Private Sector Scoops £54 million in PFI Project
Date: Thursday, 03 June 2010
Reference: PAC 14/09/10
A Private Finance Initiative (PFI) IT project, which transformed Northern Ireland’s Land Registers (the public body responsible for registering land and property transfers) netted British Telecom an estimated £54 million over ten years. That’s one of the key findings in a report, entitled Transforming Land Registers: The Landweb Project, published today by the Northern Ireland Assembly Public Accounts Committee.
The Report, which looks at the impact and cost of the Landweb project since 1999, found that the service had been enhanced through the use of a new computerised system. However, the Committee also queried a number of decisions taken by the former Land Registers Agency on the design and management of the project.
Speaking at the launch of the report, Paul Maskey MLA, Chairperson of the Committee, said: “This PFI project with British Telecom has indeed transformed the land registration functions now administered by the Land and Property Services Agency, and reflects well on BT’s ability to deliver on a complex project. The Committee also acknowledges the commitment shown by Land Registry staff.
“Landweb has provided many improvements, including the ability to process vastly increased numbers of property transfer applications resulting in faster turnaround times. It has provided a secure electronic archive for documents and has enhanced levels of customer service.
“However, having said that, there are areas in which the Committee still has concerns and believes that better value for money could have been secured.”
One issue, which proved of great concern to the Committee, was that the value of the 17 year contract with BT is worth significantly more than originally envisaged when it was signed in 1999, due to additions and changes to the contract and an unprecedented rise in property transactions between 2004 and 2008. Current estimates value the contract at £78 million.
In addition, the level of fees paid by customers and the failure to adjust fees when market conditions changed, resulted in Land Register collecting significantly more money that it costs to operate.
Paul Maskey said: “Land Registers is legally obliged to recover the full costs of its operation, and the level of fees set was intended to do this. However, it is clear to the Committee that Land Registers failed to adjust its fees quickly enough in response to the increasing numbers of transactions due to the rise in the market. This resulted in it generating surplus income of over £30 million since 2003. In effect this is an indirect local tax being levied on its customers which has added to the cost of conveyancing.”
The Committee also found that, from the outset, Land Registers lacked the strategic vision to appreciate how computerisation could transform its business. There were shortcomings in both project management and risk management and a lack of necessary skills and experience in the project team before, during and after the procurement.
Mr Maskey concluded: “I was disappointed that the Department did not identify and disseminate the lessons emerging from this project earlier, as many of these issues were also evident in the Department’s Shared Services projects, which PAC examined in 2008. However, the Agreement with BT can be re-evaluated ahead of the agreement breakpoint in 2014. This provides the Department with an opportunity to assess the value for money of the project and re-negotiate. I would therefore urge it to put in place an action plan to ensure that it is fully prepared for these negotiations.”
Notes to Editors:
1. “LandWeb” is a 17 year Private Finance Initiative Concession Agreement signed by Land Registers (now part of Land and Property Services, an Agency within the Department of Finance and Personnel) with BT in 1999 to improve its efficiency and customer service. Under this agreement, BT is responsible for the development, installation, testing operation and maintenance of an Information Computer Technology infrastructure and managed service for Land Registers.
- The estimated value of the Agreement in 1999 was £46 million;
- Current estimates put the value of the Agreement at £78 million;
- Since 1999 £54 million has been paid to BT, of which £25 million relates to changes and additions to the original agreement.
2. The Committee also found that there was a failure to identify the high level of interdependency between the Land Registry and the Register of Deeds systems.
3. Among the findings were that Land Registers encountered problems in planning and anticipating staffing requirements. This led to BT acting as a job agency, providing casual staff, without any competitive tendering, to the value of over £16 million to date.
4. As there was no legislation to levy charges on customers using the Register of Deeds, BT was paid an estimated £3.5 million in compensation for lost revenue.
5. Standing Orders under Section 60(3) of the Northern Ireland Act 1998 have provided for the establishment of the Public Accounts Committee (the Committee). The statutory function of the Committee is to consider accounts and reports on accounts laid before the Northern Ireland Assembly. These are compiled and laid by the Comptroller and Auditor General for Northern Ireland (C&AG), head of the Northern Ireland Audit Office.
6. The C&AG is empowered to investigate any area of expenditure and has a statutory right of access to all files and papers in Departments and public bodies.
The PAC Committee members are:
1 With effect from 04 March 2008 Mr Thomas Burns replaced Mr Patsy McGlone.
2 With effect from 20 May 2008 Mr Paul Maskey replaced Mr John O'Dowd.
3 With effect from 1 October 2007 Mr Mickey Brady replaced Mr Willie Clarke.
4 With effect from 21 January 2008 Mr Ian McCrea replaced Mr Mickey Brady.
5 With effect from Tuesday 27 May 08 Mr Jim Wells replaced Mr Ian McCrea.
6 with effect from 15 September 2008 Mr George Robinson replaced Mr Simon Hamilton.
7 with effect from 15 September 2008 Mr Jim Shannon replaced Mr David Hilditch.
8 with effect from 29 June 2009 Mr Patsy McGlone replaced Mr Thomas Burns.
9 with effect from 18 September 2009 Rt Hon Jeffrey Donaldson replaced Mr Jim Wells.
10 with effect from 18 September 2009 Mr David Hilditch replaced Mr George Robinson.
11 On 19 April 2010 The Lord Browne replaced Rt Hon Jeffrey Donaldson.
12 On 19 April 2010 Mr Stephen Moutray replaced Mr Jonathan Craig.