UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 823 - i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

DEFENCE COMMITTEE

 

 

THE WORK OF THE MET OFFICE

 

 

Thursday 11 May 2006

Met Office, Exeter

 

MR MARK HUTCHINSON, DR DAVE GRIGGS and MR STEVE NOYES

Evidence heard in Public Questions 1 - 91

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Defence Committee

on Thursday 11 May 2006

Members present

Mr James Arbuthnot, in the Chair

Mr David Crausby

Linda Gilroy

Mr David Hamilton

Mr Dai Havard

________________

Memorandum submitted by Ministry of Defence

 

Examination of Witnesses

 

Witnesses: Mr Mark Hutchinson, Chief Executive, Dr Dave Griggs, Director of Climate Change, and Mr Steve Noyes, Director of Production, Met Office, gave evidence.

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 part of it 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 it, including Government 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 to buy into the privatised commercial market. Equally, I have not seen evidence that says that the best way forward for the Met Office would be to return to Government on a 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 to say because they have the overall responsibility for concluding what happens 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 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 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 proper and the other one was looking at without strategic investment. In our Annual Report and Accounts we simply satisfy key point target two to both components as a single target. In the MoD Report they simply look 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.

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.

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 end targets. We have adapted them to, for example, forecasting accuracy where we used to measure simply scientific skill, particularly in forecasting, by meeting the target we term the NWP index, we added one to the last financial year which did well in the NWP index. It 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 property, which is simply a measure of commercial property 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 2004-05, the financial year which we closed. Notwithstanding that, we are delivering efficiencies in input terms and in pointing 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 2004-05. Again, what I cannot do, but I will be able to do for this current financial year, is start measuring output in terms of measuring the quality, the number, the type of our services which we generate for these and the 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 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 a claim in the sum of £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.

Q20 Chairman: Why is it not a target that you should have that true measure?

Mr Hutchinson: It is something where we have put the foundations in during the last financial year despite it not being a key performance target. Of course, in addition to the external key performance targets we have a range of internal key performance targets which we wish to develop and deliver ourselves; it is a function of manning the business model. A lot of work went on in the last financial year to define better the services that we deliver to a range of customers and to articulate the whole cost of those services. Of course, the main function of the Met Office allows us, I hope this year, to start moving towards true output cost efficiencies in terms of the services. We know the volume that we can deliver, we know the cost of those services and we can measure the efficiency, not just in terms of the money that we are saving, the input reduction, if you like, but also in terms of our services getting bigger and delivering more services for the same money. I think that also counts as an efficiency.

Q21 Chairman: How will we know whether you have achieved that?

Mr Hutchinson: We will have to look at the development of the output costing work which we are currently taking forward in this financial year. In the key performance targets, which have not yet been published for the current financial year, you will see a key performance target which puts the responsibility on me to develop a means of setting output efficiency targets for 2007-08 onwards. We put a building block in place last year and we are putting a further building block in place this year so that by the end of this financial year we will have measurements of every single service we deliver to Government in volume terms and in cost terms. We will need to use that as a baseline in setting an output efficiency target than simply saying, "In unit cost terms we are delivering better output services".

Q22 Chairman: Do I understand that for the next financial year there will be an efficiency key target?

Mr Hutchinson: In the next financial year there will be a key performance target for output efficiencies. In this financial year, with the key performance targets yet to be cleared by our Minister and published, I expect there to be a climate where we need to create the need for an efficiency target next year, in other words we put in place the costed output definitions across our Government accounts this year. That target will be done in two bites. There will be explicit reference in this year's KPT to the need to provide a baseline for setting those key efficiency output targets.

Q23 Chairman: Is that the same as the target you had for the last time?

Mr Hutchinson: No, I think the difficulty we had in 2004-05, and the reason why the efficiency target was not met, was that we were talking about different things and we could not quite resolve the debate in the timescale of that particular financial year to determine whether or not we wanted to set them. Equally, we had difficulty in determining whether we wanted to present output efficiency targets or whether we wanted to do something completely different. We have now resolved that debate, and quite clearly we want to measure our efficiency in terms of services and the cost of those services which we deliver to customers and, hence, we want to create a baseline of output efficiency targets for the future. The activity this year will be to create that baseline and have key performance targets which reflect that requirement, and next year I fully expect that to lead to clear specific output efficiency targets.

Q24 Mr Crausby: Still dealing with targets. The key target relating to the return on capital employed was quite comfortably met in 2004-05 in that the target was 3.5 per cent, yet you have achieved 7.6 per cent. Were you a bit surprised in 2005-06 that the target remained on 3.5 per cent? Were there special reasons why you achieved 7.6 per cent in 2004-05? Did you achieve the 3.5 per cent target in 2005-06 or can you do better than that?

Mr Hutchinson: Again, it is subject to NAO verification, but we believe our achievement in the course of the last financial year will probably come out at a return on capital figure of around 5.3 per cent, so better than the 3.5 per cent target. It is important to recognise that the 3.5 per cent target is meant to be an average performance over five years starting from the financial year 2004-05. Return on capital is affected by a number of one-off issues in terms of the amount of exceptional items that you cater for here or there. We would be mistaken to draw assumptions from the performance in 2004-05 and the performance so far in 2005-06 which indicates that the 3.5 per cent target is too low and it would be inappropriate at this point in time setting the key performance targets for the current financial year because they have not yet been published. We feel 3.5 per cent as an average across the five years is still about right.

Q25 Mr Crausby: Over 12 per cent in the first two years, you have a comfortable three years in front of you there, have you not, or will you do better than that?

