Review of the Operations of HM Land Registry

- Report by the Comptroller and Auditor General NATIONAL AUDIT GCE Review of the Operations of HM Land Regi&y Ordered by the ,House of Commons to be printed 9 July 1987 Her Majesty’s Stationery Office, London 526.80 net 39 This report is presented to the House of Commons in accordance with Section 9 of the National Audit Act, 1983. Gordon Downey Comptroller and Auditor General National Audit Office 8 July 1987 $” ,,“‘~&;y ~.;.~.~:,- b;;; _. Contents Review of the Operations of HM Land Registry Pages Summary and conclusions l-5 Report Part 1: Introduction 6 Part 2: Manpower, Productivity and Standards of Service 7-9 Part 3: Computerisation 10-11 Part4 Arrangements for Funding and Charging 12-13 Appendices 1. LandRegistryworkload 14 2. Productivity 15 3. Land Registry expenditure and income 16 4. Average costs and fee income by service 17 5. Comparison of fees payable under Fee Orders 18 Review of the Operations of HM Land Registry Summary and conclusions 1. The Land Registry occupies a central place in the buying and selling of property. It is responsible for the compulsory registration of titles to land and buildings in designated areas of England and Wales, which now cover 87 per cent of the population and are expected to be extended to cover the whole of England and Wales by 1990. Expenditure in 1986 - 87 amounted to E92 million, and the Registry received fees of El39 million for its services. The promptness and accuracy of the Registry’s work, and its costs and efficiency, are therefore of substantial public importance. 2. This report records the results of an examination by the National Audit Office (NAO) of Land Registry’s main operations. It examines the Registry’s system for controlling manpower and encouraging productivity and high standards of service; reviews the programme for using computers in the process for the registration of title; and considers the arrangements for funding and for charging fees for services. Manpower, productivity 3. There has been a substantial increase in the workload of Land Registry and standards of service over the past ten years, reflecting the increase in conveyancing transactions, the growth in the credit economy and the extension of compulsory registration of title. The total number of applications has trebled since 1976, doubled in the last five years and increased by 25 per cent in the last 12 months. During this period, the Registry has successfully maintained the quality of its work, but the increase in its resources has fallen well short of the increase in the number of applications (which in 1985 - 86 and 1986 - 87 far exceeded the Registry’s estimates). Therefore it has not been able to achieve the speed of service it seeks to provide. Pre contract and pre comple- tion enquiries have increased from 1.5 million a year to 5.2 million a year, and prescribed turn-round targets are achieved in only some 60 per cent of cases, although nearly 90 per cent are completed within four days. Attempts to deal promptly with these types of enquiry have in turn delayed action on post contract registrations of title, which have also increased from 1.1 million a year to 2.6 million a year. Post contract registration now takes from 10 - 24 weeks and arrears of applications awaiting registration up to March 1987 grew by 76 per cent to a backlog of over 700,000 cases [paragraphs 2.3-2.7). 4. Staff costs amount to over 65 per cent of total Land Registry costs. Per- manent staff numbers are authorised by Treasury. They increased by 32 per cent between 1982 and 1987, and in addition substantial amounts of overtime were worked and many casual staff were employed in order to meet demand. Since early 1985, increases in staff have not kept pace with rising workloads which have well exceeded expectations; and this, together with 1 the need to keep overtime and casual work within cash and running costs limits [paragraphs 2.8 - 2. lo), has been the major contributory factor to the backlog of work referred to in paragraph 3 above. 5. Within Land Registry staff numbers are allocated to District LandRegis- tries (DLRs) on the basis of productivity standards. The Registry’s aim is to provide the best standards achievable at each DLR in each of its functions. It considers that a higher performance measured in output per head is achievable where the development and maintenance of a register of title in an area is more straightforward. This would arise, for instance, because of the mix of residential/commercial property, the incidence of leasehold, rent charge interests and restrictive covenants, or where values are generally lower. Where the inherent nature of registration is less straightforward-as is the case in Central London-and where operating circumstances are testing - as is generally the case in the South East - the outputs per head tend to be lower. Land Registry policy is, nevertheless, to look for improvement in each “function area” within each DLR over successive years. The two most recently opened DLRs have matched or exceeded the productivity achieved at the best of the long established DLRs, and it appears that a more pro- ductive ethos has been established from the outset at these new offices. NAO noted that scope exists for similar improvements to be achieved at some existing offices (paragraphs 2.11-2.16). 