Examination of Witnesses (Questions 1-19)
MR MARK
HUTCHINSON, DR
DAVE GRIGGS
AND MR
STEVE NOYES
11 MAY 2006
Q1 Chairman: Good afternoon. Usually
when we start a Select Committee we would firstly say, "You
are welcome to the House of Commons", but this time we have
to say we are most grateful to the Met Office for your hospitality
in allowing us to come to take evidence in this inquiry into the
Met Office. Mr Hutchinson, thank you and to your team very much
indeed for the welcome you have afforded us. I wonder if you would
like to introduce yourselves for the record at the start of this
evidence session.
Mr Hutchinson: Thank you, Chairman.
Firstly, may I formally welcome you to the Met Office. I am glad
you found the morning useful and interesting. May I introduce
my colleagues. On my right is Steve Noyes, who is our Director
of Production, and on my left is Dr David Griggs, who is the Deputy
Chief Scientist and Director of the Hadley Centre at the Met Office.
Q2 Chairman: May I start with an
opening gambit about the ownership of the Met Office. You are
owned by the Ministry of Defence, is that an historical anomaly?
Mr Hutchinson: It is certainly
historical; I am not sure I would say it is an anomaly. Defence
does remain our largest single customer and a lot of our requirements,
in particular the whole global capability, are very much a defence
requirement. It is quite a comfortable fit in terms of what we
do and who we are owned by. Of course, our services go well beyond
the Ministry of Defence, we supply services across a range of
Government departments and directly to the public. It is hard
to find any one single Department that would be a better fit than
the MoD. Certainly it is a relationship which we are quite comfortable
with.
Q3 Chairman: Should you be owned
by the Government at all? Could you be a commercial company which
could operate in the private sector?
Mr Hutchinson: I think we need
to keep an open mind on such questions. Certainly I am aware,
in the context of the current Spending Review, that the MoD and
the Government generally are reviewing the status and the future
plans for all of its Trading Funds and Agencies. I have to say,
as things stand at the moment, I do not see overwhelming evidence
that points conclusively to say that the best way forward for
the Met Office is via a privatised and commercial route. Equally,
I have not seen evidence that says that the best way forward for
the Met Office would be to return to Government on an on-vote
agency basis. I think where we currently are as a trading organisation
feels about right for the time being.
Q4 Chairman: Can you tell us about
the relationship you have with the UK Hydrographic Office? It
is described as a "sister-agency" in the Annual Report.
What has happened, if I may ask, to the discussions that I think
there used to be about a merger between the two organisations?
Did those discussions continue? What is the status of it?
Mr Hutchinson: Chairman, I think
such questions are primarily for the MoD rather than for me because
they have the overall responsibility for concluding what happens
to their Agencies and whether they think it is a good idea or
not. I am not aware of the previous discussions so I cannot update
you on the outcome of those. Certainly, as things currently stand,
we are not aware of any current push to create a merger of two
agency functions. We are certainly working very closely with the
Hydrographic Office to share accommodation or capability or in
some way to look at merging some of our corporate functions to
save costs, but that is not the same as looking to merge the two
agencies into a single one. I am not aware of any current debate
about such a proposition.
Q5 Mr Crausby: You answered that
very well. What about the advantages and disadvantages? Can you
perhaps develop that a bit more on bringing the two together?
Mr Hutchinson: They operate a
sort of slightly different business model. The Hydrographic Office
essentially pulls together data from a range of sources and its
business is very much based on the marketing and selling of that
data to a range of users. Our business model is slightly different
in that we look at data simply as a starting point for us and
then apply a lot of mathematical modelling to it and synthesis
and analysis to generate forecasts. The two businesses are not
exactly peas in a pod in that sense, but certainly they are nearby.
There are potentials in developing theoretical advantages in terms
of if it were possible to put them into one sort of site or if
it were possible to merge the supporting functions to support
them too, then they would certainly generate potential value.
It is an issue between theory and practicality because, as things
currently stand, neither side has the capacity. We need to identify
efficiencies and savings within what we think is practically possible.
Beyond that, I simply would not be comfortable to speculate because
such matters are for the MoD to determine.
Q6 Chairman: Can I get on to your
accounts now and the key targets. The Ministry of Defence's Annual
Report and Accounts 2004-05[1]
says, on page 210, that the Met Office met four of its seven key
targets in 2004-05, but the Met Office's Annual Report we have
on page 36 says that the Met Office met three of its six key targets.
How many key targets did you have? How many did you meet? Why
is there a difference between the two?
Mr Hutchinson: We had six key
performance targets in the financial year in question. The second
of those key performance targets was subdivided into (a) and (b).
In the MoD report they simply classed those two sub-components
as separate KPTs, so the six became seven in that respect. In
terms of performance, we hit three out of the six.
Q7 Chairman: I still do not understand
why there is a discrepancy between the two. Why are they not drawn
up on the same basis?
Mr Hutchinson: They were, Chairman.
In describing the performance against key performance target number
two the actual target was expressed in two ways: one was looking
at strategic investment profit and the other one was looking at
profit without strategic investment. In our Annual Report and
Accounts we simply classified key performance target two with
both its components as a single target. In the MoD Report they
simply at both components counting them twice, if you like, so
six became seven in that respect. The targets are exactly the
same, it is just a different way of counting them. In the MoD
report they counted the sub-components individually as key performance
targets, whereas in our report we put both components against
a single key performance target.
Q8 Chairman: Was there any discussion
between the Met Office and the MoD before those two methods of
treating the same target were treated differently in the accounts?
Mr Hutchinson: Not that I am aware.
I think it was simply a clerical error, to be honest, Chairman.
