London: 18th June 2007

The UK LOCUS Association June seminar was held early evening on Monday 18th June 2007 at the Dorsey and Whitney offices in central London. The meeting, attended by 30 plus LOCUS members and guests considered The Trading Fund Model and the PSI Market. The one and a half hour meeting was followed by an informal discussion period over refreshments.

LOCUS Chair Michael Nicholson welcomed the speakers and the delegates to the meeting and briefly mentioned the LOCUS Manifesto and the LOCUS members present at the meeting before going onto outline the topic of the evening and introduce the three knowledgeable speakers:

Antoinette Graves - Leader of the CUPI Team at the Office of Fair Trading (OFT) Mark Harper MP – Conservative front bench spokesman on Defence. Mark Todd MP – Labour Member of the Treasury Select Committee and quoted as one of the busiest MP’s in the current Parliament.

Michael Nicholson recalled that the OFT published the CUPI report in early December 2006. The CUPI report has stimulated a lot of debate since, not just in the UK but also in other European Countries, which believe that the CUPI report has set the Gold Standard for PSI market reports. Recently the UK Government Cabinet Office published the Power of Information report that endorsed many of the findings of the CUPI report and went further in scope and recommendations. It is expected based on questions recently asked in Parliament by Mark Todd MP that the UK Government will respond to both reports by the end of June 2007. Michael stated that in order to have a balanced debate a number of Trading Funds had been invited to put the case forward on the advantages of Trading Funds but none were available to do so. The LOCUS Association felt that there was no doubt that there was evidence to show that the Trading Funds were inhibiting the PSI market in more ways than one to the detriment to the private and public sectors.

Antoinette Graves of the OFT then provided a quick canter through the CUPI report to remind the delegates where we currently are and to relate the CUPI report to Power of Information report.

The key findings of the CUPI report included amongst others:

• PSI is extremely valuable. 35% of PSI re-users products and services would not be possible without PSI and 40% of PSI re-users products and services were partly dependent on PSI.
• 1 in 5 of the PSI Re-users were in competition with the public sector bodies that provided the PSI.
• The definitions were reviewed – namely unrefined data and refined data.
• A substantial amount of PSI in the UK was free or issued at marginal cost.
• There was a 50:50 split within the re-users between the public and private sectors most of which added value to the PSI.
• There was a common set of issues related to availability, over restrictive contract terms, which were often complicated and restrictive.
• Public Sector Information Holders competing for tenders with the private sector PSI re-users. Examples were found where the PSIH gave themselves more favourable terms than those offered to the private sector competitors.
• The issue of Price of information could not be proved, as the public sector bodies do not allocate costs to the unrefined and refined information.
• Existing controls were not adequate to resolve the problems that have and continue to arise.
• The ground breaking work undertaken in the 2000 cross cutting review was not taken forward and the policy documents produced following the review were not in alignment with the review and were confusing.
• The report made a number of recommendations.
• The UK Government was still to respond to the CUPI report.

The remedies considered included splitting the PSIH trading fund into separate parts one for the unrefined information activities and the other for the refined information activities. This would still require regulation and ongoing monitoring in order to ensure for example the public sector body handling the unrefined information did not slowly return to refining the information or over priced the information.

The OFT did explore some of the pros and cons of free PSI but essentially this was beyond the OFT's remit.

As a result of the study the OFT decided:

• To build upon the current framework and the OFT is working with HM Treasury and OPSI with respect to Accounting practices of PSIH’s and to adopt a proportionate approach to the implementation of the new accounting practices. There was little value to be gained by requiring all PSIH’s to adopt the more rigorous accounting practices if the turn over from information trading was not significant – this was not cost effective and not in the interests of the taxpayer.
• That the resources and power of OPSI should be strengthened.
• That more PSIH’s should be included within the OPSI Information Fair Trader Scheme.
• That pricing differentials should be permitted.
• That the Trading Fund model was not found to be a problem per se as there were examples where it worked well. Where the model was not working well the OFT recommendations should address the potential dangers. For example where separation of the monopoly element was not occurring or equal access was not taking place.
• The UK Met Office and the British Geological Survey are good examples of separating the unrefined and refined information.

The Cabinet Office Strategy Unit’s report on the Power of information took the CUPI report a step further and one of the recommendations (Recommendation 9) was that government should commission and publish an independent review of the costs and benefits of the current trading fund charging model for the re-use of public sector information. That the review should include the role of the five largest trading funds (not defined in the report but referred to the CUPI report), the balance of direct versus downstream economic revenue, and the impact on the quality of public sector information.

The Government would respond to the Power of Information report in the near future.

