Appendix: Government Response
1. The MoD welcomes this report, which highlights
the great importance of the work the Met Office carries out, not
only in support of defence activities, but also on wider government
priorities and in delivering a high-quality meteorological service
to the British public. The report rightly draws attention to the
international scientific excellence of the Met Office in weather-forecasting
and in climate-research. It also underscores the priority the
government attaches to the organisation's commercial performance.
2. The MoD agrees with the Committees conclusions
that:
- the Met Office's obligations
to generate income and pursue commercial opportunities have not
had an adverse effect on its public service role, or its service
to the MoD and Armed Forces. (Paragraph 19)
- there is no compelling reason to remove the
Met Office from public ownership at present. (Paragraph 18)
- the Met Office's move to Exeter has been completed
successfully and to the satisfaction of the majority of staff.
(Paragraph 33)
- the Key Performance Target process should
provide value in assisting the Met Office to identify its management
priorities. (Paragraph 43)
- there is welcome improvement over previous
years in the business focus of the Met Office's Key Performance
Targets for 2006-07. (Paragraph 44)
- the customer-supplier relationship is an important
driver of the Met Office's performance. (Paragraph 45)
3. The MoD welcomes the Committee's conclusion that
we have been a supportive owner of the Met Office. The MoD will
continue to provide the Met Office with all the support it requires
to remain a world-class meteorological organisation, and deliver
the objectives set for it by the government.
4. Comments on some of the specific issues mentioned
in the report are set out below.
Possible Co-location of the UK Hydrographic Office
(UKHO) with the Met Office at Exeter
We recommend that the MoD consider further whether
to co-locate the UK Hydrographic Office and Met Office in Exeter.
(Paragraph 22)
5. The MoD notes the Committee's recommendation that
we consider further whether to co-locate the UK Hydrographic Office
with the Met Office in Exeter. Work is in hand to explore this
as one of a number of possible options for the future location
of UKHO. This work will take some months to complete, after which
MOD will take a final decision based on the best overall interests
of the taxpayer.
The Met Office should decide on its own investment
priorities
We welcome the Minister's commitment that the
MoD will fund investment in the Met Office if a robust business
case is made. That investment will need to be substantial if,
as it should, the United Kingdom is to maintain its competitive
edge and remain a world leader in meteorology. We also look to
the MoD to continue to allow the Met Office to decide on its own
investment priorities. (Paragraph 30)
6. MoD has rigorously separated the role its plays
as owner of the Met Office from that of principal customer, precisely
so that customer interests do not unduly influence investment
and other major business decisions. The governance and policy
framework under which such decisions are taken will be set out
in a revised Framework Document to be published shortly.
Year-on-year consistency of Key Performance Targets
We consider it desirable, whenever possible, to
provide consistency in Key Performance Target measures so that
year-on-year comparisons of performance are more easily made.
(Paragraph 38)
7. We agree that published reports should readily
facilitate year-on-year comparisons of performance, by being as
consistent as possible in the overall suite of measures used,
including Key Targets as well as other targets, metrics and indicators.
Within this framework, the composition of the set of Key Performance
Targets may need to evolve year-on-year to reflect changing
business needs and imperatives.
The importance of the Mobile Met Unit to the United
Kingdom's Armed Forces should not be understated. We recommend
that its role and work be more fully reported in the Met Office's
Annual Report and Accounts. (Paragraph 50)
8. We welcome the report's recognition of the valuable
contribution the Mobile Met Unit makes to the Armed Forces. The
Met Office is considering how the work of the Unit can be more
fully reported in future Annual Reports, building on coverage
included in the Annual Report for 2005-06.
Non-Executive Directors
We recommend that future annual reports and accounts
for the MoD's agencies and trading funds provide details of non-executive
directors and the skills which they have been appointed to provide.
(Paragraph 57)
9. The MoD is considering the Committee's recommendation
that future annual reports and accounts for the MoD's agencies
and trading funds provide details of non-executive directors and
the skills which they have been appointed to provide. Details
of Met Office non-executive directors and their skills are included
in the Met Office Annual Report 2005-06.
weatherXchange
The weatherXchange experience has led to greater
awareness of the pitfalls that can arise. Although the lack of
success is a regret, the level of loss should be placed in context.
More than £20 million was generated by commercial activity
last year. The total cost to the tax payer of the weatherXchange
joint venture was of the order of £4.5 million. (Paragraph
64)
We would not wish to see the Met Office and the
MoD overreact to the weatherXchange experience. We were reassured
by the comments of the Minister and the Met Office's Chief Executive
that commercial opportunities will be pursued. (Paragraph 65)
The MoD and Met Office must ensure that future
joint ventures are established with indisputably concrete governance
arrangements and that no conflicts of interest are possible. Furthermore,
the Met Office must do more to test the business case of commercial
ventures, and seek to bring greater business acumen into the organisation.
(Paragraph 66)
10. We welcome the Committee's conclusions on the
Met Office's relationship with weatherXchange. MoD has taken steps
to ensure that lessons have been learned from this experience,
and safeguards are in place to ensure that it could not be repeated
in the Met Office or elsewhere in the department. These include
stronger governance and business scrutiny processes, as highlighted
in the report. These safeguards will not, however, adversely affect
the Met Office's appetite for long-term commercial risk; indeed,
a new "futures" team has been created which will concentrate
on bringing new business opportunities to the market.
Staff Morale
The volatility among the Met Office's senior management
is regrettable. The MoD and Met Office should work to ensure the
organisation does not suffer as a result of that instability and
that staff morale is supported. (Paragraph 69)
11. The MoD recognises that some short-term instability
was caused by changes within the previous senior management team
at the Met Office, and that this has had some impact on staff
morale, as measured by the recent Employee Attitude Survey. The
current senior management team is committed to maintaining stability
of direction, and is working with staff to improve their understanding
of issues affecting morale. A further measure of staff satisfaction
will be taken in due course and we expect the results will reflect
the improvements that are being made at the Met Office.
Grade of the Chief Executive
It seems absurd, given the calibre of the person
the MoD is seeking, and has so far failed to find, that the MoD
has reduced the grade of the post of Chief Executive of the Met
Office. If the candidate is from outside the civil service, as
seems probable given the importance of commercial experience,
their grade will still be important in their relationship with
the MoD and the international meteorological community. (Paragraph
73)
We can find no justification for the proposed
down-grading of the post of Chief Executive. Despite the MoD's
protestations, it is inconceivable that a reduction in grade of
the Chief Executive will have no effect on how that post or person
is perceived within the MoD or international science and meteorological
communities. Given the difficulties in identifying a suitable
permanent replacement as Chief Executive down-grading cannot assist
in finding someone with suitable experience and skills. We recommend
that the MoD reverse its decision and retain the three-star grade
for the Chief Executive. (Paragraph 74)
12. The MoD has given careful consideration to the
Committee's recommendation that the grade of the Chief Executive
post should be increased to 3-star. It remains firmly of the view,
however, that the current grade of 2-star is right. The scope
and weight of the Chief Executive's responsibilities are not as
great as those of those normally associated with 3-star officers.
Nor are there any post-specific factors which suggest that over-grading
would be appropriate in this case. There is no objective evidence
to suggest that grading at 2-star would materially disadvantage
the position of the Chief Executive within MoD or internationally.
Nor should it be an obstacle to the recruitment of future Chief
Executives from outside government, as there is considerable flexibility
over the remuneration of such individuals regardless of their
formal grade. Against this background, the MoD has no plans to
change the grade of the post.
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