Clause 29 - Transfer of responsibility for local land charges to Land Registry

Infrastructure Bill [Lords] – in a Public Bill Committee at 11:30 am on 8th January 2015.

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Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government) 11:30 am, 8th January 2015

I beg to move amendment 59, in clause 29, page 33, line 37, at end insert—

‘(3) This section shall not come into force until the Secretary of State has laid an independent report before both Houses of Parliament on the effects of the transferral of responsibility for local land charges to the Land Registry, and the report shall include—

(a) an implementation plan;

(b) an assessment of the impact it will have on local authorities;

(c) an assessment of the impact it will have on businesses; and

(d) an assessment of the impact it will have on home buyers and sellers.”

It is a pleasure to serve under your chairmanship, Mr Hood, and I wish you a happy new year.

Currently, in England and Wales, a local land charge search is one of two searches undertaken as part of the standard conveyancing process for the purchase of land and/or property. One part of that search is for an LLC1 form and the other is the CON29 search, which compliments the LLC1 search. Local authorities currently provide a full local search service covering both documents, which is understandable as it is well documented that most people currently undertake the two searches together.

Clause 29 will transfer responsibility for maintaining and searching the LLC register from local authorities to the Land Registry. It is important to note that responsibility for collecting LLC information will continue to rest with local authorities, which will pass the information on to the Land Registry. Further, local authorities will continue to be responsible for CON29 searches.

The Opposition believe that peeling off part of the service will make the service worse, not better, and that the delivery, impact and cost implications of the change have not been properly assessed or considered. That sentiment is echoed by organisations across the industries that will be affected by the changes. In order to change such an ill thought-out fragmentation of such an important service, my colleagues and I have tabled amendment 59, which is designed to ensure that the proposals in the clause do not come into force until the Secretary of State has laid before Parliament a detailed, independent report on the transfer, setting out an implementation plan, an assessment of the effect of the changes on local authorities, and an assessment of the wider effect of the transfer on businesses, home buyers and sellers.

In January 2014, the Land Registry published a consultation document, “Land Registry: Wider Powers and Local Land Charges”, which noted that it had agreed a new strategy; namely, that it should take a wider role in the property sector. As an aside, I draw the Committee’s attention to the fact that the Land Registry undertook the consultation on its own proposals and evaluated the responses on behalf of the Government, so it was judge and jury on its own proposals. The consultation document stated that the Land Registry should be able to engage in new activities—specifically, that it should be responsible for local land charge searches and the local land charges register. The consultation closed in March 2014 and the Land Registry published its response in June 2014.

Part 1 of the consultation concerned widening the existing powers of the Land Registry, but the majority of respondents did not want to see the Land Registry play a greater role in the property market by providing information and registering services additional to the land registration service, or by providing consultancy and advisory services relating to land and other property.

Part 2 of the consultation concerned the Land Registry assuming responsibility for local land charges. The response document noted:

“The majority of respondents to this question felt that the reasons given in the consultation to change LLC services were not supported by the evidence produced and that the perceived problems with the current service had been overstated. Many felt that the consultation did not provide sufficient information of how the proposals would work in practice and that they would not produce the costs benefits or a centralised one stop shop.”

As the Minister will know, the response document goes on to say:

“An overwhelming majority stated that the services should all remain with local authorities.”

It also shows that an overwhelming majority of respondents did not think that the Land Registry had considered “all feasible options”,

“with the majority stating that LR had been quick to dismiss all options other than the preferred option referred to in the Consultation and that no real consideration had been given to any of the other options and that LR had been too dismissive of them.”

The impact assessment states:

“Several respondents have said that we”— that is, the Land Registry—

“have underestimated the level of integration between the CON29 and LLC1 service, and what the effect would be if the LLC1 service were to be removed from local authority delivery.”

There was overwhelming opposition to the proposals from local authorities. As the response document shows, 51% “strongly disagreed” with them and a further 15% “disagreed” with them. The response document says:

“An overwhelming majority of respondents disagreed or strongly disagreed with the…perception that the current services would benefit from reform.”

Can I ask the Minister what made the Government press ahead with the proposals despite the magnitude of opposition that is so well documented in the response to the consultation?

As for the Government’s evidence base for the proposals, other than the consultation itself it seems that they drew on very little. The origin of the proposal is unclear, and there has been no independent assessment of its merits. The only Government rationale for the proposal that appears in the impact assessment is that the lack of a standard fee makes it difficult for conveyancers to supply quotes to potential clients, and standardising the fee is cited as the No. 1 policy objective for the proposal.