Mr Hutchinson: I think our owner would ask us some very searching questions if in the course of this financial year we delivered something that was well in excess of the 3.5 per cent because that would clearly indicate three years into a five-year programme that maybe a 3.5 per cent average was perhaps on the low side. As I say, it is something that the owner and the Met Office debate annually in terms of setting the right target. This year we are comfortable in saying, "This is still an appropriate target", whether that is the case next year, I cannot speculate. It is a five-year average and we are only in year two of it at the moment.

Q26 Mr Crausby: On page 37 of the Annual Report you set out five key targets for the financial year 2005-06. How many of these targets did you meet?

Mr Hutchinson: We have achieved everything in terms of key performance targets, subject perhaps to David Carrion in the NAO, who has not yet confirmed that performance as part of their end of year audit, but subject to that confirmation we will have achieved them.

Q27 Mr Crausby: You just mentioned that these targets have been the discussion of the Met Office and, indeed, the MoD. The targets are a little bit bureaucratic to us, so are they set between you or do you think they are the right targets?

Mr Hutchinson: They are certainly set by our owner formally advised and clearly there is a debate about what targets they wish for and how far we think we can deliver against them but, yes, there are targets set between the MoD and the Met Office. As to whether they are the right targets, I think they measure the right things which give indicators about the progress and performance of the Met Office. We are a trade-run organisation and we exist to exploit an asset which the taxpayers created to bring in revenue that we would not otherwise give the taxpayers to offset the cost and give an ongoing service to the public purse. I think it is right, therefore, that we should have measures on long-term capital and commercial probability. Clearly the nature of the targets is something which is not fixed in stone, so it is perfectly reasonable for the owning department to change its requirements year-on-year, and there are already annual targets. The means exist to adapt and suit the demands of the owner as well as what we feel we want to measure. In Met Office terms, we do not measure ourselves solely by our external key performance targets, we have a range of internal targets which we use to manage the business in all aspects.

Q28 Mr Havard: Are you subject to the resource accounting budgeting processes which are produced by the Treasury as part of that?

Mr Hutchinson: Yes, we are with commercial capital.

Q29 Mr Havard: Are there any particular aspects in relation to that? You are a very capital-heavy organisation with a lot of dead money sitting on the shelves out there as far as accountants would see it. Do you have any particular observations on that process having been introduced?

Mr Hutchinson: I should try and clarify the question. Although the department moves on a resource accounting budgeting process, we, as claimed, operate under purely commercial accounting rules and regulations. The two are not dissimilar. The Mod RAB process seeks to adopt commercial accounting lines but the way they manage themselves, the way they account for capital expenditure, is slightly different from normal commercial business, which is what accountants operate under. In terms of the capital on our balance sheet, yes, you are right, weather forecasting is an expensive business and it is heavy on the infrastructure. With the sorts of assets we have it is our responsibility to use those assets to generate products and services more widely beyond our government public service base to ultimately offset the cost of those services and add infrastructure to the public purse. That is what we try and do.

Q30 Linda Gilroy: Understandably, what you have described in terms of achieving the efficiency targets, if I understood it correctly, is very output-driven and very objective, and that I understand. In developing that, do you have any more qualitative customer satisfaction feedback as part of what I see you are in the process of creating and agreeing, the central Government Customer Service Agreement? Is there qualitative subjective feedback from your customers?

Mr Hutchinson: We do a certain amount at the moment but, to be honest, I do not think we do enough. Part of the work we have been putting in place over the last 12 months through vehicles such as the Customer Supply Agreement, which we are putting in place with our Government customers, will allow us to have a much more important debate about, "We said we could do it", "Did we do that?", "Are we satisfied with what we did?" and "Can we take it from there?" Indeed, we have certainly provided a structure to have a debate with our Government customers about service delivery and satisfaction levels. I think it is just a starting point. The CSA was put in place for the first time ever only a few weeks ago, so it is early days yet. Certainly the intention is there to measure what we do for our customers to ensure that we do the right thing to meet their requirements and take stock of their satisfaction.

Q31 Linda Gilroy: I am also looking at 14, the staff satisfaction benchmark, and that got established 2005-06. Whereabouts are you in the development of that?

Mr Hutchinson: We carried out a staff survey in the early part of this year to provide a benchmark for setting targets in the future. We are in the process now of going through the results of our staff survey, picking out the areas that we want to target. I can tell you now that we have a particular interest in ensuring, during the course of this financial year, we improve the current perception of the Met Office leadership and also ensure that the levels of overall job satisfaction improve. There is a general feeling from the staff survey in the Met Office to date that it is a very good place to work and people are very, very proud of the Met Office and what it does. Certainly with the recent events here there is a certain amount of reaffirmation and restoration of the level of satisfaction and trust in the leadership and business in general.

Chairman: That takes us on to the management of the Met Office and Fabian Hamilton.

Q32 Mr Hamilton: In 2005 both the Chief Executive and the Finance Director left unexpectedly, the former having been in post for just one year. What impact did these departures have on the work of the Met Office itself and, indeed, on staff morale?

Mr Hutchinson: No organisation likes to have a revolving door that moves too quickly. The timing of the departures did have an impact. In terms of the business as such, such things are not unknown outside the Met Office and appointments and successors clearly come into the process and carry on the job. It is fair to say that the circumstances surrounding the quick departure and succession of the Finance Director and the Chief Executive generated a certain amount of short-term anxiety and uncertainty across the Met Office.

Q33 Mr Hamilton: I think people up here understand that turnaround is a fairly common thing after last week's events. It has been suggested that the post of Chief Executive has been downgraded by the MoD and the downgrading will make it more difficult to find permanent replacements and will diminish the influence of the Met Office Chief Executive in the international meteorological community. In what sense has the post been downgraded because you have not been clear on that? What will be the impact of this?