Antoinette concluded that we certainly lived in interesting times and that there was a lot of interest as to the outcomes. Until the Government published its response to the reports implementation of specific actions could not be commenced although a lot of work was underway between the OFT, OPSI, HM Treasury and the Department of Trade and Industry.

Mark Harper MP then focussed on the UK Hydrographic Office although he did have responsibilities as opposition front bench spokesman for Defence related to the UK Met Office.

The UK Hydrographic Office (UKHO) had a long heritage dating back to the time of King George III. Of the UKHO income from the sale of PSI £10 million came from the Ministry of Defence itself and was related to military objectives such as the support of the Polaris submarines. £64 million came from commercial use of the UKHO PSI namely the private sector from both within the UK and overseas. The UKHO was also governed by international treaties. The Government was likely to take into account non-economic reasons when reviewing the status of the Trading Fund.

The UK Maritime sector was large in that it generated £40 billion of revenues per annum and as such could well afford to pay for the hydrographic information.

There were a number of options:

1. To provide the unrefined data for free –the Conservative opposition party does not agree with this option.
2. To sell off the UKHO. The Conservative party once had this as a policy but it was no longer policy.
3. To establish the UKHO as a wholly owned public company reporting to the MOD with greater commercial focus and tougher targets.
4. To continue with the Trading Fund model as it is with a much clearer focus to ensure the issues identify are addressed. This was the current Conservative Party policy.

Action was required to address the issues that arose from Trading Funds acquiring of private sector companies operating within their sectors and quoted the case of UKHO acquisition of 7Seas within the maritime sector as an example. Clearer robust guidelines were required.

The recommendations made within both the OFT CUPI report and the Prime Ministers Strategy Unit report on the Power of Information needed to be acted upon and there was much to recommend them.

Mark’s final summary point was that broadly the position was that the status quo should be maintained.

Mark Todd MP’s opening statement was that of a Health Warning in that he was speaking as an individual MP and not speaking on behalf of the UK Government.

The Trading Funds were the subject of the high quality documents that have been produced which as yet have not been acted upon. This was regrettable. The discussions around Trading Funds were based on a theoretical approach and there was a real need to turn the debate to one based on substantiated economic evidence.

The Trading Funds collected 90% of the PSI revenues and this would no doubt be taken into account in the 2007 cross cutting review that was underway which would be reported on most likely in the October 2007 timescales. When the cost cutting review was initiated it was certainly the intention to undertake a sweeping review of the public sector assets, which included Trading Funds. However the precise review of public sector assets was not clear.

As no Trading Funds were able to attend the meeting Mark outlined the advantages of Trading Funds which in his view included:

• It is clear that the PSIH Trading Funds understand the value of the data that they hold in contrast to most public sector bodies that have no understanding on the value of the information they hold.
• They have a source of income from which they can develop and maintain the quality of the data. The majority of the public sector bodies do not have this option or right.
• They understand how to distribute their data and how that data can be re-used either by themselves or by others. This is not the case for most public sector bodies.

There are a lot of Trading Funds, they hold a huge amount of data and they understand the value of the information. Potentially this could be lost if the Trading Fund model was to be abandoned or changed. Most PSIH’s had no revenue stream and they had to develop and maintain their data through winning slices of financial resources from within their own budgets year on year. Data was collected in a wide range of formats and there was little expertise with respect to data management and licensing.

Much of the valuable data was held at the local level where data was collected to support the delivery of services, which they understood.

To highlight the difficulties that arose from dealing with dispersed PSI and the related services the example of the Rural Payments Agency (RPA) was cited. The RPA was required to compensate farmers for maintaining the rights of way. However the rights of way shown on the Ordnance Survey maps were indicative and not suitable for the purposes of the RPA. The public sector bodies that understood and held the rights of way data was the local government bodies. The conclusion drawn from this that there was a need to find ways to create a national depositories such as rights of way data so that public bodies and others could use that data more effectively.

The options related to Trading Fund models were then briefly reviewed. The options considered included:

• Keep the Trading Funds as they are but to ensure they complied with competition law.
• Return them to original form – this was unlikely to occur.
• Shift them to wholly owned public sector companies.
• Split them up in order to clearly demarcate their tasks.
• Sell them off.

The last three required the presence of a strong regulatory framework.

The Power of Information report recommendations would lead to a robust debate and a better understanding of the various models and approaches. The reports best point was that of explaining what is happening in the market place, which demonstrated that there was a blurring of the lines between the public, private and voluntary (or third sector) sectors. It was observed that the current Chancellor of the Exchequer (The Prime Minister elect) had a strong interest in the third sector.

