UKHO FD Ministerial Submission - United Kingdom Hydrographic ...

Framework Document

United Kingdom Hydrographic Office
FRAMEWORK DOCUMENT 2007
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CONTENTS
FOREWORD
By the Parliamentary Under-Secretary of State for Defence
and Minister for Veterans, Derek Twigg MP 5
INTRODUCTION 6
CHAPTER 1
Purpose of the UKHO 7
1.1. Status of the UKHO 7
1.2. Role 7
1.3. Vision 7
1.4. Mission 7
1.5. Top-Level Objectives 7
CHAPTER 2
Governance Framework 9
2.1. Key Roles 9
2.2. Governance Levers 9
2.3. The Owner 10
2.4. The UKHO Owner’s Council 10
2.5. The UKHO Board 10
2.6. The Chairman of the UKHO Board 10
2.7. The Chief Executive of UKHO 10
2.8. Ministry of Defence (MOD) 11
Governance of UKHO 12
CHAPTER 3
Policy Framework 13
3.1. Parliamentary Accountability 13
3.1.1. Parliamentary Commissioner for Administration 13
3.2. Dealing with the Public 13
3.3. Delegations 13
3.4. Trades Unions (TUs) 13
3.5. International Representation 14
3.6. Competition Law 14
3.7. Intellectual Property Rights (IPR) (Excluding Crown Copyright) 14
3.8. Quality 14
3.9. Policy in Relation to External Stakeholders 14
3.9.1. HM Treasury 14
3.9.2. Cabinet Office 14
3.9.3.The Stationery Office (TSO) 14
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3.9.4. Scotland, Wales and Northern Ireland 14
3.9.5. Department for Transport (DfT) and the Maritime and
Coastguard Agency (MCA) 14
3.9.6. Shareholder Executive (ShE) 15
CHAPTER 4
Financial Framework 16
4.1. Business Model 16
4.2. Commercial Products and Services 16
4.3. Accounting Officer’s Responsibilities 16
4.4. Major Decision Making 16
4.5. Annual Report and Accounts 16
4.6. Capital Structure 16
4.6.1. Loan Funding 17
4.6.2. Income and Expenditure 17
4.6.3. Return on Capital Employed (ROCE) 17
4.6.4. Dividend Policy 17
4.6.5. Retained Earnings 17
4.6.6. Assets 17
4.6.7. Liabilities 17
4.6.8. Capital Investment 18
4.7. Internal Audit 18
4.8. Risk Management 18
4.9. Subordinate Companies and Joint Ventures 18
ANNEXES 19
ANNEX A
The Hydrographic Office Trading Fund Order 1996 and
HM Treasury Minute 20
ANNEX B
The United Kingdom Hydrographic Office (UKHO)
Top-Level Objectives 25
ANNEX C
Terms of Reference for the UKHO Audit Committee,
Remuneration Committee and Safety of Navigation
Assurance Committee (SONAC) 27
ANNEX D
The United Kingdom Hydrographic Office Delegations 35
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ANNEX E
Framework for Major Business Decisions 37
ANNEX F
Provisions of the Chief Executive’s Letter of Appointment
as Accounting Officer 39
ANNEX G
Roles, Responsibilities and Accountabilities 40
ANNEX H
People 44
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FOREWORD
By The Parliamentary Under-
Secretary of State for
Defence and Minister for
Veterans, Derek Twigg MP
The UKHO faces several challenges; not
least the move from paper-based
navigational products to digital products. It
is also uniquely placed to grasp the
opportunities offered by the shift in
customers’ requirements. This document
encapsulates the UKHO’s commitment
going forward, and the confidence of the
MOD in its continued and well deserved
success.
I am pleased to introduce this Framework
Document for the United Kingdom
Hydrographic Office (UKHO). The UKHO is
a Next Steps Executive Agency within the
Ministry of Defence and has operated as a
Trading Fund since 1 April 1996.
The UKHO is a world renowned
organisation with 212 years experience of
producing navigational and other
hydrographic products in both paper and,
increasingly, digital formats. It has evolved
over the last two centuries from purely
serving its military customer, the Royal
Navy, for which it was formed, into an
organisation that is tasked with discharging
the UK’s obligations under the UN Safety of
Life at Sea Convention by providing
hydrographic services for waters of UK
national responsibility. Its Commercial
business is the third strand to this success
story, servicing primarily the worldwide
merchant shipping market, and increasingly
offering products tailored to the leisure
market, and also offering consultancy
services.
The UKHO has developed a position as a
world authority on and provider of data
essential to safe marine navigation. It
provides advice on policy formulation in
hydrographic matters to the UK
Government and represents the UK at
international fora, including the International
Hydrographic Organization.
This Framework Document identifies the
UKHO’s Purpose, Vision and Role, together
with the Governance, Policy and Financial
parameters that guide its day to day
operations. In one document the Ministry of
Defence’s expectations for the Trading
Fund, including the Top Level Objectives,
have been captured, together with the
arrangements in place to ensure the
effective delivery of those expectations.
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INTRODUCTION
The purpose of this Framework Document
is to set out, in one authoritative document,
what the United Kingdom Hydrographic
Office (UKHO) is charged to deliver by its
Owner and the principles and polices with
which he wishes the UKHO to operate,
including the governance arrangements.
Where relevant, this document includes
links to sources of further detailed
information.
Although it has no formal legal status, the
aim is to make this document as definitive
as possible. To this end updated versions
will be published from time to time, under
the authority of the Under-Secretary of
State for Defence, on the UKHO website:
www.ukho.gov.uk.
The Corporate Plan sets out the strategy
to be pursued by the UKHO in order to
deliver the objectives set by the Owner,
and outlined in this Framework Document.
The UKHO has a world-class reputation
for providing safe and accurate
navigational information, essential to the
needs of the Royal Navy and merchant
mariner.
The UKHO has a proud history, going
back more than 200 years. It has always
had an enviable reputation for the quality
and accuracy of its charts and other
products.
The Defence and commercial shipping
markets are now changing with the
progressive introduction of digital
navigation replacing paper products.
UKHO has developed a vision to maintain
its strong position within this market which,
when delivered, should ensure continued
support for the mariner in the 21st century
and well beyond.
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1. Purpose of the UKHO
1.1. Status of the UKHO
The UKHO is a government organisation
responsible for providing marine
navigational products and services, and
related safety information. It was founded
in 1795, was established as an Executive
Agency of the MOD in 1990 and has
operated as a Trading Fund since 1 April
1996. The Hydrographic Office Trading
Fund Order 1996 and Treasury Minute are
at Annex A.
Based in Taunton in the South West of
England, the UKHO employs
approximately 1,000 people and
generated revenues of £75M in the year
ending 31 March 2006.
Admiralty Holdings Limited was
incorporated as a Government Owned
Company in October 2002 for the purpose
of exploiting the commercial activities of
UKHO.
1.2. Role
The UKHO exists to help preserve life and
safety at sea. The hydrographic
information it provides is crucial not only to
support operations by the Royal Navy
around the world but also to the majority of
commercial shipping. The UKHO also
plays a central role in discharging the UK’s
‘Safety of Life at Sea’ Treaty obligations to
provide hydrographic services for waters
of UK national responsibility, as required
under the United Nations International
Convention for the Safety of Life at Sea
(SOLAS).
1.3. Vision
To be the world leader in the supply of
hydrographic information and services.
1.4. Mission
To meet national, defence and civil
requirements for navigational and other
hydrographic information in the most
efficient manner.
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1.5. Top-Level Objectives
The overall objective of the UKHO is to
deliver value to the UK taxpayer, by using
its assets and capabilities for the benefit of
Government, the economy, the
environment and society in general. Value
is delivered to the taxpayer by:
• Providing its core services to the
public efficiently and effectively;
• Assisting and supporting other public
sector organisations in meeting their
objectives; and
• Generating profitable revenue from
other customers.
The following paragraphs summarise the
top-level business objectives placed upon
the UKHO by the Government for the
period 2005-10. More detailed versions of
each objective can be found in Annex B.
These objectives support the delivery of
MOD’s Public Service Agreement
objectives, both by helping ensure that
current and potential future military tasks
are supported by high-quality hydrographic
information, and by driving down the costs
to MOD of providing this support.
In meeting the objectives below as a
Trading Fund, the UKHO is required to
make a financial return at least equivalent
to its cost of capital.
Objective 1 - Operational Support to the
Royal Navy and other Defence
Customers
The UKHO provides value to Defence by
delivering the hydrographic services which
enable the Royal Navy and other Defence
Customers to meet current and potential
future operational tasks.
Objective 2 - Support to ‘Safety of Life
at Sea’ Treaty Obligations
The UKHO provides wider value to the
government, in support of the Maritime
and Coastguard Agency (MCA), which is
the responsible authority for the UK’s
Treaty obligations; and who’s role is to

