So it appears that the spectre of Land Registry privatisation is once again rearing its ugly, ill-conceived head. Many within the industry thought the battle had been won, such was the overwhelmingly critical response to initial consultations.
November’s Spending Review and Autumn Statement however has it firmly back on the table. The policy document published 25th November states that the government will ‘consult on options to move operations of the Land Registry to the private sector from 2017’. It being a new year and the tail end of the season of goodwill to all men, we thought we’d offer up a brief summary of the major objections to privatisation.
Common parlance holds the rationale for privatisation as the private sector providing greater efficiency than its public sector counterparts. This simply does not apply to the Land Registry.
Firstly the Land Registry has no competition to spur it onto greater heights, it exists as a monopoly service. As we’ve seen with other monopolised services, such as localised rail networks, selling to private investors does not always equate a better service. Moreover it performs functions mandated by the legislature in Acts of Parliament. For example guaranteeing the titles to registered estates and interests in land, something there is little precedent for privatising.
From an efficiency standpoint the proposals make little sense. It is difficult to see how the acquisition of the Land Registry will dramatically improve its service or profitability. Most professionals who use the Land Registry will testify that many of its services are available electronically at the click of a mouse. Furthermore its current structure of regional offices ensure a degree of local knowledge. Something the outsourcing likely entailed in privatisation will bring to an end. On the other side of the coin the Land Registry, despite only being required by statute to ensure that its income covers expenditure, generates a healthy surplus. In 2014 & 2015 it generated a surplus and paid a dividend to the Treasury of £26.6 million and £19.1 million respectively. What’s more this is a service which requires no state funding, produces large annual profits and pays directly back into the treasury. As such it really deserves to be treated as a national asset rather than a quick buck for the current administration.
The proposals represent the worst in myopic short-termism. Publicly at least Mr Osborne is not following the ‘competition’ as justification for the move. Instead the basis for November’s announcement is the sale of profit generating public services to bolster the governments ongoing duel with spiralling public debt. Whilst the short term benefits of this are entirely logical, the deficit is increasing and the Land Registry does run at a profit. It represents a high risk strategy on the part of the Conservative administration. By privatising profitable public bodies the current administration risks denying future governments an important source of funding. The cynics amongst you may contend that this may well be an ideological rather than fiscal move but either way it is clear that once the Land Registry is out of public ownership it will be difficult to bring back. As a final consideration it also has to be doubted how far the £1 billion any sale is expected to generate will service either the deficit or public debt.
The final major contention to privatisation is a human one. The human cost is likely to be twofold, most obvious is the potential loss of employment for some of the Land Registry’s 4,500 strong workforce. As with any privatisation some ‘streamlining’ or ‘reallocation’ of public sector jobs is almost inevitable. In the current climate we can ill afford the loss of another major public sector employer. Secondly there is a real fear amongst many conveyancers that the lack of any competition will lead to private investors holding Land Registry data to economic ransom. Whilst this will be problematic for conveyancing departments up and down the country it will also serve to hit beleaguered home buyers in the pocket further.
To conclude the Land Registry is quite plainly unsuitable for privatisation. It runs exceptionally well for a body of its nature. It generates an annual surplus and a sizeable dividend for the treasury, an asset privatisation will deny future governments. It is unlikely to benefit from any great enhancement in either service or profitability by virtue of private sector ownership (without of course upping fees). Finally it is likely to cost public sector jobs at a time when unemployment is beginning to decline. All this for a short term fix, is it worth it?