Benefits:
i. to consumers and the private sector
56 As per option 2 except that some consumers will benefit whilst others will be negatively affected. Consumers will pay a fee that is set at the discretion of the LA and consequently may be higher or lower than £11. As a result, the aggregate benefit to consumers will be a function of the change in price and the number of searches. It is possible that LAs may decide that the £11 is too high and charge PSC a rate lower than £11. Market pricing may well hinder relations between LAs and the private sector.
23Para 6.12, 6.13 OFT Property Searches – A Market Study, Annex D Survey of local authorities, September 2005,
ii. to the public sector
57 As per option 2 except this option will place authorities in a stronger position and each of the benefits identified in option 2 would be compounded. The additional benefit is estimated to be £18.2 million per annum, £5 million more than option 2. This option would allow authorities to compete with PSCs whereas option 2 (cost recovery) means LAs will not be running at a loss but cannot reduce their fee to compete or increase it to make a profit or manipulate market share. Option 3 would require appropriate monitoring in the interest of fair competition between LAs and PSCs. Section 9 of the KPMG costing and charging guidance report contains a suggested framework for
monitoring (see para 73). The power to charge is normally conferred solely for the purpose of enabling the cost of providing the service to be recovered. However, a property search is a commercial service where there is competition from PSCs. Consequently the aim is to charge a competitive price, including a profit element. This option may therefore give LAs an incentive to inflate their fees.
Costs:
i. to consumers and to the private sector
58 As per option 2, except that the fees are likely to rise further beyond what it costs a LA to produce, conversely it would also give authorities the freedom to reduce their fees to compete if they wished to. The additional cost is estimated to be £18.2 million per annum, £5 million more than option 2.
59 As per option 2 except fees could increase beyond the cost-recovery limit or be restrained below it. This may result in some PSCs making a lower profit or none at all. Under option 3, a LA may penalise
consumers and PSCs by exploiting their monopoly power over their registers by charging significantly higher charges than at present.
60 PSCs may pass on the full cost of fee increases, or absorb part or all of a fee increase, subject to local market conditions and the policy of each PSC. There is also the possibility that fees would fall below the current level. Under this scenario, PSCs may again pass on the full cost of fee decreases, absorb part or absorb all.
ii. to the public sector
61 As per option 2 except that the personal search fee would be
anomalous as compared to other LLC services (set on a cost recovery basis). Under this option, LAs may be able to engage in a margin
squeeze, by effectively charging themselves a lower price internally for a personal search than they charge to PSCs. This would distort
Annex 4 Partial Impact Assessments | 99
Option 4 – no fee
Benefits:i. to consumers and the private sector
62 Removing the fee for a personal search of the LLCR would move this service in line with some of the other registers managed by a LA including, for example, the planning register, which is available free of charge. It will allow individuals more freedom to search local registers, benefiting local democracy and choice. The public will also enjoy the creation of another free public service.
63 This option will ensure consistency between LAs with a zero fee charge.
64 This option will give significant benefits to the private sector, particularly PSCs who will be able to search the LLC register free of charge. The option will save PSCs £11 on every search they conduct, a benefit of £11.9 million per annum.
ii. to the public sector
65 The only benefit to the public sector is that it would not need to charge itself a fee for the use of the LLCR when preparing a LLC1.
Costs:
i. to consumers and the private sector
66 No discernible costs, other than the possibility of a rise in other costs or council tax as LAs may seek to recover their costs of providing the personal search service.
67 With no incentive to gather fees from providing the personal search of the LLCR service it may encourage authorities to restrict access to their registers on operational grounds.
ii. to the public sector
68 Authorities would not be able to recover any monies from providing this service, a cost of £11.9 million per annum. In the short term they would be required to subsidise any losses from council tax, elsewhere in the authority, or from central government. This could also have the effect of reducing the level of access offered by LAs as they would gain no fee incentive from the personal search service.
Options conclusion
69 The preferred option is option 2 to devolve the setting of personal search fees from central to local government on a cost recovery basis.
70 Government considers option 2 the most appropriate solution. It will allow LAs to recover their costs of providing the service. There would be no impact on council taxes or subsidies and the measure is consistent with government policy on consent regimes.