Science in the Met Office - Science and Technology Committee Contents


2  The organisation

Ownership

4.  The Met Office was founded by Vice-Admiral Robert FitzRoy in 1854 as the Meteorological Department of the Board of Trade; it has provided weather forecasting and related services for the UK for over 150 years.[7] It was established as an Executive Agency within the Ministry of Defence (MOD) in 1990 and has operated as a Trading Fund since 1996.[8] As a Trading Fund, the Met Office is "required to operate on a commercial basis and meet agreed targets as set by [its] Ministerial Owner".[9]

5.  Over recent years there have been sporadic reports about successive governments considering privatisation of the Met Office.[10] During our visit to the Met Office facility in Exeter, we heard that privatisation would be almost impossible due to the Met Office's reliance on international partners to provide it with data, which in some cases would not be allowed if it were a commercial organisation. Mr Edward Davey MP, Minister for Employment Relations, Consumer and Postal Affairs, told us that "the Met Office only owns 4% of its data", its work is dependent upon huge amounts of data that are exchanged internationally and "therefore, one has to take account of global opinion" when thinking about the future of the Met Office.[11] The Minister confirmed that the Government had "no plans to privatise the Met Office".[12] He added that it would be "deeply irresponsible" to privatise the Met Office on the grounds of the need to "fill a hole in the Government's coffers".[13] The Minister explained that achieving efficiencies was another reason why agencies are sometimes considered for privatisation but that the Met Office was already "pretty efficient" and the Government was looking at "other models to drive efficiency".[14] We welcome the Minister's comment that the Government has no plans to privatise the Met Office and agree with him that it would be deeply irresponsible to do so on the grounds of the need to fill a hole in the Government's coffers.

6.  On 18 July 2011, responsibility for the Met Office moved from the MOD to the Department for Business, Innovation and Skills (BIS).[15] While it may be too early to comment on whether this new governance framework is working effectively,[16] we heard that the move brings the Met Office closer to the Research Councils and provides the potential to further enhance the relationship between the Met Office and the research base.[17] Housing the Met Office within BIS may also be conducive towards greater coordination, collaboration and integration with partner institutions in both the public and private sectors at home and overseas.[18] The Minister added that within BIS, under the Shareholder Executive and the Public Data Corporation, there will be extra support available to the Met Office for commercial activities.[19] We consider it too early to comment in detail on the Met Office's move from the Ministry of Defence (MOD) to the Department for Business, Innovation and Skills (BIS). However, we welcome the potential for closer links between the Met Office and the research base, as well as the opportunity for the Met Office to develop its commercial activities further.

7.  In 2006, Peter Ewins, former Chief Executive of the Met Office, noted during an inquiry by the House of Commons Defence Committee that there had sometimes been "confusion" between the Government's role as owner of the Met Office and its role as a principal customer.[20] Since the move to BIS, responsibility for the Met Office has been split between two Ministers, reflecting this concern.[21] Edward Davey MP is responsible for the "ownership function" and the Minister of State for Universities and Science, Rt Hon David Willetts MP, is responsible for the "customer function", including acting as the customer for the Public Weather Service (PWS).[22]

Costs and revenues

8.  In 2010/11, Met Office costs were £186.7 million, and it generated revenues amounting to £196.1 million. The Met Office has a largely static fixed cost base which breaks down into three broad categories:

i.  Staff costs;

ii.  International obligations—the Met Office is the UK representative on a number of international treaties (primarily, the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT), the World Meteorological Organization (WMO) and the European Centre for Medium-Range Weather Forecasts (ECMWF)) and has commitments to satellite programmes of 20+ years; and

iii.  Infrastructure—primarily property, observing infrastructure and IT infrastructure, including supercomputing.[23]

9.  Met Office revenues are secured and managed contractually. These contracts fall into three broad categories:

i.  Government Customer Service Agreements (CSAs)

There are currently three CSAs:

  • The PWS, funded by BIS, the Civil Aviation Authority and the Maritime and Coastguard Agency;
  • The Defence Service, funded by the MOD;
  • The Hadley Centre Climate Programme (HCCP), funded by the Department of Energy and Climate Change (DECC) and the Department for Environment, Food and Rural Affairs (Defra).

ii.  Other Government contracts

Contracts to provide other specific weather-related services and products to government departments.

iii.  Commercial contracts

A range of value added products and services delivered across a number of market sectors with open competition (these include contracts with broadcasters).[24]

The breakdown of revenues across these categories in 2010/11 is shown in figure 1.


