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Treasury tightens the screws on OS: will job losses follow?

Always useful to monitor the written and spoken questions in Parliament: if you use (and who wouldn’t?) you can set up an alert each time a phrase is used in Parliament (either house), or an MP appears, and get taken to the relevant page.

The latest interesting fact to emerge is that Ordnance Survey is expected, for the financial year just ended, to up its return on capital employed (ROCE) from the usual 5.5% to 6%:

Adam Afriyie (Shadow Minister, Innovation, Universities and Skills; Windsor, Conservative): To ask the Secretary of State for Communities and Local Government what financial return on ordinary activities was expected from Ordnance Survey in the year ending July 2008.

Iain Wright (Parliamentary Under-Secretary, Department for Communities and Local Government; Hartlepool, Labour): The financial target for the year ended 31 March 2008 was derived from the three-year target for 2004-05 to 2007-08 set down in the Ordnance Survey Framework Document 2004. This target was to achieve no less than 5.5 per cent. per annum return on capital employed (“ROCE”), averaged over a three-year period, with the return defined as surplus on ordinary activities before interest and dividends.

The target figure for ROCE for the year ended 31 March 2009 was increased to a return of not less than 6 per cent.

(Emphasis added)

That’s interesting, and if we get a moment it might be useful to see what that sort of increase in ROCE means for the OS’s profits and especially costs: we have heard that Vanessa Lawrence, OS’s chief, has warned staff that there might be redundancies in the coming year.

It might seem perverse to you – it does to me – to increase the ROCE demanded from an organisation that relies on third-party sales of its products as a recession bites, which would tend to mean that (a) those third parties are going to have less money to spend (b) some of those third parties might go out of business. “Capital employed” tends to be a fixed number (staff aren’t capital, they’re operating costs), and is hard to change.

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