Government's plans would create a 1970s-style monopoly.

The latest proposals for privatising Land Registry warn of the risk of ‘investor fatigue’. I bet the investors aren’t the only ones to be fatigued by this drawn-out saga. But this is no reason to accept the chancellor’s timetable for a rushed sale. 

For reasons that were eloquently set out the last time a sell-off was proposed, we need to get this right. And the problem with the proposals published for consultation just before the Easter break are not that they will break the registry (though that is always a risk) but that they will make it too strong, at a great opportunity cost to the UK economy. 

Unlike the last government’s proposal, which in January 2014 envisaged a classic ‘customer-contractor split’ between the office of the land registrar and the service delivery function, the new plan sets out to create an end-to-end information business. Call it a Google of land title. (The name may be doubly appropriate if Google emerges as the buyer.)

While the register itself will remain in Crown ownership, a ‘NewCo’ will run the shop and be allowed full rein to develop digital products based on the data, to recoup the owner’s initial investment and to make profits for the future. The hope is that a private investor would buy shares in NewCo. ‘Government could choose to retain some level of ownership of NewCo ad/or to pass some ownership to the workforce.’

I am not hostile to private investment in the running of and exploitation of the register. But I believe the approach set out in the consultation paper is the wrong one, with the emphasis on realising quick cash for the exchequer over the long-term good of the economy. As usual on these occasions, the selling off is couched in the language of ‘modernisation’. According to the consultation, Land Registry ‘is at a critical point in its existence’: the agency needs ‘to further modernise and digitise’.

In public ownership, while it has succeeded in developing some digital products ‘wholesale business transformation has proved more challenging and further investment is needed to ensure the capability and technologies are in place to combat and minimise the risk of property registration fraud’.

The document concedes that digital transformation can be brought about within the public sector, citing the Government Digital Service’s ‘digital by default’ programme. However the emphasis is on the possibilities of private ownership. ‘This could enable it to maximise the potential of the information it holds and diversity the services if offers, whether it is for professional customers or private individuals trying to buy or sell property.’

And here lies the problem. The consultation envisages a growth-minded Land Registry, taking on ‘other existing, or newly proposed, government registers’. Top of the list is local land charges. ‘Under private sector ownership, it is expected that a new owner will commit to making progress on delivering this central register of local land charges. We believe there are other opportunities for Land Registry to take on further registers, including some outside the UK, and the proposed change could create conditions for them to do so.’

Commercial revenue streams would become more important. ‘As the organisation becomes more digital, so the potential value of the data increases. With the right protections, private sector ownership could incentivise the organisation to make the most of this potential, maximising the accessibility of Land Registry’s data and driving the creation of innovative, new products for the public.’

In other words, an organisation with privileged access to valuable and constantly growing streams of data will have free rein to flood the market with products and services based on that data. Hence my reference to Google. 

It must be said that the consultation recognises the difficulties with this pitch. For a start, there is the government’s commitment to making Crown data available freely for reuse.

The consultation says that the government recognises the importance of open data and is committed to maintaining current open data products ‘on the same or better basis as at present’ and to releasing more open data ‘where this fulfils other public policy goals and represents value for money’. 

There is also a nod to the obvious dangers of creating a necessarily monopolistic entity, with a reminder that it will need to comply with the rules of the Competition and Markets Authority (CMA). On top of this, there is a risk that, as with many outsourcings, the government itself will be ripped off. As a safeguard against this, the government would need to retain ‘a separate capability… responsible for managing the relationship with NewCo’.

The body should have an understanding of land registration, and an ability to agree changes in the scope or standards set for the NewCo in the future.’ (This sounds rather like the Office of the Chief Land Registrar envisaged under the 2014 plan.)

We can expect potential investors to try hard to negotiate safeguards against ‘meddling’ by both the CMA or the management body. By likening this model to Google, I have perhaps been unfair to the Department for Business, Innovation and Skills. It is more like IBM in the 1970s, when Big Blue owned the entire value chain of computing, was constantly battling antitrust suits and yet maintained its near monopoly on big government contracts because it was the kind of organisation that big government agencies felt comfortable dealing with. 

What’s the alternative? (Assuming we take on trust that something needs doing.) I admit that the idea I floated here the other week for a peer-to-peer land registry based on blockchain encryption techniques is still blue-skies stuff. But there’s another 21st century option that could be considered immediately.

This would be to keep a core register within the public sector, though run on a day-to-day basis by private contractors rather than civil servants and funded by registration fees.

However this agency would be barred from offering any commercial services or products. Instead, it would be required to make all its data available for free to businesses that would compete to offer the best information services - conveyancing, planning, market-tracking - to the paying market. Government’s role would be to ensure the integrity of the raw data, and perhaps to encourage the creation of start-up land information businesses, including by current Land Registry staff. 

True, this model would not achieve the immediate billion pounds or so that the chancellor apparently expects from a quick sale. But the long-term gain for the UK economy might be much greater, whether or not investors are fatigued. 

Michael Cross is Gazette news editor