TUESDAY 19 MARCH 2002
Andrew Bennett, in the Chair
Examination of Witnesses
MS SALLY KEEBLE, a Member of the House, Parliamentary Under-Secretary of State, MR KEN SWAN, Finance and Sponsorship Division, and MR PETER CAPELL, Planning and Land Use Statistics Division, Department for Transport, Local Government and the Regions, examined.
(Ms Keeble) Yes, I am Sally Keeble. I am Parliamentary Under-Secretary of State at the Department of Transport, Local Government and the Regions. I have with me Ken Swan, who is from the Finance and Sponsorship Division and Peter Capell from the Planning and Land Use Statistics Division.
(Ms Keeble) I would like to say something.
(Ms Keeble) I am very pleased that the Sub-Committee has decided to undertake this investigation into the work of Ordnance Survey. I took on ministerial responsibility for it last summer, along with my separate departmental responsibility. Ordnance Survey is a non-ministerial government department. It is an executive agency and operates, as you know, as a trading fund. As the Minister for Ordnance Survey, I have particular responsibilities for its strategic direction, for approving its business plans and to set the agency key targets each year. I have to say, I have been extremely impressed by the work of Ordnance Survey. The advances that are being made with digitised geographic and mapping information are very striking in their speed and quality. During the meetings that I have had with the Chief Executive, presentations I have been to and during short visits to Southampton, I have been very impressed with the energy and the sense of direction that is going into Ordnance Survey's programme of change on both a services and a staffing level. They are very actively responding to the needs of the geographic information marketplace, and also producing a climate of change within the organisation which all staff are being encouraged to contribute to, and some are clearly very supportive of as well. They have made very significant progress over the last two to three years and I am very keen to ensure that that development continues. You will have heard that Ordnance Survey data makes a huge contribution to the UK economy and we need to make sure that that contribution grows and continues. However, perhaps of more concern to me is the fact that Ordnance Survey has a major role to play in the development of public service delivery and that has very much informed my decision-making. You will be aware that I announced to the House on the 19th December that as a consequence of the report from stage one of the Quinquennial Review of OS, I was minded to accept the recommendation that the agency should move to a wholly government-owned plc. It was considered that such a status would provide the flexibilities and business freedoms to enable OS to continue to develop and respond quickly and effectively to the changing demands of a rapidly evolving industry and marketplace, and also, therefore, to meet the needs of public service providers. The Department and OS have now embarked on stage two of the Review that is seeking to produce a thorough assessment of the costs and benefits that the most appropriate government-owned plc model would have over the current trading fund status. We have appointed consultants to undertake the work. They will also look at the risks of a government-owned plc transition and what might happen should OS remain as a trading fund. I should say that stage two is not reopening the issues dealt with within stage one, but the work is focusing on the government-owned plc and trading fund comparison. I am looking for a robust and thorough analysis to inform the decision. I expect to receive the stage two report in May and to be able to announce a decision on the future structure before the House rises for the summer recess. We need to be very positive about the role that OS data can play in both co-ordinating services across government and developing citizen-based services. There are many opportunities, and I feel that we have only at present scratched the surface. At present, there are some departments and other government bodies that have not yet gained access to OS data and I am sure that the development of the pan-government agreement will help to develop those opportunities. I should also say that I think that the steps that OS have taken since 1999 to shift away from the development of more specialised products within the marketplace has also been very important. Its stated policy is to work with partners and it is their partners who have the expertise and experience to develop applications for OS data to meet particular market needs. OS will be facing increasing competitive challenges in the future and I am very keen that it is positioned to meet those challenges. It is very important, I believe, that OS remains within the public sector arena, but it does need to be able to maximise its investment arrangements within the private sector and be able to attract and retain the skills required to manage in a competitive environment. So I am very optimistic about the future of OS and particularly its ability to play a very important role in the development of public services right across government.
(Ms Keeble) Well, the core activity is the national mapping and these maps which are produced I would say are part of the core activity because they provide a range of service which is really unmatched elsewhere, so yes, I would say it would be.
(Ms Keeble) Not across the range. One of the functions that OS has to do is it has to map the whole of the country and it cannot just cherry-pick the bits which are particularly profitable and produce those maps, so the range of them does not, although one or two particular maps within the range might.
