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Annual Report and Accounts 1996-1997 |
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Annual Report and Accounts 1996-1997 |
Those industries which exploit the unique properties of the radio spectrum continue to be amongst the most dynamic in the UK economy. Whether in telecommunications, broadcasting, navigation or indeed scientific research, the pace of change continues to accelerate. Developing the framework of legislation, administrative and technical processes and skills to meet this welcome challenge of success, whilst at the same time carrying forward the existing services to our many and varied customers, has been the hallmark of a very busy year.
In my report on Financial Year 1995/96, I introduced the 'Balanced Scorecard' as the basis for this annual statement on our activities. I have continued this approach for Financial Year 1996/97 reviewing our performance from the four perspectives of finance, customers, internal process improvement plus innovation and learning.
Financial Perspective
Our target of 6% improvement in financial efficiency was the highest Ministers' have set in the six years since the Agency's formation. This target was achieved. We generated a cash surplus of £1.957m, £1.404m in excess of our public expenditure survey (PES) target of £0.553m (all figures after charging actual/forecast disaster recovery capital expenditure). This continued the downward trend in this surplus of the previous two financial years. We seek to meet this key Parliamentary target exactly, neither exceeding nor falling short of it. However, constraints on our ability to control the timing of all cash transactions, especially when receipts proves more buoyant than expected towards the year-end, make it difficult to hit the target exactly. Nevertheless, our progress towards hitting the target is improving each year as our ability to monitor and manage in year financial performance is enhanced.
We also seek to break even at the accruals (commercial) accounting level. This is not consistent with meeting our cash target unless debtors and creditors remain broadly stable year-on-year and depreciation charges and capital investment remain broadly similar in each year. The former has been made more difficult by the impact of disaster recovery. The latter is particularly difficult to achieve while we are making the significant capital investment in IT necessary to meet future operational needs, especially the challenges of the fundamental reforms proposed for UK spectrum management. Nonetheless, we have continued the trend of reducing this surplus, down from £2.981m in FY 1995/96 to £2.021m in FY 1996/97.
Our success as a net running cost Agency has been endorsed by Ministers and the Cabinet Office through completion of our 'Prior Options' process in March 1997, confirming our existing status, and through the agreement of a new Framework Document valid until April 2000.
In keeping with the Department of Trade & Industry policy of seeking to ensure the prompt payment of suppliers, we set and achieved a target of paying at least 95% of valid supplier invoices within 30 days. This was a particularly creditable achievement both by our finance staff and by those throughout our Agency responsible for verifying and authorising such payments.
Customer Perspective
Our extensive programme of regular consultation with customers continues. Whether it be through the annual programmes of customer surveys and regional customer seminars throughout the UK, through the consultative committees covering specific market sectors, or the publication of consultative documents, customer contact remains vital. This process of continuously seeking the views of our customers and reflecting these into the development of spectrum management policy is at the heart of our work, all the more so as new 'spectrum pricing' legislation is laid before Parliament.
The UK continues to lead on the international stage. Our Agency has chaired the European Conference Preparatory Group for the 1997 World Radio Conference (WRC). Patient work with European colleagues and industry working groups over two years has resulted in more than 280 European Common Proposals going forward to the WRC almost all with the support of the 43 nations of the CEPT.
Closer to home, the seven regional customer seminars during the Summer of 1996, focused on the White Paper 'Spectrum Management into the 21st Century', provided important feedback and guidance on the development of our legislation. More than 120 formal responses were received during the White Paper consultation. These, and the continuing consultations with industry, have helped to shape the legislation now before Parliament.
Internal Process Improvement Perspective
We have started a process of significant change in the way in which our Agency is managed and organised. In January 1997, a new structure based on 'Business Units' was introduced. This sought to identify the various distinct components of our business, emphasising the role of Managers in meeting the needs of designated groups of customers (whether external or internal) for defined ranges of services.
