Box 3.B: British Waterways property portfolio

British Waterways is a public corporation which owns and maintains over 2,000 miles of canals, rivers and supporting infrastructure in England, Wales and Scotland. It owns a significant land and property portfolio alongside the waterways which assists British Waterways to deliver wider public benefits and urban regeneration. The study considered the parts of this portfolio in England and Wales.

British Waterways has achieved significant growth on its canal-side property portfolio. Under current economic conditions it is important British Waterways remains focussed on maximising gains from its property while also delivering excellence in management of the waterways. This will be enhanced by managing the canal-side property portfolio through a dedicated, wholly-owned subsidiary of British Waterways. The change will also increaseclarity of British Waterways' current funding model. British Waterways and the Department for Environment, Food and Rural Affairs (Defra) will work closely with HM Treasury and Shareholder Executive to take forward this change, and on the company's long-term strategy which will consider the appropriate business model to provide a sustainable future for the waterways and ensure delivery of a wide range of public benefits

Box 3.C: Dartford Crossing

The Dartford-Thurrock River Crossing is part of the Strategic Road Network that connects the M25 across the river Thames to the east of London. The crossing carries nearly 150,000 vehicles a day. The crossing is made up of two road tunnels and the Queen Elizabeth II Bridge, a 137 metre high cable-stayed bridge.

The 2008 Pre-Budget Report announced widening the scope of the capacity study to include the potential to realise value for the taxpayer. The Department for Transport (DfT) recently concluded this study on the future need for additional crossing capacity in the Lower Thames area and this has been published on the DfT's website. The Department has announced it will look in more detail at the recommendations of the study, in particular to explore in more depth three possible options for providing additional crossing capacity.

The OEP team, working with the Department and the Shareholder Executive have considered the commercial options for realising value for the taxpayer. This work cannot be finalised until decisions are made on the requirement for future capacity and any legislation that specific options might require is determined.

As part of the next phase of capacity work, the Department will determine the best approach to realising value for the taxpayer from the existing crossings. The Government will bring forward proposals to realise value by Budget 2010 with progress reported at the 2009 Pre-Budget Report.

Box 3.D: Defence Storage and Distribution Agency (DSDA)

The Defence Storage and Distribution Agency (DSDA) stores, processes and distributes materials and equipment for the armed forces and industry, within the defence supply chain. Following a significant three year efficiency and business improvement programme it was recognised that DSDA had potential for further modernisation, rationalisation and could operate more effectively in a commercial manner exploiting its range of assets and skills in a wider market.

The OEP team has worked closely with DSDA and the Ministry of Defence (MOD) to identify the best business model to deliver its services whilst seeking to minimise its ongoing capital investment requirement.

A number of important actions are now being introduced from 1 April 2009, including:

• the consolidation of elements of the Joint Supply Chain (the DSDA plus British Forces Post Office and the Disposal Services Authority) into a single Integrated Provider Group (IPG) from 1 April 2009 in order to rationalise overheads and to exploit the synergies between the organisations; and

• the introduction of shadow internal charging, to make the costs of DSDA's activities more transparent to its internal customers and help strengthen its business model. This is expected to lead to more efficient use of its services and prepare it for further transformation.

DSDA has also completed a full review of its ongoing/future business requirements, which highlights opportunities for modernisation and business co-location. This will form the basis for a detailed assessment of its estate needs and the potential wider commercial exploitation of its infrastructure to be undertaken over the next three to four months.

The next phase of the process will include an evaluation of potential further commercial opportunities including:

• growing third party revenues;

• partnering;

• the potential disposal of surplus assets; and

• alternative methods of ownership to fund capital requirements and to grow.

The work will also include reviewing the boundaries, synergies and relationship between the IPG and the Defence Support Group (DSG) which provides a strategic in-house facility for the maintenance, repair and overhaul of major land and air platforms. This work will be completed by autumn 2009.

Box 3.E: Land Registry

Land Registry maintains and develops a stable and effective land registration system throughout England and Wales, providing the cornerstone for the creation and free movement of interests in land. Giving a state-backed security for title to registered estates and interests in land for the whole of England and Wales, and ready access to up-to-date and guaranteed land information, enables confident dealings in property and security of title. In addition, Land Registry produces property price reports and delivers a range of non- statutory added-value products and services. Land Registry is committed to providing high quality, cost-effective services which are delivered promptly to all customers.

A review of the business model was undertaken as part of the OEP. This concluded that in light of current market conditions and recognising the need to retain responsibility for the creation, recording and guaranteeing of title to land within Government, the following improvements to the operating framework of the business have been identified and will be delivered;

• realising significant efficiency savings through a programme which includes estate and operational rationalisation and market testing of support functions that will result in a more streamlined, resourceful organisation;

• developing opportunities for the provision of wider commercial services and products;

• identifying synergies with the functions and data requirements of other public sector bodies with a view to achieving efficiency improvements through greater collaboration; and

• exploring opportunities to accelerate these initiatives through joint ventures and/or outsourcing of activities to third party providers.

A further update is planned at the 2009 Pre-Budget Report.

Box 3.F: Met Office

The Met Office is a world-leading provider of weather forecasts and climate change modelling and advice to the general public, specialist customers throughout the public sector and an increasing number of private sector customers.

