BIS and its stakeholders breathed a collective sigh of relief when they learned of the contents of the Spending Review. Scientists, business people, college leaders and vice chancellors broadly responded: “It could have been a lot worse – though the devil is in the detail”.
But while they are relieved, this is only because of the fear of something much worse: rumours swirled about the report into possible cuts across the department and its arm’s length bodies, scrapping research councils, cutting the science budget, slashing student support in both further and higher education and sweeping up small businesses in the apprenticeship levy. Appeals from well-placed scientists, universities and vice-chancellors – both publicly and privately – have paid off.
Now scientists, academics and researchers are getting ready to quibble about details of policy. Will the Haldane Principle – which holds that politicians should not interfere with academic research – be broken in order to keep the science ring fence intact? Will reforms to the Research Excellence Framework, which awards stars (followed by money) to academic departments based on "research excellence" help or hinder the UK's ambition to maintain its world leading research base? Will seemingly small changes to student loans have a detrimental impact on students?
Martin Donnelly interview: the BIS permanent secretary on open leadership, the Spending Review – and the future shape of his department
Spending Review will not mean backsliding on BIS diversity progress, vows perm sec Martin Donnelly
Sajid Javid makes case for BIS ahead of the Spending Review – but hints at shrinking estate
Catch up with KPMG and CSW's post-Spending Review webinar
These are necessary questions. But there is a risk that in successfully defending something similar to the status quo and focusing on the detail, a bigger, more fundamental question has been missed. Should BIS look after business, innovation and skills policy, or should it have bigger ambitions to be a growth department?
The chancellor has said himself that growth is fragile, but it is critical to all his plans. In order to reduce the deficit, compete in the “global race” and meet George Osborne’s target of a surplus by 2019/2020, the OBR shows growth will need to continue at or around 2.4%. This is not a done deal, and Osborne knows it. That’s why he launched a productivity strategy, to close the huge gap between our output-per-hour and that of our competitors. It’s also why he has painstakingly maintained as much growth-driving capital investment as possible in recent years: HS2; an increase in transport capital spending by 50%; repeated commitments to the science budget; and spending on house-building.
But given the importance of growth to the economy and the chancellor’s economic plan, there isn’t as much coordinated focus on it as you might expect. Many key levers of both growth and productivity are within the remit of BIS: competition; (some) regulation; science; innovation; skills; and, business policy. Other levers – tax, business rates, financial regulation, departmental spending, immigration – lie elsewhere (mainly with HM Treasury). In previous years there were attempts to pull those levers strategically in order to drive growth. Our Treasury is large and broad in its scope, incorporating a finance ministry, a budgetary ministry and an economics ministry. Some would argue that there is a strong case for separating some of these functions from the exchequer function, and that it would make sense to give them to a single department, charged with coordinating policy across government to drive growth across all sectors and all regions.
So after breathing a sigh of relief that BIS didn’t suffer the cuts some had feared, we should stop thinking about reforms to BIS as protecting the status quo. Instead, we should raise our ambitions for BIS to become the Department for Growth.