discharge efficiently and effectively those
actions required to support the obligations
under SOLAS 1974 (as amended and
including its protocol of 1998), and to
promote hydrographic services.
Objective 3 - Developing Profitable
Business Streams
Subject to maintaining the capability to
deliver against the two objectives above,
the UKHO is required to extract maximum
value from its assets and capabilities by
generating profitable revenue from
customers outside Government. In doing
this, the Government expects the UKHO to
develop a robust strategy for exploiting the
changing commercial market for
hydrographic and related geo-spatial
products and services, given in particular
the increasing demand for digital products.
Objective 4 - Organisational Excellence
In delivering the above objectives, the
Government requires the UKHO to
demonstrate organisational excellence.
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2. Governance Framework
2.1 Key Roles
The corporate governance and accountability
arrangements for the UKHO draw on best
practice in both the public and private sectors,
and reflect its special position as both part of
a Government department, and a
commercial organisation.
The central features of the governance
arrangements are illustrated in the figure on
page 12. The key roles are:
• the Ministerial Owner, who sets the
UKHO’s top level objectives;
establishes its policy and financial
framework, and approves major
business decisions;
• the UKHO Board, under an
independent Non-Executive
Chairman, which acts on behalf of
the Owner in scrutinising the
business plans and performance of
the organisation; and
• the Chief Executive, who leads and
manages the UKHO.
In exercising his role, the Ministerial Owner
receives advice from:
• CE UKHO;
• departmental officials in MOD’s
Directorate of Business Delivery
DBD);
• the UKHO Board, via its Chairman;
and
• an Owner’s Council comprising
senior stakeholders from across and
outside government.
2.2 Governance Levers
The principal business decisions
underpinning this Governance Framework
relate to the approval of the following:
• the UKHO’s, top-level objectives,
overall business strategy, and fiveyear
Corporate Plan. These are
endorsed by the Board and formally
approved by the Owner;
• a Business Plan, with detailed
objectives and targets for the first 12-
24 months of the Corporate Plan.
This is approved by the Board;
• annual Key Targets derived from the
Business Plan, and supporting the
broader Corporate Plan. These are
endorsed by the Board, approved by
the Owner, and published in
Parliament; and
• specific major business proposals
requiring approval at a level higher
than the Executive (for example for
major investment, rationalisation, or
new business ventures – see Annex
E for more detail). Depending on
their magnitude and wider
significance, these are either
approved by the Board or by the
Owner (following endorsement by
the Board).
The UKHO Executive initiates preparation of
proposals in all these areas, apart from the
development and review of top-level
objectives, on which the DBD leads.
The most influential of the above levers is the
Corporate Plan which sets out:
• the strategy for meeting the UKHO’s
top-level objectives over the next five
years, including a full market
analysis;
• the main activities, investments and
other decisions which will deliver this
strategy;
• how success will be measured,
including objectives, targets and
milestones;
• the way in which risks to success will
be managed;
• the key underpinning assumptions;
and
• a comprehensive financial analysis
and projections across the five-year
period.
The Corporate Plan is refreshed annually
and is a commercially sensitive document.
When approved by the Owner, it forms the
authoritative basis against which all business
decisions within the UKHO are to be taken.
Approval also authorises key assumptions on
which the business is entitled to plan.
Individual business decisions flowing from
these assumptions still require specific
approval under the framework at Annex E.
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2.3 The Owner
The “Owner” of the UKHO is the Under-
Secretary of State for Defence and
Minister for Veterans, who has delegated
day-to-day Ministerial responsibility for the
UKHO on behalf of the Secretary of State
for Defence, who remains ultimately
responsible and accountable.
The Owner’s main responsibilities are: to
set and review the UKHO’s top-level
objectives; to establish a policy and
financial framework; and to approve major
business decisions, including the longterm
business strategy, a five-year
Corporate Plan and annual Key Targets.
More detail on the Owner’s responsibilities
is given at Annex G.
2.4 The UKHO Owner’s Council
The UKHO Owner’s Council is a group of
senior stakeholders from across and outside
government, which meets as necessary to
discuss and advise on how the Owner should
exercise his responsibilities. More detail on
the Owner’s Council role and composition is
given at Annex G.
2.5 The UKHO Board
Led by an independent, Non-Executive
Chairman, the UKHO Board acts with
delegated authority from the Owner. Its main
role is to support and constructively
challenge the Executive, and to apply
scrutiny both in the development of business
strategies, plans, business cases and targets;
and in assessing the business performance
of the UKHO in delivering the approved
Corporate Plan.
In discharging this role, the Board has
delegated authority to approve certain
categories of business decisions (set out in
Annex E). On issues requiring approval by
the Owner personally, the Board works with
the wider Executive team in the development
of recommendations, which it then
scrutinises and endorses before formal
advice is submitted.
The UKHO Board comprises senior
Executives and Non-Executive Directors
(NEDs).
More detail on the role and composition of
the UKHO Board is given at Annex G.
The UKHO Board has three key subcommittees,
each chaired by a NED: the
Safety of Navigation Assurance Committee,
the Audit Committee and the Remuneration
Committee. The remits of each of these
committees are given at Annex C.
2.6 The Chairman of the UKHO Board
The Chairman is responsible to the Owner
for leading the UKHO Board and ensuring
that it is effective in discharging its role.
He has delegated authority (to be
exercised via the Board as a whole) to
scrutinise the UKHO’s business plans and
performance. He has a personal role, in
advising the Owner about the high-level
business issues affecting the UKHO, both
directly and as a member of the Owner’s
Council.
More detail on the Chairman’s
responsibilities is given at Annex G.
2.7 The Chief Executive of UKHO
The role of the Chief Executive is to lead and
manage the UKHO effectively in order to
ensure delivery of the objectives and targets
set for it by the Owner, and in particular the
successful implementation of an approved
Corporate Plan.
Consistent with the Next Steps approach,
the Chief Executive is formally
accountable to the Owner for all aspects of
the operation of the UKHO. In view of its
delegated authority, the Chief Executive is
accountable to the Board (acting on the
Owner’s behalf) on issues of business
strategy, plans, targets and performance,
and also on major business proposals. He
seeks the Board’s approval or
endorsement (as appropriate) for all
significant decisions in these areas, within
the framework set out in Annex E.
More detail on the Chief Executive’s
responsibilities is given at Annex G.
The Chief Executive is also appointed by Her
Majesty’s (HM) Treasury as the Accounting
Officer for the UKHO, and thus he has
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personal responsibility and accountability to
Parliament for the propriety and regularity of
the public finances under his control, for
keeping proper accounts, and for the proper,
efficient and effective use of available
resources. As Accounting Officer, the Chief
Executive may be required to appear before
the Public Accounts Committee.
2.8 Ministry of Defence (MOD)
Within the MOD, the DBD has the day-today
lead in advising the Owner on his
responsibilities in relation to the UKHO.
This involves balancing a range of
interests which the department, and
government more broadly, has in the
organisation. This includes its interests as:
• a major customer;
• shareholder: MOD owns the public
dividend capital (equity) in the
UKHO and agrees its dividend
policy;
• finance provider: as well as
owning the public dividend capital,
MOD is the only source from
which the UKHO can receive
loans; and
• sponsor of policy and standards:
as part of MOD and government,
the UKHO is bound by certain
policies and standards. The main
policies and standards are set out
in Section 3.
In discharging its role, DBD works closely
with the UKHO Executive team, with the
Board (on which it is represented as a
NED), and with stakeholders in other
departments and elsewhere.
DBD reports to MOD’s Finance Director,
whom it advises on the financial aspects of
the UKHO’s relationship with the centre of
the Department, including dividends and
loans.
MOD’s role as Owner of the UKHO is
discharged as far as possible separately
from that of key customer.
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= Advice/Accountability
= Direction/Scrutiny
Governance of UKHO
Owner’s
Council
Ministerial Owner
Responsible for top-level
objectives, policy and financial
framework, and approving major
business decisions
MoD’s Directorate of
Business Delivery
(DBD)
• Senior-level group to discuss, and advise
the Owner on, setting top level objectives,
policy and financial matters, and major
business decisions requiring his approval.
• Includes senior representatives from
MoD and other Departments, and an
independent external advisor, reflecting the
diversity of UKHO’s services to both
government and the public.
• The Chief Executive is formally
accountable to the Owner.
• In view of its delegated authority**,the
Chief Executive seeks the approval or
endorsement (as appropriate) of the UKHO
Board on all issues of business strategy,
plans, targets and performance, and on all
significant business proposals.
• Major business decisions need approval
from the Owner.
• As Accounting Officer, the Chief
Executive is accountable directly to
Parliament for the financial integrity of the
UKHO.
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Delegated
Authority* *
UKHO Board
Executives
Non-Executive
Directors & Chairman
Chief Executive
Leads the Executive Team
Responsible for leading, directing and
managing the Trading Fund
• Provides formal advice on all aspects of the
Minister’s ownership responsibilities.
• Seeks to balance all MOD’s/HMG’s
different interests in UKHO*.
• Represented as a NED on UKHO Board
and liaises closely with senior executives.
** The Board’s role is to support and
constructively challenge the Executive
Team. It has delegated authority from the
Owner to:
• scrutinise the business strategy, plans,
targets and performance of the UKHO,
and major business proposals
• approve certain matters, for example
short-term business plans. In cases
where the Owner’s approval is needed,
the Board should endorse the
recommendation before it is made.
* The distinct interests in the UKHO which
MoD discharges on behalf of HMG as a whole
are as major customer, shareholder, finance
provider, and setter of policy and standards

