PARLIAMENTARY DEBATES

HOUSE OF COMMONS

OFFICIAL REPORT

Third Standing Committee on Delegated Legislation

DRAFT HYDROGRAPHIC OFFICE TRADING FUND ORDER 1996

DRAFT METEOROLOGICAL OFFICE TRADING FUND ORDER 1996

Tuesday 5 March 1996

LONDON: HMSO

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The Committee consisted of the following Members:

Chairman: Sir Michael Shersby

Abbott, Ms Diane (Hackney, North and Stoke Newington)

Arbuthnot, Mr. James (Minister of State for Defence Procurement)

Bennett, Mr. Andrew F. (Denton and Reddish)

Bottomley, Mr. Peter (Eltham)

Cann, Mr. Jamie (Ipswich)

Cash, Mr. William (Stafford)

Cohen, Mr. Harry (Leyton)

Davidson, Mr. Ian (Glasgow, Govan)

Gilbert, Dr. John (Dudley, East)

Grant, Sir Anthony (South West Cambridgeshire)

Hutton, Mr. John (Barrow and Furness)

Lloyd, Sir Peter (Fareham)

Mahon, Mrs. Alice (Halifax)

Moate, Sir Roger (Faversham)

Murphy, Mr. Paul (Torfaen)

Nicholls, Mr. Patrick (Teinbridge)

Temple-Morris, Mr. Peter (Leominster)

Wells, Mr. John (Lord Commissioner to the Treasury)

Wilkinson, Mr. John (Ruislip-Northwood)

Mr. D. W. N. Doig, Committee Clerk

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3 Third Standing Committee on Delegated Legislation Tuesday 5 March 1996

[SIR MICHAEL SHERSBY in the Chair]

Draft Hydrographic Office Trading Fund Order 1996

10.30 am

The Minister of State for Defence Procurement (Mr. James Arbuthnot): I beg to move, That the Committee has considered the draft Hydrographic Office Trading Fund Order 1996.

The Chairman: With this it will be convenient to consider the draft Meteorological Office Trading Fund Order 1996.

Mr. Arbuthnot: Before describing the work of the agencies—both world leaders in their respective spheres—I should stress that the move to trading fund status is designed to define and secure their long-term future. It will give them greater freedom to operate along more commercial lines. They will be able to compete fully in the market place while their core services, which are essential to the operational activities of the armed forces, are safeguarded. The Hydrographic and Meteorological Offices became defence agencies in 1990 and have long and distinguished histories. Together with their support to the armed forces, both agencies have contributed enormously to the safe navigation of international shipping in accordance with the Government's obligations under the safety of life at sea convention. The Hydrographic Office is responsible for producing navigational charts and information world wide. It provides those services to three main sets of customers. The first is my Department. The second is the Government more generally, through the identifying and promulgation of all dangers to navigation in United Kingdom waters in accordance with our obligations under the SOLAS convention. The third are the shipping trade and the general public, through the range of commercial sales of Admiralty charts and other publications. The Met Office is well known as the centre of excellence for weather forecasting. The principle focus of the Met Office will remain Government Departments and the Civil Aviation Authority. It will continue to maintain the national meteorological archive. The most public face of the Met Office—its weather forecasters on radio and television—already operates on a commercial basis and will therefore be unaffected by the move to trading fund status. As trading funds, the current activities of both offices will be exposed to a greater financial discipline that before. From the customer's perspective, paying for services will reinforce the need for proper scrutiny 4 of requirements placed on both agencies. That should lead to a more cost-effective use of resources within the established programmes. From the agencies' viewpoint, hard charging will act to reinforce their commitment to the quality of the service provided and will allow them to identify and redirect as necessary those resources that are not cost-effective. Naturally, there are safeguards. I would like to make it clear that both agencies will continue to operate within set parameters and in accordance with performance standards and targets established by my Department. Under trading fund arrangements, the chief executives will continue to be accountable to my right hon. Friend the Secretary of State for Defence for the management of the agency. But they will also become accounting officers in their own right and therefore be responsible direct to this House. The agencies' annual reports and accounts will continue to be laid before the House. Assets remain vested in my right hon. Friend the Secretary of State for Defence, and agency employees remain civil servants. We intend that both agencies should keep their prestigious positions in the world market, while protecting their core services on a long-term basis. I am sure that better value for money can be achieved under trading fund arrangements. They will benefit them and their staff. Their customers, particularly those in the public sector, will benefit from the additional efficiencies that will be delivered. All that will be good news for the taxpayer. I therefore commend the order to the Committee.

