Select Committee on Transport, Local Government and the Regions Minutes of Evidence


Examination of Witnesses (Questions 20 - 39)

TUESDAY 15 JANUARY 2002

MS VANESSA LAWRENCE, MR DAVID WILLEY AND MR STEVE ERSKINE

  20. What do you say to allegations, for example, that Ordnance Survey has misused public money by using NIMSA to fund the aerial photography layer of OS Master Map because, as you know Getmapping have claimed that the idea was developed and created by themselves in the commercial sector?
  (Ms Lawrence) May I mention to the Committee before I turn to David to answer that question that we are in the middle of a procurement process which is under OJEC regulations, so we are not at liberty, so I am led to believe, to reveal commercial relationships and some of those detailed negotiations. There are three tenders within one part of the OJEC system at the moment regarding that.

  Chairman: But that is not really the point; it was about someone else doing the commercial work.

Ms King

  21. Does that tendering relate to the imagery layer?
  (Ms Lawrence) It does. I think we are able to answer some of your question. I just want the Committee to be aware.
  (Mr Willey) Certainly there has been no misuse of public funds whatsoever. The black and white imagery is used because it is part of our production process and has been for many years. Indeed NIMSA does pay to help that production process but NIMSA funds are not being used in any way to produce the coloured imagery that will become our imagery layer in part of OS Master Map. This is not what NIMSA is about. It is just to fund the production process which ensures that our mapping is kept up to date. It is not to fund the imagery layer.

  22. So when Getmapping claims that NIMSA funds have been used to finance the most intensive programme of aerial survey work ever undertaken by OS, is that not correct?
  (Mr Willey) It is correct that we have a very intensive aerial survey programme but that is different from providing images to produce an imagery layer in OS Master Map. It is part of our production process.

Chairman

  23. Wait a minute. When the plane flies over presumably it takes black and white and colour pictures. How do you apportion out the costs of the flying between the colour and the black and white?
  (Mr Willey) The black and white imagery is indeed something that NIMSA does contribute as part of the production process. Where we are taking colour imagery there will be a difference in cost between colour imagery and black and white. It is not necessarily any more for colour imagery[1].

  24. I can understand the difference in the cost between the colour and the black and white, but with regard to the plane that you take up, presumably loaded with more than one camera, who pays for the plane? How do you apportion it between the cost of the colour and the cost of the black and white?
  (Mr Willey) NIMSA contributes to flying that plane, but so does our commercial revenue. The majority of the funding for most of those activities is funded by our commercial operations and not by NIMSA.
  (Ms Lawrence) May I add one point to that? On the imagery layer, it has been openly discussed in the press that the tender that we currently have out for imagery procurement is to procure from our partners other imagery that is available in this country. It is, I imagine, impossible for one organisation to just contribute to an imagery layer within the same timescale because we do not have enough cloud-free days in this country. What we also believe is that there will be an imagery snapshot where you will have what it looks like in 2002, and 2003 would be a different set of imagery.

Ms King

  25. As I understand it, Getmapping are saying that the imagery layer is essentially identical to the Millennium Map that they produced and that OS is saying that this is not the case; it is not essentially identical. Could you elaborate on that and perhaps the specifications that Getmapping believe have been put in to prevent them being able to tender for the contract?
  (Ms Lawrence) Perhaps I can answer the first part and then for the second pass to my colleague Mr Erskine. When collecting imagery you are collecting effectively a layer made up of picture elements called pixels. That is called raster technology. There are two ways of correcting this to take account of the fact that the earth is not flat. The first is that you are able to warp the picture elements to fit with the map. Another way is where you actually completely rectify it to the actual landscape. One is called ortho-rectification; one is called geo-rectification. Geo-rectification is the one where you warp it to the map. Certainly the Royal Institute of Chartered Surveyors specification for imagery, is 25cm resolution, which is the one we are collecting at and ortho-rectified imagery is what we have specified. We do not know from our findings of any other national mapping agency who has decided to go the geo-rectified way we also had intensive discussions with customers, particularly in the government sector, and asked them what they wanted. They wanted us to provide them with ortho-rectified data, which is what our specification is, and they also wanted it to be fully maintained, as I was explaining to you, regarding the layers. They want it maintaining not just for the economic areas but also the uneconomic areas so that there will be a full national layer. We have evidence also that, for instance, one summer a couple of years ago there were a number of government agencies who, for their own reasons, flew the same area of geography in this country, an area that would be classed as uneconomic, and they very much stated that their reason for flying it was that there was not a national available fully maintained image that would definitely still be here in ten or 15 years time or whatever, and so they were very encouraging of us to do this. My colleague Mr Erskine who is leading on this may have other things to say.
  (Mr Erskine) I would just reiterate really what Ms Lawrence has said.