(Ms Keeble) No, I do not think they should. Equally, they should not make a loss. They have been subsidised obviously in the past and I think some of them do still make a loss, and I think a figure of 40 per cent has been given to you.
(Ms Keeble) Yes, I think they should.
(Ms Keeble) Well, both of those products should, as far as possible, be self-financing so that they are not making a great profit, no.
(Ms Keeble) I would say they are, yes.
(Ms Keeble) Well, in that it is an application, I would expect that to be one of the core activities to provide a range of mapping products of the more conventional type that should not make a profit, but should provide a public service.
(Ms Keeble) Well, I think that would depend on what you are getting and what use you are making of it.
(Ms Keeble) I would not necessarily say that. Some people might be able to get their maps through different agency agreements or indeed rather than go out and buy a map, you can get some maps off the Internet.
(Ms Keeble) I think the difficulty with quite a number of the pricing issues is that it is going to be governed by competition legislation and that is obviously going to put severe limits on what can be provided free and what has to be charged for. That has been the major issue for OS, as indeed it has been for other government services.
(Ms Keeble) Well, they would obviously have to come up with a pricing strategy, but depending on who is getting the information and how it is going to be used, it would either have to be charged for or it would have to be free, but that would be within the framework of the competition legislation.
(Ms Keeble) The collection of the data is the absolute core bit of OS's work. As the national mapping agency, it is the collection of the data which is absolutely core.
(Ms Keeble) The maps which are sold I think we have dealt with because they are self-financing.
(Ms Keeble) They are under one particular regime, and if people go and buy them, then they go and buy them. If people are getting a particular map of a particular area for a planning application, the pricing structure for that would have to be determined by all of the regulations and legislation which govern what OS does. It cannot undercut the market; it has to operate within that very clearly and if government services or anyone else does not, they obviously face a great deal of pressure.
(Ms Keeble) I think in a climate where the technology is changing, yes, I think it is. Clearly time has moved on since people went out and surveyed in person the countryside and there are different types of information and products used, not just by the public, but also, importantly, by the Government and I think that the production of an imagery layer is an important development and I think it could certainly be considered as part of the core activity.
(Ms Keeble) I have to say I cannot answer for Getmapping.
(Ms Keeble) In what way? OS has always done aerial survey work as part of its data collection, particularly in rural areas, and in that sense it is part of its production process. The production of an imagery layer for OS's database is obviously a different process. Now, I do not know what Getmapping is doing. I have been obviously told and shown a fair bit about what OS is doing and it seems to me that the plans that they have got are well within the range of what they should be doing as part of their core activities. Further, I think it is extremely important that they are able to develop their services because that has a direct cut-across into the planning and provision of public services and we need them to be operating at the sort of leading edge of the mapping world.
(Ms Keeble) Well, we will certainly be looking at those issues as we look through stage two of the Review, but I think their basic task, as the national mapping agency, has been clear for an extremely long time.
(Ms Keeble) That it is not. Anyone here could set up in business in competition with Ordnance Survey.
Sir Paul Beresford
(Ms Keeble) Their relationship is to, if you like, provide the applications using the data which Ordnance Survey provides.
(Ms Keeble) Yes. I think one of the key issues is also what role they can best play and where they work out their future ----
(Ms Keeble) Ordnance Survey. I do not answer for the private sector partners that they have. I think that the way in which they have gone about their business, where they have got the maps but other than that they have developed products or they have set up a series of partnerships with commercial partners who, by and large, develop the applications, it seems to me is a much more successful way, both for them and for the private sector - for them because they can concentrate on the core activities of doing the mapping and developing the data, and also it then leaves the commercial sector to do the commercial applications.
(Ms Keeble) They have their digital database, obviously, but in terms of the commercial activities they do not engage in those. It seems to me they have been successful in developing a range of partnerships with companies who buy the data from them and then use it onwards in a whole variety of applications. I think that has been very, very successful.
(Ms Keeble) If you want to deal with the court case I will happily -----
(Ms Keeble) Okay, I understand that. Can I say that I just wanted to make sure that you understand I am aware of the background to that. There is always going to be an issue, given competition legislation, of different sections of what we would term public sector ending up in court under competition legislation. We know that the companies had a reference to the Office of Fair Trading, and I think it is largely about its internet services as well. So there is always that issue there. I think what has been important is that the public sector services have got a great deal to do in the way of using the geographic information to improve services. We have only done a fraction of what we should have done and I would like to see that personally very much extended across government.
