Co-op Digital Blog

The UK Government published a consultation in March on moving Land Registry operations to the private sector.

The Co-op believes that the UK economy will benefit from new services built on data. What the Government is proposing could make it harder to access and use data relating to land and property. In the future, the Co-op may want to build services for our members based on the data that Land Registry produces. We don’t want the Government to make it more difficult for organisations like ours to innovate.

We’re worried that the Government’s plans might make contracts and deals relating to property slower and more difficult. We know about this because Co-op Legal Services works with the Land Registry on behalf of members and customers. The Co-operative Group also deals with the Land Registry because we own lots of properties, including food stores and funeral homes.

The Co-op has sent in a response to the consultation to explain the reasons why we’re worried. We’re publishing it here in full so you can read it too.

Mike Bracken
Chief Digital Officer

 

 

Co-operative Group Response to the consultation on moving Land Registry operations to the private sector

This document is for public sharing and the Co-operative Group waives any rights to confidentiality. It contains answers to all the questions set out in the official response form.
Name:                      Richard Pennycook, CEO

Organisation:         The Co-operative Group

Address:                  1 Angel Square, Manchester, M60 0AG

Respondent Type: Large Business

Background

The Co-operative Group, one of the world’s largest consumer co-operatives, with interests across food, funerals, insurance, electrical and legal services, has a clear purpose of championing a better way of doing business for you and your communities.  Owned by millions of UK consumers, The Co-operative Group operates a total of 3,750 trading outlets, with more than 70,000 colleagues and an annual turnover of £10 billion.

The Co-operative Group welcomes the opportunity to respond to this consultation by the Department for Business, Innovation and Skills on options of moving Land Registry operations to the private sector.

As a business that has significant land and property interests, both leasehold and freehold, with thousands of its own land titles and also given our client-facing conveyancing work through Co-op Legal Services, The Co-operative Group has direct engagement with Land Registry and a clear interest in the efficiency and effectiveness of how this register of UK land and property assets operates.

As a member-owned business, we are very well aware of the importance of establishing and maintaining trust with our members.   Openness and honesty should underpin all that we do.  In turn, we welcome the principles set out by the Government in its Open Data White Paper of 2012, and believe that access to data, including sharing of data-sets held by government departments and agencies, has the potential to stimulate growth, ingenuity and innovation which are vital to the future success of the British economy in the 21^st century.

 

1. Do you agree that the ownership of the Registers should remain in government?

Co-operative Group Response – Yes

Comments:

The Co-operative Group believes that an efficient, well-regulated Land Registry is essential to the health of British business, and ultimately to the state of our economy and the size of our national debt. This is for reasons both timeless and novel.We will start with the timeless argument.

The Co-operative Group believes that the role of the state is to provide certain guarantees of rights that no private organisation, even one as large as the Co-operative Group, can provide. Amongst the most fundamental of those rights is the right to property, a right that is as essential to businesses as it is to individuals. We believe that there is a reason why protection of property, as described in Magna Carta, have been legal foundations of Britain for nearly a thousand years.  A country that cannot protect the right to property is one that will not sustain healthy economic growth, or quality of life for its citizens.

The registers that the Land Registry holds in relation to property and land in the UK are an essential part of the largest asset market in the UK. Their centrality in underpinning contracts and commercial deals cannot be over-stated – they are one of the reasons that Britain is a good place to do business.

The Co-operative Group fears that either the removal from public ownership of this data  or an attempt to regulate it in private hands threatens to gum up the works of British market capitalism, and a threat to Britons’ property rights, and thus to the welfare of our economy and nation. We therefore oppose any wholesale privatisation of the Land Registry or its assets.

Furthermore, we make an argument that is based on novel concerns, unique to the 21st century.

The Co-operative Group believes that the future of the British economy will be heavily driven by organisations and individuals that can seize a competitive advantage based on their skills at extracting value from data.

Crucial to this process is the business of connecting datasets together. Often this connecting process requires using key public data sets as a form of glue, such as lists of addresses, land parcels, transport infrastructure or weather. The more difficult and expensive it is for innovators to gather these connective datasets, the less we can expect modern British data businesses to thrive.

