Ordnance Survey could become a government-owned public limited company (plc), Parliament was told today (Wednesday 19 December).

An independent review into the future status of Britain's national mapping agency has called for it to be given more freedom to develop commercial initiatives and more direct responsibility for its own affairs.

Although best known for its paper maps, around three-quarters of Ordnance Survey's £100 million-a-year income now comes from computerised geographic data. This is used extensively in both the private and public sectors, with around £100 billion of Britain's GDP underpinned by it.

The Minister responsible for Ordnance Survey, Sally Keeble MP, said she was "minded to accept the recommendation" to set up a government owned public limited company with government owning 100% of the shares, and is commissioning a further stage of the independent study to confirm the benefits and costs of such a move and its practical implications before coming to a final decision in the spring of 2002. Stage Two will also investigate how further public-private partnerships might benefit Ordnance Survey.

Ms Keeble said the recommendation for a government-owned company had come from the Quinquennial Review of the agency. Stage One of that independent review looked in detail at the services Ordnance Survey offers, the way it delivers them, whether they are still relevant and – if they are – whether there might be better ways of providing them in the future.

In a written answer, Ms Keeble said: "The Stage One review rejected the options of abolition, merger, contracting out and market testing.

She went on to say: "It considered privatisation carefully, but stated that this was not a real option at present because there is much for Ordnance Survey to do to increase its value as a business through increasing market presence and decreasing cost through operational efficiencies. Additionally, the reviewers concluded that privatisation could endanger Ordnance Survey's existing partnerships, both within government and the private sector. Government-owned plc status would balance the requirement of the national interest in maintaining consistent, up-to-date and fit-for-purpose geographic information with the commercial imperatives of an efficient organisation."

She added: "The main recommendation of the review is that it (Ordnance Survey) should further strengthen its business focus by becoming a government-owned public limited company on 1 April 2003, with the government owning 100% of the shares. This would provide Ordnance Survey with additional commercial freedoms that are considered to be essential if it is to use its full potential to develop the geographic information and e-business marketplace."

Ms Keeble said the rapid Stage Two review will be asked to confirm the benefits and costs of the transfer compared to its current Trading Fund status, consider the right structure and operating framework for the company, propose the means of removing any obstacles which would influence the establishment of the company by April 2003, and investigate how further public-private partnerships might benefit Ordnance Survey.

Ordnance Survey already contracts out to the private sector several services, including a substantial part of its surveying work, buildings maintenance and catering. The study will look to see if there are other areas within the mapping agency that might follow a similar course.

The Minister's support for the principle of establishing a government-owned company is welcomed by the Director General and Chief Executive of Ordnance Survey, Vanessa Lawrence. She comments: "If we become a government-owned company, we will be able to adopt the best practices of the private sector balanced by a public sector ethos. It will ensure that we are able to develop and deliver our products and services more effectively, while continuing to provide national coverage of quality, definitive geographic information backed by the stamp of government integrity. But we must be certain that this is a cost-effective way forward which brings real benefits. We look forward to the further work that will be undertaken before a final decision is taken."

Founded in 1791, Ordnance Survey is one of the oldest parts of government. It presently has the twin status of being a government department in its own right as well as being an executive agency. In 1999 it was also granted Trading Fund powers by Parliament to give it some direct responsibility for its own finances and some freedom to develop new initiatives. Being a Trading Fund requires the agency to operate at a profit, which it has achieved in the first two years of having the status.

If it becomes a government-owned company all these roles will cease, although as the government will own 100% of the shares, Ordnance Survey will remain part of the public sector and will continue to be required to be self-financing.