Select Committee on Defence Minutes of Evidence

Examination of Witnesses (Questions 209-219)


24 MAY 2006

  Q209 Chairman: Minister, good morning. Thank you very much for coming to give evidence to us on a Wednesday morning. We know Mr Hutchinson and Mr Andrews, but I wonder if you could introduce yourselves, nevertheless, for the record. Then I understand you would like to make an opening statement, which we do not usually allow but, given that you have only recently come to your post and given that you would like to set the context for today, a very brief one will be permissible.

  Mr Watson: That is very kind of you, Chairman. If I could introduce myself, I am obviously the new Under-Secretary and Minister for Veterans. I will allow my colleagues to introduce themselves.

  Mr Andrews: I am Ian Andrews, I am the 2nd Permanent Secretary of the Ministry of Defence.

  Mr Hutchinson: Mark Hutchinson, I am the Chief Executive of the Met Office.

  Mr Watson: Chairman, thank you for allowing me to do a very brief statement, and it will be brief—I know Committees can, occasionally, tire when Ministers drag on in their opening remarks. I just wanted to say I was immensely proud when I realised I inherited the Met Office in my portfolio. You can also imagine how delighted I was to realise that your Committee is undertaking a major inquiry into the Met Office, and I was giving evidence two weeks into my new position. It is not every job in Government where you get an organisation that is not only a household brand it is also an internationally regarded scientific centre of excellence and has a crucial role at the heart of Government and in our military operations. I want to say I have already got some news from the Inquiry, and I want to send a signal out to you that I welcome it and I will be looking at the conclusions very, very closely, and if I can act on them I will do as best I can. I think what I have really found in this organisation is that the basics are there: it is a very impressive operation; they have got world-class science, science that benefits a large range of customers, both Government and commercial, and they have got a powerful commitment to bettering the lives of ordinary people. I also see evidence that after a slightly turbulent period of governance they have introduced reforms that meant that last year they had record success in both business and, importantly, in the front-end stuff—the forecasting. They have had some problems and shortcomings but I personally think they are in good shape, and I would hope that in the course of this Inquiry you do not lose sight of the underlying fact that so much about the Met office itself is about people, that it is a positive and successful organisation, and we should be celebrating that.

  Q210  Chairman: Thank you. That is a helpful opening remark and I would be surprised if we disagreed with any of it.

  Mr Watson: A good start then!

  Q211  Chairman: Can I start by saying that the Ministry of Defence is the main customer of the Met Office but is there still a case for the Met Office being owned by the Ministry of Defence, given the work that is done both for other government departments and for the private sector?

  Mr Watson: I am tempted to say that we are the owners of the Met because John Reid did not want to take them with him to the Home Office. There is a rationale, I think, that we are the biggest departmental customer, and we take those ownership responsibilities very seriously. The kind of information they give is important to all departments, but particularly important to the MoD where they really do give us a battle-winning edge in theatre. I think they need a large department like the MoD to be able to provide the support and investment that their future size needs, so whilst, with their current structure, they fit very nicely with the MoD and I see no need for us to move away from that, I do not know whether Ian would like to offer some observations.

  Mr Andrews: Just, really, to reinforce the Minister's point. The MoD has a very strong business interest in the output of the Met Office, it does provide that potentially battle-winning edge in future conflict scenarios, and we depend very heavily on its output and, indeed, in the longer term, with the impact of climate change, that becomes a more and more significant consideration. I think, also, the sheer size of the MoD's budget gives the Office financial security. If it is to be owned in Government there is, in our judgment, no more appropriate department than the MoD to own it.

  Q212  Chairman: "If it is to be owned by the Government". Do you see that there might be any advantages to the Met Office not being owned by the Government or by the Ministry of Defence? You have talked of the risks of loss of that big budget, but would there be any advantages as well?

  Mr Watson: Let me say you will be aware there is currently an internal review going on about the way the organisation is structured, and that is not ruling anything in or ruling anything out. What I think I should say is that if we are to move to a different form of ownership, there has to be a compelling case put, and that is why although I have not seen the review I would be considering that review shortly. Until there is a strong case that we move away from the system we have got now I do not want to set any hares running.

  Q213  Mr Havard: Can I ask you a question, Chairman? Do we have the terms of reference for that—or is that just my stupidity? I do not remember knowing that there was such a review being undertaken and, if so, what the terms of reference are.

  Mr Watson: I have not got them with me but, Mr Havard, we can send them into the Committee if that is helpful.[1]

  Q214 Chairman: That would be helpful.

  Mr Andrews: If I can help to clarify that, Mr Chairman, what we are doing at the moment, in the context of preparations for the Comprehensive Spending Review, is looking at the structure of all of our trading funds. This is, in a sense, a preliminary evaluation of whether there should be a formal exercise. So there are no, I think, formal terms of reference, as such. If we were to conclude this is something, and Ministers decide they want it, to be further explored, then we would have those formal terms of reference.

  Q215  Mr Jones: How do you start reviewing that without terms of reference? I am sorry, Chairman, I do not understand that. I might be a bit thick, but either it is a review or it is not a review.

  Mr Andrews: The question we are asking ourselves is, looking at the current structure, should we be looking at a formal review? If Ministers decide that that is what they want to do then there would be formal terms of reference.

  Chairman: What is the timescale of that?

  Mr Jones: No, Chairman, I am sorry, this is nonsense. What—

  Q216  Chairman: Mr Andrews, what is the timescale of when you would be deciding whether there should be a formal review?

  Mr Andrews: I would expect that we would be putting advice to Ministers before the summer.

  Q217  Mr Jones: What are the questions you are asking yourselves? If there are not terms of reference what questions are you asking to decide whether you should have a review?

  Mr Andrews: What we are doing as part of this process is actually (as I say, this is not just confined to the Met Office; we are looking across all of our trading funds) to look at whether the current structures do actually provide full value in defence terms, in terms of delivering both to the public and to other government departments, looking at whether we have got the right processes in place to lever back value into the taxpayer from the commercial market. The aim of this is not, as I say, to reach definitive conclusions but to be in a position to advise Ministers on whether we believe there are alternative business models that are worth studying in more detail. Therefore, if as a result of that preliminary exercise the conclusion that Ministers took was that we should go and look at alternatives to trading fund, then clearly that would become a formal exercise.

  Q218  Mr Jones: So those three points are your terms of reference.

  Mr Andrews: Those would be the emerging issues that we would want to put to Ministers with terms of reference, if we decided so to advise them.

  Q219  Chairman: Which organisations are you applying these questions to?

  Mr Andrews: These are for each of our trading funds, with the exception of the Defence Aviation and Repair Agency, DARA.

1   See Ev 59 Back

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