(Ms Keeble) What to develop across government?
(Ms Keeble) I think it is for government services to look at applying and using the information that OS provides for their own interests. They could go out and contract with the private sector; OS provides a very high-quality product and is working across government. Government also, of course, pays for those services as well. I refer to the Pan Government agreement that starts this April. So I think that OS has done very well to change from 1791 when it started, to keep at the leading edge of mapping, to put itself in a position where it is a very powerful force in the market and, also, to build partnerships which have generated the finance and which have retained its position, from which the public services have benefited very greatly.
(Ms Keeble) For regulation?
(Ms Keeble) As I mentioned, there is the competition legislation which is obviously very important. There is the Ombudsman ----
(Ms Keeble) That is only one option. There is the Ombudsman and there is HMSO, which regulates in terms of copyright.
(Ms Keeble) You said is there any form of regulation - who do you complain to? There are three. We are also, I would say, as part of the Stage 2 of the Quinquennial Review ----
Chairman: You can complain to the Queen, you can complain to all sorts of people, but it is not necessarily very effective is it?
(Ms Keeble) Yes, you can complain to the Minister as well, and some people do that, I have to say.
(Ms Keeble) I do not, I deal with it.
(Ms Keeble) No, no, it should go to the relevant person, clearly. If there is an issue about copyright HMSO is the regulator. If there is an issue about the Companies Act legislation, I think you would complain to the OFT - and people do complain to the OFT and it is not actually that complicated.
(Ms Keeble) I am sure there are some sections of the industry that feel there is not a regulator, and it is a serious issue. I would say that there are some regulatory bodies that impact on different areas of OS work. I certainly agree it is something we have to look at under Stage 2 of the review. I completely agree with that. I think there are issues about governance and regulation which are extremely important and which we have to deal with. I think the area where there is a gap is the area of regulation for the geographic information market, as it were. There is a gap there, I would agree.
(Ms Keeble) Yes. AGI was actually on the steering group for the Quinquennial Review, of course, as were DTLR (my department), the Cabinet Office and the Treasury. So they did have an opportunity to make comments about what they thought about the conduct of the review then. I think it is fair to say that the review ----
(Ms Keeble) No, but I think if you are on the steering ----
(Ms Keeble) I still think that if you have particular views about what a Quinquennial Review should cover and if you think there is an issue about the core function and purpose of OS, I think it would be fair to expect an organisation to flag that up as something ----
(Ms Keeble) I would still repeat that AGI did have a voice, they were not completely excluded from the process, ----
(Ms Keeble) They had a role on the steering group and they were party to setting up the review. I think it is fair to flag that up. I would say that I think that the Quinquennial Review went very thoroughly through the options open to OS. There are clearly issues that need to be looked at very carefully in Stage 2 of the review, which is why we have gone down that road instead of just saying "This is the decision, off we go". Obviously, issues about regulation and core and non-core activities, as it were, are some of the things that will need to be very carefully covered during that Stage 2 review.
(Ms Keeble) I went through some of them in my opening statement. The issues which I am particularly concerned to see covered are issues about governance, which I think are extremely important, the issues about regulation, the issues about financial arrangements and a very thorough examination of the advantages of either moving to government-owned plc status or retaining ----
(Ms Keeble) Ninety-one.
(Ms Keeble) The basic function is still there, it is a national mapping agency. The difficulty is that because the technology has changed the interpretation of what that means is not the same ----
(Ms Keeble) We would have to look at some of those issues, yes.
Mrs Dunwoody: So you would, in effect, be re-doing some of the work that was done in the first stage.
(Ms Keeble) That depends on the outcome of the Stage 2 review. What I have said is that I am minded to think that it should move to a government-owned plc and I think there is a whole variety of reasons for that. However, I think it is extremely important that whatever structure we get for OS it is the right one. It is in a very complex position, both because of the complexity of the market and, also, because of the importance of what it does for government services, so I want to make sure that, in terms of both finances and the implications for government public services, we get it absolutely right. Although I am minded to say I think it should move to a government-owned plc, it is not a closed mind.
(Ms Keeble) I think those conflicts are going to be there whatever the structure is because of the points I made before; that increasingly quite a lot of activities are going to come under pressure because of competition legislation and, also, there are big pressures coming up from Europe. Those are going to have implications ----
(Ms Keeble) They think that a whole range of government services and information should be provided free of charge, as I understand it.
