Could the DTI be on the way out under a Brown-led administration?

Energy supplies this winter will be 'tight', Trade Secretary Alistair Darling told a Fabian fringe meeting in Manchester, acknowledging that 'Energy has risen up the agenda of businesses in a way that just wasn't the case four or five years ago' and had now become among the top concerns which British business raise with government.

'This year illustrates that the government has a duty to have a coherent energy policy which avoids the problems of last year and this year, where demand outstripped supply', said Darling, speaking at the Fabian and Financial Times Trade and Industry Question Time, alongside CBI Director-General Richard Lambert, TUC General Secretary Brendan Barber and FT Business Editor John Willman. The fringe, immediately following the conference economy debate, was chaired by Liam Halligan, business editor of the Sunday Telegraph and was kindly supported by Scottish Power.

But CBI Director-General Richard Lambert chose not to repeat Digby Jones' claim at the same event the previous year that British business risked seeing 'the lights going out' across Britain. 'This winter the market will be as tight as it was last year. But the uncertainty is less', said Lambert, arguing that there was now much better communication between government and business about the issue. While a particularly severe winter could have unpredictable effects, Lambert said that the futures markets supported his sense of a case for 'sober optimism'.

FT Business Editor John Willman agreed that many businesses now regarded this as among the most crucial infrastructure issues facing UK business, and that it was now up there with taxation, regulation and transport as the issues which businesses around the UK raised. TUC boss Brendan Barber also said that the cost of energy was now the most cited factor in businesses explaining the need to make redundancies.

Darling said that government had taken steps to improve the short-term supply but that the longer-term challenge of ensuring a sustainable security of supply which was at the heart of the Energy Review's long-term strategy, along with need for greater measures in demand management if Britain was to meet its energy needs and carbon reduction targets: 'the challenge for government is to break the link between growth and energy demand … we need to incentivise energy companies to sell you less electricity, not more'

Darling also called for Europe to liberalise its energy market, saying 'The European market system is opaque to put it at its best'. He acknowledged that the UK's difficulties with rising prices and supply issues had perhaps been seen by some EU governments as a reason to delay liberalisation but argued that the delay could only be temporary. 'They are simply putting off the day which they will have to liberalise their markets.' Alastair predicted the move towards a freer market would take place over the next couple of years.

UK planning reform also needed to be a priority, said Darling. 'At the moment, it is very difficult to build anything big anywhere' in a system which was too slow and made too much money for lawyers. He also criticised other parties for professing an interest in the environment at a national level but who locally blocked initiatives such as wind farms.

Development agenda

On the international economy, the panel members all felt that a global trade deal was vital but were highly pessimistic about progress on the Doha round. 'We are not heading anywhere at the moment. Things are absolutely stuck', said Darling. 'It is essential that we achieve a pro-development settlement. But we are stalled. There are hopes of a US move after November's mid-term elections but we will have to wait and see … The United States has got to move; the EU has got to move; Brazil and India have to move. The prize for getting an agreement is immense; millions will pay the price if we don't an agreement. Bilateral agreements are no substitute at all for a global agreement', he said.

Willman agreed that Western governments delaying the conclusion of the talks was 'completely mad'. Barber warned against "brinkmanship" and emphasised the need for movement from the Europeans, 'the importance (of a pro-development deal) can't be exaggerated' he said.

What is the DTI for?

Was the DTI necessary at all, asked one audience member?

John Willman said that there needed to be a strong voice at the Cabinet table articulating the concerns and interests of business when policy proposals came up. Richard Lambert said that the largest functions of the DTI – with over half of its budget on science and innovation funding, and the second largest element being nuclear decommissioning and clean-up – were important and necessary. On the department's business services, some were very valuable but others could be rethought, particularly the focus of the small business support services.

Brendan Barber also supported the DTI, though he felt that the old department for employment had taken a more balanced approach to business and labour while the DTI was seen to take a more 'pro-business' line. 'We don't currently have in government a coherent way of thinking through these issues around the good society, and the role of the world of work in achieving that'.

Alistair Darling suggested that the debate, for example at the last general election, tended to miss the point: government will need to do these functions, and where they were housed was a secondary issue. Hence the scope for savings tended to be much overstated, unless the opp

Darling welcomed the comments of other panel and audience members which showed that a lot of important work was done by DTI staff. But he had also been concerned to refocus the department, for example in cutting small business support services from 400 staff to a core group of 100: 'too many civil servants were employed to lobby other civil servants in Whitehall or simply to 'keep in touch' with industry and business – I don't think that is the best or most effective use of taxpayer's money' said Darling.

Darling also revealed that there had been extensive consideration as to whether employment law might have been moved to the new Department of Work and Pensions in 2002. 'These things have to be done somewhere – but there is no reason in principle why that has to be in the DTI'.

Liam Halligan, from the chair, suggested that the Trade Secretary had in fact made the most lukewarm defence of the department from any of the panel, and did not seem to mind the suggestion that large parts of his brief could be dealt with elsewhere in Whitehall. Could this have been the first hint that the DTI in its present form might not survive a transition to a Brown administration?

Fabian/Financial Times Trade and Industry Question Time took place on Monday 26th September 2006 in Manchester Town Hall. The speakers were Alistair Darling, Secretary of State for Trade and Industry; Richard Lambert, Director-General of the CBI; Brendan Barber, General Secretary of the TUC; and John Willman, FT Business Editor, with Liam Halligan, business editor of the Sunday Telegraph, chairing. The Fabian Society is grateful to Scottish Power for their support of the event.