Terms of reference

Origin

The Industrial Development Act (1982) (the Act) empowers the Secretary of State to provide selective financial assistance to industry in England, Wales and Northern Ireland. The Industrial Development Advisory Board (IDAB) is appointed under Section 10 of the Act to advise the Secretary of State on the exercise of their functions under sections 7 (support for industry in assisted areas) and 8 (for industry generally), collectively statutory matters. In Wales, the Welsh Industrial Advisory Board fulfils the same role.

Section 10 of the Industrial Development Act 1982

1. There shall continue to be a board called the Industrial Development Advisory Board appointed by the Secretary of State to advise on the exercise of their functions under sections 7 and 8.

2. The Board shall consist of a chair and not less than 6 nor more than 12 other members.

3. The members of the Board shall include persons who appear to the Secretary of State to have wide experience of, and to have shown capacity in, industry, banking, accounting and finance.

4. If the Board make a recommendation with respect to any matter at the request of the Secretary of State and the Secretary of State exercises their functions under sections 7 and 8 contrary to their recommendation, they shall, if the Board so request, lay a statement as to the matter before Parliament.

Role of IDAB

It is imperative that public funds for supporting industry are allocated appropriately and deliver value for money. The presumption is that IDAB advice will be sought on individual projects and on programmes under which individual projects are evaluated.

IDAB can make a recommendation to the Secretary of State at the minister’s request on any matter and in respect of financial assistance for industry:

A. in assisted areas under Section 7 of the 1982 IDA for the purposes set out below where, in the Secretary of State’s opinion—

(a) the financial assistance is likely to provide, maintain or safeguard employment in any part of the assisted areas; and

(b) the undertakings for which the assistance is provided are or will be wholly or mainly in the assisted areas.

B. under Section 8 of the 1982 IDA for the purposes set out below where, in the Secretary of State’s opinion—

(a) the financial assistance is likely to benefit the economy of the United Kingdom, or of any part or area of the United Kingdom; and

(b) it is in the national interest that the financial assistance should be provided on the scale, and in the form and manner, proposed; and

(c) the financial assistance cannot, or cannot appropriately, be so provided otherwise than by the Secretary of State.

The purposes mentioned in A and B above are:

  • to promote the development or modernisation of an industry
  • to promote the efficiency of an industry
  • to create, expand or sustain productive capacity in an industry, or in undertakings in an industry
  • to promote the reconstruction, reorganisation or conversion of an industry or of undertakings in an industry
  • to encourage the growth of, or the proper distribution of undertakings in, an industry
  • to encourage arrangements for ensuring that any contraction of an industry proceeds in an orderly way

In respect of statutory matters

When providing advice on a statutory basis, IDAB acts as a board, with a quorum of a minimum of 5 members, including the chair. For applications under sections 7 and 8 of the Act, the Board will:

  • provide commercial and financial advice on all large regional support cases (i.e. those above £5 million)
  • provide commercial and financial advice on proposals to make major modifications to existing forms of support
  • provide commercial and financial advice on all new schemes of support

In respect of non-statutory matters/ advice

IDAB will provide commercial and financial advice on large projects that fall outside its statutory remit where the department considers that the Board’s expertise would enable it to improve its decision-making.

How IDAB advice will be sought

IDAB is supported by a Secretariat and all teams wishing to consult IDAB should first contact the Secretariat on idab.secretariat@businessandtrade.gov.uk.

To consult IDAB, teams should present a business case to the Board which meets monthly. When urgent deadlines apply, IDAB can be consulted outside scheduled meetings.

IDAB can be consulted for definitive advice on the basis of detailed papers or more informally on the basis of incomplete information to obtain directional guidance. Early consultation is essential as it allows more scope for advice to be reflected in final cases and facilitates matters of concern to IDAB being acted on.

Use of advice

IDAB will provide its conclusions to the project team. IDAB’s advice will then be provided to the relevant minister prior to final decisions being made.

If ministers wish to provide support which the Board has advised against, and the proposal would represent poor value for money, it is established practice to seek formal Accounting Officer Direction, which goes to the Public Accounts Committee and enters the public domain.

To date, the Board has been content to register its concerns with ministers through this process.

IDAB has the authority under section 10(4) to require the Secretary of State to lay a statement before Parliament if he acts contrary to a recommendation it has made. The Board would use its section 10(4) authority in circumstances where the statutory powers of IDAB were being inappropriately challenged or where it was, in the Board’s view, in the public interest that it should do so and it believed that the seeking of a formal Direction alone was insufficient.

History

Current version: April 2024

Original: February 2013

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