3. Policy Framework
3.1.1. Parliamentary Commissioner for
Administration
The UKHO is to conduct its affairs within the
approved Corporate Plan, its Trading Fund
Order, and such general instructions and
guidance as the Owner, Treasury and the
Cabinet Office may provide from time to time.
The UKHO is also bound by policies and
standards which are general across
government, and by some which are more
specific to MOD Trading Funds. The main
non-financial elements in this framework are
set out below. Policies and standards
bearing on the financial management of the
UKHO are set out in Section 4.
3.1. Parliamentary Accountability
The UKHO is subject to the jurisdiction of
the Parliamentary Commissioner for
Administration. The Chief Executive is
responsible for the preparation of replies
on any matter concerning the operation of
the UKHO, and for replying in the majority
of cases. He is also subject to the
jurisdiction of the Information
Commissioner in relation to Freedom of
Information obligations.
3.2. Dealing with the Public
The UKHO aims to respond substantively
to requests for information from the public
within ten working days.
The Owner will normally deal personally with
inquiries from Members of Parliament (MPs);
Members of the European Parliament
(MEPs); Members of the National Assembly
for Wales and Members of the Scottish
Parliament who specifically seek a ministerial
response. MPs and MEPs are, however,
encouraged to communicate directly with the
Chief Executive on day-to-day operational
matters, keeping the Under-Secretary of
State for Defence and Minister for Veterans
informed as appropriate. The Owner may
invite the Chief Executive to respond directly
to enquiries raised with Ministers. Any letters
sent by the Chief Executive in reply to
Parliamentary Questions are published in the
Official Report.
As the Accounting Officer, the Chief
Executive may be required to appear
before the Public Accounts Committee
(PAC).
At Select Committee hearings, the Owner
will normally ask the Chief Executive to
represent or accompany him if the
Committee is concerned with the day to
day operations of the Agency. The Chief
Executive will also be responsible for
implementing the recommendations of the
PAC or other Parliamentary Select
Committees if they are accepted by the
government.
3.3. Delegations
As a matter of policy, the Chief Executive
receives delegated authority in the areas of
finance, contracts, people management, pay,
health, safety and environment management,
and security. These are articulated in a
Letter of Authority issued by MOD’s
Permanent Under-Secretary of State. More
details are at Annexes D to H. All
delegations are vested in the Chief Executive.
He may sub-delegate within the UKHO.
Annex F separately details the Chief
Executive’s Appointment by Treasury as
Accounting Officer (see section 4.3)
The personnel delegations give the Chief
Executive full authority for personnel apart
from posts at the Senior Civil Service grade
where the Chief Executive must secure
agreement to any proposals from the MOD
Personnel Director or his staff.
The Chief Executive has delegated authority
for certain pay issues within the overall
framework policy set by HM Treasury and
MOD Personnel Director.
3.4. Trades Unions (TUs)
The Chief Executive is to ensure that staff
are consulted about proposed changes to
conditions of service. The UKHO will
recognise the negotiating rights of the TUs
on matters related to pay and conditions of
service. The UKHO will engage openly and
constructively with them in discussing
proposals for change affecting UKHO staff.
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3.5. International Representation
The Chief Executive and/or National
Hydrographer represent the interests of the
UKHO at national and international fora and
are responsible for interacting with other
national Hydrographic offices. They are also
a key source of hydrographic advice to
Government.
3.6. Competition Law
In competing with other organisations in
order to maximise profitable revenue from
commercial activities, the UKHO must
ensure that it is – and is seen to be – fully
compliant with competition legislation,
including the need to avoid misusing its
position as a dominant provider in certain
sectors. Transparent processes are to be
put in place to ensure that there is no
cross-subsidy between services delivered
under its different objectives set out in
chapter one..
3.7. Intellectual Property Rights (IPR)
(Excluding Crown Copyright)
The UKHO’s intellectual property is vital to
the delivery of its objectives. IPR generated
in the UKHO are administered in accordance
with the IPR Concordat agreed between the
MOD and the UKHO. The IPR (excluding
Crown Copyright) in all work done by the
UKHO shall be held in the name of the
Secretary of Sate for Defence under the
administrative and managerial control of the
UKHO.
3.8. Quality
The UKHO is committed to providing
products and services that meet customers’
expectations, and that reflect the reputation
of the highest quality and accuracy
associated with the Admiralty brand.
3.9. Policy in Relation to External
Stakeholders
3.9.1. HM Treasury
3.9.2. Cabinet Office
The UKHO will follow all relevant Cabinet
Office instructions and guidance.
3.9.3. The Stationery Office (TSO)
Crown Copyright is vested by Royal
Letters Patent in the Controller of Her
Majesty’s Stationery Office (part of the
Office of Public Sector Information). The
Controller has delegated powers, subject
to some constraints, to the Chief Executive
for the day-to-day administration of
copyright in the UKHO data and
publications, including the determination of
rules and terms under which permission
for their reproduction and use is given.
The Controller of Her Majesty’s Stationery
Office regulates management of Crown
Copyright by the TSO Information Fair
Trade Scheme. The UKHO is committed
to the principles of fair, open and
transparent information trading embodied
in the Scheme.
UKHO practices in respect of the Fair Trade
Scheme are subject to regular verification by
TSO.
3.9.4. Scotland, Wales and Northern
Ireland
The UKHO has responsibility for providing
hydrographic and oceanographic services
for the whole UK, and waters of national
interest. The UKHO will maintain close
links with the devolved administrations
(Scottish Executive, Scottish Parliament
and the Welsh Assembly).
3.9.5. Department for Transport (DfT)
and the Maritime and Coastguard
Agency (MCA)
The UKHO acts in support of the DfT
shipping safety policies by contributing to the
MCA Key Targets. It supports the MCA in its
role as the responsible authority for the UK’s
‘Safety of Life at Sea’ Treaty obligations
under SOLAS. (See Objective 2 in Annex B
for further details).
The UKHO will comply with current HM
Treasury guidance to Government
departments and Trading Funds.
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3.9.6. Shareholder Executive (ShE)
The role of the ShE (located in the
Department for Trade and Industry but
reporting to the Cabinet Secretary) is to
provide specialist advice to Ministers and
officials across Government on a wide range
of business ownership issues. The ShE is
represented on the UKHO Owner’s Council,
and also provides advice, as requested, to
the organisation itself and to officials in MOD.
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4. Financial Framework 4.2. Commercial Products and Services
This Section sets out the broad financial
basis on which the UKHO operates, and
related policies and standards.
4.1. Business Model
UKHO creates value through the production
of navigational charts, hydrographic products
and associated services from a wide range
and sources of information including raw
hydrographic survey data. This contributes
to both the UK’s obligation under SOLAS
legislation as well as providing products and
services valued by governmental and
commercial customers.
The supply of hydrographic survey data for
UK and international waters are secured
through agreements and contracts with a
wide variety of bodies internationally
including the UK Navy and overseas
governmental hydrographic offices.
Given the requirement to charge for all
services provided, it is important that the
UKHO can demonstrate compliance with
competition law, and that revenue derived
non-competitively from Government is not
used to cross-subsidise its more
‘commercial’ services and equally revenue
from commercial services is not used to
cross-subsidise the cost of providing
statutory or cross Government services.
To this end, the UKHO has adopted a
business model which distinguishes
clearly between these two types of
customer.
In the case of services provided to, or on
behalf of, the Government which are not
generally capable of being competed, prices
are set to recover costs including a return
consistent with HM Treasury guidance on the
cost of capital for inter/intra departmental
services. UKHO is to maintain Service Level
Agreements for services provided within
Government which clearly define the outputs
and associated costs, and where possible
provide incentives for cost-reduction and/or
service enhancements.
In contrast, profit margins for business which
is either competed or capable of being
competed are to be dictated by market
conditions. This applies to competed
services to Government departments.
16
A list of current products and services can be
found on the UKHO website at
www.ukho.gov.uk
4.3. Accounting Officer’s Responsibilities
The UKHO operates as a Trading Fund in
accordance with the Government Trading
Funds Act 1973 as amended, and the
Hydrographic Office Trading Fund Order
1996.
As the Accounting Officer for the Trading
Fund, the Chief Executive is bound by the
provisions of his formal Letter of Appointment
from HM Treasury. The provisions are at
Annex F. The Chief Executive cannot subdelegate
the Accounting Officer
responsibilities.
4.4. Major Decision Making
The policy governing key financial decisions
in the UKHO is set out in Annex E. This sets
out the circumstances in which the Chief
Executive is required to seek higher approval,
either from the UKHO Board or the Owner,
before a decision is taken.
4.5. Annual Report and Accounts
The UKHO will prepare an annual report
together with a statement of accounts, in
accordance with relevant guidance from HM
Treasury.
The Annual Report and Accounts reviews the
operations of the UKHO over the previous
year, provides details of performance against
the objectives and targets and reviews
planned developments. The Accounts will
meet the accounting and disclosure
requirements set by HM Treasury.
The Annual Report and Accounts will be
submitted to the Comptroller and Auditor
General within an agreed timetable to allow
for their audit and certification. The audited
accounts will be laid before both Houses of
Parliament. They will be published on, but
not limited to, the UKHO website.
4.6. Capital Structure
The net assets of the UKHO Trading Fund at
vesting day, 1 April 1996, were financed by a