Mr Hutchinson: In terms of grading, the MoD operates a grading system, and it is true to say that the post which the previous Chief Executive occupied had historically been graded at the three-star level, if that is the term I can give. The recent job evaluation post of Chief Executive took place early last year. I believe the formal designation of the post is now a two-star post. In practical terms, I do not believe that has an impact whatsoever. The nature of the recruitment process for the Chief Executive will reflect the fact that we wish to have a proven world-class leader of the Office, and if that leader comes from outside government circles then the salary will be commensurate with the weight of the job. In international circles, the post of Chief Executive of the Met Office is one which has international renown and has a huge reputation internationally. I feel the Met Office status and stature internationally do not depend on the grade of the Chief Executive, it is much more in terms of the quality of what the Office and staff do across the board?

Q34 Mr Havard: Is the appointment of another Chief Executive in a year or so going to lead to yet more uncertainty at the Met Office and, if so, how will this be managed?

Mr Hutchinson: I believe one of the reasons why I was invited to take on the role as Chief Executive in January was to provide that stability rather than to have a movement of Chief Executive every year. There is a generation of stability which I provide over the two year period. In terms of the appointment of my successor, I think that is really a matter for the MoD in terms of the timescale for that and the nature of the job spec, if you like. My understanding is that they intend to do that with effect to find a successor to me by spring next year. I do not think it will have, and I hope it does not have, a major impact, or even a significant impact, on the business direction or the stability of the Office. We are setting a course which I think the new Chief Executive will simply take on and complete.

Q35 Mr Hamilton: Many people are going through a staff appraisal at the present time and one of the questions is about morale. Can you forward that report to the Committee because I think it would be interesting to find out about the morale of staff?

Mr Hutchinson: Of course. We are about to release it to our own staff in a few days' time and I will make sure a copy goes to you, Chairman.

Q36 Chairman: That would be extremely helpful. Do you have any other internal measurement data which you publish to your own staff that you might be able to release to us?

Mr Hutchinson: We have the normal sort of internal management scorecards, if you like. We have a range of performance indicators across a range of our programmes. I do not think that is sensitive and we could provide that if you would find it useful or of benefit. In terms of the measure of staff perception, we do not do much more than what we did at the end of the year in terms of the annual staff survey. That is the thing I should probably send you.

Q37 Chairman: I think that would be most helpful as well. Thank you very much on the issue of WeatherXchange, as a Committee we do not intend to delve into the details of the dispute which exists between the Met Office and WeatherXchange. It is not the sort of inquiry that we would be very well set up to undertake, but there are issues which arise on the accounts which we would like some factual answers to. I would like to start with the £1.5 million investment by the Met Office in WeatherXchange, which itself is a joint venture company that has gone into administration. The memorandum from the Ministry of Defence suggests that the company would be put into liquidation. Has that happened? If not, do you expect it to happen? If so, when?

Mr Hutchinson: The data supply part operation of the joint venture has been sold on. My understanding is that the remainder of the business is now in liquidation, a process which will take several months, I suspect, Chairman.

Q38 Chairman: There were losses in relation to that investment which were expected to be written-off in the 2005-06 Met Office financial accounts. Have they been included in those accounts? If so, what is the total value of the write-off relating to that investment?

Mr Hutchinson: The total value of share capital has been written off. The direct investment for the Met Office in the joint venture amounted to £1.53 million to be precise. That amount will be written-off in the last year's accounts which are currently going through the audit pending process, the total cost of our engagement with the joint venture over the five years of its existence, of course going beyond direct investment in share capital and taking account of staff time and effort from the Met Office, accommodation which the Met Office supplied to the joint venture company as well as some of the charges for services which were waived, or only partially recovered, over the course of the joint venture operation. So 1.5 is the cash investment in the share capital which will be written-off and will be in the past year's accounts, but the total cost of our involvement with the joint venture goes well beyond that. Of course quite a lot of those costs would be incurred regardless because they are part of the Met Office run operation in terms of its staff and accommodation and such like.

Q39 Chairman: Those further costs would not necessarily appear in the accounts at all?

Mr Hutchinson: Certainly they are not of any significance on a sort of annual basis to require that sort of write-off. Clearly insofar as we have not recovered the costs of those services supplied to the joint venture, that has been reflected in the accounts going back a number of years, the history of our involvement with joint ventures. In terms of materiality and significance, they have not required formal write-off action in previous accounts or, indeed, in this account, so the write-off action will be in relation to the share capital.

Q40 Chairman: Are there any other losses which might come into future accounts? If so, how much will that amount to?

Mr Hutchinson: In relation to WeatherXchange?

Q41 Chairman: Yes.

Mr Hutchinson: I am not aware of any future write-offs of the costs. Clearly there are ongoing liabilities associated with our involvement in the joint venture. I do not believe they are significant and I do not believe they will lead to future write-offs, but I think at this stage the answer to are there circumstances where we are likely to generate future write-offs in relation to our joint venture is I fully expect the £1.5 million write-off in the 2005-06 accounts to be, in accounting terms, the end of the story.

Q42 Chairman: Do you have any other joint ventures with private companies?

Mr Hutchinson: We have a Shell joint venture, and there was a paper arrangement structure in relation to a New Zealand concern. The joint venture was called Eco Connect. Our involvement with Eco Connect is not being progressed, so in practical terms we have no active joint ventures. Clearly we have learned lessons from the WeatherXchange joint venture, and whilst I think joint ventures do have a place in progressing our objectives for entering commercial business, I think undoubtedly we could manage those better. Certainly I think at this stage there are no additional active joint ventures which the Met Office is engaged with.

Q43 Mr Havard: We have also written to the Ministry of Defence about some of these issues and we have a viewpoint, not so much about the detail on the WeatherXchange, I do not want to pursue that, as the Chairman said, but what I do want to ask, however, is in the replies they have given us there are references to the MoD having taken steps to ensure that appropriate controls and best practice are now in place to prevent similar circumstances in the future. I would like to hear what you have to say about what those new procedures and controls are in order to deal with avoiding a similar sort of circumstance?

