Sajid Javid makes case for BIS ahead of the Spending Review – but hints at shrinking estate

Business secretary tells MPs that axing Department for Business, Innovation and Skills would be a "step backwards". But he asks: "Do we need 80 locations?"

By Sarah Aston

14 Oct 2015

Business secretary Sajid Javid has made the case for his department to live on beyond the Spending Review – but questioned the size of its estate and network of partner organisations.

Originally led by Lord Peter Mandelson, the Department for Business, Innovation and Skills was established in 2009 by merging the Department for Innovation, Universities and Skills and the Department for Business, Enterprise and Regulatory Reform. It was tasked with boosting economic growth in the wake of the 2008 financial crisis.

However, questions around the department’s lifespan have arisen and earlier this year, former Business, Innovation and Skills select committee chair Adrian Bailey expressed concern over whether BIS could survive the next round of Whitehall cuts.

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Appearing in front of that committee on Wednesday, Sajid Javid defended the department, saying it would be “a step backwards” if the government decided to abolish it.

The BIS committee's current chair – Labour MP Iain Wright – pressed Javid on whether the department added “distinctive value” to government and whether its objectives could be met with “a revised, enhanced Treasury and a beefed-up Department for Education and Skills”.

But Javid stressed the importance of having a distinct department to focus solely on economic productivity.

He said: “Some people have indeed suggested that, but I think it would be a step backwards. It’s good to have one department – with all its officials and advisers – thinking about all the bits and pieces that the government can directly influence that have a big impact on business and productivity and employment.

“The Treasury, for example, has got a role to play, of course, but it also has a role to play in government and departmental budgets, so not every decision the Treasury takes is about UK productivity.”

However, the business secretary told MPs he agreed with the decision not to ring-fence the department from spending cuts.

“I think my department should make a contribution to savings and investment, without comprising on the objectives it has. It is right that the government has priorities when it comes to spending, and the government has set [them out] in terms of health spending, schools spending and defence spending,” he said.

As an unprotected department, BIS is expected to produce plans for cuts of 25% and 40%, which, according to Wright, could lead to a potential reduction of almost £350m in the department’s annual expenditure.

Asked by MPs how he planned to meet the targets, Javid said he was looking at the department's “key deliverables and priorities”.

High on that list is “investment that has the biggest impact on productivity”, the business secretary told MPs, but the department is also looking at ways to become more efficient.

“We have had a process that started soon after the election that we’ve internally called BIS 2020, where we are looking at the admin costs of how we run the department itself and whether we are actually getting value for money,” he explained.

“For example, I have 45 partner bodies. Do I still need 45 partner bodies? Are there costs – middle office costs or other costs – that can be shared between some of those bodies?

"I have over 80 locations my department operates in. Do we need 80 locations? I don’t think so. Even taking an individual location – for example our head office in Victoria Street – are we making best use of the floor space we have?

“I think we need to look at all of these issues – which we are – and that itself can save a considerable amount money.”

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