combination of loans and Public Dividend
Capital. With the concurrence of MOD and
the Chief Secretary to HM Treasury, UKHO
has established and maintained general
capital and other reserves.
The UKHO should, with DBD, review its
capital structure and funding requirements as
part of the annual Corporate Planning
process.
4.6.1. Loan Funding
The sole provider of loans to the UKHO is
the MOD. The MOD will set loan terms on
advice from HM Treasury. Where a loan is
used to finance commercial services or
activities rather than to provide noncompeted
services to Government, the
expectation is that the loan shall be made on
arm’s-length commercial terms.
All loans must be subject to the presentation
of a timely and compelling business case
built around the high-level business
objectives set out in the Corporate Plan.
Like all requests for funding from the
Defence Budget, business cases will be
subject to scrutiny by MOD Head Office.
4.6.2. Income and Expenditure
UKHO revenue will come from payments
made by customers for its services and by
other exploitation of its assets, data and
intellectual property. All sums received by
the UKHO will be paid into, and all
expenditure incurred will be paid out of the
Trading Fund.
4.6.3. Return on Capital Employed
(ROCE)
The Owner will, with the concurrence of HM
Treasury, set a ROCE target which reflects
the prevailing cost of capital to Government,
and the level of risk adjusted commercial
return that should be generated under toplevel
objective 3.
4.6.4. Dividend Policy
The dividend policy will be agreed by the
Owner with the UKHO on an annual basis,
but unless specifically agreed otherwise, the
UKHO will (as a minimum) aim to cover
through interest and a dividend to MOD the
cost of capital charge to the Defence Budget
against its net assets. The Owner retains the
right to seek additional dividend payments if
he/she judges that the cash position and
business circumstances of the UKHO so
permit, although he will consider the advice
of the Board.
4.6.5. Retained Earnings
As soon as possible after the end of the
trading year, the UKHO will calculate its net
operating surplus/deficit after deduction of
interest charges. This surplus may be
retained in the business or paid as dividends
in proportions to be approved by the Owner.
The UKHO may reinvest retained earnings in
the business in line with the Corporate Plan,
subject to the delegations set out in Annex E.
4.6.6. Assets
The UKHO will retain, maintain and renew
only the assets it needs for its business and
will dispose of any surplus land, buildings,
plant and equipment to achieve economy in
its operations. Any proposals to alter
significantly the assets held by the UKHO will
be considered during the Corporate Planning
process and endorsed by the UKHO Board.
Appraisals for all major investments will be
undertaken in accordance with HM Treasury
guidance.
The assets appointed to the Trading Fund
are shown in the Hydrographic Office
Trading Fund Order; changes in these assets
or their valuations are indicated in the Annual
Report and Accounts, and in the UKHO
Corporate Plan. Ownership of the assets
apportioned to the UKHO remains vested in
the Defence Secretary.
The UKHO follows the maintenance
standards laid down by Defence Estates (DE)
Rules and Procedures. Any disposal of land
and/or buildings should be undertaken only
after consultation with DE to ensure there
can be no alternative use for them.
4.6.7. Liabilities
The UKHO is responsible for all site liabilities
occurring after vesting day. The MOD is
responsible for the settlement of third-party
claims in respect of incidents which occurred
prior to vesting.
17

4.6.8. Capital Investment
The UKHO five-year capital investment
programme is approved by the UKHO Board.
The five-year profile is set out in the
Corporate Plan. Approval of the investment
programme authorises assumptions on
which the UKHO is entitled to plan.
Decisions on individual investments in the
programme require specific approval under
the framework at Annex E.
4.7. Internal Audit
The Chief Executive and the Audit
Committee are responsible for
commissioning such internal audit services
and studies as may be required to ensure
proper and efficient management of the
UKHO’s affairs. The Chief Executive is
required to discharge his responsibilities as
Accounting Officer, in a manner that best
demonstrates value-for-money and in
accordance with the standards of the
Government Internal Audit Manual.
The Department’s Defence Internal Audit
(DIA) has remit from the Permanent
Under-Secretary of State (PUS) and the
Defence Audit Committee to carry out
audits on all MOD departments. They are
to have continuous unrestricted access to
all records, personnel, property and
operations of the MOD (including Trading
Funds), with strict responsibility for
confidentiality and safekeeping and
compliance with all statutory instruments
relating to the use, retention and
disclosure of data. In order that PUS can
be provided with an assurance that
Trading Fund Agency audit arrangements
are both adequate and compliant with
Government Internal Audit Standards,
PUS requires a DIA representative to
attend Trading Fund Audit Committee
meetings, particularly where they choose
not to employ the services of DIA as their
internal auditor.
4.8. Risk Management
The UKHO operates risk management
processes at all levels, from strategic risks
through to project delivery. The Audit
Committee reviews the risk management
strategy and, in particular, assesses the
adequacy of the internal controls operating
within all key processes in relation to risk
identification, assessment, response and
monitoring.
4.9. Subordinate Companies and Joint
Ventures
The UKHO Board must satisfy itself as to the
rigour and overall effectiveness of the
governance arrangements for any
companies administered by the UKHO on
behalf of the Secretary of State for Defence,
and any Joint Ventures or other enterprises
in which the UKHO has a formal financial
interest. To this end, initiation of any new
business enterprise will require approval
from the Owner, following consultation with
DBD.
AHL is a Government-Owned company
operating in parallel to the UKHO. It has its
own Board, and is 100% owned by the
Secretary of State for Defence. Its accounts,
however, are consolidated annually within
the UKHO accounts.
The Chief Executive may choose to use
the services of the DIA, or employ
qualified auditors so long as they fully
meet required Government and
Departmental Audit standards. To remain
consistent with the requirements of
Government Internal Audit Standards, the
Agency’s internal audit arrangements will
be subject to periodic independent review.
18

ANNEXES
A. The Hydrographic Office Trading Fund
Order 1996 and HM Treasury Minute
B. The United Kingdom Hydrographic Office
(UKHO) Top Level Objectives
C. Terms of Reference:
• Audit Committee
• Remuneration Committee
• Safety of Navigation Assurance
Committee (SONAC)
D. The United Kingdom Hydrographic Office
Delegations
E. Framework for Major Business Decisions
F. Provisions of the Chief Executive’s Letter
of Appointment as Accounting Officer
G. Roles, Responsibilities and
Accountabilities
H. People
19

Annex A – The Hydrographic Office Trading Fund Order 1996
STATUTORY INSTRUMENTS
1996 No. 773
GOVERNMENT TRADING FUNDS
The Hydrographic Office Trading Fund Order 1996
Made 8th March 1996
Coming into force 1st April 1996
Whereas:
(1) It appears to the Secretary of State for Defence ("the Secretary
of State") that:—
(a) those operations of the Ministry of Defence which are
referred to in Article 2 of, and Schedule 1 to, this Order are
suitable to be financed by means of a fund established under
the Government Trading Funds Act 1973[1] ("the 1973 Act")
and, in particular, to be so managed that the revenue of the
fund would consist principally of receipts in respect of goods
or services provided in the course of the operations in
question, and
(b) the financing of the operations in question by means of a
trading fund would be in the interests of the improved
efficiency and effectiveness of the management of those
operations;
(2) The Secretary of State has, in accordance with section 2 of the
1973 Act and with the concurrence of the Treasury, determined what
Crown assets and liabilities are properly attributable to the operations
in question and are suitable to be appropriated to the fund;
(3) In accordance with section 6(2) of the 1973 Act, a draft of this
Order has been laid before the House of Commons and has been
approved by a resolution of that House;
Now, therefore, the Secretary of State in exercise of the powers
conferred upon him by sections 1, 2, 2AA(1), 2A(1), 2C(1) and 6(1)
of the 1973 Act, and of all other powers enabling him in that behalf,
with the concurrence of the Treasury, hereby makes the following
Order:—
Citation and commencement
1. This Order may be cited as the Hydrographic Office Trading
20

Fund Order 1996 and shall come into force on 1st April 1996.
Establishment of the fund
2. As from 1st April 1996, for all the operations of the Ministry
of Defence known as the Hydrographic Office, which operations are
more particularly described in Schedule 1 to this Order, there shall be
established a trading fund to be known as the Hydrographic Office
Trading Fund (hereinafter referred to as "the fund").
Source of loans
3. The Secretary of State for Defence is hereby designated as the
source of issues to the fund by way of loan.
Assets, liabilities, reserves and public dividend capital
4.—(1) The Crown assets and liabilities set out in Schedule 2 to
this Order shall be appropriated as assets and liabilities of the fund.
(2) 5.1 per cent of the amount by which the values of the assets
exceed the amounts of the liabilities shall be treated as a revaluation
reserve in the accounts of the fund and the reserve so treated shall be
maintained as a revaluation reserve.
(3) 47.3 per cent of the balance of
(a) the amount by which the values of the assets exceed the
amounts of the liabilities, less
(b) the amount to be treated as a revaluation reserve in
accordance with paragraph (2) above,
shall be treated as public dividend capital of the fund.
Maximum borrowing etc.
5. The aggregate of the following shall not exceed £50,000,000
(a) the total outstanding at any given time in respect of
amounts issued to the fund under section 2B of the
Government Trading Funds Act 1973 (other than as
originating debt), and
(b) the total at that time constituting public dividend capital
issued to the fund under section 2A(2A) of that Act.
Michael Portillo
Secretary of State for Defence 6th March 1996
We concur
Simon Buras
Bowen Wells
Two of the Lords Commissioners of Her Majesty's Treasury 8th March 1996
21

SCHEDULE 1
Article 2
FUNDED OPERATIONS
The operations of the Hydrographic Office to be funded by the fund are:—
(a) the provision of hydrographic, oceanographic, geophysical and
associated goods and services to the Ministry of Defence and to other
Crown bodies;
(b) the provision of such goods and services to other customers;
(c) operations incidental, conducive or otherwise ancillary to the
foregoing.
SCHEDULE 2
Article 4
ASSETS AND LIABILITIES APPROPRIATED TO THE FUND
ASSETS
Land and buildings, as at 1st April 1996, used or allocated for use in the
funded operations.
Plant, facilities, machinery, fixtures, fittings, vehicles, equipment and
computer hardware and software, as at that date, used or allocated for use in
the funded operations.
Intangible assets arising from the funded operations as carried on up to that
date.
Current assets as at that date used or allocated for use in, or arising from, the
funded operations.
LIABILITIES
Creditors and accruals as at 1st April 1996 in relation to the funded operations.
Provision for sales credits, as at that date, referable to the return by Admiralty
Chart Agents of superseded charts and publications pertaining to the funded
operations.
EXPLANATORY NOTE
(This note is not part of the Order)
This Order provides for the setting up as from 1st April 1996 of a fund with
public money under the Government Trading Funds Act 1973 for the
operations of the Ministry of Defence known as the Hydrographic Office.
22

The Order designates the Secretary of State for Defence as the authorised
lender to the fund. The Order also specifies the assets (estimated at
£27,350,000) and liabilities (estimated at £800,000) which are to be
appropriated to the fund; provides for a proportion of the difference in value
between those assets and liabilities to be treated as a revaluation reserve and
for a further proportion of that difference to be treated as public dividend
capital of the fund; and specifies the maximum aggregate amount that may at
any time constitute outstanding loan issued to the fund (other than as
originating debt) and public dividend capital.
23