(Ms Keeble) At present they are looking, primarily, at environmental information. It is a way off yet but we have to have a robust framework and be aware that that is on the horizon. So the pressures are always going to be there.
(Ms Keeble) Let me just answer Mrs Ellman's points first. I think what is important is that we get to a position where OS can deal with those pressures but, also, where it has a very robust financial framework so that it can continue to invest in the development of its database because the Government has a direct interest in having the highest possible quality of information to inform public services.
(Ms Keeble) The other one would be to keep to a trading fund. I will go into as much or as little about that as you want. There has already been mention of issues about the payment of staff and that we should just pay the chief executive more money and that would do it. I am not convinced that that would be enough actually, because there are issues about staffing and the skills that need to be got in to do the range of work for OS. I think there are also issues about the fact that the technology is changing very fast. I know that OS does not want to be at the cutting edge of technology because you sometimes have to be a little bit removed from it, but they need to be able to invest reasonably quickly. They need quite a lot of flexibility, and one of the constraints on the trading fund is the investment on capital returns, which in a sense could actually be a deterrent to investment. That is also one of the reasons why I think we really seriously have to look at the flexibilities of a government-owned plc as opposed to a trading fund account.
(Ms Keeble) I am very much opposed to OS being privatised.
(Ms Keeble) If you look at the wording of the Quinquennial Review, I think it says that privatisation is not seen as an option at the current stage.
(Ms Keeble) I am personally very much opposed to it. If I could just explain one of the reasons why I think it is so important that OS succeeds and succeeds in the public sector, it is that I think it is very important, with the level of information that you can get in a national database of this type, that it is within the public sector and protected by Crown copyright.
Chairman: Chris Grayling, do you want to pursue this EU point?
(Ms Keeble) I am not an expert on this part of the EU but I am told that it is looking at this area.
(Ms Keeble) I think it is about basic citizens' rights. I think my officials are more involved in the negotiations than I am.
(Mr Capell) My understanding is that what the EC want to do is to have a common system of access to environmental information for all residents in all countries of the EC in a common and systematic way. Ordnance Survey are certainly part of the negotiations that are going on and are very firm in their expressions and representations of the constraints that they are under as a trading fund. One has to bear in mind here that Ordnance Survey's mapping, as a level of excellence, is generally better than other European countries, and it is not necessarily the case that the largest scale of mapping that Ordnance Survey produces, which is where the greatest considerations are in this area, is what is going to be needed on the European database.
(In the absence of the Chairman Mrs Dunwoody was called to the Chair.)
(Mr Capell) I do not think so.
(Ms Keeble) I take your point. I would just say that I have only fairly recently been made aware of this particular difficulty.
(Ms Keeble) We will do that.
(Ms Keeble) I think the Quinquennial Review looked at the possibility of merging with a range of organisations. In the case of the Land Registry it would seem there that you would be combining an organisation whose main purpose was to collect the data and to manage it, with one whose main purpose was to actually use it, and I think it would be unwieldy. So, yes, I think it was given proper consideration and I think that the Quinquennial Review was right to rule that out.
(Ms Keeble) I have looked at the different options - I have to say not in huge detail - and I cannot think of one where those two were specifically merged. Was it the Australian one that you were looking at?
(Ms Keeble) I think it is the Australian one, and I think that the circumstances in Australia are completely different from here. I think we need to look at what OS has done and what is the best way forward.
(Ms Keeble) We are different from Australia because they have a not very densely populated country, and we have one of the most highly urbanised countries in the whole of, certainly, Western Europe. If we look at some of the other models, some of them have got some merit. Germany is probably the closest one; they devolve it down to the Lander. If we look at the United States, for example, and its model, some of its data is seven years out of date, which I do not think is where we want to get to. We do have the advantage of having been one of the first countries to get into this, and we are fortunate in having a very, very high standard of national mapping. I think we have to look at how we develop it in the best interests of this country.
(Ms Keeble) Our Quinquennial Review turned it down. I think the Land Registry quinquennial review also turned it down. If you have got two organisations that do their job in an efficient manner - certainly in the case of OS in an outstanding manner - I do not see the need then to merge it with another organisation which has got quite a different function.
(Ms Keeble) How do you mean?