Chairman

  26. I do not think there is a need to reiterate. We are quite pressed for time. If you disagree by all means go ahead.
  (Mr Erskine) The only extra point that I would add, apart from the fact that other national mapping agencies use this specification, is that we are being driven by customers telling us what they want from the specification, and the fact that we believe geo-rectified imagery is not as easy to maintain consistently as ortho-rectified imagery because the way that you do the warping on the geo-rectified may be different depending on where the plane happens to be flying, the position of the camera and how you do the warping, and therefore we believe that, as our customers want it, it is easier to get a consistent update from ortho-rectified imagery.

Christine Russell

  27. So what you are saying categorically to us is that you are not using public funds to compete with the private sector?
  (Ms Lawrence) Yes, that is what we are saying.

  28. Can I move back to pricing, particularly for your maps, because there certainly has been some criticism, not least from the Ramblers Association, that the cost of paper maps has gone through the roof whereas charges for services that you are mainly providing to the business sector have been reduced. Could you comment on that?
  (Ms Lawrence) First of all we are in a highly competitive market place as I have mentioned for both our paper mapping and our digital mapping. Our status very much requires us to make a return on our investment. We have two different pricing mechanisms and I would like to pass to my colleague to discuss the paper mapping one, but the two main models are very much that there is an annual licence for the digital data and for certain other things including paper maps it is very much just transaction pricing.
  (Mr Erskine) Specifically on paper maps, perhaps I could start by putting into context that there have been some quite significant increases in some of the paper mapping. Our most popular paper maps, which are the Outdoor Leisure maps, only went up by 3.5 per cent rather than all of the maps going up the same amount. The Road and Touring maps that we sell only went up by 1 per cent. There has been a range of increases rather than them all going up the same. The major paper mapping series that we produce actually make a loss and have done for some time.

Chairman

  29. How much?
  (Mr Erskine) The Explorer mapping series is about 40 per cent; Landranger now is about 2 per cent.

Christine Russell

  30. 40 per cent?
  (Mr Erskine) Yes.
  (Ms Lawrence) Can I also mention that I believe you, Steve, told me that before we put the price up of Explorer maps over 60 per cent of them were going to make a loss.
  (Mr Erskine) Yes. The point I am making is that because we are the national mapping agency in Great Britain we believe absolutely that what we should be providing is mapping for the whole country and we should do that to a specific specification and to a consistent pricing model as well. We do not charge different prices because a map happens to be more popular in one area than another. It makes a loss. We believe that national coverage is part of our remit and is done for the national good, and we believe it is right to have a consistent pricing and specification. Of course we also have to work with our retail partners to make sure that the mapping is available in as wide a range of outlets as possible and we have to take into account how the retailers are driven to sell their shelf space. We do not want to have one or two maps available in a retail outlet. We want as wide a range of the stock available as is possible which of course puts pressure on the shelf space. We also have to give reasonable margins to those retail outlets. We are dealing with a whole range of retail outlets from the larger ones such as Waterstones and WH Smiths to much smaller bookshops in some of the areas where mapping is not quite so available. To be absolutely frank, for what we have now and where we have much more clearly differentiated between products and different paper maps, I think what we are asking for is a fair price for what I would regard as some of the best maps in the world.

