RESPONSE
FROM INTELLIGENT ADDRESSING LIMITED TO
THE CLG
SELECT COMMITTEE IN RESPECT OF
ORDNANCE
SURVEY
Introduction
We welcome the decision by the Communities and Local Government
Committee ("the Committee") to conduct a short follow-up exercise to check the
progress of recommendations made in its 10th report of Session
2001-02 (HC 481) relating to Ordnance Survey.
Issues
of Context
Intelligent
Addressing Limited (IA)
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IA is a specialist private sector SME employing recognised
experts in addressing and data management.
It was created in 1999 to work in a public/private partnership
with the Improvement & Development Agency (IDeA), a subsidiary of the
Local Government Association, helping local government create the National
Land & Property Gazetteer (NLPG).
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The National Land
& Property Gazetteer (NLPG)
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The aim of the NLPG is to improve service delivery to
citizens. It has become one of the
most successful modernizing Government initiatives within local government.
The NLPG improves service delivery by creating and maintaining a
master list of references for all land and property throughout England &
Wales. The process by which the NLPG
is updated improves the currency and completeness of local authority address
data and facilitates the linking of local data (eg for call-centres and
social services) through a shared address referencing system.
The NLPG is already proving its value to local government and
the emergency services in their interactions. It is potentially also of great value to central government and
the private sector. At present it
cannot be licensed for use outside local government on what IA consider to be
fair and reasonable terms because an element of NLPG data was originally derived
from Ordnance Survey.
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Summary
Q1. Boundary definition?: If anything,
the boundaries of OS's activities are now less clear than they were five years
ago because the role of OS was widened and blurred in their Framework Document
(2004) which also drew no distinction between their commercial activities and
public service.
There needs to be a clear definition
of OS's operating boundaries. Separation
of their data collection activities ("upstream") from those which are
"commercial" ("downstream") is vital if other operators are going to be
permitted to work successfully in this market-place.
Q2.
Independent
arbitration?:The government wants to encourage the growth of the UK's
knowledge economy as a means of sustaining international competitive
advantage. Given the central role of PSI
to this objective, it needs to attract re-users of PSI as well as investment
and ideas for new services. These
things will not occur unless the "rules" of engagement are clear, fair and
enforced. In our experience none
of these things are currently the case.
Q3 GI Panel Assessment?: It is
difficult to make any assessment of the GI Panel's operation since it was
introduced two years ago, primarily because little of any substance has been
published. However, we consider that
Government shows few serious signs of appreciating the strategic importance of
Geographic Information to its operations and that, until it does so, the work
of the Panel, whatever it is, will remain undervalued.
Q4. GI
Panel membership?: The
membership of the Panel should reflect its remit which we argue needs
reconsideration. If it is to serve as
an independent advisory body to government it needs a well-respected and
independent Chair and more balanced representation, particularly from the
private, academic and local authority sectors.
Q5 Role of GI Advisor to Government?: It is surprising that such a clear
conflict of interest, which has been so well sign-posted over so many years,
has been allowed to endure by Ministers,
implying a lack of understanding of the scope of OS's current commercial
remit and influence.
Q6.
OS
competitive postion?: OS is the
only source for much of GB's essential geographic reference data. It makes that data available on terms which do
not encourage competition, stimulate an active third-party GI "Value-Added"
supplier market or encourage wider GI uptake.
OS licensing terms are perceived as restrictive and complex and their
prices high and inflexible. Nor does
the Treasury benefit from the current OS business model which appears to have
resulted in an overall deficit on normal operations over the past seven years whilst
prices of their key products have remained broadly static.
Background
1. Over the past six years there have been many
government policy statements about the importance of the public sector
improving its efficiency and service delivery, Sir David Varney's being the
most recent.
2. However, at least one crucial part of the
public sector has a remit which currently cuts across the grain of these two government
objectives. The questions posed by the
CLG Select Committee about Ordnance Survey are aimed at the heart of this
conundrum.
3. On the one hand the government seeks
collaboration across Departments, "partnership working", the sharing of core
data (where appropriate), and joined-up access to government services for
citizens, and on the other hand it seeks to encourage cost recovery on (a few) pivotal
parts of Public Sector Information (PSI) which prevents these things happening
quickly, easily and efficiently.
