Memorandum by Intelligent Addressing
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)
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).
The National Land and Property Gazetteer (NLPG)
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.
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:
— 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;
— secondly, the issue relates to a
policy, which emenates from Treasury, but with implications across
other Departments. There is no single Minister responsible; and
— 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.
Q1 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 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.
Q1.2 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.
Q1.3 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 March 20) 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.
Q1.4 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.
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 five years
Q2.1 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.
Q2.2 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.
Q3.3 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.
Q4.4 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.
Q3 What is your assessment of the UK Geographic
Panel's operation since its introduction in 2005?
Q3.1 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.
Q3.2 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.
Q3.3 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).
Q3.4 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.
Q4 Is the current panel's membership sufficiently
balanced with three private sector representatives among its 12
members?
Q4.1 The membership of the Panel should
reflect its remit which, in Q3, we suggest needs fundamental
review.
Q4.2 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.
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."
Q5.1 No. The Select Committee should be
clear that the OS, as it currently operates its business model,
is perceived by the majority of the GI community as an entirely
commercial organisation having no restraining remit of "public
duty".
Q5.2 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. This implies
a lack of understanding of the scope of OS's current commercial
remit and influence.
A perception of a conflict, rather than actual
evidence of abuse, is all that is required for a process to appear
disreputable.
Q6 Does OS use a monopoly position to prevent
fair and transparent competition in the geographical information
market?
Q6.1 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.
Q6.2 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.
Q6.3 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".
Q6.4 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.
Q6.5 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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