Marks final summary was that great care should be taken when adapting to the changes and addressing the issues that are arising from Trading Funds so as not to loose the jewels in the Crown. Splitting the Ordnance Survey could potentially be damaging which would damage the country as a whole.

An active question and answer session then followed and covered the following issues in outline.

Question 1:

Addressed to Antoinette Graves - Do you believe guidelines can be put in place that result in the private sector adding value to PSI?

Answers:

Antoinette Graves. In short yes we should be able to. The longer answer is that this is dependent upon the review of the government accounting practice that is underway, which would result in high level guidance on charging for government services with an annex on charging for information and cross-references to other guidance for example on Trading Funds. The challenge was to ensure the guidance provided was suitable for all public sector business models.

Mark Todd. It was the principles that needed to be set down and then a centralised public body should then be the regulator and adviser as to how those principles should be applied to different public sector bodies. Trying to produce guidance that fitted all was unlikely to be achieved.

Question 2:

Addressed to Mark Harper. The current Government has real concerns about self-regulation – should the Government be regulating itself?

Answers:

Mark Harper. Tthere were two parts related to the data unrefined and refined. It was necessary that the responsible Department for a Trading Fund should not regulate that Trading Fund. There was a need for external involvement in the regulation process.

Mark Todd. The regulatory framework must address matters such as equity, discretion, timeliness, provision of expertise and resources and to ensure enforcement. The Government could manage this process.

Question 3:

Almost two years have now elapsed since the PSI Regulations came into force yet many local government bodies have not complied. What action can be taken to address this issue?

Answers:

Mark Todd. The short answer is with considerable difficulty due to the number and range of sizes of local government bodies. Issuing specific instructions combined with resources is an approach but there is evidence to show that this also does not address the issue. Flooding was quoted as an example where this had not worked yet flooding was life threatening so if this did not have the effect then it most likely would not occur with PSI.

Antoinette Graves. We did look at this within the market study. However the PSI Directive itself does not force public sector bodies to permit re-use of their PSI holdings. The framework only comes into force if the public sector body allows the re-use.

Question 4:

There are examples where Local Government has specifically asked for legislation to be put in place but this has been turned down. In the example of Address data local government has contracted within itself to produce a key data set that benefits a very wide range of local services and is also proving to be of benefit to central government. Local Government delivers more services than central government yet central government issues conflicting demands to the local government level about the delivery of those services. What can be done to ensure Central Government delivers on their responsibilities and do not just opt out? For example in the area of a National Addressing data set.

Answers:

Mark Todd. Cited the planning portal. Planning data has an incredible value – it is held all over the place and in different formats.

Mark Harper. The question to take up is the economic value and the revenue flows. Such studies should pay attention to local government.Tristram Cary. The format of PSI not being easily accessible is not the key issue – the private sector is ready and able to handle that providing they are given access to the information. There is a real need for the vision to reflect the reality of the emergence of both private and citizen sector led mash-ups.

Question 5:

Addressed to all panel members. Is health data in the same vein as Ordnance Survey or Local Government data?

Answers:

Mark Harper. Health data related to specific people is different and has to be treated differently. However generic data (data that does not identify a person) is no different in principle.

Mark Todd: There are examples where the collection of drug information has been re-used for over 18 years now and it delivers real benefit both to the private and public sectors.

Antoinette Graves. The commercial re-use of the PSI has to pass the FOI and Data Protection tests first. The OFT CUPI team briefly reviewed Australia and how it permits the re-use of health data. Commercial use of health data is generally occurring with respect to aggregated health data, drugs data, service reach data etc.The latter is of interest to bus companies for example as to where to run bus routes and place bus stops. There is a real difference between the NHS and the Ordnance Survey. With respect to the former the PSI produced is as a result of a by-product of delivering a service where as the Ordnance Survey is dedicated to the capture and maintenance of their data. The principles would solve the issues that arise.

Michael Nicholson then drew the meeting to a close and thanked the speakers for their contributions and the audience for their attention and responses.

Michael agreed with the speakers that we certainly were living in an interesting time and looked forward optimistically to the Governments response in the near future.

The debate then continued informally over refreshments for a further 30 minutes.

The reaction to the meeting and debate varied depending upon where each person sat in the PSI value chain. The views ranged from the optimistic to being pessimistic especially if the speakers (all of whom were on the inside of the public sector machinery) were hinting at the status quo being maintained perhaps with some tightening of the guidance and regulation. It was clear that perhaps the speakers had embarked unintentionally on an aspiration control!

The one point where there was consensus and that was that all welcomed the CUPI and Power of Information reports and yes we did live in interesting times but will the UK Government respond to the challenges in the right way?

As ever the delegates were left in the wait and see mode whilst the Government produced its response!

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