(Ms Keeble) I do not think so because they have got very good partnership arrangements with the private sector. They have got Service Level Agreements with different government departments and they have got a good track record of working very closely with a number of organisations including the Land Registry. There is a difference between working well with somebody and merging with them.
(Ms Keeble) Of what, of a merger?
(Ms Keeble) In terms of merging?
(Ms Keeble) That is a criticism of their discussions about pricing, which I would have thought is fair enough if people think that the discussions about prices go on for too long. If there is a requirement for pricing to be there, if they have to have that arrangement, they are going to have to have it whether or not they are under the same management.
(Ms Keeble) I would expect so, yes, and I would expect it would also deal with some of the wasteful discussions that you talked about.
(Ms Keeble) There will be established arrangements for the pricing and you will not have to have the kind of discussions that are talked about there. I would also hope that it would lead to more government services and agencies actually taking up and using OS data.
(Ms Keeble) I cannot offhand. Do you want to deal with that?
(Mr Capell) I will try and deal with that. The new Pan Government SLA will come in from 2 April as a pilot. It has not been easy to come to an agreement between our department, the Treasury and the Office for e.Envoy on funding the gap between the current amounts of money which are paid under a range of Service Level Agreements and the increased amounts that Ordnance Survey reasonably want in order to open up all of their data to the whole of central government. We have an agreement with them that a pilot will be put in place on 2 April and work will continue then, vigorously, to put in a long-term, established system.
(Mr Capell) Yes.
(Mr Capell) Yes.
(Ms Keeble) There is an issue about that and that comes up again with the regulation and governance issue, which I would expect to be dealt with, at least, as part of the Stage 2 review. I am aware that there is criticism of the OS role. OS, I have to say, has always been the national mapping agency and, therefore, it would be logical for it to have that role. Increasingly, given the changes that are taking place, there is a need to look at it. I have to say I am not quite clear who else could do it.
(Ms Keeble) No, it does not. It just means that if there is going to be an alternative suggested there is going to have to be some very careful thinking about what that might be - what kind of a person or agency or function that might be.
(Ms Keeble) I do not know. Is there?
(Mr Capell) Yes.
(Mr Capell) I am happy to supply a note. In brief, there are great benefits to the country if there is a joined up, single, definitive data-set which includes land and addresses - property information and address information - in one data-set. That does not exist in a perfect stage today. Ordnance Survey, together with a number of other government bodies and with our department are working towards creating that. That is necessary to produce the benefits in data-systems and public services that we want to see.
Mrs Dunwoody: You can give us a short note on that, Mr Capell. Thank you.
(Ms Keeble) I think he found himself in a personal difficulty and he took the decision very suddenly to resign.
(Ms Keeble) I think he had particular personal reasons for doing that, which I probably should not go into here.
(Mr Capell) There are two parts to the National Land Use Database. One is a collection of brownfield sites from local authorities, which benefit from being mapped on Ordnance Survey, and another part of it is the wider, total land use data-set, and that is being taken forward between our department and Ordnance Survey as a possible future layer as part of their master map system.
(Mr Capell) The previously developed land part of the National Land Use Database was collected comprehensively in 1998 and is being completed now for 2001. A new National Land Use Database is something which is still being researched. I cannot say it is going to be complete now, we are researching how to do it.
(Mr Capell) No, there is no discrepancy at all. Ordnance Survey have been partners with the Department, IDA and English Partnerships in trying to make a success of this project to create an improved National Land Use Database. The mapping element is a key part of that.
(Ms Keeble) I think the problem there, as I said previously, is about the impact of the competition legislation. They keep their maps up, but some of the data comes off. It is put on, as I understand it, only when there is an election or by-election. If they did otherwise (because it was provided free-of-charge, as I understand it, at the last election) they would run into real problems for under-cutting some of the private sector.
(Ms Keeble) Members of their staff?
(Ms Keeble) Basically, we ought to be buying it. It was provided at the elections, it was enormously useful but they do have to be careful about their pricing policies because otherwise they can find themselves in difficulty with the Competition Act. That is my understanding.
(Ms Keeble) Can I just say, presumably they could do something like provide it as a service that you can buy, like you can buy anything else on the internet. That would mean you would have to pay for it, like we have to pay for so many other things.
(Ms Keeble) I think I covered that in my statement, that we expect to have Stage 2 completed by May and a decision made before the summer recess. So that is not long.
(Ms Keeble) Thanks.