UK HYDROGRAPHIC OFFICE
TRADING FUND TREASURY
MINUTE DATED 17 JULY
2003
UK HYDROGRAPHIC OFFICE
TRADING FUND TREASURY
MINUTE DATED 31 MARCH
2004
1. Section 4(1) of the Government Trading
Funds Act 1973 provides that a trading fund
established under that Act shall be under
the control and management of the
responsible Minister and in discharge of his
function in relation to the fund it shall be his
duty:
(a) to manage the funded operations so that
the revenue of the fund:
(i) consists principally of receipts in
respect of goods or services
provided in the course of the funded
operations, and
(ii) is not less than sufficient, taking
one year with another, to meet
outgoings which are properly
chargeable to revenue account; and
(b) to achieve such further financial
objectives as the Treasury may from time to
time, by minute laid before the House of
Commons, indicate as having been
determined by the responsible Minister (with
Treasury concurrence) to be desirable of
achievement.
2. A Trading Fund for the UK Hydrographic
Office was established on 1 April 1996
under UK Hydrographic Office Trading Fund
Order (SI 1996 No. 773).
3. The Secretary of State for Defence, being
the responsible Minister, has determined
(with Treasury concurrence) that a further
financial objective desirable of achievement
by the UK Hydrographic Office Trading
Fund for the period from 1 April 2001- to 31
March 2004 shall be to at least break even
year on year and achieve a return,
averaged over the period as a whole, of at
least 7.5 per cent in the form of a surplus on
ordinary activities before interest (payable
and receivable) and dividends expressed as
a percentage of average capital employed.
Capital employed shall equate to the total
assets from which shall be deducted the
total of the current liabilities.
1. Section 4(1) of the Government Trading
Funds Act 1973 provides that a trading fund
established under that Act shall be under
the control and management of the
responsible Minister and in discharge of his
function in relation to the fund it shall be his
duty:
(a) to manage the funded operations so that
the revenue of the fund:
(i) consists principally of receipts in
respect of goods or services
provided in the course of the funded
operations, and
(ii) is not less than sufficient, taking
one year with another, to meet
outgoings which are properly
chargeable to revenue account; and
(b) to achieve such further financial
objectives as the Treasury may from time to
time, by minute laid before the House of
Commons, indicate as having been
determined by the responsible Minister (with
Treasury concurrence) to be desirable of
achievement.
2. A Trading Fund for the UK Hydrographic
Office was established on 1 April 1996
under UK Hydrographic Office Trading Fund
Order (SI 1996 No. 773).
3. The Secretary of State for Defence, being
the responsible Minister, has determined
(with Treasury concurrence) that a further
financial objective desirable of achievement
by the UK Hydrographic Office Trading
Fund for the 5-year period from 1 April 2004
to 31 March 2009 shall be to achieve a
return, averaged over the period as a whole,
of 9.0 per cent in the form of a surplus on
ordinary activities before interest (payable
and receivable) and dividends, expressed
as a percentage of average capital
employed. Capital employed shall equate to
the capital and reserves, ie Public Dividend
Capital, long-term element of Exchequer
loans, and reserves.
24

Annex B – The United Kingdom Hydrographic Office (UKHO)
Top-Level Objectives
Objective 1 - Operational Support to the Royal Navy and other Defence Customers
The UKHO provides value to Defence by delivering the hydrographic services which enable
the Royal Navy and other Defence Customers to meet current and potential future operational
tasks. To achieve this, the UKHO will:
• Provide the navigational, oceanographic and hydrographic products, the services and the
advice that the UK armed forces require for the success of operations and tasks; and
• Work with the MOD to define and develop the digital products and services that will be
required to replace paper charts and publications.
Objective 2 - Support to ‘Safety of Life at Sea’ Treaty Obligations
The UKHO provides wider value to the government, in support of the Maritime and
Coastguard Agency, which is the responsible authority for the UK’s Treaty obligations; its role
is to discharge efficiently and effectively those actions required in order to support these
obligations under the United Nations International Convention for the Safety of Life at Sea
1974 (as amended and including its protocol of 1998), and to promote hydrographic services.
To achieve this, the UKHO will:
• act as co-ordinator for North-West Europe (NAVAREA One), co-ordinating, collating and
issuing long-range navigational warnings and NAVAREA warning bulletins to cover the
whole of NAVAREA One;
• act as the national co-ordinator for the UK, collating and issuing coastal warnings;
• arrange for the collection and compilation of hydrographic data and the publication,
dissemination and keeping up-to-date of all nautical information necessary for safe
navigation;
• prepare and issue nautical charts and nautical publications, where applicable, satisfying
the needs of safe navigations;
• promulgate notices to mariners in order that nautical charts and publications are kept, as
far as possible, up-to-date; and
• providing advice on areas requiring surveying.
Objective 3 - Developing Profitable Business Streams
Subject to maintaining the capability to deliver against the two objectives above, the UKHO is
required to extract maximum value from its assets and capabilities by generating profitable
revenue from customers outside Government. In doing this, the Government expects the
UKHO to develop a robust strategy for exploiting the changing commercial market for
hydrographic products and services, given in particular the increasing demand for digital
products.
25

Objective 4 - Organisational Excellence
In delivering the above objectives, the Government requires the UKHO to demonstrate
organisational excellence by:
• ensuring all obligations, contractual or otherwise, to its customers and suppliers are met
in line with Government policy;
• operating its business to the recognised Industry standards required by customers;
• providing a working environment that fosters diversity, leadership, personal development,
innovation and team working; and
• delivering its outputs as efficiently and effectively as possible, and ensuring that all
expenditure and investment represents good value-for-money.
26

Annex C – Terms of Reference for the UKHO Audit Committee,
Remuneration Committee and Safety of Navigation Assurance
Committee (SONAC)
UKHO AUDIT COMMITTEE
TERMS OF REFERENCE
Purpose
1. The responsibility for the System of Internal Control rests with the Accounting Officer.
The Audit Committee is a sub-committee of the UHKO Board. It supports the Board and
Accounting Officer by: reviewing and assessing the adequacy and integrity of risk
management and internal controls within all key processes in relation to risk identification
assessment, response and monitoring, and promoting their improvement; and providing
an opinion on how well the Board and Accounting Officer are supported in decision taking
and in discharging their accountability obligations (particularly in respect of financial
reporting).
Membership
2. The Chairman and members of the Audit Committee shall be appointed from nonexecutive
members of the UKHO Board including an Owner’s Representative, with a
quorum of two members.
3. The Secretary shall be appointed by the Audit Committee and provided by the UKHO.
Meetings
4. The Audit Committee shall meet at least four times yearly and at such times as requested
by external or internal auditors.
5. The Head of Finance, Strategy & Technology will normally attend meetings of the Audit
Committee. Other members of the UKHO Board have the right to attend meetings.
6. The Audit Committee may, if it so decides, meet with external and internal auditors
without UKHO staff present.
Authority and Responsibility
7. The Audit Committee is authorised to investigate and report on any activity within these
Terms of Reference and has the right to access the information it requires from civilian or
service personnel employed by the UKHO. It can require their attendance when
necessary.
8. While the Audit Committee has the responsibilities set out in these terms of reference, it
is not the duty of the Audit Committee to plan or conduct audits or to determine that the
UKHO’s financial statements are complete, accurate and in accordance with GAAP or the
Accounts Direction issued by HM Treasury. The NAO and internal auditors are
responsible for planning and conducting audits. The Accounting Officer and UKHO
management are responsible for preparing complete, accurate financial statements in
accordance with GAAP and Treasury Guidance.
9. Since MOD’s Defence Internal Audit (DIA) has remit from the Permanent Under-
Secretary of State (PUS) and the Defence Audit Committee to carry out audits on all
MOD departments, they are to have continuous unrestricted access to all records,
personnel, property and operations of the UKHO and in order to provide assurance to the
PUS on matters of Internal Audit a DIA representative shall attend Audit Committee
meetings.
27

Duties
10. The primary duties of the Audit Committee (among others) are to :-
a. review the UKHO’s external financial statements, policies and reports to ensure they
reflect best practice;
b. discuss with the external auditor the nature and scope of each forthcoming audit and
ensure that the external auditor has the full cooperation of staff;
c. consider all relevant reports by the NAO or the appointed external auditor, including
reports on the UKHO’s accounts, achievement of value for money and the response
to any management letters;
d. review the effectiveness of the UKHO’s internal risk management and control system
established to ensure that the aims, objectives and relevant targets are achieved in
the most economic and effective manner;
e. review the annual and long term programme of the UKHO’s internal audit function for
comprehensiveness and appropriateness;
f. ensure the UKHO internal audit function meets acceptable standards of work and
levels of service;
g. consider and comment upon internal audit reports, including value for money reports,
and their implementation;
h. receive reports from the Safety of Navigation Assurance Committee on assurance
matters relating to their terms of reference;
i. review with senior UKHO management their response to the identification and
management of risk within their area of responsibility;
j. consider and comment upon any other matters relating to the financial and
commercial affairs of the UKHO that it deems appropriate;
k. review UKHO business continuity arrangements annually to ensure they meet MOD
guidelines;
l. review UKHO annual Security Report to ensure physical security of the UKHO
premises, assets (including IP) and data meet appropriate commercial and MOD
guidelines;
m. review these terms of reference annually.
11. The references to the UKHO in paragraph 9 above shall refer, as required, to Admiralty
Holdings Limited and its subsidiaries.
Reporting
12. The chairman of the Audit Committee will report to the UKHO board on the discharge of
its duties following each meeting and also to the Accounting Officer when control issues
arise between meetings. Additionally the chairman of he Audit Committee is required to
make a written annual report to the Accounting Officer in support of his/her
representations in the UKHO Annual Report.
13. The Secretary shall circulate minutes of the Audit Committee meetings to the members of
the UKHO Board.
Approval
14. These Terms of Reference were approved by the UKHO Board on 27 June 2007
28