4. Geographic Information (GI) is a central part
of virtually all government information, although not always recognised as
such. Virtually all government services
are delivered to a "place"; and yet Ordnance Survey, a monopoly supplier of many key datasets relating to place, is
required to operate on a commercial basis and thus imposes barriers - through restrictive
licensing terms and high cost, the value of which cannot always be measured
precisely - on re-users of their data in government and the private sector.
5. There is a further conundrum. On the one hand government wants to
encourage the private sector to innovate, develop and provide choice and wealth
to the economy and on the other hand, in a crucial piece of the information infrastructure,
it has implemented a policy approach which encourages the expansion of its own
monopolistic commercial supplier, inevitably a disincentive to the private
sector as the competitive playing-field appears far from level.
6. We believe there are several reasons why such
obvious conundrums have been allowed to endure:
o First, the issue is not a
vote-winner. It is seen as an
"administrative" matter of "process" and relatively low priority, and the
consequences are normally passed for resolution by those with the power to
question and initiate change in the public sector to those who have neither;
o Secondly, the issue relates
to a policy, which emenates from Treasury, but with implications across other
Departments. There is no single
Minister responsible; and
o Finally, certainly in the
case of Ordnance Survey, some of the potential and necessary changes, directly
threaten what we consider is their overly-comfortable business model. It is too easy for OS to argue (even if
potentially fallaciously) that there will be a net increase in cost to
government or a diminution in the quality of map data if the current policy is
altered.
1. The "need to define the boundaries of Ordnance Survey public
service and national interest work." To
what extent has the position changed in the intervening five years? How clear are the boundaries between the OS
as holder of base geographical products and as a commercial operator?
Q1.1
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If anything, the boundaries of OS's activities are
now less clear than they were five years ago because the role of OS was
widened and blurred in their Framework Document (2004). Specifically, the Document failed to clarify
and define the generic area of OS operations: most nationally important datasets have a crucial geospatial
element but OS has a remit to manage "nationally important geospatial
datasets" but clearly not all such datasets.
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Q1.2
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The recent DCLG response that there is "no
distinction between public service and commercial activity for Ordnance
Survey" does not offer further clarity.
If true, it even raises the possibility that the commercial activities
of OS equate to their public duty.
This could put the OS beyond the reach of the Office of Fair Trading
and Competition Law.
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Q1.3
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Given
the position of OS in the market-place and the scope of its remit, it might be
expected to have achieved a substantial net revenue growth since it became a
Trading Fund. However, growth in
normal "external" operating turnover (excluding the AA settlement,
NIMSA contract and reorganization grants) appears to be about 5% pa since
31/03/1999 whilst product prices (except for AddressPoint) do not appear to
have fallen. Excluding the AA settlement
(as an exceptional windfall) but including NIMSA and reorganization grants, OS's
accounts indicate a cumulative operating deficit for the seven year period
(to 31/03/06) of £433,000.
This
appears to us to be a disappointing performance and well below the general
rate of growth of the information industry; perhaps an indication of the
difficulty that the public sector encounters when expected to act
entrepreneurially.
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Q1.4
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It is our experience that OS is both commercially
aggressive and expansionist (although their results do not imply much success
at either) and that their current remit encourages them to be both which acts
as a brake on wider market development.
There needs to be a clear understanding of OS's operating boundaries. A proper separation of their data
collection activities ("upstream") from those which are "commercial"
("downstream") is vital if other operators are going to be permitted to work
successfully in this market-place.
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Q2 The "clear need for some form of
independent arbitration so that conflicts can be resolved between OS and
its partners and customers." To what
extent has the position changed in the intervening 5 years.
Q2.1
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Since the DTLR Sub-Committee published its
recommendations in 2002, the Office of Public Sector Information (OPSI) has
introduced the Information Fair Trader Scheme (IFTS), the Public Sector
Information Regulations (PSI Regs) have become law, and the Advisory Panel
for Public Sector Information (APPSI) has been formed as an advisory and
further review body (on the PSI Regulations).
All these have been tested by our company in the
past two years. Our conclusion is
that their processes do not offer clarity or certainty of redress because of
a lack of empowerment and resources amongst the appropriate authorities.