Mr Hutchinson: The main lesson we have all learned from our long engagement with the joint venture was the need to ensure that the structures that were in place to ensure proper governance of our investment in this joint venture were compliant with that. Certainly one of the experiences from the WeatherXchange joint venture was that sometimes decision-making in relation to investments or if a service was supplied to this company, the company did not go through the appropriate governance bodies with that sort of deep scrutiny and audit which should be conducted. Certainly what we have put in place as a result of some of our experience of the joint venture is a much more formalised and structured set of control and governance bodies and stepping from the Met Office board, which was put in place towards the back end of 2004, I believe, through to a greatly enhanced audit control and scrutiny process. We have also separated out the delegating powers within the Met Office so that no one person can make a financial commitment, they have to accept the requirement, state the price but then get financial concurrence from a second person, so there is a degree of separation of powers, delegations and controls, which I think reflects an awful lot of what goes on elsewhere within the MoD. Until recently, it did not really exist in quite the same structured way within the Met Office. Basically, there have been improvements around the control and governance of our investments and the engagement of such concerns. I think also the second issue which came out after our experience was the need to ensure that management information flowed better to those bodies set up with oversight responsibilities for the Met Office, ensuring financial reporting, management reporting, holistic rather than piecemeal, so that people could have a true view of the totality of what we were talking about and we could do a better exercise of due diligence to the Government.

Q44 Mr Havard: When the Annual Report and Accounts 2004-05 refers to changes to the Government's framework, you have just explained what that means but obviously I need to find out what the difference between some of those things are. Sometimes the language gets interchangeable and loses its meaning for people. That was what you referred to in relation to the governance framework. Can I ask you, first of all, are all of these things therefore fully operational 2005-06 because this is the Annual Report for 2004-05? This is now in place and has been in place for some time, has it not?

Mr Hutchinson: Indeed. The new Met Office board - which was new then in 2004 - was put in place with a clear mandate to bring in experience from executive directors with commercial experience to apply the sort of scrutiny and due diligence checks on our commercial activities which we suffered from a lack of before then. Perhaps that was one of the reasons why we got ourselves into the pickle we did over WeatherXchange. That was in place before the final decisions were made about WeatherXchange and was also one of the reasons why some of the experience and some of the findings came out. Yes, all the other things in terms of delegation, control and audit arrangements are now in place.

Q45 Mr Havard: The NSTs, the due diligence and those processes, cover all the other things about best practice of governance, does it, that is what all that means? Can I ask a question, however, which is that you have these non-executive directors and so on, have you looked at the appropriateness of all this with anyone else? Has anyone else independently reviewed these things? For example, have you been to the National Audit Office? Where have you taken advice?

Mr Hutchinson: We involved the National Audit Office from the first in terms of exposing what we thought had gone wrong and what the most effective measures would be. I am pleased to say that the National Audit Office confirmed our view in that we had identified the right lessons from our experiences. They said also that the steps we have taken are the right steps to ensure that those lessons are not repeated in future cases.

Q46 Mr Havard: That leads me to the next question which is where does it go beyond there because quite clearly past experience is going to colour people's attitudes to some degree or another, so it is really a question about whether all this makes other private sector companies cautious about coming forward to enter into any other types of partnerships you might want to do in the future? Can you say something about that? I know you cannot speak for the rest of the world.

Mr Hutchinson: I cannot, but I can certainly speak for the Met Office. We have been taken aback by the failure of the WeatherXchange joint venture to succeed in quite the way we wished it to. I think, looking with perfect hindsight, the concept was the right one. It was an attractive proposition and it was not just us who thought so, some major investors, Billiton and Zions Bank, also thought it was a thing that was worth putting money into. The failure lay not so much in the concept of the joint venture, or the objective of seeking to get into new markets to secure commercial return, it was the failure within the Met Office to properly manage and apply the appropriate governance checks. I do not rule out future use of joint ventures because they have their place in the conduct of a trading environment. Afterall, we are supposed to be looking for innovative, successful ways of offsetting the cost of our operation to the public purse by this sort of commercial behaviour. As I have said in the past, I think we need to improve the way we assess risks, manage investment and take a total view of the package with sufficient commercial experience available to us so we do not let our own naivety and lack of familiarity cloud our judgment.

Q47 Mr Havard: I asked the question for the obvious reasons relating to what I have just said. It is interesting because the number of trading terms and processes are reducing which the MoD are engaged with, and the pathway and partnerships are becoming a much more common currency to us. It is interesting for us to know what your future position might likely be, whether it is the original question asked by the Chairman as to why you are still part of the Ministry of Defence, but also how one is then set in order to be able to maintain a trading position if you do not believe any of this has disturbed you in anyway in relation to that.

Mr Hutchinson: As I said in an earlier answer, I am aware that the MoD is keeping its mind open and reviewing its options in relation to how a trading body such as the Met Office should be managed and directed in the future. As I said, I am not aware of any clear evidence of points which collude to privatisation or to internal voting. The trading position, it seems to me, is about where we are at the moment. If that stays the case, and clearly this is something which is not wholly within the Met Office's gift, I do believe that a trading firm has the right, and indeed in some cases the obligation, to look at ways of securing commercial return, and joint ventures potentially can play a part in that. Our experience with WeatherXchange has not made us more reluctant to go into joint ventures as a principle, they simply have made us very careful about how we go into joint ventures in the future, if we ever do, and to be much more scrupulous about how we manage those ventures in the future.

Q48 Chairman: Does that not amount to the same thing? Does it not run the risk of retreat because you have been bitten once, as you might say, and therefore there will be a nervousness about ever getting into this dangerous area again?