However, the evidence provided for the idea that regional variations in fees pose a significant problem to conveyancers is based only on “informal consultations”, and as those are not documented we have no idea what information they actually produced. We also know from the wider consultation exercise that conveyancers do not identify searches as a significant cause of delays, and that 82% of conveyancers found the Land Registry proposal unappealing or very unappealing. If that issue were the problem for the sector that the Government are trying to suggest it is, why is the sector not complaining about it? In fact, no one seemed to think that the lack of standardisation was such a problem. Alternatively, some people thought that if it was such a problem, the Government could simply issue a regulation saying that there should be a standard fee set across the whole country.

In transferring responsibility for searching and maintaining the local land charges register to the Land Registry, the Government have singled out one aspect of a service, which make the proposals particularly hard to comprehend even from the Government’s standpoint—although to be honest, I do not really know why I am trying to do that. The Land Registry will hold the data and will carry out searches of the register, but local authorities will continue to collect the information to go in the register and all other local land charge data. That simply does not make sense, because the Land Registry will take on only one part of the service, leaving the more complex part of the service with local authorities. As the Land Registry itself has noted,

“92% of applications are for both LLC1 and CON29 together.”

So, as I say, this fragmentation simply does not make sense.

I am absolutely mystified as to how splitting up the service will achieve the Government’s stated policy objectives—it seems that it will not. Despite the Government’s key objective of speeding up the service, their own impact assessment, published in October 2014, admitted that they could not claim there would be “any significant time savings” as a result of the change.

The Local Land Charges Institute has pointed out that the preferred option will not meet Government objectives for time efficiencies and standardisation at this stage. However, in a letter to the institute dated 19 February 2014, the then Minister, the right hon. Member for Sevenoaks (Michael Fallon), cited delays in the provision of searches as a key reason for the change. On the question whether the problems would be resolved by the Land Registry taking over the service, he responded:

“Standardising the current disparate datasets and digitising the remaining data, which still exists in paper format will provide efficiencies in the service.”

We actually agree, but there is no reason why that digitisation cannot be supported in the local authority sector, as well as in the Land Registry.

On the financial implications of the proposals, or what we know about them, the Council of Property Search Organisations notes that the current proposals risk stripping councils of income while leaving them with many of their current responsibilities and costs. The Government’s impact assessment further notes the

“possible redundancy costs for local authority staff” and that

“these costs have been calculated for illustrative purposes” and have the potential to be between £6.6 million and £16.8 million, with a budgeted contingency of £11.2 million. The impact assessment goes on to say:

“It is possible that there may be redundancies among the 850 local authority staff who deal with local land charges. Such staff would typically have other responsibilities in addition to working with local land charge data, which account for up to 75% of their time…Some local authority staff will still be required to update the register and deal with enquiries from data users…There is no evidence available on the likely redundancy or redeployment policy at the local authority level, and so redundancy costs have not been quantified in the impact assessment.”

Surely that is extraordinary. What estimate has the Minister made of the number of staff local authorities will need to retain to continue collecting local land charge information? How could those staff be paid for?

Further to the issues I have already discussed, a number of organisations have been doing extremely important work on the impact of the proposals, and they have been vocal in their opposition to not only the content of the proposals, but the way in which they have been devised and assessed.

The Minister will know that the Local Government Association has called for clauses 29 and 30 to be deleted. In the event that that is not possible, it has made clear its support for agreeing to amendment 59 to ensure that the Government’s proposals do not come into force until a proper assessment has been made.

The LGA gives two key reasons for its opposition to the proposals. It states:

“The land charges service supplied to businesses and residents is best improved locally. The upheaval of a national transformation would have a negative impact on the quality of the conveyancing process, and will remove local knowledge and expertise from the process that may in turn lead to delays” and increased costs, because it will take more time for queries to be resolved. It also says:

“The case for this change has not been made.”

In addition, it points to the fact that the majority of the responses to the Government consultation opposed the proposals. Should clauses 29 and 30 remain in the Bill, the LGA calls

“for a firm commitment on the face of the Bill that the transitional costs are met in full under the new burdens doctrine, and all ongoing costs based on an independent cost assessment are funded by central government. This is especially important as the current proposals in the Bill risk stripping councils of income”.

The District Councils Network is also concerned that centralising local land charges registers entails high risk, and it is of the view that the proposals should be reconsidered. It has a particular concern about the impact on the operation of the property market if there are problems with the IT system that is being developed to support the centralised local land charges register when the Government try to transfer the data from local authorities.

The Law Society has registered doubts that the proposals will achieve their stated objectives, and the Local Land Charges Institute believes that the proposed takeover of part of the local land charges service by the Land Registry will lead to

“a more fragmented, more costly and less reliable service than that which already exists and would result in a poorer service for the property-buying public and the businesses that assist them.”

