One suggestion that has been made by Robert Barr (of Manchester Geomatics) and echoed recently by Ed Parsons on his blog (though I think Ed came up with it independently) is that Ordnance Survey’s non-refined data (that is, the stuff it does as part of its public task, which the Cambridge economics study of trading funds interpreted to be its MasterMap and Large Scale Topo) could be made available for free by making up any funding shortfall from a surcharge on Land Registry transactions.

The reasoning: most LR transactions involve OS mapping.

According to the study, that would cost between £12m and £30m in foregone revenue.

So how much would you have to add to Land Registry transactions to make up that amount? It sounds like an awful lot of money to generate.

Here are the figures I’ve culled from the Land Registry’s performance data for the past three years on the number of transactions.

With millions of transactions, it looks like raising £12m – £30m wouldn’t actually be too hard. “Discharges” are the ending of a claim to a legal title – generally, though not always, the end of a mortgage. They attract no fee at present. Other LR charges range from £2 (for a search) to £700 (for first non-voluntary registration of a pricey parcel of land). Most of the charges, though, are £20 – £40 and upwards.

So to find the £12m that the trading funds report suggests OS would lose solely from non-discharge transactions would mean adding £2.65 to the cost of each LR transaction.

If we take the loss in revenue to OS as £30m, then it means adding £6.61 to each transaction. It’s not more than the cost of any transaction (except searches – which aren’t the same as the “searches” one does when buying a house; those go through your local authority), and compared to the cost of the typical transaction – say, the average £180,000 house purchase – it’s peanuts.

Right – that’s the analysis done. Now we just need to find a minister who is in charge of Land Registry and Ordnance Survey and can tweak the legislation (it doesn’t need primary legislation, surely?) to make these changes. And we’re done.

This analysis also appears (without the fun table) in today’s Guardian: Land Registry holds key to free OS.

Following on from the trading standards report, today’s Guardian examines what it could mean, and what the government – and other – response so far has been.

In sight of victory notes about the study that:

The findings will be hard to dismiss. Unlike previous studies, they are based on hard figures from the trading funds affected. It also takes a holistic view, for example taking into account the overall cost to society of the extra taxation needed to pay for free data.

And then there’s the reaction:

Britain’s leading expert in public sector information policy, Professor Richard Susskind, chair of the Advisory Panel on Public Sector Information, described the report as “precisely the kind of detailed, systematic and rigorous economic analysis of trading funds and PSI re-use that APPSI has been recommending since 2003. We hope this represents the beginning of a new era of open and sophisticated thinking about the economics of PSI.”

Michael Nicholson, chair of the industry association Locus, said the study “breaks new ground. It is the first time the consequences of exploiting public sector data have been reviewed from a socio-economic perspective in this way”.

Ordnance Survey, the agency that would be most affected by a change in policy – and whose raw data the report says would benefit the UK most – said the study is “an important input to the wider debate”.

Ed Parsons, the OS’s former chief technology officer, noted that “the ludicrous merry-go-round of government departments paying [each other] would disappear, reducing costs and increasing the use of geographic information (GI) within government … the relatively small GI industry in the UK would flourish”.

(We should also note that Ed is not in favour of an OS that is totally directly funded. In the same blog post he says that

OS in the position where its continued operation and the quality of its data is reliant on a subsidy from government [would be] a disastrous position which could result in a USGS like reduction in funding if political priorities change.

We take that point on board – and we’ll deal with that in coming weeks.)

So what does government, which now has stacks of data about free data’s benefits, say?

Central government was less enthusiastic in its responses. The department for Business, Enterprise and Regulatory Reform, which oversees the running of trading funds, implied pricing policy would continue as before. While the government would set out clearly what information it needs for its public task, to ensure that such information “is made available as widely as possible for use in actual and potential downstream markets” the principle of recovering costs will remain in the next spending review (after 2011).

Yes, you can groan now.

“The underlying principle will be that information collected for public purposes will be made available at a price that balances the need for access while ensuring customers pay a fair contribution to the cost of collecting this information.”

In other words, DBERR knows much better than economists using data gleaned from the organisations involved what’s right for the economy. It’s a bit shocking, really.

Over to you: what do you think should be the next steps in the campaign? Our first thought is to examine how effective a system where Land Registry registrations part-fund Ordnance Survey, since registrations are (in economic lingo) inelastic. Anyone know where the data about the number of registrations via LR for the past 10 years could be found?

So here are the tallies, according to the Trading Funds report, of how making bulk data free would benefit the economy, and how much it would cost the government. (You can find the figures in Chapter 7 of the report.)

The figure for Ordnance Survey is dramatic, but understandable: as it says itself, it underpins huge amounts of economic activity. The point that this study makes is that making its raw data free would allow even more economic activity – creative, useful, beneficial, taxable – to occur.

