40 Under this option, all LAs would provide access to the unrefined information necessary to complete a Local Enquiries search free of charge. This would mirror the situation in Scotland where most information is available for free by statute.
41 If central government chose to set prices at zero, as happens in
Scotland, it would not be necessary to determine the cost base and so would remove the complexity associated with Option 2a.
Impacts
42 Although the costs and benefits are the same as for Option 2a, there is considerable variation in their magnitude:
i. to the public sector
Under the Government’s new burdens policy it would need to
provide an estimated £11.05 million to cover the loss income to local government from this change in policy as LAs would no longer be able to recover any of the costs associated with providing access to search records.
This would also have a knock-on impact on LAs ability to compete effectively in the market for compiled property searches.
ii. to the private sector
There would be considerable financial benefits to the private sector if the fee were set a zero, with LAs bearing the full cost of providing third parties with access to search records.
Delivering this option
43 As with Option 2a, this option would cut across the current grain of government policy, which is to delegate greater financial powers to LAs. However, the legislative complexity of this option is minimal, as
ensuring that all unrefined information were provided free of charge would require change to a single piece of secondary legislation.
Annex 4 Partial Impact Assessments | 69
Option 3 – LAs set their own fees at a level that covers
their costs
44 An alternative to setting a uniform fee would be to let LAs set their own prices for access to search records. LAs would set their prices for access to the ‘data set’ at a price set locally to reflect their costs. It is to be expected that if LAs were allowed to charge a fee for unrefined information that covered their costs, the incentive to restrict its availability should be greatly reduced.
45 It would be necessary to provide LAs with very clear guidance about which costs may be covered. As part of their work for Communities and Local Government and Ministry of Justice, KPMG produced a draft methodology for assessing costs.13
46 This option would further require that every LA knows what its costs are. In its 2004 market study the OFT found that only 29% of LAs say that they record these costs separately in their accounts. In these cases, LAs would have to set up an accounting system to determine their costs.
47 There might also be a need for monitoring, as LAs would have an incentive to inflate their estimates of the cost of making unrefined information available, in order to raise prices and increase revenues.
48 All parties would benefit from the establishment of a level playing field in setting the price of the unrefined ‘data set’. Both public and private sector search providers would start from the same point in the market for compiling property searches.
Breakdown of costs and benefits
Benefits49 The main benefits arising from this option are:
i. to the public sector
LAs would, for the first time, have clarity as to how and for what unrefined data LAs should charge. By allowing cost recovery based on local conditions, it is estimated that LAs would be able to recoup an additional £1.49 million per annum, with LAs that currently deny access and those that charge below cost being among the major beneficiaries.
ii. to the private sector
Where the cost recovery approach improves access, enabling a fully complete Local Enquiries search by a personal searcher – this would better enable personal searchers to compete in the market for compiled searches as both the public and private sectors would start from the same point in the market for compiling property searches.
Costs
51 The main costs arising from this option are:
i. to the public sector
The only additional cost to the public sector would be in putting in place systems based on the KPMG guidance to assess costs.
However, this would be part of their costs and therefore no loss in income is anticipated.
ii. to the private sector
In many cases LAs do not currently charge for or deny access to search records. It is expected that with the greater clarity provided by the guidance that would underpin this option LAs would levy access charges to recover cost. The additional cost to private sector search providers is estimated to equate to £1.49 million nationally;
However, private sector firms operating in Local Authorities which currently deny access to some or all search records, or offer
unreasonable access, would benefit from improved access and therefore the ability to compete on the basis of quality and turnaround time as well as price. This should drive more effective competition and reduction in fees for consumers.
Annex 4 Partial Impact Assessments | 71
Delivering this option
51 The KPMG guidance would need to be published so that LAs could establish costs for unrefined data based on cost recovery. Changes would be needed to the legislative base for LA charging to clarify that ‘having regard to costs’ in setting these fees equates to the cost recovery model in the KPMG guidance.