Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by Department for Transport, Local Government and the Regions (OS 17)


  1.  Ordnance Survey is an independent Government Department, which became an executive agency in 1990, and has operated within Trading Fund status since 1999. The Secretary of State for Transport, Local Government and the Regions has Ministerial responsibility for Ordnance Survey, and has delegated this responsibility to a Parliamentary Under-Secretary of State. The day to day management of Ordnance Survey is the responsibility of the Director General of Ordnance Survey.

  2.  Ordnance Survey's Framework Document of April 1999 sets out the organisation's aims, strategic objectives, and where accountability and responsibility rests for the Agency's policies and activities. The Ordnance Survey Trading Fund Order 1999 (SI 1999/965) sets out the funded operations, and the assets/liabilities and financing of the fund upon its establishment. A Treasury Minute dated 29 March 1999 sets out the financial objective set for the fund over the period 1 April 1999 to 31 March 2004. This is to achieve a return, averaged over the whole period, of 9 per cent on capital employed by the fund.

  3.  Each year, as required by the Framework Document, Ordnance Survey submits a Business Plan for the year ahead, to the Minister for approval. The Minister, as part of the Business Plan discussions, agrees key targets for Ordnance Survey to meet, and these are announced to Parliament, in common with those of all other executive agencies, in March or April. The key targets announced for 2001-02 are at Annex A.

  4.  During the first two years as a Trading Fund the Ordnance Survey has achieved a return on capital employed of 20.6 per cent (33.5 per cent if an exceptional receipt of £20 million following a copyright action is included). During the current year a small operating loss is forecast, moving to break even in 2002-03, as a consequence of taking forward investment programmes. The expectation is that over 1999-2004 the 9 per cent return on capital should be achieved.

  5.  On the setting up of the Trading Fund it was decided that Ordnance Survey should be able to re-invest surpluses made up to 2003-04 to ensure that they could take forward their e-business strategy to fully facilitate the development and use of geographic data within the UK economy. The expectation is that the investment in new technology will maximise the use of geographic data, lead to reduced prices, yet still maintain a financial return. From 2004-05 they will be expected to make a dividend payment from operating surpluses.

  6.  Ordnance Survey's pricing strategy to their business and consumer customers is therefore determined by commercial considerations that are driven by the average 9 per cent return on capital employed target, and the need to meet the investment requirements of their e-business strategy.


  7.  Stage 1 of a Quinquennial Review of Ordnance Survey was announced to Parliament on 15 February 2001. This review has considered the options for delivering Ordnance Survey's services and outputs. An announcement should be made to Parliament shortly on the Government's response to the recommendations made in the independent report submitted following the review. That report will be published in full.


  8.  DTLR has an interest in Ordnance Survey's pricing strategy as a major user of their data and from having lead responsibility for the existing Central Government Service Level Agreement. DTLR also chairs the Intra Governmental Group on Geographic Information which promotes the wider use of mapping and geographic information.

  9.  The use of Ordnance Survey mapping as a supporting infrastructure to the presentation and interchange of data within and without Government is a key enabler in helping to achieve true joined up government. Recent legislation (such as social exclusion and countryside acts) demands the collation and integration of information from disparate data sources. It is estimated that 80 per cent of all Government data is spatially related. The common referencing medium for spatial information is the digital mapping products of Ordnance Survey.

  10.  Ordnance Survey data already underpins a significant part of government decision making and many government services. With the push for e-government, many more services are being set up which will require access to their data. For example, the e-PIMS (electronic Property Information Mapping System) project being managed by OGC will allow departments to access and update their own property and workspace information, thereby improving decision making and realising departmental savings when acquiring, changing or disposing of central estate properties and workspace. The Forestry Commission is moving its administration of Grant Aid and Licensing of Woodland to be fully electronic to meet Modernising Government targets.

  11.  The production of many cross-government projects/services will require the sharing of Ordnance Survey data. This will require all parties to be licensed to use their data. A recent example is the stamp duty relief within the 15 per cent most deprived wards announced by the Chancellor this week. DTLR through their role in Neighbourhood Renewal are providing Inland Revenue with Ordnance Survey data to help them implement this policy. Inland Revenue does not currently have a SLA with them, and are therefore not licensed to use their data. This will need resolving, whereas if the pan-government agreement was in place this would not be an issue.

  12.  Savings from using Ordnance Survey data are large. For example, Registers of Scotland save an estimated £10 million per year by using their data for identifying land and property boundaries in Scotland. The savings in England are much larger and there is potential for further savings. Many emergencies have had a spatial dimension which have involved analysis of data combined with Ordnance Survey map information. Notable recent examples are flooding, foot and mouth, and the fuel crisis. The ability to spatially analyse the data has enabled quicker response times, reduced costs and made it possible to keep the public and government promptly informed. Traditionally Ordnance Survey has negotiated individual Service Level Agreements with a number of Government Departments and Agencies who used their products. Four years ago an attempt to maximise collective bargaining power was successful in bringing together nine Departments and Agencies in a Consortium, currently chaired by the Environment Agency. Since then, six more Departments and Agencies have joined the Consortium.

  13.  The Consortium acts as a single customer with Ordnance Survey, which has:

    —  created many opportunities for the provision of enhanced public services;

    —  provided improved decision-making and analysis tools;

    —  enabled significant bottom line departmental cost savings; and

    —  resulted in an overall saving to the tax-payer.

  14.  Also, the Scottish Executive has negotiated its own consortium agreement for Scotland, which covers a further 16 bodies. In addition several other central government bodies have their own individual agreements with Ordnance Survey.


  15.  The current consortium agreement expires in March 2002.

  16.  At present about 40 central government bodies actively utilise Ordnance Survey data in their business operation returning £16 million through the various SLAs.

  17.  Ordnance Survey and Central Government are now working together to extend the principle of the successful Consortium to encompass all Central Government bodies in the Civil Service Year Book (CSYB) as a single "customer" for a single Global Fee. This would mean expanding from 40 users to potentially over 500.

  18.  This would allow Departments with an as yet emerging requirement to use Ordnance Survey mapping. The savings would be very significant not only in reduced overall cost, through efficiency savings from using and storing the information, but also in eliminated administrative time spent negotiating individual purchases and agreements. This proposal has been discussed with directors in Ordnance Survey, Office of the e-Envoy (OeE), the Department of Transport Local Government and the Regions (DTLR), Her Majesty's Land Registry (HMLR) and the Office for Government Commerce (OGC) who are very supportive of the concept.

  19.  Unlike the current agreement where the cost to each user is based on usage (which involves monitoring costs), the new agreement will allow unlimited use. In addition users will be able to access all Ordnance Survey national data sets rather than negotiating separately which data they will use.

  20.  The cost of Ordnance Survey data remains an obstacle to a number of government bodies. Major bodies like the Home Office, Department of Health, and the Department for Work and Pensions do not have SLAs for their data, but would like to use it in the near future. The new agreement would facilitate the use of Ordnance Survey data by all these bodies.


  21.  DTLR is responsible for managing NIMSA. This purchases services from Ordnance Survey which it is agreed are in the national interest, and which would not be undertaken for commercial purposes. Payments totalling £14 million were made in 2000-01. These services mainly cover the frequency of updating of mapping in sparsely populated areas and the provision of emergency services. Examples of the need for these are transport accidents and the Foot and Mouth Disease outbreak. NIMSA purchases are governed by an agreement and monitored quarterly by a team led by DTLR.

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