It is clearly a single key performance target, it just has two
components to it. I think it is wrong to describe it as two separate
key performance targets, which is what the MoD report has done.
Q9 Chairman: But it was there?
Mr Hutchinson: I cannot put hand
on heart and say that, Chairman, I simply do not know the facts.
I am happy to investigate and provide you with a note.[2]
Q10 Chairman: Would you mind, bearing
in mind in the future that these accounts are intended for the
enlightenment of outside readers as much as for inside readers,
it would be helpful if they could be comprehensible as between
the two organisations.
Mr Hutchinson: That is fine.
Q11 Chairman: Why was 2004-05 a challenging
year as you describe it in your Annual Report and Accounts?
Mr Hutchinson: It was challenging
for a number of reasons, I think. Firstly, we sustained a significant
commercial challenge in terms of competition to our role in the
marketplace. That undoubtedly posed challenges for our commercial
performance in the year in question. It was the principal reason
for our failure to achieve that particular key performance target
in terms of commercial capability. The second challenge was in
relation to bringing on-stream improvements in our ability to
forecast the weather accurately. We were engaged in a major programme
to improve our data assimilation to generate better weather forecasts.
That was a complicated process and a complicated project. It did
not deliver the results in the year quite the way we had planned
and anticipated, but I am pleased to say it is now bedding in
and delivering the benefits that we want, just slightly later
than we planned. The key performance target still had assumed
that the benefits would be flowing through in the year in question
and we got it slightly wrong. We fell quite short on that NWP
index which measured our forecasting skill.
Q12 Chairman: Do you think this year
you will not fall short?
Mr Hutchinson: Subject to NAO
verification, which is yet to be complete, I am pleased to say
that this year we think we will achieve all the key performance
targets.[3]
Q13 Chairman: All of them?
Mr Hutchinson: Every single one.
Q14 Chairman: Have your targets changed
for this year?
Mr Hutchinson: No, they have been
very much an extension of the previous set of targets. We have
adapted them to, for example, forecasting accuracy where we used
to measure simply scientific skill, that went into forecasting,
by meeting the target we term the NWP index, we added one to the
last financial year which as well as measuring the NWP index also
measures the accuracy of our weather forecasting across 11 locations
across the United Kingdom. There is a dual measure of our forecasting,
so we have expanded our key performance targets to provide that
sort of information. We have also expanded and simplified our
commercial profitability KPT, simply to be a measure of commercial
profitability rather than as previously where I think we tried
to distinguish between new growth and existing business.
Q15 Chairman: You think you are going
to meet the forecast accuracy. What about your accuracy compared
with other equivalent organisations in the world? Do you benchmark
your accuracy against other countries' Met Offices?
Mr Hutchinson: Yes, we do. Indeed,
under the umbrella of the World Meteorological Organisation, which
is a UN body that sits across all national meteorological services.
In terms of the WMO meteorological standards we currently come
out as number one in terms of operational forecasting accuracy.
The closest comparator to us is the European Centre for Medium
Range Weather Forecasting, which is based in Reading, and they
have a slightly better figure on forecasting accuracy than the
Met Office but in their case they have longer to work at the data
because they do not issue operational weather forecasts, they
simply indicate a long-range, medium-range weather forecast, so
they have more time to get more data for their forecasts. In terms
of operational Met services from WMO's judgment, we are number
one.
Q16 Chairman: If you are going to
meet all of your targets, one of the targets which you have missed
I am afraid was the target of developing a new efficiency measure.
Is that right?
Mr Hutchinson: Based on the year
2004-05?
Q17 Chairman: Yes, for 2004-05 it
was not achieved, but do you expect to achieve that target this
year?
Mr Hutchinson: We have not set
a target to create an efficiency measure and a KPT in 2005-06,
the financial year recently closed. Notwithstanding that, we are
delivering efficiencies in input terms. In other words I can point
to the reduction in our costs for delivering the same services
and generating that level of efficiency. Currently our programme
is in the amount of £6 million in the course of 2005-06.
Again, what I cannot do, but I will be able to do for this current
financial year, is start measuring output efficiencies in terms
of measuring the quality, the number, the type of our services
which we generate for the unit cost of those services.
Q18 Chairman: You are saying you
will be generating efficiencies without saying that you will be
generating any measure of that efficiency, is that right?
Mr Hutchinson: I am trying to
explain, Chairman, that we would like to be able to measure efficiency
in terms of unit cost of production, so we have a particular service
and we can demonstrate that the cost of that service, as we measure
it in terms of delivery, is getting cheaper over time. Whether
we build up more of a service for the same money or less of a
service for less money is something which we are not currently
capable of doing because we do not know our services in quite
those output terms. At the moment, all I can point to is the fact
that we have reduced our costs and are delivering the same level
of services as previously. Therefore, in input efficiency terms
we can generate and claim some £6 million of improved efficiencies
in the course of the last financial year.
Q19 Chairman: Do you think there
is any value in continuing to try to develop a particular measure
of efficiency or have you abandoned that as a task?
Mr Hutchinson: No. I would agree,
Chairman, there is value in creating that measure of efficiency.
The measure I would like to create—which I think the work
in the last financial year allows me now to create in this current
financial year—is a measure of output efficiency, in other
words, measuring the volume, the type of services we deliver,
the cost of those services and hopefully breaking it down by unit
cost of the services we deliver, so we have a true measure of
our output efficiency, not just a measure of how much money we
have saved.
1 MoD Annual Report and Accounts 2004-05, HC 464. Back
2
Ev 50 Back
3
Note by Witness: This refers to financial year 2005-06. Back
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