(The UKHO is unlike the other trading funds, as the report points out, because it takes in raw data from outside organisations, which it may not be allowed to make available royalty- or payment-free. Which goes some way to explaining the answer to the question I was asked earlier.)

Just in case you’ve got a slot in your diary: Michael Cross, the co-founder of the Free Our Data campaign, will be talking at the British Computer Society’s Geospatial Specialist Group on Wednesday April 2 at 6.20pm in London.

As the page says, “Michael will be explaining the rationale behind, and taking questions about, the sometimes controversial campaign, now in its third year.”

Better to be sometimes controversial than always bland, though, that’s what we say.

The page says that “NB This event is free, but registration is required. If you would like to attend this event please register by sending an email to GSG.Event@Googlemail.com”. It’s not clear if you need to be a member of the BCS or its Geospatial Specialist Group to come along – but presumably the registration email will tell you.

We suspect that Mike will talk a little about the strength of the official reports that have all, so far, backed more or less the campaign’s standpoint; none has demonstrated that the wider economy would lose out by adopting our system.

Still chugging through the Trading Funds report (because it is 154 pages, after all): here we are at chapter 6.

Where we find (PDF p107-108):

With the development of the ‘knowledge’ economy, driven in large part by improvements in digital technology, the supply of data by trading funds can be seen as an analogous activity in ‘information’ sector to the supply of physical infrastructure in the form of power and electricity, transport (roads, trains etc), and telecommunications. This comparison is illuminating in a variety of ways.

First, existing utilities often have similar cost structures where large fixed costs are combined with low marginal costs. Related to this, many of them, at least in some areas of their activities, have ‘natural’ monopolies just as trading funds may do in some areas of their business. Utilities are usually providing ‘essential’ infrastructure which, if not directly essential to government, are essential to the general economy – this could be seen as similar to the ‘public task’ of trading funds.

For a combination of these reasons many of these utilities are regulated and have been now for some time and one might think that these regulatory experiences would have something to offer when considering the situation of trading funds (few, if any, of which have any independent regulation at the present time).

This is an interesting point. It’s been clear for a long time that trading funds tend to be natural monopolies (it would make no sense – as we have pointed out – to have two competing national mapping agencies, nor to privatise Ordnance Survey, because the latter would create the situation where mapping would be a cherry-picking exercise).

Two things: first, which trading funds are tightly regulated? One does hear the phrase of “capture”, in which a trading fund is able to persuade its controlling minister that it’s doing everything just right, and because it’s handing over the money every year the minister doesn’t have any cause to come down heavily on it – quite the opposite: don’t annoy the Treasury is one of the first rules of Being A Government Minister.

Of course, utilities – certainly electricity and gas, and increasingly roads and rail – aren’t free. But then again, it costs money to generate and distribute electricity and gas, or build roads and rail. By contrast, the cost of running online distribution is falling all the time; the amount of data that the Met Office distributes every day – a few gigabytes, it told the report’s authors – would cost a few pounds per day to distribute if held on Amazon’s S3 system. That’s pretty cheap.

We’ve reached page 22 of the 154-page PDF, and alight on this piece of economic analysis, looking at how the demand curve for a trading fund may misrepresent the wider demand out there. Stay with it: it’s interesting.

…imagine there are a large number of downstream firms [from the trading fund] each demanding one unit of the product but each with different fixed costs. The trading fund’s demand curve [for its product, determining the price it sets for the product] then arises from aggregating across all these downstream firms.

Pick a point on the trading fund’s demand curve (p, q) say, and consider an increase of δp in the price charged, resulting in some reduction δq in purchases. Now this reduction in demand corresponds to some number of downstream firms who cease to purchase (and hence cease production).

Consider one of these firms and let initial revenue be R, and C their total costs (excluding the payment for data).

Then one must have R − C ≈ p (since R − C < p + δp and R − C ≥ p). What about the surplus generated by this firm? Its producer surplus is zero (R − C − p = 0) but consumer surplus, denoted CS, is almost certainly not zero.

Thus, from the point of view of society current total surplus produced by this firm is p + CS.

However using the demand curve of the trading fund all that would be recorded is the p coming from the payment for data.

Academic? Not at all – you could imagine the firm that ceases production at the δq rise in the cost of using, say, a map is the same as one which never starts because the startup costs of licensing the data are too high.

We can think of an example. Actually, here’s another. See? Economics isn’t all about imaginary five-pound notes on the ground after all.

The summary of the section (p23):

if users of a trading fund’s information products are not end consumers but other firms, then there is good reason to think that the demand curve seen by the trading fund will significantly underestimate the welfare benefits (costs) of lower(higher) prices.

The executive summary of the Trading Funds report says, after some preamble about the challenges of doing it, that

the analysis has generally been confined to comparing the existing average cost (cost-recovery) regime with marginal cost.