UKHO REMUNERATION COMMITTEE
TERMS OF REFERENCE
1. Overall purpose
1.1. The Remuneration Committee of the UKHO Board. It exists to advise the
UKHO Chairman, Chief Executive and Board on matters relating to remuneration as set
out in this document.
1.2. These Terms of Reference have been written to reflect the various
remuneration structures in place within UKHO at the time of writing, but it is envisaged
that these will be updated as appropriate.
1.3. The Remuneration Committee will work within MOD and other HMG guidelines
as appropriate.
2. Membership
2.1. Members of the Committee shall be appointed by the Board. The Committee
shall be made up of at least three members and one shall be appointed to act as
Chairman.
2.2. One member shall be the Shareholder’s representative, and all other members
shall be independent non-executive members of UKHO’s Board.
2.3. Only members of the Committee have the right to attend Committee meetings
but other individuals (e.g. Chairman, Chief Executive and Head Change, Development
and HR) may be invited to attend all or part of any meeting as appropriate.
3. Secretary
3.1. The Secretary shall be appointed by the Remuneration Committee and provided
by the UKHO. The Secretary of the Committee will keep full minutes of all Committee
meetings and circulate draft and final versions to all Members for their comment and
records respectively, in both cases within a reasonable time after the meeting
4. Quorum
4.1. The quorum necessary for the transaction of business shall be two members.
5. Frequency of Meetings
5.1. The Committee shall meet at least twice a year with additional meetings to be
held should the committee so request.
6. Reporting
5.2. It is envisaged that meetings will be timed around UKHO Board meetings where
possible.
6.1. For the Chief Executive, the Remuneration Committee will report, alongside the
UKHO Chairman, directly to his 1 st Reporting Officer.
6.2. For the Board members, the Remuneration Committee will report, alongside the
UKHO Chairman, to the Chief Executive.
6.3. For all other staff detailed in Annex A the Remuneration Committee will report to
the UKHO Board.
(N.B. Consistent with Civil Service principles there must be a formal TU
agreement for each of the posts outside the SCS or UKHO Pay
Agreement to be covered by these arrangements).
7. Duties
7.1. Determine and agree the framework and broad policy for the remuneration
packages of positions referred to in Annex A and the establishment of a formal and
transparent procedure for developing policy on such remuneration.
29

Note: FTA Senior Civil Service members will have their targets and performance reviewed by
the Committee and recommendations made to their respective Reporting Officers.
7.2. Consider and recommend an appropriate performance based remuneration
scheme for the posts listed in Annex A with reference to corporate goals and objectives.
7.3. Keep any agreed performance schemes for the Heads of Divisions under
regular review, including the review of targets and setting of hurdle rates. The degree of
challenge within the hurdle rates to be transparently communicated to those staff
holding posts agreed in Annex A.
7.4. Review and endorse objectives for staff in posts in Annex A as proposed by the
Chief Executive.
7.5. Based on recommendations from the Chief Executive, consider individual
performance and recommend related bonus payments for the staff in posts listed in
Annex A.
7.6. The Committee shall advise on and recommend all new sales reward plans for
posts in Annex A and sales related incentives as a part of their remuneration structure.
7.7. To agree in advance, based on Chief Executives recommendations, the reward
parameters applicable to or any significant revision to existing posts listed in Annex A.
7.8. Consider and advise on any other remuneration and conditions of employment
issues as directed by or requested by the UKHO Chairman or the UKHO Chief
Executive.
7.9. The Committee shall ensure it remains aware of relevant MOD and HMG
guidance on terms and conditions of employment and remuneration matters.
8. Other
8.1. No Head of Division shall be involved in the determination of his/her own
remuneration package
8.2. The Committee has responsibility for the selection, appointment, terms of
reference and dealings with any remuneration consultants who advise the Committee.
8.3. The Chairman of the Committee shall report to the Board on its proceedings
following each meeting.
8.4. The Committee itself and the Board shall at least once a year review the
performance of the Committee and its Terms of Reference to ensure that it is operating
at maximum effectiveness and recommend any changes it considers necessary to the
Board for approval.
9. Authorities
The Committee is authorised:
9.1. to seek any relevant information it requires from any employee of UKHO or its
subsidiaries in order to perform its duties
10. Approval
9.2. to obtain, at the UKHO’s expense, outside legal or other professional advice on
any matter within its terms of reference
9.3. to call any employee to provide information or evidence at a meeting of the
Committee as and when required.
These terms of reference were approved by the UKHO Board on 27 June 2007.
30

ANNEX A
Post
Chief Executive
Head of Change,
Development and Human Resources
Head of Finance, Strategy & Technology &
DCE (Corporate)
Head of Sales, Marketing and Customer
Services
Head of
Operations and Production
Post
Sales Manager
International Sales Manager
Major Account Manager
RemCo
Responsibility
Bonus
Bonus
Bonus
Bonus
(Incentivised Bonus
Scheme agreed )
Bonus
RemCo
Responsibility
RRA and Bonus
(Incentivised Bonus
Scheme agreed)
RRA and Bonus
(Incentivised Bonus
Scheme agreed)
RRA and Bonus
(Incentivised Bonus
Scheme agreed)
C1 Post
CDH
Development Manager
HR and Learning Manager
Site Strategy Manager
FST
Safety and Quality Manager
Chief Financial Officer
Joint Venture Company Secretary
Head of Profession
OCE
International Partnering Programme Mgr
OPD
Defence Account Manager
Process & Structure Development Manager
Production and Delivery Manager
Defence Business Manager
Head of SOLAS Paper Products
Data Operations Manager
SMCS
Marketing Manager
Business Development Manager
Services Manager
RemCo Responsibility
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary and Bonus
Salary+ RRA and Bonus
Salary and Bonus
Salary and Bonus
31

Exit Compensation
Compensation for UKHO Civil Servants is in accordance with the Civil Service Compensation
Scheme.
The Civil Service Compensation Scheme 1994 was laid before Parliament on 9 January 1995
under section 1 of the Superannuation Act 1972. The latest amendment to the scheme were
laid before Parliament in July 2006 but further amendments are thought likely following Age
Diversity Legislation and the expected new Pension schemes.
The payments depend on which scheme the individual is a member of. The current booklets are
embedded below but links to both schemes have been added as the schemes are currently
being reviewed by Cabinet Office.
Classic Scheme members ( must have been employed prior to new pension scheme in 2002 )
http://www.civilservicepensions.gov.uk/upload/assets/www.civilservice_pensions.gov.uk/errc_06.pdf
Errc_06.pdf
errcpp_06.pdf
Nuvos Scheme (Post 30June 2007)
Premium Scheme (2002-June 30 2007)
http://www.civilservicepensions.gov.uk/upload/assets/www.civilservice_pensions.gov.uk/errcpp_06.pdf
http://www.civilservicepensions.gov.uk/upload/assets/www.civilservice_pensions.gov.uk/publications/NS_PCO_07.pdf
32

UKHO SAFETY OF NAVIGATION ASSURANCE COMMITTEE (SONAC)
TERMS OF REFERENCE
Role
1. The SONAC, chaired by a Non-executive Director with experience of navigation and
hydrographic survey, is an advisory sub-committee of the UKHO Board. It sits alongside the
Audit Committee (AC) in reviewing the work and procedures of the UKHO and advising the
Chief Executive (CE). Its focus is on key UKHO activities related to the provision of
information for safety of navigation. It has no executive responsibilities.
Constitution
2. The Committee will be formed as follows:
Chair:
Secretary:
Members:
Non-executive Director (Captain (HM)/Hydrographer of the
Navy)
Provided by the Safety and Quality Branch
Maritime and Coastguard Agency (MCA) Representative
Nautical Institute (NI) Representative
Royal Navy Representative from the Navigation Specialisation
(NAAB approved)
Royal Yachting Association (RYA) Representative
Royal National Lifeboat Institution (RNLI) Representative
In attendance: Safety & Quality Manager
Also members of the following branches as required:
Safety & Quality Branch
Operations Support (Standards) Branch
Frequency of Meeting
3. The Committee will meet quarterly.
Authority
4. The Committee is a non-executive body which reports to the CE and the UKHO
Board. It has delegated authority from CE to make recommendations on any matters which
improve the support of the UKHO for navigational safety.
5. The Committee has the authority to call for any information it requires from civilian or
service personnel employed by the UKHO and can require attendance when necessary.
Responsibilities
6. The primary responsibility of the SONAC is to advise the CE and the UKHO Board on
the effectiveness of arrangements to ensure that existing and proposed safety of navigation
products, services and delivery mechanisms meet all standards for validation, assessment,
data selections for promulgation, quality assurance, publication and transmission to the point
of sale or distribution. In particular the Committee is tasked as follows:
a. to satisfy itself that:
(1) investigation of incidents and complaints, and improvement actions
following incidence of Non-Conforming Products (NCPs) relating to safety are
being handled correctly and in a timely fashion;
33

Reporting
(2) systematic follow-up procedures for such incidents or complaints are in
place.
b. to review and quality assure the activities of the Products Safety
Management Board; and
c. to review the maintenance of the bearing, qualifications, recruitment and
training of specialist mapping and charting staff by the Head of Profession (Mapping
and Charting).
7. The Chairman of the Committee will report to the CE at the UKHO Board on the
discharge of its duties following each meeting, and also when issues of safety arise between
meetings.
8. The CE will ensure that any issue involving a possible shortfall in the safety of
navigation products, services and/or delivery mechanisms is immediately reported to the
chairman of the SONAC.
9. A standing item on the AC agenda requires the Chairman of SONAC to provide
feedback on pertinent assurance matters.
Approval
10. These Terms of Reference were approved by the UKHO Board on 27 June 2007
34