Mr Hutchinson: A certain amount of nervousness has to be expected. As you say, "Once bitten, twice shy", but I think in this case we have learnt the appropriate lessons which, as I said before, was not so much about, "This was a daft idea or a daft vehicle to access a new market", it was much more internal to that in terms of, "We did not manage it very well and we need to learn our lessons from it". I still think the concept of a bench set into a new market with a set of new products is potentially very attractive. As I said before, it was not just our judgment. I do believe we need to keep our eyes open and maintain that innovative risk-taking approach to trading. We are a risk-taking business simply by virtue of our trading status, so I think we need to make sure those risks are properly identified and properly managed. Undoubtedly, that was what we felt most strongly about after our experience with the joint venture.

Q49 Linda Gilroy: The relocation from Bracknell to Exeter was a cost of some £106 million, I wonder if you can run in front of us what the expected benefits were of the relocation and the extent to which they are being delivered?

Mr Hutchinson: If I may pass on to Steve Noyes to talk about some of this because he had the leading role in the relocation project at the time, so he can go into that in much more detail than me. As far as I understand it, the main benefits of the relocation at the time the project was being planned and executed were very much along the lines that we expected to deliver a significant reduction in the operating costs, the payroll costs and, indeed, the cost of the relocation. We had become a smaller organisation with a 500 post difference between the size of the Met Office in Bracknell and the size of the Met Office which is currently in Exeter. Not all of those benefits related directly to location but it was certainly one of the factors which allowed us to downsize and reduce the cost of our operations. Also, one of the big areas we thought we would get major benefit from would be simply co-locating a lot of our activities in one building because in Bracknell we were operating out of many different buildings. Although they were in the same geographical area, you would probably realise how difficult it is for people to talk to each other if they have to walk down a corridor, let alone across a road. The benefits of teamwork interaction across the office and the synergies that will drive in terms of our performance will play a key part to benefit from the relocation. Finally, we hope the specific operation part of the business will be much more resilient given the investment we have made in each of these boards. Those are the main areas where we expect to get benefits. Mr Noyes can probably say whether or not we are on track in terms of delivering those.

Mr Noyes: I will start in terms of where Mark finished, which was on deliverance. Certainly where we stand now is we are doing significantly better in terms of our ability to keep the operation running than we were when we were in Bracknell. We were getting repetitive problems, particularly in regards to power, which caused significant interruptions to services during the end of last year. Having moved down here, our performance in order of magnitude, if not more, is a step forward. That is not to say we have not got any problems, we had some small concerns last year but we are learning from those. As with any new building, as you move into it you learn how to use it. With regard to the performance of the organisation and the way in which the staff are using the building, there is definitely a lot more cross-contamination of ideas which breaks down the barriers between the different divisions and parts of the organisation. That is reflected in the staff attitude survey which we carried out after we moved. We looked at perceptions beforehand and then afterwards and there was a definite improvement in terms of the staff's view in terms of whether or not the new building was helping them to work more effectively and work better in the context of a team. In particular, our teams draw together skills from across the organisation as a whole. With regard to our operational performance in terms of financial, we have moved to a new building with the commensurate running costs and those are running exactly as we would expect them to be, so we are delivering those. The actual services that are also part of arrangements are working effectively as well.

Q50 Linda Gilroy: Are there any specific examples? You mentioned the staff survey as a verification of how cross-fertilization benefits from the co-location, but are there any specific examples which come to mind, things that you think may have come about more easily and more quickly in a more innovative sort of way?

Mr Noyes: There are a number of statistics, but they will be more likely to be on the cusp, so to speak. In particular, if you look at the awareness within the organisation on capability in terms of climate change, when we were based in Bracknell, the climate research scientists were located in a separate building and they are now part of a single office here in Exeter. I think largely as a result of that the expertise and capability which they offer to the organisation is now beginning to be much more integrated into our more corporate thinking. In terms of the sorts of services we may start to offer to customers, we are now able to exploit that much better than we were in the past.

Mr Hutchinson: One very significant example of the sorts of benefits which come out of that closer alignment of our research staff and our operational forecasting staff was seen in the recent forecast we made in the autumn of last year, making a long-range forecast for the winter season. It is certainly possible to improve but I do not believe we have got that sort of connection between what was essentially a research target being brought into the operation of forecasting research capability in quite the same way had we been in Bracknell. I think that offers a hard example of where the joining-up of our capabilities can lead to an outstanding result.

Q51 Linda Gilroy: Following the relocation, has the Met Office been operating at a full manning level? If not, what is the shortfall and what impact is it having?

Mr Noyes: We are, and we are actually bringing more staff than we originally expected to. Our target was to bring about 70 per cent of our staff as a minimum to ensure business continuity, expecting that we would probably have to recruit some more, but in the end we brought 82 per cent from Bracknell down. In terms of our forecast headcount that we budgeted year on year, we have always been there or about right, so there has been no reasonable shortfall in terms of staff nor of skill. Indeed, as a result of moving - and I think we were questioned about whether or not relocating to Exeter would enable to us bring perhaps some of the best and most eminent scientists to the region - we are able to attract very good skills, not just in the science area but across the business as a whole. That is partly because of the environment they work in and in terms of a place to live, but also our salaries are more competitive in the South-West than they were in the South-East.

Q52 Linda Gilroy: You have got a full complement of staff, and I think you are saying to me there are no difficulties in having brought skilled staff down, in maintaining the levels of skilled staff. Are there any pinch points or skill shortages?

Mr Noyes: No. We were aware of where there might be skill shortages so we already recognised them and we managed those risks as part of the relocation itself.