Performing this comparison on the subset of products suitable for analysis, it was found that, in most cases, a marginal cost regime would be welfare improving – that is, the benefits to society of moving to a marginal cost regime outweighed the costs.

And as they also note, for a digital product, the marginal cost is close enough to zero that there’s no difference between a zero-cost regime and a marginal cost regime.

In other words, the Free Our Data campaign is right, at least as regards raw [non-personal] data from the public sector.

Let’s continue with the executive summary:

For registration based trading funds (DVLA, Companies House and the Land Registry) it likely that this change in charging policy could be made without the need for government to provide additional funds as any shortfall could be made up from the registration side of their activities. For the other trading funds some direct assistance, beyond that already provided, would be required.

In the case of the UKHO and the Met Office the sums involved would be limited (around £1m) but in the case of Ordnance Survey would be substantially larger (though the benefits in this case would be commensurably bigger).

It does note that

A change in charging regime should not have a detrimental impact on the performance of trading funds in terms of efficiency or data quality, providing a suitable governance and regulatory regime is put in place (and this is desirable in any case).

This is of course the tricky thing to get right, and the authors add that

having an adequate governance/regulatory regime in place is absolutely central to realizing the potential benefits from change (and also for delivering value for money even under the present charging arrangements). Thus, getting this right should be one of the first items for consideration whether or not any restructuring does take place (and will be essential if additional subsidies are required under a move to marginal cost pricing).

More once we’ve digested further.

As the report was written by two economists (Professor David Newbery and Rufus Pollock) and a professor of law (Lionel Bently), all of Cambridge University, it’s not surprising that it contains a lot of economic calculations – the sort that require at least A-level maths to feel comfortable with. (Do we all still feel comfortable? Good.)

We like the start:

The contents of this document may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not used in a misleading context. The material must be acknowledged as Crown Copyright and the title of the document given.

So, just to be clear, the 154-page report is called “Models of Public Sector Information Provision via Trading Funds”. (Please note: page numbers given here refer to those in the PDF, which often differ from the printed form.)

We began at the end, with the appendix “A General Argument for Selling Public Sector Products at Marginal Cost”. This is a pretty important part of the argument: why should the government give away stuff rather than selling it for a profit?

A crux point from the appendix which looks at pricing at marginal cost (p139):

taxing public production (by the difference between price and marginal cost) is inefficient if the production is an input into production, and unlikely to be part of an optimal commodity tax system when sold as a final good.

That is (to simplify again from the economics) if the public data get used to generate something else that is then used in the private sector, charging for them isn’t the most efficient way of growing tax revenue.

They add (p139):

Certainly it is hard to believe that taxing any PSI products would increase consumers willingness to undertake taxed labour activities, or that reducing their price would lead to an increase in leisure at the expense of paid employment.

As shown by the government’s 2003 Green Book, the authors say, (p140)

The UK Government attaches importance to the distributional consequences of its actions, many of which are justified by the beneficial impact they have on distributional outcomes.

A key question then becomes the “marginal cost of public funds” – how much it costs the private economy to spend £1 in the public sector. A 1992 study noted that (p146)

‘The MC(P)F ultimately depends not just on the tax, but also on the nature of the government expenditure under consideration.’ This is a particularly salient point in the case of government revenue subsidising trading funds in order to offer below average cost pricing. As an example, the lower cost of trading fund data may lead to greater innovation.

Which would mean? (p146-7)

On the one hand this could result in higher corporate incomes, which would contribute to subsequent higher

government revenues and hence a lower MCPF.

(This is the Free Our Data argument.)

On the other hand the lower costs of trading fund data may be passed onto lower final goods prices. This case would leave the public with more income to spend on other goods and services, and could weaken incentives to supply labour. This time the lower government revenue would raise the MCPF.

(I have to admit I don’t follow the logic of the second sentence, unless it is that extra income to spend on other goods and services does not lead to extra government income because the same amount of money is being spent – all you’ve done is shift some spending from trading funds goods to other goods, without expanding the economy.)

The trading funds report that Tom Steinberg and Ed Mayo recommended should be carried out (in the Power Of Information report for the government) has just been published, while Alastair Darling has been giving his budget.

Download it from DBERR (584KB PDF). For future reference, the file is at http://www.berr.gov.uk/files/file45136.pdf.

We’ll host the file here presently. That is, once we’ve read it!

We’ve heard from an impeccable source that the trading funds report will be released on budget day. We’re not sure which of them is the bad news that’s being buried by the other…

But what we have heard is that its recommendations will be encouraging about the idea of making raw data available for re-use at marginal cost – and that it’s thought that won’t have an effect on their efficiency. A suggestion like that will probably not delight Ordnance Survey, which has resisted the suggestion that it ever does anything in a raw-vs-processed way.