Figure 1: Met Office Revenues, financial year 2010/11 (CSA - Customer Service Agreement)[25]

GOVERNMENT CONTRACTS

10.  Government CSAs are supposed to be multi-year contracts covering primary Met Office services.[26] However, John Hirst, Chief Executive of the Met Office, told us that currently, only the PWS contract runs for more than a year, the HCCP has an unsigned contract, and the Defence contract is "for no fixed term".[27] He explained that this creates "uncertainties and difficulties in resource allocation" and that as the Met Office "requires a long-term perspective" for "scientific and operational development", this results in some "tensions".[28] Mr Hirst added that it would be better if the Met Office had a slightly longer-term perspective of two or three years funding to which its customers were clearly committed.[29] While the Minister was sympathetic about these concerns, he stated that "there have never been very long funding arrangements" for the Met Office and that the current financial climate made it "more challenging".[30] He added that while it was difficult to specify exact levels of funding, following the Spending Review in 2010, the "big totals" were "there for all to see" and that "that should give some comfort".[31] Given that the Spending Review provides headline figures for spending in Government departments for the next three years, we conclude that it is not unreasonable for the Met Office to expect clearly defined funding commitments from the Government over that period. As a matter of urgency, the Government should ensure that its Customer Service Agreements (CSAs) with the Met Office are signed and that these CSAs are truly multi-year agreements. Furthermore, we recommend that the Government sets out its minimum funding commitment to the Met Office for each year of the current Spending Review period by the end of this financial year.

11.  The benefit of having a contractual relationship between the Government (as customer) and the Met Office (as supplier) is that it focuses both parties on providing products and services that match the customer's exact requirements.[32] However, Government CSAs are not legally enforceable.[33] This caused problems in 2009, when the MOD withdrew £4.3 million funding from the Met Office's HCCP with only three months' notice.[34] In a subsequent review by the Government's Chief Scientific Adviser, Professor Sir John Beddington, it was stated that while DECC and Defra were able to replace most of the funding shortfall for that year, long-term stability continued to be a problem.[35] To address this, Sir John recommended that the Hadley Centre be governed by a single department, most logically DECC.[36] However, following the review, DECC and Defra agreed joint management of the HCCP.[37] Mr Hirst suggested to us that stable long-term funding remained a problem, particularly for the HCCP and the Defence Service.[38] In the light of this, we asked the Minister whether he thought the HCCP would be better managed by a single Government department, as recommended by Sir John. In response, he indicated that DECC and Defra would be signing a Memorandum of Understanding (MoU) in order to give the Hadley Centre reassurance.[39] In a supplementary written memorandum, the Government stated that the MoU approach would "provide a greater level of stability than the current contractual relationship".[40] We were also told that signing of the MoU was deferred in 2011 due to uncertainty over the future status of the Met Office.[41] Another option to provide greater stability would be for the Hadley Centre to be governed by a single parent department. The strong customer relationship between the Hadley Centre and non-parent departments could then be maintained through, for example, the Hadley Centre Science Review Group (or a similar Hadley Centre Climate Programme Customer Group, see paragraphs 14 and 25), which already includes representatives from DECC and Defra, and is tasked with asking whether the Met Office is delivering science that is appropriate to their needs.[42]

12.  It is our view that the Hadley Centre Climate Programme (HCCP) should be managed by a single Government department, as previously recommended by the Government Chief Scientific Adviser. A less satisfactory alternative would be for the Government to ensure that the Memorandum of Understanding between DECC and Defra is signed as a matter of urgency.

13.  In BIS, the customer relationship with the Met Office is managed through the Public Weather Service Customer Group (PWSCG). The PWSCG's wide remit is to ensure that "Government is obtaining best value for money, setting and measuring performance against focused targets and ensuring that the public are afforded the protection provided by the latest scientific knowledge and understanding".[43] To the best of our knowledge, there is no similar group that oversees the services under the Defence CSA and asks whether the Met Office is delivering science that is appropriate to the MOD's needs. However, the Defence CSA is "supported by annual Service Definition Agreements (SDA) covering the provision of meteorological and oceanographic support to Defence".[44] The Minister added that there were also quarterly meetings between officials from the MOD and the Met Office "to ensure that the customer service agreement is up to date and being met".[45] He explained that this was an "historical relationship, and, although the change to BIS has broken it to some extent, it is still very close".[46] In recognition of this change and to "ensure a close liaison is maintained in the future", the Government has recommended that an "RN OF5 (Meteorological Specialist) post" be established within the Met Office.[47]

14.  We recommend that the Government and the Met Office reassess whether the existing mechanisms intended to support a strong customer relationship between the Met Office and departments such as MOD, DECC and Defra are effective. Specifically, we invite the Government and the Met Office to consider, and report back to us, on whether there is a need for a Defence Customer Group and a Hadley Centre Climate Programme Customer Group, analogous to the current Public Weather Service Customer Group. One of the benefits of introducing these new customer-focussed groups would be that scrutiny of Met Office science could be streamlined under one review group, as we discuss later in paragraph 25.