We are concerned that the proposed privatisation of Land Registry, as currently envisaged, risks raising barriers to future innovation and business growth, instead of lowering them.  The proposals appear counter to the principles set out in the 2012 White Paper on Open Data. In particular, the potential emergence of a monopoly competitor, with unique access to the most valuable data, makes the flourishing of a wide, competitive market seem extremely unlikely. The Co-operative Group may wish to compete in these new data service markets, and we are worried that they will be closed to us (and others) before we can even start to establish new businesses and provide new value-added services for the benefit of our members.

2. What steps should government take and what safeguards should it put in place to ensure continued and improved access to high-quality and reliable Land Registry data?

We agree that digital transformation within Land Registry has the potential to better serve the needs of its users, including individuals and organisations.  But we are not convinced that this will be met by a move into private ownership.

Instead, we believe a better a better course of action is:

1. Rather than pressing ahead with options to move Land Registry operations to the private sector, we suggest a strategic review of Land Registry in the first instance. Such as strategic review should be conducted by a Review Board composed of a range of stakeholders from inside and outside of Government. The mission, legislative constraints and current capability and capacity of Land Registry should also be reviewed.

 

2. We also believe that, given the strategic importance of data held by Land Registry, the Competition and Markets Authority (CMA) should be asked to review of how to shape an appropriate regulatory framework that ensures adequate consumer safeguards of data, and equality of access to data in a market economy.

 

3. After the reports from both the Review Board and the CMA are published, develop a new plan for the mission and governance of the Land Registry, delivered if necessary through amended legislation.

 

 

 

3. How could government use this opportunity to improve the quality and accessibility of data produced by Land Registry for all sectors of the economy?
4. The Co-operative Group believes that all non-personal and non-secret government data should be Open Data, freely licensed for re-use, and correctly formatted to make such re-use economically viable for businesses and innovators in the UK. We would therefore recommend that Land Registry adapts its current policies of selling some parts of its data in favour of making all of its data freely available, shifting the operating costs to the registration side of the business.

 

2. We believe that the digital transformation that has been seen at its best in certain parts of central government has not yet arrived at Land Registry. We encourage a comprehensive programme of replacing current digital systems with ones built in accordance with the government’s own Service Design Manual, both as a way of improving quality, and as a way of reducing operating costs.

 

3. The Cabinet Office has recently been promoting the idea that modern government registers are the backbone of 21^st century government infrastructure. We agree with this design philosophy.  We believe that there is an opportunity now to ensure that Land Registry is part of this infrastructure of modern data registers.

 

4. On what basis should government manage the relationship with a privately owned Land Registry to ensure Land Registry meets, as far as is reasonable, the data quality and availability requirements of all stakeholders?

 

If the Government does pursue the course of privatising all or part of the Land Registry, it is vital that a full independent economic regulator is put in place, rather than simply a contractual relationship with government. A contract would only ensure that the Land Registry fulfilled the needs of the parent department, whereas the Land Registry impacts on the activities of the whole economy.

Even if such an independent economic regulator is set up, we believe that the quality of data within the register will suffer because the fundamental economic incentives of a monopoly provider will be to minimise expenditure on data quality whilst maximising the value extracted from it. No amount of regulation can change the basic logic behind the financial incentives for any monopoly data provider.

As a business with thousands of properties in our estate we fear that this lowered data quality will lead to more legal disputes over property related ambiguity, which could hit our profitability and slow down our ability to respond to market conditions. We encourage the government not to create this business risk for us, and other British businesses with large property estates.

 

5. Do you agree that the suggested safeguards should be included in any model?

Co-operative Group response: Not sure

The safeguards set out in the consultation document are thin on detail.

If the government does proceed with moving the operations to the private sector, it is vital that detailed safeguards are published for consultation in advance of any ultimate decision.

6. Are there any other safeguards that you think should be included?

X Yes                       ☐No                ☐ Not sure

As previously set out, we believe the ownership of the Registers should remain public. However, if the government does pursue options to move Land Registry options to the private sector, we consider vital the following safeguards:

1. All prices for data and services sold by the NewCo must be set by the regulator, not by NewCo itself, which will have standard monopoly incentives to extract the entire consumer surplus.