It is essential that the Met Office's unified approach to short, medium and long term forecasting and climate modelling, which is the most efficient and sophisticated in the world, is preserved. The Met Office also performs a number of key government roles, especially in international data collaboration and UK representation. In order to maintain the quality of its services it will require long-term investment and the freedom to develop its operations. There remains potential to expand commercial operations at the Met Office beyond those already provided, possibly through the introduction of private capital in some areas.

Over the coming months the project team will:

• work closely with the MOD as the owner department and HM Treasury to identify improvements to its business model, ownership structure and financial framework in order to reduce the administrative burden, maximise its development and to fully exploit the market opportunities open to it;

• work with other public sector bodies to achieve efficiency improvements through greater collaboration or transfer of functions;

• explore increased commercial activities, for example weather warnings to industry and helping business understand the impact of climate change;

• seek opportunities for private sector partners to develop specific services to complement the Met Office's business; and

• maximise operational freedoms and reduce bureaucracy in the interface between the Met Office and the MOD.

Box 3.G: Oil and Pipelines Agency (OPA)

The Oil and Pipelines Agency manages the Government Pipeline and Storage System, overseeing all aspects of its operation and maintenance to support UK defence needs and exploit surplus capacity. It is an important player in the UK fuel industry and infrastructure, which has changed significantly since it was set up, creating a need to develop and modernise.

The OPA, and the assets that it manages on behalf of the Ministry of Defence, have the potential to make a broader contribution within the downstream oil market to enhancing the UK's product distribution and storage infrastructure, thereby reinforcing the security of energy supply for the UK and adding to the resilience of important parts of the nation's economic infrastructure. This is constrained by current legislation, which will be reviewed and amended.

Doing so will also enable private sector users to make greater use of these assets, in particular the spare capacity, and therefore deliver improved value to the taxpayer.

The project team have concluded that there may also be scope to drive efficiencies by applying the OPA's expertise in the management of pipelines and fuel storage to a wider range and use of assets than at present.

As part of the programme, the project team are engaging in discussions across a number of government departments to determine how these opportunities can best be exploited in the short to medium term, to the UK's benefit, whilst supporting defence needs.

The next phase of the Operational Efficiency Programme will also explore whether there is a potential role for the private sector in the future financing, ownership or operation of some or all of these assets.

Box 3.H: Ordnance Survey

Ordnance Survey collects, maintains and publishes high quality and up-to-date geographical information for the whole of Great Britain. Ordnance Survey provides data and services to customers both directly and indirectly through its network of commercial partners. The Government is committed to stimulating innovation in the geographical information market, increasing competition where it would be beneficial to consumers and to making geographical data and services more easily available.

The OEP has concluded so far that Ordnance Survey needs to be more customer-focused and commercially driven. The Government is therefore publishing a new commercial strategy for the Ordnance Survey on their website. The new strategy balances the requirement to maintain the highest quality standards with the need to significantly enhance ease of access to geographic data and services for both commercial and non-commercial use.

The new strategy seeks to equip Ordnance Survey to thrive in and better support competition and innovation in a wider geographical information market that is being transformed by advances in technology. It is a significant and ambitious programme of change. The Government has set key milestones for delivery in 6 and 12 months' time and beyond, as well as a process for independent review and challenge of progress. If sufficient progress is not made to promote competition and innovation in these timescales, the Government will consider further reforms. Opportunities to accelerate the delivery of initiatives through introducing further commercial experience and capabilities will be fully explored over the coming year.

Box 3.I: QE II Conference Centre

The QE II Conference Centre is a purpose built conference centre located in Westminster in central London. It provides high quality conference facilities for national and international meetings for both government and private use.

Following the statement in the 2008 Pre-Budget Report, further work on the QE II conference centre has been undertaken. Although, in theory, the QE II conference centre could be disposed of now, this would be potentially at a significant discount to its underlying value. A more measured approach is required. The conclusions are, therefore, as a first step, to undertake a site development study within three to six months advised by a firm of property professionals. It will explore the opportunity of redeveloping the existing

site, in a way that is sympathetic to planning considerations and current business operations. This could entail retaining the existing conference business for the foreseeable future. Marketing and disposal could take place at various stages depending on market evolution and prevailing risk and reward considerations, but at the latest by mid 2012.

Box 3.J: Royal Mint

The Royal Mint manufactures all UK circulating coins for the UK Government, sells coins and blanks to overseas governments, and sells commemorative coins to the public. It also produces ceremonial coinage and medals.

The Royal Mint has demonstrated success over the past few years through an increasingly diversified and commercial strategy. The business' performance has improved significantly. As well as continuing to manufacture circulating and commemorative coins for the UK, it has won a number of important overseas contracts and enhanced productivity. Its performance remains robust in these challenging times.

In line with this success, the Government's priority is to facilitate further growth to better secure the sustainable success of the business for its staff, customers, and also to secure value for money for the taxpayer.

There is now a strong case for the introduction of private capital into the Royal Mint. This will best allow the business to pursue further commercial opportunities and grow, taking advantage of the resources and opportunities which come from moving outside the public sector. It will cement the Royal Mint's position as a high-quality British manufacturing success, competing and winning in global markets.

In the 2004 Pre-Budget Report, the Government announced an intention to vest the Royal Mint as a company. Work on vesting was halted in 2006, due to the need to tackle the performance of the business. Given the recent developments in the business outlined above, the Mint will now recommence work on vesting, with the intention of completing the process later this year.