Annex D – The United Kingdom Hydrographic Office Delegations
Financial
The Chief Executive (CE) is authorised to exercise full financial authority delegated to the MOD
by Her Majesty’s (HM) Treasury.
Financial authority is delegated to the CE as Accounting Officer by HM Treasury (see Annex F).
This authority, which may be sub-delegated to suitably qualified members of staff, must be
exercised in accordance with HM Treasury guidance, reinforced and amplified by UKHO
internal guidance on the efficient conduct of business. All novel or contentious items, or
issues raising questions of financial principle, must be referred to HM Treasury for approval
regardless of the sums involved. The CE should consult with MOD finance staff before
approaching HM Treasury on matters of financial principle, as distinct from individual
casework. The Owner should also be consulted if a proposed course of action could have
wider implications for the government, or could generate interest in Parliament.
Audit
The CE is to ensure that UKHO systems and procedures are subject to regular audit to the
standards required in the Government Internal Audit Manual. Whilst normally these audits
are to be conducted by the Department’s Directorate of Internal Audit, the CE may, however,
choose to employ qualified auditors, so long as they fully meet required Government and
Departmental Audit standards. In exceptional circumstances an independent review of the
Agency’s internal audit arrangements may be required.
Contractual
The CE is authorised to enter contractual commitments on behalf of the Owner, provided
financial approval has been obtained where necessary. Contracts will conform to HM Treasury
and MOD guidance and HM Governmental purchasing policy and will follow best contracting
practice.
The CE should ensure that, when delegating authority to members of his/her staff, financial and
contracting authority is not vested in the same individual.
Management of People
Within the terms of the Framework Document the CE is responsible for the management of staff
and for developing and implementing personnel policies to meet the needs of the Agency and
for ensuring the quality and consistency of Agency personnel standards and practices. The CE
may exercise the authority in personnel matters in accordance with the principles and standards
laid down in the Civil Service Management Code for the management of the Civil Service as a
whole and in accordance with the principles governing the management of staff throughout the
Department. Attention is drawn to the Department’s Personnel Policy Statement directed at all
staff and their line managers. In any cases where changes are envisaged to UKHO personnel
policy or practice that might have wider implications for the rest of the Department, the CE
should discuss these with MOD’s personnel staff. A detailed list of personnel delegations is at
Annex H.
35

Health, Safety and Environmental Management
The Secretary of Sate for Defence has a Policy Statement on Safety, Health and Environmental
Protection, which is kept under constant review.
This Policy Statement makes the CE responsible for ensuring that its strategic principles are
achieved and for putting in place an organisation and arrangements to ensure this is in
accordance with the General Duties set out in the Policy Statement. The CE should
continually strive for excellence in safety and environmental performance to provide a safe
and healthy workplace, and to protect defence assets, the environment, and members of the
public.
In order to ensure that the UKHO remains a healthy, secure and safe working environment, the
CE will require that appropriate procedures be put in place. These procedures are to be
enshrined in systems that are made available to all staff and other interested parties, are fully
utilised in the planning and conduct of activities, and are routinely and regularly audited.
Regular risk assessment of all UKHO activities [and those of any associated joint ventures and
partnerships] will take place to ensure continued improvement in all areas of workplace safety
and security.
Security
The CE is responsible to the Secretary of State for Defence for meeting the security
requirements specified by the MOD Security Officer. The UKHO will be subject to periodic
security audit and report by the MOD.
The CE is required to nominate a senior business manager (if practicable a member of the
Management Board) as Trading Fund Security Risk Manager (SRM). The SRM is
responsible for ensuring that the UKHO implements security risk management in line with
MOD security policy and corporate governance, and for advising the Management Board on
security risks that require Board level attention. The CE is also to appoint a Trading Fund
Principal Security Adviser to manage corporate security staff and to provide security advice to
the Management Board, the Security Risk Manager and delegated Risk Managers.
36

Annex E – Framework for Major Business Decisions
This Annex sets out the basis on which major business decisions within the United Kingdom
Hydrographic Office (UKHO) are to be approved.
Strategy and Five-Year Corporate Plan
Drafts of these are to be developed by the Executive team, scrutinised and endorsed by the
UKHO Board, and submitted to the Owner for approval. Approval authorises the key
assumptions on which the business is entitled to plan. Individual business decisions flowing
from these assumptions still require approval under the framework as set out below.
At his discretion, the Owner may seek advice from the UKHO Owner’s Council. The
Corporate Plan is to be refreshed annually under the same approvals process.
Business Plan
This should cover the first 12-24 months of the Corporate Plan period. It is developed by the
Executive Team, and is to be scrutinised and approved by the UKHO Board.
Annual Key Targets
Drafts of these are to be developed by the Executive team, scrutinised and endorsed by the
UKHO Board, and submitted to the Owner for approval, together with a rationale paper
demonstrating that they flow from the Business Plan, are stretching but achievable, and will
drive delivery of the Corporate Plan.
Specific Major Business Proposals
All novel or contentious items, or those with wider implications for the Department or likely to
generate public or Parliamentary interest, are to be submitted to the Owner for approval with
reference to the financial value involved. Before this is done UKHO staff should, in first
instance, consult with the MOD’s Directorate of Business Delivery. Her Majesty’s Treasury
approval will be needed on all issues raising matters of financial principle.
The financial approval thresholds in relation to other decisions are set out in the table
following. Where projects, programmes or other relevant items comprise discrete subelements,
it is the overall cost to which the limits apply.
37

Table 1 – Approval Thresholds
The following thresholds will be reviewed from time to time by the Owner in conjunction with
the Chairman and Chief Executive.
1
Type of Expenditure or other
item
Capital Expenditure (excluding
property) included in the Corporate
Plan.
Capital Expenditure (excluding
property) not included in, or going
beyond, the Corporate Plan.
Non-Capital Investment and
Expenditure (excluding property)
included in the Corporate Plan
Non-Capital Investment and
Expenditure (excluding property)
not included in, or going beyond,
the Corporate Plan.
Expenditure on Land and
Buildings
Limit above which the Chief
Executive must seek the
Board’s approval, or
endorsement prior to
submission to the Owner
Limit above which the Owner’s
approval must be sought
£1,000,000 £3,000,000
£250,000 £1,000,000
£1,500,000 £3,000,000
£500,000 £1,000,000
£250,000 £1,000,000
Table 2 – Other Financial Commitments
Type of financial commitment
Actions leading to Write-Offs/Write
Downs
Limit above which the Chief
Executive must consult the
Board
Limit above which the Chief
Executive must consult the Owner
£500,000 £1,000,000
Loan applications £500,000 £2,000,000
*
Special Payments £250,000 N/A
External Assistance (annual limit
per contract)
£250,000 N/A
*
Table 3 – Bids & Sales Contracts
Type of financial commitment
Binding bids and sales contracts
included in the Corporate Plan
Binding bids and sales contracts
not included, or going beyond the
scope of the Corporate Plan
Limit above which the Chief
Executive must consult the
Board
Limit above which the Chief
Executive must consult the Owner
£2,500,000 £5,000,000
£1,500,000 £3,000,000
1 All expenditure should be subject to the UKHO’s own internal approvals processes – e.g.,
the Project Approvals Board.
* The Board should determine for individual cases whether consultation with the Owner is
required.
38

Annex F – Provisions of the Chief Executive’s Letter of Appointment
as Accounting Officer
The appointment as Accounting Officer is in accordance with section 4 (6) of the Government
Trading Fund Act 1973.
In essence, as an Accounting Officer the Chief Executive must ensure that there is a high
standard of financial management, including a sound system of internal control; that financial
systems and procedures promote the efficient and economical conduct of business and
safeguard financial propriety and regularity; that financial considerations are fully taken into
account in decisions on policy proposals; and risk is considered in relation to assessing value
for money.
The Memorandum setting out the responsibilities of an Accounting Officer (Annex 4.1 of
Government Accounting) is available online at
http://www.government-accounting.gov.uk/current/frames.htm.
Section 4(6)(a) of the Government Trading Funds Act also applies, requiring that the Accounting
Officer shall be responsible for the preparation of the United Kingdom Hydrographic Office
Trading Fund Accounts, in accordance with the accounting direction issued by Her Majesty’s
Treasury, and for their transmission to the Comptroller and Auditor General.
39

Annex G – Roles, Responsibilities and Accountabilities
1 – OWNER’S RESPONSIBILITIES AND ACCOUNTABILITIES
Responsibilities:
On advice from the Chief Executive (CE), departmental advisers and the United Kingdom
Hydrographic Office (UKHO) Board, and in consultation as necessary with the UKHO Owner’s
Council, and other relevant customers and stakeholders across government, to:
• set and review, coherent and prioritised top-level objectives which balance the
government’s customer, shareholder, finance provider, and policy interests in the UKHO;
• approve the long-term business strategy for achieving the top-level objectives;
• approve the five-year Corporate Plan for delivering the strategy;
• approve annual Key Targets for the UKHO, which are stretching but achievable, and will
drive delivery of the Corporate Plan;
• define the policy and finance framework within which the CE is to operate;
• satisfy himself that the UKHO Board is working effectively, under delegated authority, on
his behalf to:
o
o
o
o
scrutinise the business strategies, plans, targets and performance, to ensure the
approved Corporate Plan is being effectively implemented;
approve major business decisions which do not need his personal involvement;
develop, scrutinise and endorse advice to him on issues which require his
personal approval (i.e. those with significant financial, operational and/or
presentational consequences, including major investments, rationalisations,
acquisitions and any novel or contentious issues – see Annex E); and
Provide appropriate support and constructive challenge to the CE and the senior
Executive Team in delivering the Corporate Plan;
• account to Parliament for all aspects of policy, the operation, performance, achievements,
and governance of the UKHO. (N.B. This is the Ministerial accountability function, and is
different from the Accounting Officer role attaching to the CE – see Annex F). This
includes announcing Key Performance Targets to Parliament;
• approve the appointment of the Chairman of the UKHO Board, following normal selection
procedures;
• endorse the appointment of the CE, following normal selection procedures; and
• on appropriate advice, determine the CE’s performance pay and that of other senior
executives as appropriate.
Accountability:
• to the Defence Secretary; and
• to Parliament.
2 – ROLE AND COMPOSITION OF THE UKHO OWNER’S COUNCIL
Role: As required, to provide advice and assistance to the Owner in:
40

