11
Department of Energy and Climate Change 9, 14, 70,
91,122, 207-208, 232
Departmental Strategic Objectives (DSOs) 7-8, 14,
19, 20
Departmental Strategic Objective (DSO) 1 40-41,
211-212
Departmental Strategic Objective (DSO) 2 51-52,
212, 213
Departmental Strategic Objective (DSO) 3 63-63,
214-215
Departmental Strategic Objective (DSO) 4 74-75, 216
Departmental Strategic Objective (DSO) 5 77, 216
Digital Britain 26, 31, 42
Diversity 84-85
Doha Development Round 60, 63
East Midlands Regional Development Agency 228
East of England Development Agency 228
Electronic Leadership Council 230
Employment Act 2008 58, 96
Employment Agency Standards Inspectors 55, 59
Employment Law enforcement 55
Employment Law Guidance Programme 55, 58, 96
Employment Strategy 58-59, 65
Energy markets 66
Enterprise Finance Guarantee 15, 28, 29, 33, 123-
124, 190-191
Enterprise policy 29
Enterprise Strategy 29, 47, 100
Environmental Innovations Advisory Group 231
Environmental report 235
Equality Impact Assessments 98-104
Estates management 88-89
Estimates 125-127, 128-129
Ethnic Minority Business Task Force 231
EU Market Access Strategy 61, 63
European Consumer Credit Directive 56
Executive Agencies 227
Executive Committee 107
Executive Non-Departmental Public Bodies 228
Executive Summary 7
Expenditure tables 243-253
Export Control Organisation 61
Fees paid to Non-Executive Board Members 119
Financial Guarantees 188-192
Financial instruments 199-201
Financial Reporting Council (FRC) 231
Financial Review 121-139
Financial Reporting Standards 135
Fiscal Stimulus Packages 123-124
Fixed investments and loans in public bodies 174
Flexible deployment and project management 85
Foreword from the Secretary of State 5
Free and fair markets 54-69
Free Trade Agreements 61, 63
Fuel Poverty Advisory Group 232
G20 55, 60, 63
Gas and Electricity Consumer Council (Energywatch)
233
General Fund 192
Glossary 256-257
Glover Review 28
Hampton Review 47, 49-50, 53
Health and safety report 236-237
Hearing Aid Council 228
Illegal Money Lending Enforcement Project 55, 56,
Impact Assessments 95
Improving outcomes from Health and Safety 46
Improving the design and communication of
regulations 47-48
Income 171
Independent Statutory Office Holders 230
Industrial Development Advisory Board 229
Information and workplace services 88-90
Insolvency Practitioners’ Tribunal 229
Insolvency Service 14, 62, 92-93, 103, 122, 227, 233,
251
Intangible fixed assets 174
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International Financial Reporting Standards 205
Killian Pretty Final Report 46
Labour market flexibility 65, 68, 215, 223, 225
Launch Investment 28, 71, 72, 76, 133, 179
Legal support 85-86
Legislative Reform (Consumer Credit) Order 2006 56,
97
Legislative Reform Orders 97
Local Better Regulation Office (LBRO) 49, 228
London Development Agency 229
Losses and special payments 204
Low carbon 11, 17, 30, 38, 42 234
Low Carbon Industrial Strategy 52
Low Pay Commission 229
Lyons relocations 93
Management Board 105-106
Manufacturing Strategy 28, 30, 38, 42
Media relations and marketing 87
Ministerial Advisory Body on Manufacturing 231
Ministerial pensions 117
Ministerial responsibilities 12
Motorsport Development UK Advisory Board 231
National Audit Office (NAO) Reports 137-139
National Consumer Council 233
National Economic Council 15, 47, 53
National Minimum Wage 55, 59, 101
New Industry, New Jobs 5, 7, 17
Non-Departmental Public Bodies 227-230
Non-Ministerial Government Departments 230
Non-operating income 166
North West Development Agency 228
Notes to the Accounts 155-209
Notes to the Consolidated Cash Flow Statement 193-
194
Notes to the Consolidated Statement of Net
Operating Costs by Departmental Strategic Objective
195
Nuclear Decommissioning Authority 76, 232
Nuclear Trust/Nuclear Liabilities Fund (NLF) 232
Ofcom 230
Office of Fair Trading 58, 230
Ofgem 232
One North East 228
Operating Committee 108
Operating Cost Statement 131-132, 151
Operational Efficiency Programme 72, 76
Other financial assets 172-182
Other financial commitments 198
Payment of suppliers 136
Pension liabilities 136
People Strategy 82-83
Performance and reward 110-112
Performance assessment terminology 21
Performance Report 19-78
Performance summary 20
Personal data related incidents 90