Yet the Land Registry proposes spending between £40 million and £60 million on the scheme, for which there is no demand and no guarantee of success, with no benefit to consumers. The LLCI says that the scheme also fails to meet its stated policy objectives, and it urges the Committee to scrap the proposal.

The Council of Property Search Organisations has said:

“The proposed changes to centralise Local Land Charges Registers have not been thoroughly considered and will jeopardise hundreds of jobs and businesses which rely on the Local Land Chargers Registers to provide searches. This will also negatively impact on the housing market, causing delays to the home buying process”.

That would cause potential deals to fall through. CoPSO understands

“the need to digitise the register but it is clear the government have not considered all viable options… The sector is currently operating well and there is no clear implementation plan”.

The views of the seven local authorities involved in the trial scheme do not represent the views of the vast majority of local authorities, which are against the changes:

“CoPSO contacted every LA and of the 83 responses received, 54 said they were very concerned about or completely against the changes.”

Furthermore, absolutely everyone understands that, as the local authority is still responsible for CON29, the changes are nonsensical. I could go on, but I will not. The Chartered Institute of Legal Executives, the Association of Independent Personal Search Agents, the Society of Local Authority Chief Executives and Senior Managers, the Public and Commercial Services Union and Unison are all totally against the changes.

So given the significant opposition to the transfer of responsibility for local land charges to the Land Registry, the confusion surrounding the impact of the change and the limited evidence that the change is necessary,  surely if the proposals in clause 29 are to come into force, at the very least Parliament will need to see a more detailed, independent report on the transfer.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East 11:45 am, 8th January 2015

Before I call the next speaker, I inform the Committee that I will take clause stand part with amendment 59.

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

It is a pleasure to serve under your chairmanship for the first time, Mr Hood.

The hon. Member for City of Durham is more fundamentally opposed to the proposals than I had thought, but none the less I will try to allay the concerns that we anticipated and address the concerns that she has raised. She has called for a further report. Some members of the Committee will have served on Finance Bill Committees, some of us on rather more occasions than we would have liked, and will recognise how common calls for reports are from Labour Front-Bench Members. They suggest reports rather than tabling alternative proposals, particularly during this Parliament. A further report is unnecessary because a lot of work and preparation has already gone into the proposal. It would delay the implementation of the service, which would have an impact on the services currently provided to the public and would perpetuate uncertainty for staff within local authorities.

Let me set out why we wish to proceed along these lines and the rationale behind that. Many local authorities operate systems that are either wholly or in part reliant on paper records which, of course, decay over time. It was even said to me during my preparation for this session that some of these paper records have, over the years, been affected by floods and other environmental damage. That, of course, is a serious risk for the public in accessing accurate information before they go ahead and buy a property.

On the visits that the Land Registry has conducted around the country, I was rather startled—so startled that I wrote it down—that the hon. Lady said it was an “ill thought-out” and fragmented approach to what we are doing. There have actually been three years of consultation, preparation and discussion with local authorities. As part of that, the Land Registry has visited more than 200 local authorities over the past three years to see for itself the practice on the ground. In some cases, it found that there is a digital service, which is what we want to proceed to. In many cases, there is an entirely paper-based system and in some cases there is a microfiche system.

I have a history degree. I enjoy researching primary records, and I have done that for dissertations in the past. I am also a genealogist. It is wonderful to turn up to Taunton’s record office, which is in the constituency of my hon. Friend the Member for Taunton Deane. I have never actually been to Taunton—I will have to rectify that at some point—but I have been to its outskirts, where the county record office is in Somerset, to research some of my family history. There is no substitute for going through the paper records of parish registers. It can be slightly enjoyable to go through the microfiche, turn the wheel and look for the Seward family name, which I was looking for that time. It is rather more  frustrating, though, when looking for a Williams, an Evans or a Davis, which are the other surnames I have looked for. Although it is more interesting and perhaps more rewarding for someone to do that primary research themselves, I have to concede that looking at digitised parish records and census returns via a secure website from a living room or, indeed, an iPad leads to quicker and usually more accurate results. That is precisely what we are trying to ensure here.

Photo of Chris Ruane Chris Ruane Labour, Vale of Clwyd

In my county of Denbighshire, the local authority is considering cutbacks to the county archives where such records are stored. What assessment has the Minister made of the impact of local government cuts on the accessibility of these archives to ordinary people?