Q53 Linda Gilroy: The other issue affecting staff and staffing levels was the decision to move the production of the majority of weather forecasts to Exeter from other Met Office centres around the UK and the sort of impact this is having on other centres, such as Birmingham and Manchester. Can you tell us a bit about how the decision is being taken forward and what sort of level of savings are perhaps expected from that move?

Mr Noyes: I am sure you are aware the Minister announced plans to do what was described at the end of January, so the decision has now been taken. In terms of a project for delivery, the intention is to move almost all of the work we do by the beginning of winter this year. The focus of the activity at the moment is primarily on making sure that we have the right people in the jobs who can then be moved to Exeter from these various locations. Just recently we completed a recruitment exercise internally, and we are now in the process of moving towards interviewing staff for those jobs. Clearly there are fewer jobs than there were before, so it is a major issue for the staff, and we are treating that very, very carefully and working with the representatives of the trade union and staff directly. The other key activity at the moment is the actual transfer of the activities of staff in terms of the products we give to customers and the technology required for that, so there are two key aspects. One is the management of people and the impact on the staff, and the other is in terms of the services our customers receive.

Q54 Linda Gilroy: We understand that Direct Space Research was undertaken by Sounding Rockets and Satellites Experiments at Bracknell. What was the outcome of this research? How has it been affected by the relocation to Exeter?

Mr Noyes: I am not aware of the exact research you are talking about. We have an experimental site in Bracknell where various research was done on radar and other operational instrumentation. That work is currently being carried out at different locations, but I am not quite sure about the exact research you are referring to.

Q55 Linda Gilroy: The work involved in Direct Space Research, I thought the name of the entity part of the organisation was the Sounding Rockets and Satellites Experiments units. That work is being carried out but not here?

Mr Noyes: I would need to check.

Q56 Linda Gilroy: If you can let us have a note?

Mr Hutchinson: It is certainly not an area that would have been affected by the rationalisation of our production centres, they were not conducting research in quite that way, it would be another aspect of that, but we will find out.

Q57 Mr Crausby: Some questions on the future military Met requirements. The Met Office has run a trial at two RAF bases delivering automated meteorological services to the Army and the RAF delivered electronically from a remote location. Can you tell us something about this trial? When do you expect the results to be available?

Mr Hutchinson: Certainly. I will update you on the memorandum which we sent to you some weeks ago now. Apparently the trial has slightly changed, it is now going to be held at RAF Wittering. I believe the first day of the trial will commence in June, and it will take several months to take stock of all of its products and what the customer in this case thinks of it. Beyond that, I cannot really say. It is a trial which will have a lot of education on both sides. We are trying to move it forward in the light of that education and results, but we are waiting for the trial to commence.

Q58 Mr Crausby: Have you any idea of the scale of savings that you would expect if the trial was successful?

Mr Hutchinson: Not at this stage. Perhaps it is a question which would be more properly addressed to the MoD because, of course, this is a requirement of the Met Office, supplying forecast services to meet their current requirements. Certainly, if the organisation succeeds in meeting the customer's requirements, then the direct consequence of that is we will not require quite so many forecasters themselves to be positioned at airfields across the country. That undoubtedly would generate a degree of resource saving in the Met Office in terms of supplying the customer requirements, but the scale of that at this stage is not something I am proposed to speculate on.

Q59 Mr Crausby: The MoD memorandum also tells us that these trials are part of a broader programme aimed at improving meteorological support to all military users. What are the main elements of the broader programme? How exactly will that meteorological support to the military users be improved?

Mr Hutchinson: I think I have to refer you to the MoD to talk about their broader programme, it is not mine. Certainly the Met Office is engaged fully with the Ministry of Defence to look at how we can play our part in integrating meteorological information into a broader environmental picture which the MoD wish to have. We are playing a big role in the overall debate because, of course, from a defence perspective, it is not just meteorological information, it is a range of environmental issues and we have to integrate them together to generally recognise the environmental picture. That is not something which I have a particular oversight on, so I am afraid I am probably not going to be able to answer your question about how the overall defence programme is structured and proceeds.

Q60 Mr Havard: I will ask this, but whether I have got it right. I have got the FMMR which has shown the need for the FEDEC, which links into the NUC, part of which is BSE, which is overseen by the DI JE, is that right?

Mr Hutchinson: That is almost right.

Q61 Mr Havard: It is not far off. Seriously though, within that there is this - as I understood what you have just said to me - EFC, Environment and Future Capability part of network and capability. I know what these initials stand for and that is sad. As part of that, is that the bit you are now talking about in June? Is that the bit which is being taken forward in the programme you were describing at Wittering?

Mr Hutchinson: That is very much about the Future Military Meteorology Requirement, FMMR; it is an acronym.

Q62 Mr Havard: You are inviting me to go away and ask various questions about these things, so I am trying to figure out what intelligent question there is to ask and then I am going to have to figure out who in this hierarchy I need to ask it of basically. What about this bit in June?

Mr Hutchinson: It should be that every customer gets the same level of service that they are satisfied with from an automated Met product which is not delivered by a team of forecasters sitting on the airfield. That may be done on a computer screen or something. That is what the trial is about.

Q63 Mr Havard: You have an input, and will have an input, through all of these various aspects?

Mr Hutchinson: We are fully engaged.

Q64 Mr Havard: You are engaged with the Intelligence, Joint Environment Capability Infrastructure which develops from that?

Mr Hutchinson: We are fully engaged with defence in terms of explaining and articulating how we can integrate Met data into what they want, which is a much broader environmental set of data.

Q65 Mr Havard: When they said in the memorandum about the concept work which was going to end in February, that did end, and that has also come out in terms of the project running in June, has it not?

Mr Hutchinson: The project running in June is a single input to that work, as your colleague said. It is a broader programme.

