Planned restructuring of DTI angers unions

Under new proposals, unveiled on 22 November 2001, the UK's Labour government is to undertake a controversial restructuring of the Department of Trade and Industry. The overhaul promises to give business a bigger say in strategy development.

The UK's Department of Trade and Industry (DTI) is to undergo a radical and controversial overhaul that looks set to give leading business executives a key role in the formulation of strategy.

DTI reorganisation

The new plans, announced by the trade and industry secretary, Patricia Hewitt, on 22 November 2001, include the following changes:

  • the creation of a seven-strong strategy board to oversee the work of the department and provide central direction to the DTI's overall strategy. The board will be chaired by the secretary of state, who will joined by the department's permanent secretary (Robin Young), one other minister, a senior official and three appointees from the world of business who will serve as non-executive directors;
  • the appointment of a new chief economist as part of a new strategy unit which will supply the strategy board with analysis;
  • the streamlining of the department's business grant schemes (currently numbering in excess of 150) into five distinct 'portfolios', to make it easier for business to identify and gain access to support; and
  • the strengthening of the Small Business Service, alongside the appointment of a small business equivalent of Lord Haskins, who chairs the Better Regulation Task Force, to look at how regulation affects small and medium-sized enterprises.

The above changes go hand in hand with the reorganisation of the department into four central areas. These are:

  • 'Competitive Frameworks', including better regulation, consumer protection, workforce standards and European and trade policy;
  • 'Science, Technology and Innovation', including the Patent Office, innovation and the exploitation of science and technology by business;
  • 'Core Services', such as the employment tribunal service, the Advisory, Conciliation and Arbitration Service and export control; and
  • 'Business Relationship and Support', bringing together teams dealing with different sectors of the economy, regional policy and business support, including the Small Business Service.

Under the main strategy board, four new 'directorates-general' will be created with responsibility for each of the four areas. Each directorate-general will have its own strategy board, with key advisors drawn, once again, from the private sector.

The restructuring of the DTI comes in the wake of a series of governmental reorganisations that followed the Labour Party government's re-election in June 2001 (UK0107137N). These saw the DTI take over responsibility for 'work-life balance' issues, equal opportunities and pay from the former Department for Education and Employment (DfEE), which was renamed the Department for Education and Skills. The DfEE's responsibility for age and disability discrimination issues also passed to the new Department for Work and Pensions (formerly the Department of Social Security).

A 'flagship department''

Announcing the new changes, Ms Hewitt said they were 'designed to make the DTI a flagship department with a clear role and strategy, truly focused on its customers' needs'. In an interview with the Financial Times on 22 November 2001, she insisted that the restructuring would aid the DTI in its core role of working 'with business, with employees and with consumers to drive up UK productivity and competitiveness'. She argued that the reforms would also boost the credibility of the DTI within Whitehall by ensuring that it became the Treasury's 'strategic partner'. Ms Hewitt was supported in her remarks by the DTI's permanent secretary, Robin Young, who stated that 'the closer involvement of business people and other outsiders' was designed to 'make sure we deliver results' and that the department was genuinely 'customer-focused'.

Response of the social partners

The announcement of the new DTI structure received a mixed response from social partner organisations and others such as consumer bodies. Business representatives were upbeat about the changes. Digby Jones, director general of the main employers' organisation, the CBI, welcomed the reforms for strengthening the voice of business within government. 'Patricia Hewitt's initiative has a good chance of creating a more customer-focused department,' he said, adding: 'It could give companies a business champion within government that the CBI has long campaigned for. We made strong representations to the review because of a concern that the business voice was not sufficiently loud within Whitehall.'

However, the announcement provoked a strongly critical response from trade unions. In a letter to Patricia Hewitt, John Monks, general secretary of the Trades Union Congress (TUC), expressed both astonishment and alarm at proposals that had first been brought to his attention by the Financial Times report. The new plans, he stated, could only 'lead to accusations of the DTI being in the pockets of business'. He went on to say that 'yesterday's announcement does not mention social partnership. There is no mention of any proper role for trade union input into DTI strategy.' Mr Monks concluded: 'I find it increasingly difficult to have confidence that the DTI will be even handed, never mind committed to building a better system of employment relations in this country which I would expect to be a central tenet of the beliefs of a Labour government. All this looks like favours to business, not fairness.'

The Consumers' Association accused the DTI of having 'forgotten that one of its key roles is to promote the consumer interest.'

Responding to the criticisms in a televised interview with Channel 4 news on 22 November, Ms Hewitt stated that the changes did not mean business was being granted a privileged voice in policy development, and insisted that the department would remain open to the views of all interested parties and stakeholders.

Commentary

The involvement of senior business figures in the DTI is by no means a novel development. In the 1980s, the then Prime Minister Margaret Thatcher brought in Lord Young to head the department. More recently, the current prime minister, Tony Blair, has given junior ministerial posts within the DTI to former BP chief, Lord Simon, and to Lord Sainsbury. What is new, however, is that business now seems to have been granted an unprecedented degree of external influence in shaping DTI policy. Patricia Hewitt's reforms may strike many observers, therefore, as simply one more illustration of a Labour government anxious to demonstrate its pro-business credentials and further distance itself from the trade unions. The fact that John Monks appears to have heard about the reforms only after the news broke in the press raises serious questions both about the government's commitment to social partnership and about whether the DTI will genuinely reflect the concerns and interests of a wider group of stakeholders in addition to private business.

Significantly, Ms Hewitt's interview with the Financial Times failed to mention employment relations issues. Furthermore, it is not clear what role the existing employment relations directorate will now have in the new-look DTI. It should be noted, however, that the new 'Competitive Frameworks' directorate-general is to take charge of trade policy, regulatory activity, and consumer and employee protection. This may be a further indication of the government's insistence that the case for employee protection will now have to be made in terms of its contribution to the competitiveness and productivity of the UK economy.

At one level, the changes appear to represent a further step in the 'de-institutionalisation' and downgrading of employment relations issues which have been increasingly divided up and 'hived off' to different government departments, starting with the abolition of the former Department of Employment in 1995 by the previous Conservative government. From a European perspective, the reorganisation will take the UK even further away from having the equivalent of a 'Ministry of Labour and Social Affairs'- typical of most EU Member States - with strong social partner involvement in the regulation of employment relations. A different interpretation could be that the changes are more a matter of presentation than substance - and that, in practice, the DTI will still have to take a balanced approach to industrial relations and employment law issues where conflicts of interest between employers and workers are inevitable. (Jonathan Payne, SKOPE)

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