Pilot Task Force for Oil and Gas 232
Post balance sheet events 205-207
Post Office Network 30, 71, 73, 76, 133
Postal Services 71, 73
Postcomm 230
Primary Statements in the Consolidated Resource
Accounts 130, 150-154
Productivity 22-26
Programme costs 170
Promoting Equality of Opportunity 98-104
Prompt payment 29
Providing professional support, capability and
infrastructure 77-78, 82-80-90
Provision for Liabilities and Charges 186-188
Public Accounts Committee reports 238-241
Department for Busine:
Annual Report and Accounts 2008-09
Enterprise and Re
y Reform
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Public Corporations 230
Public sector regulation 47, 52
Public Service Agreements (PSAs) 7, 12, 19, 20
Public Service Agreement (PSA) 1 24-25, 217
Public Service Agreement (PSA) 6 66-67, 217-218
Public Service Agreement (PSA) 7 34-37, 219
Public Service Agreements from previous spending
reviews 220-226
Quality of data for Departmental Strategic Objectives
(DSOs) 211-216
Quality of data for Public Service Agreements (PSAs)
217-219
Real Help for Businesses Now 7, 16, 26, 28
Reconciliation of income recorded within the
Operating Cost Statement to operating income
payable to the Consolidated Fund 166
Reconciliation of net resource outturn to net cash
requirement 165
Reconciliation of outturn to net operating cost and
against administration budget 164
Reconciling Estimates, Budgets and Resource
Accounts 128-129
Regional Development Agencies (RDAs) 33, 38, 40,
42, 93 228
Regional Industrial Development Boards 229
Regional Loan Transition Funds 15, 33
Regional policy 33
Regulators’ Compliance Code 45, 50, 53
Regulatory burdens 47
Regulatory Enforcement and Sanctions Act 2008 45,
49
Regulatory Policy Committee 47, 53
Related-party transactions 205
Remuneration Report 110 - 119
Renewables Advisory Board 232
Reserves 193
Resource Accounts 141- 209
Resource Budget 125, 248
Resources available to the Department 123-127
Restatement as a result of Machinery of Government
changes 207-208
Review of sub-national economic development and
regeneration 28
Risk and Regulatory advisory Council 231
Risks 136
Royal Mail 70-71, 73, 76, 132-133, 230
Salary and pension entitlements for Ministers 113-
14
Salary and pension entitlements for senior managers
115-116
Scambusters 56
Security and resilience 89
Senior Civil Service salaries 111
Service contracts 112
Service Transformation programme 32
Shareholder Executive 70-71
Shareholder Executive's portfolio of businesses 70-
72, 74-75, 76
Sickness absence 85
Simpler Trade Procedures Board (SITPRO) 228
Simplifying and modernising existing regulations 46-
47
Small Firms Loan Guarantee Scheme 189-190
Social and community responsibility 104
South East England Development Agency 228
South West of England Development Agency 228
Staff numbers 244, 251
Staff numbers and related costs 167-168
Staff survey 77, 84
State aid 54, 57, 68
Statement of Accounting Officer's Responsibilities
141
Statement of accounting policies 155
Statement of Operating Cost by Departmental
Strategic Objectives 154
Statement of Parliamentary Supply 130, 150
Statement of Recognised Gains and Losses 130,
132, 151
Statement on Internal Control 142-146
Stocks and work in progress 182
Strategic Investment Fund 17
Supporting Innovation in Services 30
Sustainable development 89, 234
Tangible fixed assets 172
Task forces, ad-hoc advisory groups and reviews 230-
231
Third-party assets 207
Total Departmental Spending 243, 246-247
Trade Credit Insurance Scheme 17, 124, 206
Trade policy 60-61, 63, 68
Tribunal Non-Departmental Public Bodies 229
UK Chemical Weapons Convention National Advisory
Committee 232
UK Commission for Employment and Skills 23-26
UK Energy Research Practitioners’ Panel (UKERP)
232
UK Trade & Investment (UKTI) 28, 38-39, 41, 42, 103,
122, 212, 233
Union Modernisation Fund Supervisory Board 229
United Kingdom Atomic Energy Authority UKAEA
228, 233
Value for money 91-93
Values 82-83
Vehicle Scrappage Scheme 16, 42, 124, 206
Vulnerable workers 59, 68
Vulnerable Workers Pilot Practitioners’ Panel 231
Waste Electrical & Electronic Equipment Advisory
Board 229
Women’s Enterprise Task Force 231
Working Capital Scheme 29, 123-124, 206
Working Time Directive 55, 68
Yorkshire Forward 228
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