The Department for Business and Trade has a “limited view” of overall government spending on support for UK companies and sometimes struggles to influence other departments to achieve pro-enterprise policy change, according to the National Audit Office.
A new report from the public-spending watchdog commends DBT for the progress it has made in the two years since it was created from the Department for Business, Energy and Industrial Strategy and the Department for International Trade.
The report says DBT has engaged extensively with industry stakeholders to understand their needs and developed sector plans using its knowledge of the economy – and shares its business intelligence widely across government.
However, the NAO said DBT lacks a “complete overview” of what it and the wider government spends supporting industry, “hindering its ability to make sound decisions in the future and allocate resources strategically”.
The Supporting the UK’s priority industry sectors report says that in 2023-24, DBT reported spending of £790.9m on business grants, of which 62.4% was allocated to advanced manufacturing, 29.9% to energy and 6.4% to “pan-sectoral support”. The single largest programme administered by DBT’s Business Group is the automotive programme, which cost £250.1m in 2023-24.
The NAO said that while DBT tracks its programme spending, grant expenditure and Business Group resource spending across sector teams, it does not have processes to break this down by support type using existing systems.
It added that the department also treats each sector it supports individually, with “limited consideration” of the trade-offs and interdependencies between interventions and between sectors.
The report also notes that DBT needs to influence at least 10 other government departments to achieve policy change that supports business, but says its ability to do so “varies”.
It points out that the Ministry of Housing, Communities and Local Government and the Department for Energy Security and Net Zero both have remits to drive growth, while the Department for Education has a key role on skills policy.
"DBT faces challenges in its relationships with departments who view growth as integral to their own work and therefore have a different approach to growth and prioritisation in those sectors," the report says. “This is increasingly important in the context of the forthcoming industrial strategy and the growth mission, which require even more effective and joined-up cross-government working.”
The NAO concludes that DBT needs to “clarify its role within the wider system, and address identified weaknesses”.
It urges DBT to use the industrial strategy – expected to be published alongside chancellor Rachel Reeves’s Spring Statement later this month – as a base for reviewing its operating model for supporting key industry sectors.
According to the NAO, the department should also “undertake work” to develop its relationships with other government departments – to clarify roles and responsibilities on growth. The watchdog said part of the work should involve DBT learning from its “more mature relationships” to establish effective influencing where it does not own policy levers.
Other recommendations for DBT include considering how it can collate spending to support business in a more useful way; leaning more heavily on evidence when making such decisions; and developing its approach to monitoring and evaluation to better understand what works.
NAO head Gareth Davies said one of the underlying motivations for the Sunak government’s decision to form DBT was to unify business and trade expertise to strengthen the UK’s offer to international investors and give a joined-up offer of support to UK firms.
“DBT was created to provide a ‘front door’ to the UK’s key industries, supporting government’s priority mission of growing the economy,” he said.
“It has made early headway, and now needs to build on its approach to supporting industry and make transparent, informed decisions about where best to deploy its resources.”
Public Accounts Committee chair Sir Geoffrey Clifton-Brown said DBT’s role was central to the government’s ambitions to grow the economy, but that the department was “not yet working effectively across Whitehall to provide a unified voice for business”.
“For businesses and taxpayers to have confidence in the new industrial strategy, DBT must be much clearer about the business support decisions and trade-offs it makes, and ensure these are backed by evidence of what works to drive economic growth," he said.
A DBT spokesperson said: "Growth is at the heart of everything we do, and we have robust systems in place to undertake due diligence when we monitor, deliver and evaluate grant funding to ensure it provides value for money.
“Our modern industrial strategy will prioritise the high growth sectors most promising for future prosperity, creating the right conditions for increased investment and ensuring a lasting impact in communities across the UK.”