House of Commons - Trade and Industry

Select Committee on Trade and Industry Tenth Report

IV BUSINESS SUPPORT

81. The Government announced a new target in the December 1998 Competitiveness White Paper, to triple the number of UK small and medium sized enterprises "wired up to the digital market-place", from 350,000 at the beginning of 1998 to 1 million by 2002.[210] As we have seen, the most recent study of UK firms' use of external communications technologies has revealed that, already, around 600,000 firms are regular uses of such technologies.[211] In response, DTI has set three new, more challenging targets to be achieved by 2002:[212]

1.5 million small and medium sized enterprises to be regular users of external communications technologies
1 million small and medium sized enterprises to be "actually trading (ie purchasing or selling) on line"
the performance of smaller firms in relation to information and communication technologies to be "up to the level of the best in the G7".

82. The new targets set by Government are challenging. We commented earlier on the limited use made of new information and communications technologies by companies with fewer than nine employees.[213] There will need to be a step change in the attitude of very small firms to external communications technologies in order for the UK to catch up with the best of the G7 in this area. Also, firms employing only 9% of the UK workforce currently sell goods on-line and firms employing 24% of the workforce make purchases on-line.[214] Although it is not easy to tell how many firms are currently buying and selling on-line,[215] the target of having 1 million small and medium sized enterprises buying and selling on-line by 2002 will be significantly more difficult to achieve than that of having 1 million such firms regularly using information and communications technology by that date.

Competitiveness White Paper

83. DTI's strategy for achieving these targets was set out in the Competitiveness White Paper. We were told that "a wide range of initiatives are being taken forward with the Government's business partners in the Information Society Initiative", including:[216]

completion of the national network of Local Support Centres by Autumn 1999, accompanied by an enhanced promotional campaign
the Advisor Skills Initiative, referred to earlier[217]
a Local Partnership Fund to increase use of information and communications technologies
sectoral/supply chain seminars to develop use of information and communications technologies
development of an E-Commerce Resource Centre on the Internet, available through the Enterprise Zone[218]
the launch on 11 February 1999 of a new national award (the ISI/Interforum E-Commerce Awards) to recognise excellence in electronic commerce.[219]

84. The Government has promised "some £20 million extra", invested through the Information Society Initiative, to help fund the initiatives outlined above. We asked for a breakdown of how this new money would be allocated between projects during the three year period covered by the Competitiveness White Paper but were told, in May 1999, that individual funding allocations had not yet been made.[220] We were also surprised to discover, at the same time, how lacking in detail were several of the initiatives announced by DTI back in December 1998. We were told that work on both the Local Partnership Fund and the supply chain seminars was at an "early stage" and that "no specific financial commitments" had been made towards them. Similarly, proposals for the E-Commerce Resource Centre were "currently being considered with a view to providing an effective and good value for money alternative to developing the Centre from scratch". The Competitiveness White Paper Implementation Plan states that several of the schemes announced in December 1998 will not be launched until December 1999 or January 2000.[221]

85. Another cause for concern is the extent to which the initiatives announced in the Competitiveness White Paper are coordinated with each other and with existing business support structures. Local Support Centres are the centrepiece of the Government's current IT business support strategy and are "embedded in the existing SMEs support infrastructure...eg Business Links in England and Wales".[222] The Local Partnership Fund is intended to be developed with "emerging RDAs in England and the Scottish Office, Welsh Office and Northern Ireland Office and the new Small Business Service".[223] It is not clear how Local Support Centres will relate to the Local Partnership Fund, RDAs and the new Small Business Service, or what will be the role of the devolved assemblies in developing and implementing policy in this area, including in relation to the development of regional strategies to help achieve the Government's targets for the participation of small and medium sized enterprises in electronic commerce.[224]

86. The Minister told us that "we need a communications strategy" for the initiatives detailed in the Competitiveness White Paper "to make sure they are reaching the people they are meant to reach in the way they are meant to reach them, to open up the horizons for them". When we asked about the communications strategy we found that it was rather less ambitious than the Minister described. We were told that it was "an internal media strategy" aimed at exploiting "newsworthy events" to do with the electronic commerce commitments made in the Competitiveness White Paper.[225]There is a danger that the projects outlined in the Competitiveness White Paper are not capable of making a significant contribution towards the achievement of the ambitious goals set out by the Government in relation to the participation of small and medium sized enterprises in electronic commerce. Too many of the initiatives seem ill-thought out and lacking in detail — promising on paper, but, so far, short of substance. There is a worrying lack of attention to the coordination of these projects with existing initiatives, the proposed Small Business Service, new regional organisations and the devolved Assemblies. The Competitiveness White Paper Implementation Plan has proved a useful tool for keeping track of the projects announced by DTI in December 1998. We recommend that DTI publish details of progress made in implementing those initiatives relating to electronic commerce launched in the Competitiveness White Paper, how those initiatives are to be coordinated with regional and national bodies including the proposed Small Business Service, and how they will be evaluated in further Implementation Plans.

