Land Registry

Debate between Matthew Offord and David Lammy

Thursday 30th June 2016 Commons Chamber

[Mr Lammy]

My hon. Friend makes a very serious point. Even if there were a case for these proposals—I suspect all of us agree that there is no case—now cannot be the time to continue with them. There is no doubt that a private company would seek a profit and become a compulsory monopoly business, driving up the fees charged to users—the point raised by my hon. Friend the Member for Harrow West (Mr Thomas). A sale price of about £100 billion has been mooted in the press. A private company would therefore look to recoup this investment through the fees it charges and then turn a profit for its shareholders.

The argument we often hear in favour of privatisation is that competition will drive prices down, but this completely disregards the fact that the Land Registry is a unique asset in our lives. It is one of a kind, and users are compelled to pay the fees during any transaction involving land or property. There is only one Land Registry; it is a compulsory monopoly and we need to reflect on what would happen if this public monopoly became a private monopoly. We would have profiteering—pure and simple—by ripping off the public with inflated fees.

The Minister refused to answer my written question of 6 June about what steps would be taken to ensure that Land Registry service fees did not increase in the event of privatisation, so I hope we will hear something from him today. We are left to assume that the “protections” and safeguards that the Secretary State mentioned in the foreword to the consultation document do not include any protection from vastly inflated service fees. In time, whatever sum the Government might secure from a sale today will ultimately be paid for by the people and businesses who use and depend on the Land Registry’s services.

[Dr Matthew Offord (Hendon) (Con)]

rose—

[Mr Lammy]

I must make some progress.

We therefore reach the crux of the issue: the Government are looking to sell off the family silver to turn a short-term profit to try to make their sums add up. As the most recent Budget showed, the Government’s plan to close the deficit is dead in the water, so now they are looking around for assets to cash in. This privatisation is purely political, with absolutely no regard for what is right for the Land Registry or indeed the people of this country. The short-term profit derived from any sale will be dwarfed by the increased costs that are ultimately paid by all of us in the form of increased fees, and it will be dwarfed by the lost revenue to the public purse in the medium to long term.

There is no economic rationale for this privatisation. If the Land Registry were making a loss and being subsidised by the taxpayer, I could understand the Government’s enthusiasm for privatisation, but it has made a surplus in 19 of the last 20 years, and it returned over £100 million to the Treasury last year alone. The Land Registry pays rich dividends to the public purse, and there is absolutely no reason why it should pay dividends only to wealthy investors and shareholders in the future.

Satisfaction with the Land Registry is currently running at 96%. Far from being a basket case of public sector inefficiency, it is a shining example of a successful public service being run efficiently and effectively. I must state in the clearest possible terms that privatising it would be daylight robbery and a national scandal. Sadly, we know that this Government have previous: just look at what they did to Royal Mail.

Let me deal briefly with the conclusions of earlier studies. In particular, the Government’s quinquennial review of 2001 found that the privatisation of the Land Registry

“should be firmly rejected”,

and would

“be an act of…considerable folly”.

It is clear from the responses to the consultation on proposals to transfer the Land Registry to a service delivery company in 2014 that the proposed privatisation was decisively rejected by most of the respondents. We are told that

“91% of respondents did not agree that creating a more delivery-focused organisation at arm’s length from Government would enable Land Registry to carry out its operations more efficiently and effectively”,

and that

“89%...not be comfortable with non-civil servants processing land registration information”.

However, although the overwhelming majority of respondents made it clear that the Land Registry must remain publicly owned, the Government are back, disregarding what was said just two years ago and making their case again.

A further issue of vital significance is the impact that a privatised Land Registry would have on the transparency of our property market. The Panama papers leak earlier this year brought to light the industrial use of tax haven shell companies by tax evaders, oligarchs, corrupt crooks, drug traffickers and arms dealers seeking to conceal their wealth. More than half the 214,000 companies whose details were leaked were incorporated in the British Virgin Islands, and many channel their money into the UK property market. A total of 100,000 properties worth £170 billion have been registered by shady and opaque overseas entities in the UK to hide their true owners.

Meanwhile, the Prime Minister and Members of his Government have consistently spoken of a crackdown on offshore tax evasion and dirty money. Indeed, the Prime Minister himself declared last year:

"There is no place for dirty money in Britain... London is not a place to stash your dodgy cash.”

How, then, can we be in this situation? I noted with interest the Prime Minister's article in The Guardian, in which he said:

“We know that some high-value properties—particularly in London—are being bought by people overseas through anonymous shell companies”

using

“plundered or laundered cash.”

The Department for Business, Innovation and Skills has also said that it is aware of the problem. Perhaps the team who wrote its consultation document could let the Minister know.

I listened with interest to this year’s Queen's Speech, which promised that

“legislation will be introduced to tackle corruption, money laundering and tax evasion.”

I say this is in the strongest possible terms, and I say it as a warning to the Government.

We are faced with a severe housing crisis and institutional tax avoidance on a huge scale. First, we need serious steps that will make it harder for shady offshore entities to buy up property in this country, and secondly, we need to make it harder for opaque shell companies to shield themselves from scrutiny and investigation. Privatising the Land Registry would achieve the complete opposite. Surely the most basic common sense tells us that the first step in any crackdown on tax evasion, money laundering and corruption should be to ensure that data about who owns what are made public and are not privately held. As recently as last month, the Minister for the Cabinet Office told the Open Government Partnership in South Africa:

“The UK is a leader on transparency...Increasing openness and tackling corruption are 2 sides of the same coin.”

A public Land Registry could open up its data to support efforts to tackle the endemic corruption and abuse of the property market.

Currently, the average fee for the searching and provision of Land Registry data is £3. Journalists and campaigners have made use of that function to lay bare the true scale of offshore ownership of UK property, much of it derived from shell companies set up to avoid tax or to launder dirty money. A private organisation would have no obligation to open its data and would be able to charge whatever it liked for providing such data. Crucially a private company would not necessarily be subject to the Freedom of Information Act, so would have no duty to supply such data when asked.

Confidence in land and property in our society depends on a land registration system that is administered with integrity, neutrality and absolutely no conflict of interest.

It is a nonsense that a private company should be given an adjudicatory role on the land rights of citizens, other companies and the Government. It is a nonsense that a publicly owned Land Registry that is performing well and returning healthy dividends to the public purse should be turned over to a private owner. And it is a nonsense that this is being forced through by a Government apparently committed to tackling offshore tax evasion and corruption in this country.

This privatisation is not only woefully misguided, but plain wrong and should be abandoned before the public interest is sacrificed in favour of a short-term profit. I look forward to what the Minister has to say and the many contributions from Members in this House this morning.