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Q2.2
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It needs to be understood that if government
organisations are encouraged to perform commercially then they will
inevitably defend their business models and commercial practices from attack
by potential competitors. The
response to Parliamentary Questions have revealed that OS employ 6 in-house
lawyers and paid over £500,000 in legal fees in 2005/06, a total overhead
which substantially exceeds OPSI's entire annual budget.
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Q3.3
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Therefore, if the government is to self-regulate
(which it tries to do through OPSI), then such self-regulation must be
capable and willing to deal with public sector bodies which are reluctant to
conform. Government is suspicious of
self-regulation in the private sector and should bear its own concerns in
mind when assessing the best way forward.
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Q4.4
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The government wants to encourage the growth of the
knowledge economy as a means of sustaining international competitive
advantage. Given the central role of
PSI to this objective, it needs to attract re-users of PSI as well as investment
and ideas for new services. These
things will not occur unless the "rules" of engagement are clear, fair and
enforced. In our experience none
of these things are currently the case.
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Q3 What is your assessment of the UK Geographic Panel's operation
since its introduction in 2005?
Q3.1
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We consider that Government shows few serious signs
of appreciating the strategic importance of Geographic Information to its
operations and that, until it does so, the work of the Panel, whatever it is,
will remain undervalued.
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Q3.2
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It is, nevertheless, difficult to make any
assessment of the GI Panel's operation since it was introduced two years ago,
primarily because little of any substance has been published. The Minutes are sparse and do not indicate
clear progress towards the completion of a well-defined programme of work.
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Q3.3
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We do not believe the remit of the Panel was drafted
by ODPM in the way that had been anticipated by the DTLR Sub-Committee, since
the Director General of OS retained her role as GI Advisor to Government (the
Panel has only some vague and potentially irrelevant medium to long-term
remit).
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Q3.4
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This lack of a meaningful and valuable role is one
of the Panel's clear weaknesses. The
view of many outside the Panel is that it is currently a vehicle to give
legitimacy to OS's own strategy. The
position needs fundamental review.
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Q4 Is the current panel's membership sufficiently balanced with
three private sector representatives among its 12 members?
Q4.1
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The membership of the Panel should
reflect its remit which, in Q3, we suggest
needs fundamental review.
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Q4.2
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If, for example, it was to become an independent
advisory body to Government then we would suggest it should recruit an
independent and well-respected Chair and have a wider representation amongst
its members, especially from local government, the public utilities, the
private sector and academia.
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Q5 Should the head of a commercially active organisation continue,
ex-officio, to be official adviser to Ministers on "all aspects of survey,
mapping and geographic information."
Q6 Does OS use a monopoly position to prevent fair and transparent
competition in the geographical information market?
Q6.1
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OS is the only source for much of GB's essential
geographic reference data. It makes
that data available on terms which do not encourage competition, stimulate an
active third-party GI "Value-Added" supplier market or encourage wider GI
uptake. OS licensing terms are
perceived as restrictive and complex and their prices high and inflexible.
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Q6.2
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In our opinion, OS licensing terms are designed to
protect the current OS business model which is risk averse but puts pressure on
OS to make a financial surplus. The
model places OS at the centre of the supply chain, focusing on achieving
benefit for OS rather than considering primarily how the UK can best secure
its future geographic information needs.
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Q6.3
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At present no third party supplier can access the OS
base data except through the acquisition of OS products which we consider to
be of "added value".
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Q6.4
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We believe that OS needs to be split in two: an
upstream producer/ procurement activity to meet public sector requirements (ie
to maintain the national geospatial database) and a downstream commercial
activity. The producer activity would
licence data (which it produces or procures) at cost (eg plus 5%) to any
third party on simple and homogenous terms.
In this model OS "commercial" would become a third party supplier.
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Q6.5
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It is worth noting that, in OS's 2000 accounts, the
National Audit Office reports that it had been informed by OS that the cost
of maintaining the National Geospatial Database was £28 million pa, some 30%
of OS's overall cost base at that time. We are not aware of any reason to suggest that the proportion of
OS's costs relating to data maintenance has increased since 1999 whilst the
proportion of staff engaged in data maintenance appears to have declined.
This suggests that a significant cost reduction might
be achieved in the supply of base geographic reference data if it were to exclude
the apparently expensive licensing, marketing, commercial management and
administration overheads which, in our view, should be transferred to OS
"commercial".
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