Land Registry: (A) proposed changes to the commercial model; and (B) Infrastructure Bill Standard Note: SN/SP/6885 Last updated: 20 January 2015 Author: Tim Jarrett Section Social Policy This note covers two topics concerning the Land Registry. The first part of this note (section A) considers the Government’s proposal to change the status of the Land Registry from a Trading Fund, and to split the delivery and policy functions of the Land Registry with the delivery functions undertaken by a service delivery company, and policy work the responsibility of a new Office of the Chief Land Registrar (“OCLR”) to be retained in Government. This proposal was set out in the January 2014 consultation, Consultation Document – Introduction of a Land Registry service delivery company, published by the Department for Business, Innovation and Skills. The consultation closed on 20 March 2014. In response to the comments received during the consultation, in a July 2014 written ministerial statement the Government stated that it had “concluded that further consideration would be valuable”, adding that “therefore, at this time, no decision has been taken to change Land Registry’s model”. The second part of this note (section B) considers the Infrastructure Bill [HL] which is currently before the House of Commons, including developments at Second Reading and Committee Stage. More detailed background on the Bill can be found in the Library Research Paper on the Bill (RP 14/65), which was published ahead of its Second Reading in the Commons. It should be noted that the Land Registry only operates in England and Wales. This note was previously published under the title Possible changes to HM Land Registry’s commercial model. 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Contents 1 The consultation: what was proposed 3 2 Background to the statement 5 2.1 A brief history of HM Land Registry 5 2.2 The current model of Land Registry ownership 5 Previous reviews of the Land Registry 6 2.3 The Land Registry’s current Business Strategy 7 3 Proposed split of delivery and policy 9 3.1 Creating a service delivery company and an Office of the Chief Land Registrar 9 3.2 Ownership of the service delivery company and the “privatisation” debate 10 3.3 Legislative changes that would be required 12 3.4 The Government’s position during the consultation 13 4 Potential impact on customers of the proposals 14 5 Government response to the consultation and the “further consideration” decision 15 2 A Consultation on changing the Land Registry’s commercial model 1 The consultation: what was proposed On 23 January 2014, the then Minister of State at the Department for Business, Innovation and Skills, Michael Fallon, made a written ministerial statement to the House announcing the launch of a “consultation around proposals to help Land Registry deliver more efficient and modern services”, namely to consider the commercial model of the Land Registry. The consultation document was entitled Introduction of a Land Registry service delivery company. The Government stated that “against the option of remaining as it is, we are considering the proposal to create a new company, to which responsibility for the performance of the service delivery functions would be transferred, and to have a separate Office of the Chief Land Registrar (‘OCLR’) which would be retained in Government”1 – in other words, a split of the delivery and policy functions of the Land Registry. On the issue of the possible privatisation of the service delivery company, Mr Fallon told the House that “no decision on ownership and control of this new service delivery company has been made, and several options are being considered”.2 He added that: Government believe that changing Land Registry’s commercial model by separating policy and delivery of services between two entities could have a number of benefits and enable it to move more successfully into the digital age. The proposal is to create a new company, still subject to Government oversight, which would be responsible for delivering land registration services. A separate Office of the Chief Land Registrar would be retained in Government to carry out regulatory and fee- setting functions. This model could allow a greater focus on service delivery, greater operational flexibility around pay, recruitment and possibly provide other services and a more clearly defined relationship with Government. Land Registry is currently moving into a new phase as it embarks on a new business strategy designed to deliver significant benefits for customers, including: Making more land registration services available online, this should reduce processing times, risk of error and the costs of registration; Delivering more efficient services, including creating a centralised access point for local land charge searches; Maximising the reuse of property data for the benefit of the economy. As Land Registry moves into this new phase, it is critical that the business has the right commercial model to best deliver these benefits to its customers and the wider economy.3 It should be noted that there were also changes planned as part of the Land Registry’s strategic review. The then Minister noted that the Land Registry’s “ambitious new business 1 Department for Business, Innovation and Skills, Consultation Document – Introduction of a Land Registry service delivery company, January 2014, p13, para 29 2 HC Deb 23 January 2014 c10WS 3 HC Deb 23 January 2014 c10WS 3 strategy” is “focused on a number of areas”: “the digitisation and re-engineering of its core registration services, which should reduce processing times, risk of error and the costs of those services; playing a wider role in the land and property market, including being able to take on other adjacent registers; and maximising the reuse of property data for the benefit of the wider economy … [which] will all bring significant benefits for customers and make it easier to register land in England and Wales”.4 More information on these proposals can be found in section B of this note. Mr Fallon provided further explanation in his response to a Westminster Hall debate in February 2014: Commercial models dominated the debate. The hon. Member for Swansea East [Siân C. James] fairly asked: “If it ain’t broke, why fix it?” I will reply directly to that. Of course, the Land Registry is profitable, but we have a responsibility to review continually whether the business can drive further benefits to its customers and the wider market by driving digital by default services, which could deliver lower-cost services and reduce processing time. The proposal in the consultation to introduce a new service delivery company is aimed at supporting the business in delivering its business strategy in the best way possible. We have been working with the business to consider whether the current model is fit for purpose or whether there may be benefits in considering alternative commercial models. Following that, there should be a number of benefits through a greater focus on service delivery, greater operational flexibility and a more clearly defined relationship with Government. Central to any change in the commercial model is the guiding principle that we must continue to protect the integrity of the registry in such a way that its role in underpinning the property market by giving confidence to buyers, sellers and lenders is not compromised.5 4 HC Deb 25 February 2014 c89WH 5 HC Deb 25 February 2014 cc89WH–90WH 4 2 Background to the January announcement 2.1 A brief history of HM Land Registry Her Majesty’s Land Registry was created in 1862 as a non-Ministerial department. From 1990 it became an executive agency of the Ministry of Justice. Since July 2011, the Land Registry has been an executive agency of the Department for Business Innovation and Skills (BIS). The Land Registry holds and maintains the register for land and properties that have their ownership status entered onto it (currently over 23 million titles). The Land Registry’s existence was continued by the Land Registration Act 2002, which provides that it “is to deal with the business of registration under this Act”. The 2002 Act introduced some of the most recent changes to the Land Registry. The Act implemented a number of recommendations made by the Law Commission in their 2001 report; Land Registration for the Twenty-First Century: A Conveyancing Revolution. The Land Registry website provides a summary of the main events in its 150 year history since its creation in 1862. 2.2 The current model of Land Registry ownership Since April 1993, the Land Registry has been a “Trading Fund”, in accordance with the Government Trading Funds Act 1973, as amended by the Government Trading Act 1990.6 As a Trading Fund, the Land Registry “does not make any call on monies voted by Parliament. By statute, it is required to ensure that its income from fees covers all of its expenditure under normal operating conditions”.7 Its trading fund status means that the Land Registry “must match our resources to the volumes of work expected in the financial year”.8 The Land Registry is self-funding: it charges fees for registering properties and changes of ownership and other services.