Terraced house painted different colours

In light of new research commissioned by the ODI on the economic value of open versus closed data, Peter Wells reaffirms the benefits of making all Land Registry data open and unrestricted

Today we have released new research on the economic value created by open data compared to the value created by paid data or data released under a restricted licence. We hope the research helps people make better decisions about funding the publication and maintenance of open data as part of a robust and open data infrastructure.

We will use the research as part of our response to the UK Government’s consultation on transferring the operations of the Land Registry to the private sector. We think it will help us make better decisions about the data that the Land Registry keeps and maintains both now and in the future.

The Land Registry underpins the records of land and property ownership. It is vitally important to the UK’s housing sector.

But the data that the Land Registry, either currently or in the future, maintains is also part of our data infrastructure, both in the UK and internationally. As a topical example, the Land Registry’s records of property and land ownership are part of a global data infrastructure for anti-corruption. Land Registry data is used in multiple sectors to deliver services and find insights. It is vital to and underpins innovation, transparency, accountability, public services, and civil society.

The new economic research helps us understand the risk to our economy through the proposed transfer of operations.

The research says that open data creates more value than paid or restricted data

The new report says that across all core public sector data assets, some of which are maintained by the Land Registry, open data will provide 0.5% of GDP more economic value every year than data that users have to pay for.

In 2014, for the UK this increase in GDP would have amounted to £9bn. Across the EU it would be £56bn. Across the world? £232bn.

People and governments benefit

The report explains that most of this value is likely to be passed on by a relatively competitive production chain. Based on our research of open enterprises we suspect that those businesses that embrace open data and open innovation will win the competition in their segment of the chain. Because of this competition the value will eventually be passed on to people

Because people receive the additional value we will receive better services and a wide range of economic effects will be triggered. This will lead to extra tax revenues for governments. Putting a precise figure on these additional tax revenues is not easy and probably not possible – this is macroeconomics after all – but we can estimate.

One way to estimate is to assume that people tend to spend money in their home countries hence governments will receive extra revenues due to sales taxes. This argument would tell us that the UK Government could have reasonably seen an additional £1.8bn/year of extra VAT (20% of the extra £9bn of value) in 2014.

Another estimation method would be to look at the total tax revenue as a percentage of GDP. In 2014 this would have amounted to £3bn/year for the UK (32.65% of the extra £9bn).

Both of these estimates – £1.8bn/year and £3bn/year – are useful increases in the UK tax take. This revenue could support public services including the maintenance and publication of open data.

We already receive some of this value, but it is at risk

Some of this data is already open so government is already seeing some of this extra tax revenue. The current openness of Land Registry data contributes to it, particularly price paid data which is used by organisations such as ZooplaLand Insight and RentSquare. This extra tax revenue is incremental to the regular surplus shown in the Land Registry’s accounts.

But the consultation on moving the operations of the Land Registry to the private sector leaves the door open for any future owner of the Land Registry to release additional data under restrictive licensing or paid models. The future owner might even choose to keep some data closed so that only they can use it. As the research shows us, these actions will inhibit GDP growth and reduce that tax revenue.

A private owner has a legal duty to maximise profit for their shareholders. By necessity they will seek to maximise their own return. It is government's job to consider the impact on the economy as a whole.

Data infrastructure connects multiple sectors, it requires strategic thinking

At a time when government is trying to break down organisational silos and use data better within government it is strange to see it building barriers in our data infrastructure. These barriers add friction to our economy and reduce the value that could be created by data. Barriers should only be there when they are necessary – to secure personal data, for example.

The argument does not just apply to current datasets but also to new ones that may become important in the future that may either be kept and maintained by the Land Registry or that may depend on data kept and maintained by the Land Registry. To maximise value our data infrastructure should be as open as possible, expect change to happen and able to evolve to meet changing needs.

Unless the UK government retains control over the data and releases as much data as possible as open data then whilst the UK government may receive a short-term boost to its coffers it risks losing the increase in GDP and innovation described by the report.

Data infrastructure supports and connects multiple sectors. It requires long-term strategic funding and thinking from our governments to realise its full value. We need to change our approach to data policy and we need to change our approach to funding data infrastructure to take a more macroeconomic view.

Our response to the data infrastructure consultation

The consultation on the Land Registry closes on 26 May 2016.

We have published the themes that we intend to use in our response openly and are gathering information on how organisations use Land Registry data. Please comment before Friday 29 April. We will then publish our draft response during May before it is submitted to government, again you will be able to comment.