6. Land Registry has an efficient management accounting system which enables productivity standards to be effectively monitored and also enables management to deploy resources efficiently. The performance of Registry management at all levels is assessed in relation to their success, inter alia, in meeting productivity targets. Land Registry, along with the Civil Service generally, adopted a system of performance bonuses, on an experimental basis, for senior staff and assessments take account of performance achieved (paragraph 2.17). 7. Productivityrose by about 30percentinthe tenyearspriorto 1982-83, but it then fell following an attempt to streamline working practices and save some 200 posts, which led to industrial action in 1983. In 1985-86 it remained about 6 per cent below the 1982 - 83 level. Because of the rapid growth in workload and the limitations on manpower and expenditure, Land Registry has had to service an accumulating backlog of unprocessed work which militates against efficiency and effectiveness. Sustaining and improvingproductivity against this operatingbackground is doubly diffi- cult but even so productivity increased in 1986-87 by 3 per cent (para- graphs2.18-2.22). 8. Work on the project to computerise title records began in 1976. So far68 million has been spent and it is estimated that a further 816 million will need to be spent before the system is operational at all DLRs in 1992. Latest estimates show that this investment will not achieve the intended target rate of return until 1998, although savings of at least 615 million per annum are then forecast. The system became operational at the first DLR in September 1986, and the extension of the system will depend on an evaluation of its success there and at a second DLR [paragraphs 3.1- 3.4). 9. In 1963 Land Registry’s concern about delays in implementation led to the appointment of external consultants to review progress and suggest improvements in project management. The consultant’s report in April 1984 revealed serious weaknesses in the project management and recom- mended fundamental changes which were accepted and implemented. Since then the project has proceeded substantially according to plan and management of the project has been considerably improved (paragraphs 3.5-3.10). 10. The computer project is both complex and ambitious with a system design which is close to the forefront of technology. This could increase the risk that the project may fall short of its technical and financial objectives which, in turn, would,result in material amounts of nugatory expenditure. The delay between 1979 and 1984 means that major changes to the design could be required well before the project shows any financial return. Conti- nuing system maintenance costs are also likely to be high (paragraphs 3.11-3.13). 11. However Land Registry considers that a comprehensive computer development was necessary to meet the long term demands of conveyancing practice and it believes that this approach offers significant long term benefits over a more selective and progressive development. As yet there is insuf- ficient information upon which to assess the prospects of eventual success (paragraphs 3.14-3.16). Funding and charging 12. The average cost of processing a registration has been falling in real terms, since 1980 - 81 by over 18 per cent. This reflects the overall improvements in productivity achieved since that time, and the increasing propor- tion of transactions on already registered titles. Land Registry has reduced fees in its ad valorem scales for most values of transaction in each of the last two fee orders; but given the substantial surpluses of revenue over expenditure which have been paid over to the Consolidated Fund, benefits passed on to customers by way of fee reductions could have been greater. A table showing the effect of fee changes in the main Fee Scales is shown at Appendix 6. 13. There are five main reasons why large surpluses have arisen: (a) Land Registry’s need in each year to ensure that its covers its costs (paragraph 4.3); (b) the ad valorem basis of the fees coupled with unforeseeable increases in property prices (paragraph 4.4); (c) the massive and rapid increases in conveyancing workloads which have been higher than expected and have generated higher revenue totals [paragraph 4.6); (d) inherent delays in revising fees (paragraph4.6); and, importantly (e) the pre-determined ceiling on expenditure and the Registry’s ina- bility, within existing funding arrangements, to utilise promptly revenue arising from its increased commitments to take on additional manpower (paragraph 4.7).

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