In some circles (e.g. mine) news that the government is trying (again) to sell off the Land Registry has caused something of a stir. The curtain closed on the first act of this drama in March 2014, by which time 91% of respondents to the consultation opposed the Land Registry’s transition to a service delivery company. Apparently, it wasn’t the overwhelming opposition from, well, everyone that scuppered the deal, it was Vince Cable.
Government appears to have decided that if your first consultation doesn’t go the way you want, then why not try again with a more radical option? Should you worry?
Here are some issues to which there seems to be no clear answer:
1. What is the impact that this will have on the ONS’ ability to produce timely statistics about the housing market? A privatised Land Registry will be looking to maximise revenue, not provide a high-quality service to public sector bodies or competing private companies. You only get to a point about free and/or open data in the consultation document at the very end – up to that point all of the language is about “innovative services to the customer” – and it’s pretty clear from this that the open data statement is about ‘maintaining’ existing offerings with only a gesture towards other data sets and no clear path for making it available for free to individuals or companies (only “the public sector” is explicitly included in the ‘free at point of use’ statement 60.iii).
2. With the closing of the open data door, what is the long-run impact that this will have on the ability of anyone other than Rightmove, Zoopla, and the owner of the Land Registry to properly understand what is happening in the market? New data feeds would clear be on a pay-to-play basis and so would limit the market to a few major licensees instead of the range of small- and medium-businesses (as well as major estate agents such as Savills) currently making use of the data. It’s hard to see how this will ‘increase overall accessibility and quality of data’.
3. The government has just had to allocate £5mm to the start-up costs of (re)building an open Postal Address File since the original was sold off with the Royal Mail. The full costs of this build are currently unknown but are likely, given the failure of a crowdsourced alternative, to be substantial. This outcome should make it clear that keeping basic data about the country, and the digital services that make it accessible, in the public realm not only has cost benefits but also underpins the very digital economy innovation that the government says it wants to promote (since a large number of businesses depend on having a valid address, and a large number of businesses benefit from having timely housing market data).
4. For the LR privatisation, the government has asserted that ownership of the register (and, effectively, the guarantee that goes with it) will remain in the hands of government since the “no-fault indemnity” needs to be retained to ensure “smooth functioning of the property market”. This would seem to mean that the liabilities for errors or issues with the register will remain with government as well since there is only a brief mention of “transfer an appropriate share of financial risk… to NewCo”. In which case, why sell off the organisation that manages the data since this appears to increase risk to the data owner?
5. With modest fee levels the LR is still generating a surplus and so the logic of selling it off to ‘increase efficiency’ is therefore fundamentally flawed. It is already offering a high-quality, cost-efficient service such that, even if the surplus is a temporary artefact, significant improvements from cost-reductions seem unlikely. A commercial owner would therefore naturally look to increase fees for ancillary services charged to end users in order to ensure profitability and year-on-year revenue growth. A more Machiavellian firm might deliberately neglect the core, regulated fees section and ‘up-sell’ customers on to unregulated premium services that increase revenue. All of this runs exactly counter to the government’s presumed intention of ensuring the efficient operation of the housing market. To put it another way: for what, exactly, is someone paying £1.2 billion if not the opportunity to exploit a monopoly position with minimal downside risk? Government negotiators have not covered themselves in glory in most contracts with private sector firms such as SERCO, Capita, etc.
6. A private sector operator would also be exempt from Freedom of Information regulations and so would be able to either charge for, or to refuse to publish, data of compelling interest to individuals, groups, and government. For instance, the ‘foreign ownership’ data set was first obtained via FoI requests, but is now being published as an open access data set and supporting wider, evidence-led public debate. The government might well find itself wishing to obtain access to just such data for policy reasons and be unable to do so or forced to pay in order to do so.
7. Finally, a privatised, revenue-oriented LR would be in a position to exploit data in advance of its availability to competing firms (firewalls inside companies are always ‘leaky’). This would fundamentally undermine the basis on which the service is offered to users: that the Land Registry is an impartial collector and publisher of data to all consumers and that it cannot seek to capitalise on privileged access to market movement. The impact of this outcome will be a reduction in innovation since there will be fewer entrants able to compete with the data-owner and increased fees for those who try.
The Innovation Fetish
On a final note, I can’t resist responding to the rhetoric around ‘innovation’ and the ‘digital economy’ embedded in the introductory notes to Consultation: “Indeed, Land Registry could have more freedom in the private sector to continue to evolve into a high performing, innovative business, delivering for customers and the wider market in a 21st century, digital economy.” Bear in mind that this is being written about the organisation that has delivered open – and open-ish – data far and above most other government bodies.
You can, right now, download every single open market transaction (and, increasingly, non-market ones as well!) going back to 1995. At a cost of exactly £0 I was able to map every transaction and link it to regional household income data to help visualise affordability changes in London (and Manchester) with a view to increasing our understanding of the housing crisis and its spatial extent. Companies such as Savills, Zoopla, and Rightmove use it for research and pricing estimates. And, of course, if you are lucky enough to own a property then the Land Registry holds the record of that ownership. You can also, after entering unverified details, download a register of which properties are owned by overseas companies.
So, aside from recording transactions and related data, where exactly does innovation enter into this? I don’t want a Land Registry that ‘fails fast‘ or that ‘moves fast and break things‘. I want an Land Registry that thinks very carefully about what it does and how it does it, that consults with end users about how it could expand our access to the data that they hold (which they’ve done, as my inbox will attest), and that has no profit-driven motives when making plans for the future provision of services.
Recognising that you may not have a lot of time, here’s what I said in my response – I probably didn’t get everything right or 100% accurate, but I did my best: BIS-16-165-rf-response-…
It’s not often that I find myself posting content from the Daily Express, but to their credit this article makes many of the same arguments that I’ve formulated.