COMMERCIAL CONTRACTS

15.  In 2010/11, commercial income made up approximately 16% of all Met Office revenue (see figure 1). The Met Office's major commercial customers come from a range of different areas, including water utilities, power utilities, and the insurance industry.[48] The services provided to commercial customers are widely appreciated: for example, Rowan Douglas, CEO of Global Analytics for the global insurance broker Willis Group Holdings, told us that the Met Office was "an institutional asset for the continued position of the UK insurance sector".[49]

16.  During the course of our inquiry we were keen to explore whether or not the Met Office should seek to increase the proportion of income it generates from commercial sources. Mr Hirst told us that the Met Office continues to make "steady progress" in this area.[50] Furthermore, the Met Office is also encouraging other national meteorological services across the world to take on its products under licence.[51] When we questioned the Minister about the extent to which the Met Office should be expanding its commercial activities, he told us that the Government had "no target figure to work toward, but there would be attractions to having one if the Met Office were to develop its commercial arm".[52] He acknowledged, however, that this would need to be done carefully.[53] As discussed earlier (see paragraph 6), the move to BIS may provide the Met Office with opportunities to develop its commercial activities. The Minister told us that under the Shareholder Executive and the Public Data Corporation, extra support, advice and guidance would be available for these activities.[54] He was, however, clear that the services that the Met Office provided to the public sector were "absolutely critical" and that while it was possible to expand the Met Office's commercial activities, that should not put services for the public sector at risk.[55] This was a concern also raised by Professor John Pyle, Chair of the Met Office Hadley Centre Science Review Group, who stated that there needed to be "continued scrutiny" to ensure that the balance between Government and commercial funding was right.[56] We recommend that the Met Office continue to expand activities that generate commercial income; however, mechanisms must be in place to ensure that these activities do not put core services for the public sector or the Met Office's international reputation at risk. We invite the Met Office to explain in its response to us how this will be achieved.


7   Met Office, "Met Office celebrates 150 years of forecasting for the nation", www.metoffice.gov.uk/media/pdf/g/m/150_years_video_script_01.pdf Back

8   Met Office, "Met Office Framework Document 2007", p 7 Back

9   Met Office, "Management of the Met Office",www.metoffice.gov.uk/about-us/who/management Back

10   For example, Defence Committee, Tenth Report of Session 2005-06, The work of the Met Office, HC 823, paras 15-18; and The Guardian Online, "Conservatives may privatise Met Office", 18 October 2009, www.guardian.co.uk Back

11   Q 129 Back

12   Q 128 Back

13   Q 129 Back

14   As above Back

15   Met Office Press Notice, "Met Office becomes part of the BIS family", 18 July 2011 Back

16   Ev 65, para 17 [Royal Meteorological Society] Back

17   Ev 63, para 3.5.7 [National Oceanography Centre]; Ev w13, Executive Summary [Research Councils UK]; and Q 36 [Professor Alan Thorpe] Back

18   Ev w10 [Rowan Douglas] Back

19   Q 138 Back

20   Defence Committee, Tenth Report of Session 2005-06, The work of the Met Office, HC-823, para 11 Back

21   Q 127 Back

22   Q 127; and Ev 37, para 2.2 [Met Office] Back

23   Ev 48, para 4a-c [Met Office] Back

24   Ev 47, para 3a-c [Met Office] Back

25   Ev 48, para 3 [Met Office] Back

26   Ev 47, para 3a [Met Office] Back

27   Q 83 Back

28   As above Back

29   Q 85 Back

30   Q 134 Back

31   Q 137 Back

32   Q 83 [John Hirst, Met Office] Back

33   Ev 49, para 5 [Met Office] Back

34   Ev 49, para 6 [Met Office]; and Nature Online, "Funding cut for UK climate research", 25 June 2009, www.nature.com Back

35   Government Office for Science, Review of climate science advice to Government and Met Office Hadley Centre role, governance and resourcing, September 2010, p 5-6 and p 23 Back

36   Government Office for Science, Review of climate science advice to Government and Met Office Hadley Centre role, governance and resourcing, September 2010, p 6 Back

37   Ev 49, para 7 [Met Office] Back

38   Q 83 Back

39   Q 135 Back

40   Ev 78, para 1 Back

41   Ev 78, para 1 [Government] Back

42   Q 72 [Professor John Pyle] Back

43   Ev 63, para 2 [Royal Meteorological Society] Back

44   Ev 73, para 5.9 [Government] Back

45   Q 131 Back

46   As above Back

47   Ev 73, para 5.10 [Government] Back

48   Q 84 [John Hirst, Met Office] Back

49   Ev w10 Back

50   Q 84 Back

51   Q 84 [John Hirst, Met Office] Back

52   Q 138 Back

53   As above Back

54   As above Back

55   As above Back

56   Ev 57, para 11 [Professor John Pyle] Back


 
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Prepared 21 February 2012