  31. Do you not feel though that there is an argument that paper maps, because they enable you to fulfil your national interest role, should therefore be eligible if you like for subsidy under NIMSA?
  (Ms Lawrence) Perhaps I could answer first. Certainly at the moment NIMSA does not cover any product. It only covers maintenance or some services such as mapping and surveying of uncommercial areas.

  32. Could you comment on whether you think it should perhaps in order to keep the paper maps affordable and accessible wherever you are in the country?
  (Ms Lawrence) We have thought about this, whether NIMSA could be extended to cover some of those maps, some of which sell less than ten copies per annum I believe, but we still maintain them when necessary under our regular maintenance programme. It is important that they are available if they are needed for emergency use or if people wish to have leisure in those spaces. Sometimes it would be helpful if they would just buy a new map rather than use their old one. Yes, I do think it would be most helpful in the uneconomic areas[2]. We work very closely with retailers to ensure that there is as much stock available in your high street as possible. Some of our retailers carry some of these maps that are not bought so often but there is a complete range if you go into most high streets. Reducing the price drastically would not be of help to the retailer because they are valuing their shelf space per half metre today. I have made a commitment that while I am Director General we will do our best to continue to have two national series: the Explorer map and the Landranger map because I believe, as does the whole Board, that we are here to have two national series but yes, it is a problem that so many of them make no contribution or make a loss to this business.

Mr Betts

  33. I come to the issue of more investment which you referred to at the beginning. Who is going to pay for the new investment?
  (Ms Lawrence) Certainly we see that the need for location data is an expanding market and we believe that more people will be using that data and so we expect to have more customers. The answer must be that we are providing data to our customers and they will be giving us a return for the products that we produce together with our partners. Our Partner Programme has been launched in order to expand and attract more partners than ever before to work with our data. We have traditionally had people from the geographic information industry. Now we are seeing all the new location based providers most interested in working with us or through other partners and so on, and we see this as more of an expanding market.

  34. So in shorthand it is more product and more customers rather than increases in prices that are going to pay for it?
  (Ms Lawrence) That is how we see it.

  35. In terms of the investment you are going to be looking for freedom to borrow. Have you any idea over how long a time you are looking to recover the costs of borrowing as a business plan?
  (Mr Willey) Typically within two or three years, or even faster than that. For example, in some of our products we would certainly be looking at faster turn times than that. Something like a building, for example, may be rather slow, but those are the sorts of timescales that we are talking about.

  36. Presumably some of the investment you are embarking on might not produce the new products for some years down the line.
  (Mr Willey) That may have been the case ten years ago. Now we would be looking at much faster timescales than that.

Chairman

  37. You are actually looking at persuading pensioners to pay a bit more for the common maps, are you not, in order to provide the investment so that at some time in the future someone with one of these mobile gadgets will be able to get their map from a satellite?
  (Ms Lawrence) I would like to refute that if I may, most certainly. We also are very careful to make sure we do not cross-subsidise across our products anyway, Mr Bennett, so the answer is definitely no.

  38. So you are not raising the money for your new ventures out of present products?
  (Ms Lawrence) We have talked about our paper mapping and we have talked about the fact that overall many of them make a loss. Our income from there goes into supporting the national coverage.

  39. Some of them make a loss but some of them make a very nice profit, do they not? Outdoor Leisure maps all make a profit, do they not?
  (Mr Erskine) In fact Outdoor Leisure maps, the series as a whole, just about break even, or make a very small loss.


1   We hire two aeroplanes, one of which is equipped with two cameras. However since June 2001 each plane has only captured coloured imagery. Back

2   Although it would be helpful it could not subsidise the product price as this may be contrary to competition law. Back


 
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