Saving Defence by selling off the profit makers

So Liam Fox seems to think that an approach to cutting costs in MoD might be to sell off the Met Office, mentioned in a BBC interview.

I’ve felt for some time that Fox has little understanding of defence in the round, given his various utterances. There is a fixation on the front line, whatever that means, with no recognition that there is a fairly significant amount of support required to get boots on the ground on a consistent, reliable and safe manner. Neither does he demonstrate a particularly strong grasp on defence economics or how the majority of the system works. I will allow him some latitude given that he’s a politician and his main loyalty appears to be to getting his party elected, however he gives every indication that as Sec State for Defence he’ll preside over a wide ranging decimation of our military capabilities.

Anyway, to the point. Selling off the Met Office is more likely to increase costs to MoD than reduce them.

The Met Office is a trading fund, able to sell services to government, and in the wider private sector. The CEO is answerable to the Minister and Parliament for performance and the office have a broad remit to support MoD and wider government. Any surplus, or profit if we’re going to be grubbily commercial about it, hits the MoD bottom line.

Clearly MoD, its agencies and the uniformed services are heavy consumers of meteorological data and have to pay for it, but any surplus made eases the burden. Other government entities also purchase data from the office. The data would need bought anyway, and in selling off the provider Fox would expose the MoD to the need to then compete the service provision anyway. The competition would cost money and given the limited size of the supply market a cost reduction would be a surprise. So not only does he suggest losing the contribution but also increasing the cost of the met information anyway. There is a case for regular market testing, but that can be done cost effectively without the risks of divestment.

The profitability isn’t high, an agreed target of ¬£5.3M, which places it fairly firmly in the small business sector, but one wonders just how much of a saving it’s supposed to generate by divesting. Other performance metrics are all fairly general and apparently being achieved Wouldn’t it be more reasonable to look at business areas that do currently cost, rather than contribute, and find other ways to deliver those capabilities?

This short sighted and ill informed populism from Fox is not an isolated case, one would hope that he’s watching his back come the election.

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