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
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
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
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.
A NEW PAN-GOVERNMENT
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.