With spectrum pricing (subject to Parliamentary approval of the legislation) removing the link between fees charged and our administrative costs, a rigorous approach is required clearly defining spectrum management objectives for each licence class and setting fees accordingly. This complements our work on business processes and systems under the major 'RULES' project and our increasing understanding of market demand and dynamics from our extensive economics and market analysis programme. All these threads come together in the empowerment of Managers and their teams to respond to growing customer demand on a more formal business basis and to deploy our Agency's limited resources to best effect.
Innovation and Learning Perspective
As I described in the 'Foreword' for 1995/96, we are continuing with a process of major business change as we prepare for the new challenge of spectrum pricing. I would highlight in particular three areas:
We published our second economic impact study in May 1997. This illustrated the continuing dramatic growth in the contribution to the UK economy for industries drawing on 'spectrum' as their raw material. Headline GDP growth was 11% per annum in real terms with a contribution of £13Bn in financial year 1995/96. Employment is also growing fast with 1000 new jobs being created each week and the total employment being some 410,000 in financial year 1995/96. Consumer economic surplus and industry efficiency gains were estimated at between £11Bn and £15Bn per annum. Our new legislation seeks to support this growth and indeed to accelerate it further. New spectrum management tools are essential to maintaining the supply of the 'spectrum' raw material. Funds, which might be made available under the Spectrum Efficiency Scheme in the proposed legislation, could also provide vital assistance in enhancing the supply of the other essential 'raw material' for our industry - trained radio engineers and technicians.
We have also carried out ground breaking studies on the market demand for private and public services (and thus spectrum) for a series of market sectors, these include:
The results of these studies have been shared with industry and provide the final element in our process to develop a full and transparent spectrum strategy. From identified market demand for services through to the detailed plans to match that demand with timely spectrum provision, the strategy can now be complete and self consistent. This detailed information came too late to capture in the latest Spectrum Strategy Document published in May 1997. It will be incorporated in the next edition.
We have long sought both the means to deploy more resources on the definition and development of our Agency's major new information systems and the means to exploit these in response to requests for help and consulting support from other spectrum management administrations around the world. These objectives have been brought together in our proposed 'Information Systems Strategic Partnership'. A European Community-wide procurement is in progress to select a partner and to create an innovative public sector-private sector partnership. Subject to successful negotiation, the partnership, which would involve redeployment of our existing IT staff, would both provide enhanced value for money in the development and support of our information systems as well as selling these to other administrations keen to build on the UK's leadership in spectrum management.
Our most important internal challenge has been to further improve communications within our Agency. This has been emphasised in our continuing work towards Investors in People accreditation, to which we made a formal commitment on 20 August 1996. We have put in place a programme of management development, starting with our Management Board and cascading on to Managers and then to individual business units. This is enabling us to develop a better understanding at all levels of the role of our Agency and the unique values and culture we need to foster in order to serve best both our Ministers and our exceptionally broad range of customers.
Conclusions
This is my last Chief Executive's Foreword as I complete my five year contract with the Agency at the end of April 1998. I would like to close with some thanks. First I would like to thank our staff. They continue to cope with the challenge of change on an unprecedented scale, whether in the continued disaster recovery from the temporary loss of South Quay Three, the major pressures of fundamental legislative change or the internal upheavals of reorganisation. Change is necessary but it is seldom pleasant and I am grateful for the achievements of all our staff despite their inevitable concerns and uncertainties.
I would also like to thank Roger Skiffins Director of Broadcasting Space Services and Radio Technologies and David Reed Director of Resources Management - Finance & IT. Roger has been a stalwart of the Agency and its predecessors over many years. Due to ill health he was unable to contribute during the latter part of the year and has subsequently taken medical retirement. I know I speak for the Agency as a whole in wishing him a long and happy retirement. David Reed has moved to a new role within the Department of Trade & Industry. Again, the contribution of him and his team in driving forward the Finance and IT areas of our Agency in its first six years has been exceptional. We all wish him well in his new role.
I close by thanking my colleagues on both Management and Steering Boards for their unstinting help and counsel through what has been easily the most interesting and worthwhile period of my career. I wish all my colleagues well as they carry the Agency forward into a new era of spectrum management.
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