Mr Havard: Several of your staff are nodding vigorously behind you, so you have got agreement on that.

Q66 Mr Hamilton: Dealing now with satellites. The Met Office and the MoD are planning to spend substantial sums of money on meteorological satellites over the next ten years. What specific benefits are expected from the investment of some £300 million in satellites over that ten year period?

Mr Hutchinson: If I can offer a preliminary view and then perhaps hand over to my colleague, Dave Griggs. Ultimately the investment in satellites, a bit like the investment in supercomputers, is an expensive business which requires a lot of introductory terms with the deed of gaining observation, which primarily is what we invest in satellites for, a number crunching exercise of synthesising all of that data through a mathematical model to generate weather forecasts, which is what we use the supercomputers for. In terms of the benefit of that investment, it is about gaining increased and improved accuracy of our weather forecasts. That is the ultimate acid test, if you like. Has the investment been worth it? Do you get a more localised weather forecast?

Q67 Mr Hamilton: I just want to follow-up on supercomputers. You are spending more than £21 million on upgrading your supercomputers. How do you justify this expenditure? What will the taxpayer get for this investment?

Mr Hutchinson: If I can ask Steve Noyes to talk about the plans for investment in the next generation of supercomputers.

Mr Noyes: The way in which we are thinking of moving ahead is looking at whether there is a possibility of working more closely with research councils in terms of initially buying the supercomputer that they need and we need together. That is one of the things we are looking at for the future. The next supercomputer we would be looking at procuring will be around about 2009, so that is how far away we are looking. The way that we decide what size of supercomputer we are going to need is very much in discussion with customers. We talk to customers about what they will like to do in terms of services or research activity, of course in the case of Defra the Climate Change Programme, with regular and intensive dialogue about how much work they would like to do and how much supercomputer costs, therefore, would be required to service that requirement. By the time we get to the position where we are making decisions about the next supercomputer we will have agreed with our customers exactly what their requirements are and the funding they will be providing which underpins the investment in those technologies. It is not about us taking risks in terms of investing in something and hoping we can sell the services from it, it is very much a joint decision with our customers, with budgets and funding lines allocated accordingly. The primary funders for our computers are two-fold, the Ministry of Defence in support of the public Met service and defence forecasting primarily, and Defra in support of the Climate Change Programme.

Chairman: Let us move on to the very important area of the Mobile Met Unit.

Q68 Linda Gilroy: The Annual Report and Accounts refer to the Mobile Met Unit as "Our Sponsored Reserve Unit at the RAF working alongside the UK Armed Forces". I wonder if you can tell us what the current strength of the Mobile Met Unit is and how does this compare with the manning level required?

Mr Noyes: Certainly. The total number of military personnel we have on our books at the moment is 74; of those 59 are operational, in training and ready to deploy. The number that we have in the unit has increased significantly in recent years. If we cast our minds back to where we first deployed a unit, which would have been the Falklands conflict in 1982, the number of people in the unit was probably of the order of between 12 and 20 personnel in total. Following that very first deployment, the role which the MMU plays in supporting meteorological operations has been recognised widely, with strong acknowledgement in terms of the benefits delivered by all three of the Armed Services and the coalition services as well. Over the years our numbers have gradually increased because we have been called increasingly to support more operations, but also in terms of making sure that we have enough personnel to respond to major conflicts when they arise. At the moment, as I say, we have 74 personnel on the books, 59 in operation and the rest are in training, either getting forecasting training, civil operational and support training or military training at the moment.

Q69 Linda Gilroy: Given the current UK operations, is there an overstretch problem despite the increases you have just mentioned? If so, how are you addressing it?

Mr Noyes: No, there is not. The way we manage the personnel of the MMU is we have full-time reservists and also part-time reservists, so what we aim to do is surge our manning levels by drawing upon part-time reservists and backfilling with civilian personnel back in on a part-time basis. The fact that we use part of the Met Office and the fact that we have around 200 forecasters in the organisation, we are able to manage that total resource and release MMU personnel required for military conflicts. We were not overstretched. Certainly when there is a major conflict, like we had with the Iraq war, we are stretched, but we are able to respond. With the Iraq conflict we had our biggest deployment ever, we had 6 teams on location in Iraq, which is twice as many as we have had before and we were able to service that.

Q70 Linda Gilroy: How many forecasters have you got deployed at the moment?

Mr Noyes: At the moment we have people in various places. We have two forecasters working in Banja Luka and one in Sarajevo, so that is three in the Falklands. We have a team of five forecaster support and engineering staff working in Basra in Iraq, a single team of forecasters in Al Udeid and two support staff working in Kabul in support of the NATO operations.

Q71 Mr Havard: Can I ask a question about the training part. I noticed that they are helping to try and develop the capability by "training people", for example in Iraq, so that they get used to a certain level of service even though they cannot turn them into doing exactly the same things which our people can do. Are they engaged in that type of training activity elsewhere? The other thing that strikes me is what you said about NATO and other joint activities. How are we engaging in terms of sending people to, if you like, create a common standard elsewhere? Is this a function that they are also fulfilling, in a sense wearing a double hat, because I know the meteorological community by definition is an international community as well?

Mr Noyes: If I can take your question in two parts. The first one would be in relation to training meteorological personnel from other countries where the standards of training would be the best standards applied by the world meteorological community rather than military standards. That is something which we have a long history in irrespective of whether we are engaged in a conflict. We have a college here in the Met Office where we train forecasters, meteorological staff from all over the world and we continue to do so. When we become engaged, either through conflict or we have a particular strong relationship with other countries, for example there is a Commonwealth meteorological community that we are engaged with, we tend to find with some countries that we have a stronger relationship either for a long period of time or a short period of time with particular national meteorological services. Following the conflict in Afghanistan, for example, a number of years ago we developed a very close relationship with the Afghanistan Met service and a large number of their personnel came here to receive their training. In fact, we used Torquay as we were in the process of moving our Met Office college to Exeter. We have had other staff and we are training Iraqi staff as well. That is just a small example of the wider programme of support we give to national Met services, particularly in the context of training. With regard to the other part of your question, which is a joint operation, a coalition operation within NATO, NATO itself has a military Met group which looks at common standards for joint operations, which we participate in as an active member. They work hard to identify a common approach to support those operations. I think it is fair to say that the Met Office is called upon significantly more than maybe some of the other NATO countries because we have a better developed deployment capability than most NATO countries have.