Local Support Centres

87. DTI told us that one finding of the 1999 International Benchmarking study was that "business use of Government initiatives and support organisations for access to information about information and communications technologies is high across the whole of the UK and is the highest of the G7 countries." Furthermore, "of those who use them, well over a third made successful changes to their businesses as a result, and over half felt that staff were knowledgeable and the advice relevant to their business." DTI concluded that "this demonstrates the importance that businesses in the UK place on the services supplied by the Government through Business Links and other organisations".[226] Local Support Centres are that part of the Business Links network specifically concerned with providing services relating to information and communications technologies. We have long taken an interest in the Business Link network, including Local Support Centres, focusing on whether they fully meet the needs of business and provide the taxpayer with value for money.[227]

88. We asked DTI how it had evaluated Local Support Centres to date and were told that 60,000 firms had used the Centres in the last twelve months. Evaluation of their usefulness involved:[228]

each Centre providing monitoring reports to Government every six months. "Customer satisfaction rates reported are 85% plus"
existing monitoring of Business Links, which is soon to be supplemented by the publication of information about the impact Business Link services, including Local Support Centres, have on the profitability, turnover, productivity and export performance of assisted companies
identification of best practice for Local Support Centres to follow and of areas of weak performance to be addressed
an "internal economic evaluation" of the Information Society Initiative, which is about to commence.

89. We asked the Federation of Small Businesses for its views on Local Support Centres. In oral evidence they said that "Business Links have very little IT knowledge...and if we get down to e-commerce there is very little knowledge of it unfortunately...Business Links are not providing the service...to the people they are supposed to be assisting".[229] Rather than use Business Links services for advice on information and communications technology, the Federation told us that "the average age of an [IT] consultant in small business was 14 — it was the sons and daughters".[230] Small businesses remain unpersuaded of the usefulness of Business Link services, including Local Support Centres, as providers of advice on electronic commerce.

90. In reply to a parliamentary written question, DTI recently published details of the "local electronic commerce support centres" available in the north west of England. These included twelve "Information Society Initiative centres"; seven (soon to be eight) Technology Management Centres operated by North West Technology Web; the Connect centre in Liverpool; and the ISaware and Gemisis centres in Greater Manchester.[231] The different organisations each recorded usage of their centres in different ways. 2,523 firms had used the twelve Information Society Initiative centres between April and December 1998 while only 350 firms were recorded as using the Gemisis centre between mid-1996 and the end of 1998.[232] e centre^UK told us that Local Support Centres and related organisations "need stronger focus and drive from the centre".[233] We are not convinced that it is desirable for the Government to sponsor the provision of advice on information and communications technology to firms through a hotch-potch of seemingly unrelated organisations. A greater degree of national consistency is required. We recommend that steps are taken to improve the consistency and coordination of the electronic commerce support services offered to small and medium sized enterprises, including clarification of the relationship between Local Support Centres and the proposed Small Business Service.

On-Line Business Support

91. Websites have become an important aspect of the Government's business support strategy. Each Government department and agency has its own website, facilitating access to press notices, consultation documents, command papers, ministerial speeches and the like. DTI has also been involved with the establishment of the Information Society and Enterprise Zone websites, which are aimed at encouraging small and medium sized enterprises to get on-line and to provide them with a starting point to exploring the internet.[234] The Federation of Small Businesses told us about its similarly focused initiative.[235] DTI has also recently launched several internet resources aimed at specific business needs, particularly those of exporters.[236] We welcome the increasing use made of the internet to provide business support services. DTI should ensure that its on-line services are coordinated with the business support services it sponsors off-line.

92. The Federation of Small Businesses told us that many small and medium sized enterprises would find it useful for the Government to expand the amount of information it made available for free on-line. In particular, the Federation argued that the entire statute book should be available on-line, to assist firms' awareness of and compliance with legislation.[237] At present, almost all Acts of Parliament since 1996 and statutory instruments since 1997 are available on-line.[238] Older legislation, including references to such legislation in more recent statutes, is not available on-line. Particularly given the frequency with which new laws refers back to older pieces of legislation, we recommend that the Government consider placing all primary and secondary legislation currently in force on-line.

210 Ev, p200 paragraph 5.3 Back

211 Paragraph 15 Back

212 Ev, pp6-7 Back

213 Paragraph 15 Back

214 Benchmarking, exhibit 6.22, p131 Back

215 Benchmarking bases its research on an assumption that there are 26.6 million company employees in the UK (p182) and does not publish a breakdown by number of employees of how many firms there are in the UK. DTI's 1997small and medium sized enterprise statistics do include such a breakdown, but state that there were only 21.073 million company employees in the UK (on the internet at www.dti.gov.uk/SME4/pn98-597.htm). Using the DTI's 1997 assessment of the number of company employees in the UK, and the average number per company, around 900,000 firms employ 24% of the workforce, perhaps equivalent to the number of firms currently buying on-line Back

216 Ev, pp200-1 paragraph 5.4 Back

217 Paragraph 73 Back

218 See Ev, p4 section 8 Back

219 Ev, p4 section 8, pp259-60 Back

220 Ev, p1 question 3 Back

221 CWP Implementation Plan, section D3: the E-Commerce Resource Centre is due to be launched in December 1999; the Adviser Skills Initiative and Local Partnership Fund are due to be launched in January 2000. "Initial research...to formulate proposals" to build on the sectoral/supply chain seminars is due to begin in December 1999 Back