10.34 am

Mr. Paul Murphy (Torfaen): I assure the Committee, first, that I will not detain it for many minutes; and secondly, that in principle we agree with the orders and will not oppose them. However, there are a number of questions that should be asked at this stage and I should be grateful it the Minister responded to some of them. There are no problems with regard to the order relating to the Hydrographic Office, but it is interesting to note that the Hydrographic Office is separate from the Ministry of Defence's hydrographic department. That department, which is responsible for operational policy on surveying and for planning defence and civil surveys, is quite different. It will procure services from, and supervise, the hydrographic services supplier, the Hydrographic Agency, serving as a trading fund. That is a good idea, because there will be a counter-balance and a check. However, there is no such equivalent for the Meteorological Office, although the function could be undertaken by adding meteorologists to the staff of the chief scientific adviser to the Ministry of Defence. Members of the Committee will recall that the Public Accounts Committee recently dealt with the Meteorological Office; some criticisms were offered, despite its being a body of great international repute, 5 as the Minister rightly said. We must not sweep under the carpet some of the points that were made. In its report, the PAC concluded: "We consider it quite unacceptable that the Meteorological Office's performance reports, which have been presented to Parliament, have been inaccurate and misleading for at least two years running." One of the assurances that we need from the Minister is that the management structures within the Meteorological Officer, which were criticised by the National Audit Office as being "complex and bureaucratic", will be adequate to meet the needs of trading fund status. The Meteorological Office has said that it will improve its management and accounting facilities; will those improvements be achieved in readiness for 1 April, when the trading fund takes over? Secondly, the Minister should give the Committee some idea of the costings of the exercise. Bearing in mind that 24 per cent. of the Meteorological Office's work is funded from a contract from the Civil Aviation Authority which amounts to £28 million and is up for renewal this year, is he confident that the office will retain the contract? It will be crucial to the good financing of the office. We are also concerned about the future and security of the public meteorological service. The NAO stated: "The Department have not yet determined how the Public Meteorological Service will be funded when the Meteorological Office becomes a Trading Fund. The rationale for the Service is under review." We have to be assured that the service will continue, whether under the Ministry of Defence or whether, as some people suggest, under the Department of Trade and Industry, which is responsible for scientific matters. Whoever is responsible for it, we must be assured of the certainty of the service's future. We are all concerned that there could be a tension between the commercial activities of the Meteorological Office and its status as a public service. As the months and years pass, I hope that the Department will be vigilant in ensuring that the Meteorological Office is not neglected and that, after serving the people of this country very well for many years, it will continue. I should be grateful if the Minister dealt with those points in his wind-up speech.

10.38 am

Mr. John Wilkinson (Ruislip-Northwood): As a user of the Meteorological Office's material in my former profession, I have a considerable interest in its continued efficiency. Will the Minister explain a little more deeply the methods he will use to ensure that the current level of service is, at the very least, maintained for the aviation community? It is crucial for flight safety that general aviation and recreational fliers should have access to adequate weather forecasting. Will the Minister also explain what the status will be of meteorologists on flying stations in the Royal Air Force, the Fleet Air Arm and the Army Air Corps? Will they come under the direct chain of command of the commanding officers? Will they be answerable to civil service authorities through the fund? How will they be controlled and managed? That is important. 6 The former Member for Taunton, Sir Edward du Cann, used to regale those attending successive Navy debates with extremely well informed contributions about the importance of the hydrographic service to Britain's overall maritime power and global maritime commitments. Can the Minister confirm that the Government will continue to make funds available to procure an adequate number of hydrographic survey vessels? That aspect of maritime procurement has been somewhat neglected, to the detriment of our naval capabilities.

10.40 am

Mr. Peter Bottomley (Eltham): I declare an interest. Lewis Richardson, who married a great aunt of my wife's, invented the mathematics of weather forecasting. The Richardson wing of the Meteorological Office is named after him. In addition, one of my oldest friends, who is also an indirect cousin, married the present chief executive of the Meteorological Office. The hon. Member for Torfaen (Mr. Murphy) raised the important issue of the extent to which experts outside the agencies can advise Ministers on what those working in the agencies are doing. My experience in agriculture at the Northern Ireland Office—where the research side was a faculty of the university—and with the transport and road research laboratory when I was at the Department of Transport has led me to believe that if an agency is to be a world leader, it does not make much sense to have people with the same professional expertise outside the agency giving a running commentary. There should be policy advisers who give advice on the hydrographic or meteorological services, but they should not be experts in the discipline. If they were fully qualified and could do better than those working in the agencies, they should be working for, or running, the agencies. On the question of cost-effectiveness and of greater financial discipline, referred to in the Public Accounts Committee report on the Meteorological Office, each agency should do what is cost-effective as well as what is required by Government Departments. I would argue against moving the Meteorological Office from the Ministry of Defence to the Department of Trade and Industry, because at times of conflict, or potential conflict, defence services are critical. There is not much point in losing a battle because in peace time it was convenient for science agencies to be put together in a Department. However, the Department of Trade and Industry could work with the Ministry of Defence and the agencies in developing computing. The Meteorological Office drives forward applied, advanced super-computing. Even if we do not make the equipment ourselves, we should procure the most advanced equipment and use it effectively. Are Government Departments working with the agencies which have the greatest expertise in using that computing equipment, such as the Meteorological Office? On cost-effectiveness, there is a discipline in Government that we should do only what gives the greatest return. It is important to let agencies expand 7 or contract so that they can do work that is worth doing and produces an acceptable return as well. To do only what produces the greatest return is too limiting. As agencies evolve over the years—and I am glad that this is a reasonably bipartisan idea—people should tell the heads of the agencies and those who effectively control them what the public expectation is. In that way, the agencies can be judged against whether they live up to that expectation. There is one point, in which I have no personal interest, which came up in connection with the National Audit Office and the Public Accounts Committee. It was thought that a very senior member of staff at the Meteorological Office was not doing his job sufficiently badly to be thrown out or sufficiently well that continuing to do the job would benefit the service. The method by which that person left raised questions that, rightly, were investigated. Heads of agencies should know what freedom they have. If it is commercially acceptable to spend money to enable the agency to progress, they should know what procedures they should go through to clear decisions. Clear guidance on such questions as whether to approach the relevant Department, or the National Audit Office, would be useful. The movement to trading fund status is sensible, and I am glad that it is being generally welcomed.