Chairman: You have managed to develop a tutorial?

Q72 Mr Harvard: Deployment. That was part of what was driving my question. We are due to go to the States next week and the need for transformation is an issue which runs across a number of countries. There is a lot of discussion about the issue of capability or contributions and different things. The other thing that interested me was what you were saying about, for example, the Afghan Met service coming here. Perhaps I can ask the Chief Executive, is that a nice little earner? Is that itself part of it? What happens in relation to that in terms of what value do you get, if you see what I mean, and how is such a contribution valued?

Mr Hutchinson: It is valuable in terms of building international relationships and supporting the capability across different boundaries. In practice it has not been a nice little earner in that we view all these things either as part of our international obligation to reconstruct the capabilities in countries where the infrastructure has been degraded by war and/or disaster, so it is part of our broader public duty to act in an international aid way. We do seek to recover the cost of the training but we do not historically treat it as a commercial profit.

Q73 Mr Harvard: No, but you do get relief for it.

Mr Hutchinson: In some cases because the Met Office college runs primarily to train Met Office forecasters, and sometimes these services are run with a marginal cost. It is very much down to the ability of the company to pay and the circumstances in which the need arises; sometimes it is horses for courses.

Mr Noyes: One benefit clearly would be if the UK Ministry of Defence is engaged in an operation somewhere, probably in the first conflict stage where things are beginning to settle down a bit, then the cost of deploying Met Office personnel to those locations, if you can substitute skills from the local community, is reduced, and then it reduces the cost to Defence, the customer and, indeed, taxpayers. There is that aspect as well.

Q74 Ms Gilroy: I am just trying to understand how some of this work comes about on the preventative side as well. I noticed on page 31 of your Annual Report that you were talking about the links with Algeria and the work which is being done there to help them understand the problems severe flooding. This clearly gets into the preventative side of things. I wonder if you can tell us a bit about the links with the Foreign and Commonwealth Office and how the relationship works there with that sort of aspect of what the Met Office is involved in?

Mr Hutchinson: Can I start on that and perhaps hand over to Steve Noyes. It is fair to say that our links with the Foreign Office are increasingly strong, particularly in the light of recent events across the last 12 months. I think they take two distinct forms. One is in relation to the services we can offer the Foreign Office to support UK citizens abroad. The most candid example of that sort of support would be the service we provided to UK citizens holidaying in the Florida region as Hurricane Katrina made its way towards that part of the States. We were able, because of our global capability, to track the likely outcome of the hurricane and predict the impact on the people and the structure in the region. We made that information available to the Consulate and to UK citizens. In terms of the quality of information, it was better quality information, 24 hours earlier than the Americans gave to their own people. The Foreign Office was very impressed by that capability, and we will continue to support them in this current currency for future years. I think the other big strand of our relationship with the Foreign Office and, indeed, with the Department for Overseas Development is the fact that we do support broader international policy aims in terms of our relations and our capability looking across national boundaries. Yes, our engagement with Algeria and our engagement with national Met services is an important part of our role as a public service to support other government departments over PSA targets projected. We do have the capability where we are increasingly keen to use it to rather than simply respond to natural environmental disasters, particularly in Africa, to try and predict them and to organise across government a way which anticipates and prevents rather than simply responds to environmental disasters in other parts of the globe. That is an area where I think there should be more to come. Certainly the relationship is very, very strong.

Chairman: Thank you. I am conscious of the fact that we have asked Dr Griggs virtually no questions. I would just say that is usually a relief to witnesses in front of the Select Committee, and it has nothing whatever to do with a lack of interest in the issue of climate change, which I think most politicians would accept was just about the most important issue that we face. We are particularly proud of the fact that the Met Office is a world leader because of the work that Dr Griggs does. Instead of asking questions, I will, if I may, simply give you that plaudit and say that we are here to examine the management of the Met Office. We have been extremely grateful today for the answers that you have given to our questions and the help that you have given us in our inquiry. I was going to say we have no further questions, but Ms Gilroy has one.

Q75 Linda Gilroy: We have already mentioned that we are going to the United States next week, and clearly climate change always provokes a lively debate with our counterparts in the United States. We will be looking at the ability of our defence industries to do business with the United States. Is it easy to do business with your counterparts in the United States? Have you found in recent years that it is at all possible to work closely with them? I have in mind that when I went there in 1998 I was interested in climate change, then in going to talk to people I found there was no common ground at all because they just did not accept it.

Mr Griggs: We have very close relationships with various levels within the United States. Obviously we have very strong scientific links with our scientific colleagues in the research community in the United States. They have some very interesting climate research capability in the US. On a more governmental level, a good recent example is the CCSP report which is being produced by the US Government to advise itself. We provided three authors, the only three non-US authors on that report. We are providing advice directly to the US through the policymaking in that way and obviously also through the Intergovernmental Panel on Climate Change, which is the UN body which provides assessments on climate change on a regular basis. They have a very high profile on all of those reports that cover virtually all the chapters of scientific assessment which is currently going through its formal assessment report. Of course those reports are all agreed line by line including those governments and the US.

Chairman: That was the last question. Thank you very much indeed.