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

I was using archives as a way of illustrating and bringing to life the sorts of issues we are discussing. I do not want to go off into a discussion about county record offices in general. I have actually been to Denbigh record office in the past, when I had a scholarship to stay at St Deiniol’s library. We have heard about lots of things thanks to my hon. Friend, but we have not heard about Gladstone. We have heard about Disraeli, so it is about time that we heard about Gladstone. Gladstone, of course, left his book collection and many records at St Deiniol’s library, some of which are held in Denbigh record office. I have been there, and it is a marvellous service. I hope that it will continue. However, this is nothing to do with our county record offices. [ Interruption. ]

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

Order. The hon. Member for Vale of Clwyd should not heckle the Minister when he is addressing a point which the hon. Gentleman made. It is not right and I will not have it.

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

Thank you, Mr Hood. I was simply using county record offices to bring to life what we are discussing. I will return to local property searches, which is what we are discussing. We want to replace this service, which is currently fragmented and spread over 300 local authorities in England and Wales, as we have heard, and replace it with a modern, digitised service which we think will be to the benefit of all. The transfer of the service will be phased. For each local authority, the first step will be collating the data it holds and checking that they are accurate. The checked datasets will then need to be transformed into a digital format before being transferred into the central local land charges register which will be created under the clause. The local land charges service will only transfer from individual local authorities to the Land Registry once that process has been completed and is functioning.

Implementation will also require a range of secondary legislation to support the changes; an example is land charges rules. That will ensure that Parliament has the opportunity to monitor progress and to ask further questions.

The impact on local authorities was the thrust of what the hon. Member for City of Durham was speaking about, although I want to refer also to the impact on businesses and home buyers and sellers, which is the reason why we are coming forward with the proposals.  We have recognised from the start that we need to ensure that the new system takes account of concerns in that regard. That is why we have involved local authorities, as I said, at every step, including prototyping the service with seven of them. Indeed, one of the seven authorities subject to that prototype was that of the hon. Member for Vale of Clwyd—Denbighshire. One of the prototypes taking part was Denbighshire. Liverpool city council, not far away over the Dee and the Mersey, was also one of the prototypes, and I will quote what it said for the benefit of the record:

“Together we demonstrated that this could work and that if Land Registry were to roll this out then there could be benefits to the conveyancing process in the UK”.

Under the new service, local authorities will continue to retain responsibility for keeping the information on the register up to date, so there is an important continuing role for local authorities to populate the register with all the relevant pieces of information: charges, tree preservation orders and everything else that needs to be on it. However, they will not be maintaining the register in its new digitised, nationally accessible format and will not need to provide a search service.

As I said, the Land Registry has already met a huge number of local authorities to answer any questions and to complete a profile of each authority. A number of interviews have also taken place with HR departments. The hon. Member for City of Durham asked about the impact on employees and how many employees are affected. Obviously, there is variation between authorities. Clearly, there is a big difference between Birmingham city council and, to pick a small council off the top of my head, Breckland or West Somerset, which might also be providing the service. However, the information that I have is that an average of two people per local authority are involved in this work. Obviously, in some local authorities, there may be a larger team than two, but typically in the smaller authorities, from what I have heard, the staff members involved in this work will also have other responsibilities in the authority; this is not their sole reason for working for the local authority. However, the practice varies, depending on the size of the authority.

The engagement with local authorities and the LGA will continue. Key stakeholders have been invited to join a local land charges advisory board. Local authorities will also have a role in implementation. The most cost-effective methods of digitisation and data preparation are being explored to ensure minimal disruption to local authorities and users of the existing service.

The hon. Lady asked about costs to local authorities, and I can confirm that all the costs of the conversion from the various databases held locally at the moment, whether they involve paper, microfiche or any other format, to a digitised process will be met by the Land Registry; those costs will not fall on the individual local authority. I hope that that gives her an important reassurance on that front.

Photo of Alistair Burt Alistair Burt Conservative, North East Bedfordshire

On a point of order, Mr Hood. You might be aware that at 12 noon, MPs and others are gathering in Westminster Hall to remember the journalists killed yesterday. I wonder whether you would mind suspending the Committee for a minute so that in this room we could all stand and remember the journalists who lost their lives yesterday  and remember what they stood for, in solidarity with our friends downstairs. Could we just take a minute of our time to do that at 12 noon?

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

I have no objection at all to that if all members of the Committee agree.

Sitting suspended.

On resuming—

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

I am sure that all of us were deeply shocked watching the news last night or reading in great detail in the newspapers this morning about what happened in Paris. We would certainly all want to join with our colleagues elsewhere on the parliamentary estate in showing solidarity with the people of Paris and France.