 

2. All calculations about the cost of data and the sale price of data must be revealed publicly, and ‘commercial confidentiality’ must be excluded as a reason to conceal data on the cost and price of sale calculations. The Government’s contractual relationship with any buyer must make this explicit prior to sale of the government assets.

 

3. The terms of use and details of any contracts between ‘NewCo’ and data consumers must be approved by the regulator.

 

4. The regulator must be given a clear mandate to reduce the year-on-year costs of data, in the manner of the original ‘RPI-X cost’ reduction model imposed by early UK telecoms regulators. Ideally the regulator would require the price of data publications to fall to zero within a short time-frame.

 

5. The exact technical requirements for data published, and the quality-levels must be set by the regulator, not by NewCo. Furthermore, the regulator should have adequate resources to regularly audit the data to make sure that it is compliant with the regulations in both technical terms and quality terms.

 

6. Given that technology and data processing is evolving very quickly, the regulator should publish, consult and impose a revised set of standards covering the nature of data gathered and published, the technical and quality standards for that data, and the price of data, at least every 12 months. A refresh once every ten years is no longer acceptable for modern data businesses.

 

 

7. Do you agree with the preferred option?

Co-operative Group response: No

For more detail, see answer to question 8.

 

8. What are your reasons for your answer to question 7?

We do not believe that it is possible for any government to establish a regulator powerful or skilled enough to prevent the owner of ‘NewCo’ from abusing the resources of the land registry in a way that is detrimental to either individuals or to other businesses in the UK, including The Co-operative Group.

In particular we agree with the Competition and Markets authority who argue that:

‘there is a significant risk that a vertically-integrated, privatised NewCo engaged in both the supply of monopoly data and the supply of commercial products (which use the monopoly data as an input) would not maintain or improve access to the monopoly data…rather, despite price-regulation on its monopoly activities, NewCo may degrade the terms of access to its monopoly data in order to weaken competition to its own commercial products.’

Consequently we have two fears:

1.That the estate management of several thousand co-operative properties will become slower, more expensive and more prone to error and fraud.

 

2.That the pace of digital innovation in the UK will slow, and that The Co-operative Group will be kept out of markets where we could otherwise compete for the benefit of our members.

These fears will unfortunately more likely to be realised as:

1. Data prices rise, as well as the cost of other land registry services
2. The quality of data and services fall, as the new monopoly embarks of a process of extracting value

 

9. Do you think an alternative model would be better and why?

Co-operative Group response: Yes

It is clear that the Land Registry does need digital modernisation, and an overhaul of its licensing regime.

We would endorse a review of Land Registry operating principles and management structures, to lead to a new charging model based on much greater provision of open data, and a model based on a comprehensive overhaul of internal processes, based on modern digital management techniques. All this can be done without privatising the core of the service.

 

10. Are there other key costs and benefits that you think we might have missed?

Co-operative Group response: Yes

The current proposal does not make any attempt to model the overall impact on the UK economy of the introduction of a significant new private monopoly as a gatekeeper within the single highest capitalised part of the entire UK economy.

We believe, along with the Competition and Markets Authority that such a monopoly is not going to be possible to regulate properly. Given this it would be appropriate to model the impact on UK economic growth, and the size and growth of individual business sectors in particular, especially the digital services sector, and the land and property sector. We believe the dent in growth to these two sectors that will emerge from such a modelling exercise is likely to dwarf the short term revenue boost, by some distance.

We therefore request that the Government commissions an independent modelling firm to assess the likely impact of privatisation on the size of related parts of the UK economy, an overall economic growth, and the size of the national debt.

 

Final Questions from BIS

Do you have any other comments that might aid the consultation process as a whole?

 

No

 

Please use this space for any general comments that you may have, comments on the layout of this consultation would also be welcomed.

Comments:

None

Thank you for taking the time to let us have your views. We do not intend to acknowledge receipt of individual responses unless you tick the box below.

Please acknowledge this reply ☐

At BIS we carry out our research on many different topics and consultations. As your views are valuable to us, would it be okay if we were to contact you again from time to time either for research or to send through consultation documents?

Yes

BIS/15/165/RF