• setting coherent and prioritised top-level objectives which balance the government’s
customer, shareholder, finance provider, and policy interests in the UKHO;
• approving the long-term business strategy for achieving the top level objectives;
• approving the five-year Corporate Plan for delivering the strategy;
• approving annual Key Targets for the UKHO which are stretching but achievable, and will
drive delivery of the Corporate Plan; and
• defining the policy and finance framework within which the CE is to operate.
Composition:
• Chairman (Under-Secretary of State for Defence and Minister for Veterans);
• Senior Finance and Policy Representative (MOD Finance Director);
• Senior Customer Representatives (Director General of Intelligence Collection, Deputy
Commander in Chief Fleet, and a senior representative from the Maritime and
Coastguard Agency);
• An External Customer Representative
• Director-level representation from the Shareholder Executive;
• Chairman of the UKHO Board;
• CE UKHO;
• MOD’s Director of Business Delivery (DBD).
DBD will also provide the secretariat function to the UKHO Owner’s Council.
3 – ROLE AND COMPOSITION OF THE UKHO BOARD
Role: Under the leadership of the Chairman, and with authority delegated (via the Chairman)
from the Owner, the role of the Board is to challenge and support the Executive Team, and
carefully scrutinise its proposals and/or performance in relation to:
• Developing a long-term business strategy, a five-year Corporate Plan and annual Key
Targets. The Board is to endorse these prior to submission to the Owner for approval.
• Developing a Business Plan covering the first 12-24 months of the Corporate Plan, and
from which annual Key Targets are derived. The Board has authority to approve this plan
on the Owner’s behalf.
• Developing other major business strategies, plans or proposals in support of the
approved Corporate Plan. The Board must judge case by case (guided by the principles
at Annex E whether it can approve these itself, or endorse them prior submission to the
Owner for approval.
• Delivering the approved Corporate Plan, including performance against the published Key
Targets.
In exercising this role, the Board is to ensure, as far as possible, that the Owner is given full
and accurate advice on matters requiring his attention.
The presumption is that whereever possible, the Board will seek to operate on the basis of
unanimity. The precise decision making arrangements are a matter for the Chairman, in
consultation with the Chief Executive. However, where there are significant differences of on
major material issues, the Owner would expect the issue to be referred to him for
consideration.
Composition: The size and broad composition of the Board will be agreed with the Owner by
the Chairman. The quorum for the Board is three (note: this must include at least one Non-
Executive Director (NED) and the CE or DCE). The Chairman is to ensure that there is an
41

appropriate balance of the necessary skills and experience, and between executive and nonexecutives;
and that the Trades Unions are invited to nominate a representative if they wish:
• Chairman;
• CE,
• selected members of the Executive and Leadership team;
• external NEDs – chosen to ensure that the Board has an appropriate mix of skills and
experience. The role of the NEDs will be to provide expert advice, guidance and
challenge to the executive team;
• a member of DBD, sitting as a formal NED; and
• a representative from the Trades Unions, should they wish to nominate one, also sitting
as an engaged NED/attendee, attending regularly and making a substantive contribution
to Board meetings.
4 – RESPONSIBILITIES AND ACCOUNTABILITIES OF THE CHAIRMAN
Responsibilities : Working under delegated authority from the Owner, with secretariat support
from within the UKHO, and in consultation with key stakeholders both inside and outside the
UKHO, to:
• ensure that the Board as a whole is effective in its overall role;
• determine and agree with the Owner the composition of the Board, in consultation with
the CE, including seeking approval for the appointment of new NEDs;
• Organise and chair Board meetings, including:
o determining frequency of meetings and the agenda for each; and
o ensuring all directors receive relevant and timely information in preparation for
meetings.
• facilitate effective support and constructive challenge by the NEDs to the Executive Team;
• provide personal advice to the Owner, where appropriate, on issues affecting the UKHO,
including being a member of the Owner’s Council;
• ensure that the SONAC, Remuneration and Audit Committees are properly constituted
and operate effectively; and
• advise on the appointment of a new CE, including sitting on the selection panel.
Accountability:
• To the Owner.
5 – RESPONSIBILITIES AND ACCOUNTABILITIES OF THE CE
Responsibilities: Working with the UKHO Board and within the policy and financial framework
set by the Owner, to:
• discharge the role of Accounting Officer, i.e. personal and direct accountability to
Parliament for all the UKHO’s expenditure and financial systems;
• lead the UKHO Executive Team;
• develop for endorsement by the UKHO Board, and approval by the Owner, a business
strategy and Corporate Plan to deliver the top-level objectives set for the UKHO, and
annual Key Targets;
42

• develop for approval by the Board, a detailed business plan for the first 12-24 months of
the Corporate Plan period;
• implement the approved business and Corporate Plan, including development of
appropriate internal strategies and policies, developing new products and services,
leading and motivating UKHO staff, improving business processes, and maintaining
effective and efficient management systems;
• report regularly to the UKHO Board performance against the Corporate Plan and Key
Targets; bring to its timely attention all matters requiring its or the Owner’s approval; and
generally make it aware of broader issues relevant to its role; and
• be a Member of the UKHO Board and the Owner’s Council.
Accountabilities:
• to the Owner for the efficient and effective management of the UKHO, and for delivering
the aims, objectives and targets set for it;
• to Parliament as Accounting Officer; and
• to the UKHO Board in its role of agreeing business strategy and Corporate Plan and
scrutinising performance on behalf of the Owner. In the event that the CE believes that a
decision taken by the UKHO Board will cause a conflict with his responsibilities as
Accounting Officer, he/she will seek to remedy this in discussion first with the Board, then
through DBD, and ultimately through the Owner. However, the CE is at all times bound
by his personal responsibilities as Accounting Officer, a fact that the UKHO Board should
bear in mind.
43

Annex H – People
Terms and Conditions of Service
United Kingdom Hydrographic Office (UKHO) civilian staff are Crown employees working within
the UKHO Executive Agency, subject to the Civil Service Management Code and are members
of the Principal Civil Service Pension Scheme. For day-to-day operational matters, including
those to do with the management of staff, the UKHO operates as a discrete body within the
MOD, but is subject to all relevant Cabinet Office instructions and guidance, including the Civil
Service Code.
Where the Chief Executive (CE) wishes to make proposals for changes to existing terms and
conditions of employment that would exceed current management flexibilities, these will need to
be agreed with the MOD, Her Majesty’s Treasury and the Office of Public Service as appropriate.
There will be full consultation with staff and their representatives, including the Prospect Trades
Union, on any changes that affect terms and conditions of appointment.
Management of People
The UKHO’s management policies for its people aim to achieve a well-motivated, properly
trained and developed workforce with appropriate skills and expertise to meet the aims and
objectives of the business and in which individuals are committed to serving customer needs.
UKHO will continue to encourage and facilitate a two-way flow of information and ideas between
management and staff.
The CE will develop and maintain a personnel management strategy which enables the UKHO
to recruit, develop, retain and motivate staff in the numbers and with the appropriate skills and
expertise; whilst observing the principle of equitable treatment of all.
Pay and Performance
The CE has authority for pay bargaining under delegation from central departments and is
responsible for setting the terms and conditions of service for all UKHO staff below Senior Civil
Service (SCS) level. This is carried out under the provisions of the Civil Service (Management
Functions) Act 1992.
Recruitment
The CE will normally be appointed through open competition. The UKHO will recruit its other
staff directly, with the recruitment of SCS level staff managed by the MOD’s senior staff
management team. Recruitment will be undertaken on the basis of fair and open competition.
Non-Executive Directors will have an input into the recruitment process of Executive Directors.
Conduct and Discipline
The CE is responsible for ensuring that civilian disciplinary and restoring efficiency cases are
handled in accordance with MOD guidelines. He/she will have full powers in matters relating to
the conduct and discipline of all employees. The full range of disciplinary sanctions will be at the
CE’s disposal; this includes dismissal, demotion, loss of seniority, loss of pay, reprimands and
postings. A three-stage grievance procedure is in place that is available to all staff, which
includes a right to appeal to either 2nd PUS or an independent Grievance Appeal Panel. Any
conduct or disciplinary issues involving military personnel will be taken forward in consultation
with the appropriate Service Secretary.
44

Staff Development and Performance Assessment
The UKHO is committed to ensuring that its staff are developed and trained so that they are able
to make the maximum contribution to the success of the UKHO. Staff will be given the
opportunity to participate in their personal development and to link their skills and experience
with the needs of the organisation. Staff will be supported, as necessary, by a development
strategy that offers technical, professional and managerial training, and appropriate vocational
qualifications.
All staff will participate in performance assessment procedures, and will be encouraged to
discuss their development needs as part of the performance appraisal process.
Equality and Diversity
The CE will promote best practice in the area of Equal Opportunities. He/she will ensure that
his/her staff are provided with a working environment free from discrimination and harassment.
Investor in People
The UKHO is an accredited Investor in People and will aim to retain its accreditation.
45