I will now return to the rather more prosaic matters of digitising local authority records. Work is under way with both the Department for Communities and Local Government and local authorities to assess any financial impact of the changes and ensure that they are appropriately addressed. The hon. Member for City of Durham asked me whether there will be any benefit to the public from proceeding with these changes. As a result of the Land Registry’s visits around the country, we have found a variety of practices in not just the method of record keeping itself but the service impact on people. There is great variation in the service turnaround times for purchases of property. I will give two examples at either end of the spectrum, which might be politically pleasing to the hon. Lady. Bolton council, which I believe is run by the Labour party, has already moved to a digital service and returns official service results within one day. Bath and North East Somerset council is—unhelpfully, in the example I have here—run by the Liberal Democrats, and I am sure that it will continue to be so for some time. It says on its website that it takes 20 days to turn around a local search. There is a variety of service level out there. By digitising all the records, we want everywhere to be able to emulate Bolton council and provide that one-day turnaround service, so that we have uniform good practice around the country. That will be the advantage of having a national database which can be accessed locally.

Taxpayers rightly now expect this sort of service locally. Whenever we renew our tax disc or driver’s licence, we now expect digital by default from Government, which is something that the previous Government did and that this Government are continuing to do. It is about time that the local Land Registry service caught up with that approach, saving costs but also providing a better service to the public elsewhere in the full range of Government services. I hope that, with those remarks, I have picked up all the questions that the hon. Lady asked me in the course of her remarks.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

My question about cost was not only about the cost of digitising the service; it was about the loss of income to local authorities and who had worked out the impact of that.

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

I can happily deal with that from memory. The cost recovery provided in the service at the moment is precisely that: cost recovery. It is not a revenue stream that can be spread elsewhere among local authority services. It is meant to purely cover the cost of providing the search facility service. The cost of populating the database is not meant to be recovered from that, because that cost falls within general local government responsibilities that will continue. Given that local authorities will no longer be providing the search service, there will not be a cost to recover, so it is therefore neutral.

We are talking about two elements of local property searches that are currently done by local authorities—I had hoped we would not get into this area. There is the LLC1 search, which is what we are considering here. That will be digitised and searched nationally. There is also CON29, which is an all-embracing sweep-up of other things that might affect property. That will continue to be provided by local authorities, and revenue will still accrue to them for providing that service. With that final reassurance, I hope that the hon. Lady will withdraw her amendment.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I am not convinced by the Minister’s response. It is one thing to ridicule the Opposition—we might expect that—but it is quite another to dismiss what almost every single organisation in the sector is saying about the provisions in the clause, including the Chartered Institute of Legal Executives and the LGA. If the Government have got local authorities on board, it is peculiar that the LGA has come out so strongly in saying that the clauses should be deleted. I could go on. The Local Land Charges Institute and the organisations that represent estate agents are opposed. Opposition is absolutely widespread. Not only people in local government, but people right across the sector, with the exception of the Land Registry itself, are opposed.

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

If I understand it correctly, most of the objections from local authorities—directly or via the LGA—were purely on the subject of uncertainty about whether the cost of moving to the new service would be covered. I have answered that and given reassurance that the cost will be covered. That is what most of the objections were about, or so I am told.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

The concern from local authorities is on two fronts. It is about how they will manage, without the fee for the LLC1 form, to collect the information that is necessary for the CON29 form, which will remain their responsibility. They are also concerned about fragmentation of the service and about the lack of local knowledge underpinning the register itself, which might happen over time. That is why we were not simply asking for an additional report, but an independent report.

Photo of Stephen Williams Stephen Williams The Parliamentary Under-Secretary of State for Communities and Local Government

On the point about local knowledge, I reiterate that the main responsibility for local authorities is populating the database in the first place with everything from tree preservation orders to any charges that exist on the property other than the primary mortgage that an individual householder may have, and a range of other encumbrances and charges that may be against  that property. That responsibility will remain with local authorities, and that is where the local knowledge and expertise is germane. Providing the search service does not really require local expertise, particularly when it is digitised.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I appreciate that, as do local authorities at the moment. The concern is about where the next stage might go. If local authorities are losing money and cannot support CON29, it might be that CON29 will go over to the Land Registry as well. So a set of anxieties have not been addressed. I urge the Minister to go away and read what the people who work in the sector are saying about this. They are greatly concerned that we are moving towards digitising the service in the Land Registry without thinking through what is already happening.

The Minister made my case for me by giving the example of Bolton. The local authority there has digitised its service and shown that the Government did not need this proposal. If the Government wanted the service to be digitised, they could simply have helped local authorities to do that, without fragmenting the service. We therefore need to think more about the clause, but, for now, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 29 ordered to stand part of the Bill.

Schedule 4 agreed to.

Clauses 30 and 31 ordered to stand part of the Bill.