10.45 am

Mr. Arbuthnot: I am grateful to hon. Members on both sides of the Committee for their interest in the orders. The Hydrographic Office and the Meteorological Office both stand at the threshold of change, with regard to the way in which they have traditionally conducted their business. It is right that before the proposed future course is embarked on, the proposal to place both agencies on a trading fund basis should be considered carefully. The debate reaffirms the importance of assisting each agency to face the more challenging and commercial world in which it will need to operate successfully in the years to come. Trading fund status is a natural development for both agencies. It is an evolution, rather than a leap in the dark. It will supply the flexibility, disciplines and stimulus needed to meet the challenges ahead. The hon. Member for Torfaen referred to several issues, including the performance reports, which were touched on in the consideration of the Meteorological Office by the Public Accounts Committee. One of the actions that we and the Treasury have already taken is the implementation of improvements recommended by the National Audit Office. Those include clearer and more consistent target setting, output measurement and reporting. We expect a move to trading fund status to bring further improvements in efficiency and its measurement. The hon. Member for Torfaen also asked about the Civil Aviation Authority's contract, which is up for renewal this year. Both the Civil Aviation Authority and the Meteorological Office are undergoing considerable change this year. As a result, it has been 8 decided to extend the arrangement for an extra year, so that both organisations can consider the future at more leisure, without being bounced into anything with which they would not be happy. It is right that the Meteorological Office should continue under the ownership of the Ministry of Defence, which is, after all, its biggest customer. I hope that my hon. Friend the Member for Eltham (Mr. Bottomley) will be reassured to learn that we do not intend ownership to be transferred to the Department of Trade and Industry at the moment. We intend to continue to ensure the availability of very high quality meteorological advice to the Ministry of Defence—and to the aviation customers about whom my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) was concerned. I agree with my hon. Friend about how crucial the standard of service to the aviation community is. We believe that the move to trading fund status will ensure that such standards are maintained and improved. The Met support group also provides intelligent customer capability to the Ministry of Defence. It advises customers in the Government. Met Office staff have been seconded to work with the chief scientist to create that support group. My hon. Friend the Member for Ruislip-Northwood also raised the important issue of hydrographic survey vessels. That matter is separate from the business of the Hydrographic Office, which does not conduct surveys. That very important function is carried out by the Royal Navy. I confirm that we intend to ensure that there will be adequate vessels in the squadron to meet our defence requirements. The position on replacement vessels, which is relevant at present, is currently under review and will be considered in the coming year. My hon. Friend the Member for Eltham made some valid points, including one about the importance of super-computing in relation to the Met Office. That issue is also important to the Hydrographic Office, because now that charts are becoming more widely digitised, it is essential that the Hydrographic Office should also be able to move into digitised charts in order not to fall behind in the market place. My hon. Friend spoke about the knowledge that is available to the heads of agencies. I agree with him that a recent occurrence left something to be desired. Compensation of £100,000 was paid to a former director, which was rightly of concern to the Public Accounts Committee. That payment was made on the basis of what the chief executive then understood to be within the limits of his delegated authority. I welcome what the PAC said about the general recommendation on the need for greater clarity in setting down powers of delegation. The Meteorological Office's framework document and the chief executive's letter of authority are being revised in readiness for the trading fund operations from 1 April 1996. I hope that that, at least to some extent, meets my hon. Friend's concerns. If I find that I have not answered certain points in my closing remarks, I will write to any hon. Members concerned.

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Question put and agreed to.

Resolved, That the Committee has considered the draft Hydrographic Office Trading Fund Order 1996.

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DRAFT METEOROLOGICAL OFFICE TRADING FUND ORDER 1996

Resolved, That the Committee has considered the draft Meteorological Office Trading Fund Order 1996.—[Mr. Arbuthnot.]

Committee rose at eight minutes to Eleven o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

Shersby, Sir Michael (Chairman)

Arbuthnot, Mr.

Bennett, Mr.

Bottomley, Mr. Peter

Cash, Mr.

Grant, Sir Anthony

Lloyd, Sir Peter

Moate, Sir Roger

Murphy, Mr.

Nicholls, Mr.

Wells, Mr.

Wilkinson, Mr.