More once we get our hands properly on the report. But to keep you warm, here’s a quote from the conclusion: “Any of the major pricing policies considered in this report can be implemented without adverse effects on the efficiency and performance of the trading fund affected.” 

 

At the suggestion of a regular reader, we’ve started a Facebook group. (A bit behind the curve, perhaps, but no one can accuse us of being slaves to fashion.) The group’s at http://www.facebook.com/group.php?gid=6633682438 and, in the general spirit of free data, it’s all yours, folks.

 

 

 

The government commissioned a trading fund report last year. We told you about its terms of reference; and it was delivered (we trust) towards the end of last year.

And since then? Not a peep. The Treasury, which is the lead department looking after the study, told me last week that the report will be published “shortly”.

How long – or short – is “shortly”, I asked? “Shortly,” the spokesman replied. Pieces of string have been more precise.

Now, though, David Cameron may be parking his tanks on the government’s lawns. In a speech on Friday, he noted how American local government and central government organisations make data more easily available:

The second announcement I want to make today is about information. For decades, information, power and control have been monopolised by well meaning public officials. Now, because of the internet and dynamic change in our broader culture, we can consign this top-down model to history.

We’re entering a post-bureaucratic age, where true freedom of information is making possible a new world of people power, responsibility, citizenship, choice and local control. One of the best examples is crime mapping. In cities all over America, police forces regularly publish information about crimes in their area. What type of crime, when it happened, and where.

Anyone can take this information and overlay it on an online map. This gives the public unprecedented information about crimes in their local area. And it gives social entrepreneurs, drugs charities, and a whole host of organisations to pick out hotspots, see what needs doing and transform neighbourhoods.

(You’ll have heard of chicagocrime.org – now renamed as Everyblock Chicago – which is clearly what he’s referring to there.)

And he continues:

But look at our Government at home. It’s still bureaucratic, still top-down and still old-world. It still thinks it knows best and that it should keep all the information. If you don’t believe me, try getting a supposed freedom of information request on important issues like exactly how taxpayers’ money is being spent. It’s next to impossible. This is bad for democratic accountability. And it stifles the sort of social innovation that we see happening in America.

We Conservatives must be different. Indeed, because of our instinctive scepticism of bureaucracies and our belief in human potential, we are different. That’s why we have introduced a House of Commons bill that will require the government to publish – online and accessible to all – every single item of expenditure over £25,000.

It already happens in the US. They call it “Googling Your Tax Dollars”. And it’s already strengthening democratic accountability and promoting government transparency.

Today, I want to set out for the first time how I want to extend this approach to local government. At the moment, local government bodies must provide the public with information about the services they provide, what goes on in council meetings and how councillors have voted on specific issues. Sure enough – you all do this.

But the information isn’t published in a standardised way. Some councils use adverts in newspapers. Others use their own magazines. And others publish the information on their website. Because you all present your information differently, it’s impossible for the public, charities or private companies to effectively collate this data, compare and contrast your performance and hold you to account.

That’s why the Government relies on expensive and bureaucratic schemes to try and hold local government to account. Best Value. Comprehensive Performance Assessments. Comprehensive Area Assessments. We will turn that approach on its head.

We will require local authorities to publish this information – about the services they provide, council meetings and how councillors vote – online and in a standardised format. That way, it can be collected and used by the public and third party groups. And this move will be accompanied by relaxing controls which force councils to pay to publish statutory notices.

OK – this is very interesting. It’s not quite embracing the whole of the Free Our Data concept, but it’s going some way down the road. At least standardising council output is a step forward. But here’s the interesting bit: he thinks it will make a difference to costs.

That way, we will actually reduce local government costs. I don’t expect this to happen overnight. It will take time to implement all the standardisation and bring everything online. But it is so important that it does happen – because it will make you more accountable to your residents.

He’s clearly read The Power Of Information report (or at least his speechwriters have, and given him the brief version; the clue is the mention of mumsnet below):

But the benefits of setting local government data free go far beyond democratic accountability.

By standardising this data, it can be used by anyone’s website, anytime, anyplace to flag up the services you are putting on and get that information to the people who most need it.

Let me give you some examples. Take the young kid looking for something to do at the weekend. By standardising this information online, it will be for companies or charities to build Facebook or Bebo widgets that keep them updated on when the leisure centre or local swimming pool is open or when the youth centre is holding a special night. Or what about the pensioner looking to join an adult learning course? They won’t have to go to individual websites and find out what’s going on.

By standardising this information, it’s possible for the websites like Saga to collate the information from individual councils and make it all available in one place. The same is true for a young parent looking for local crèche facilities. This information revolution will allow websites like mumsnet.com to flag up what is available, where and at what time and save people the bother of trawling individual websites.

Making councils more accountable by giving your residents greater power. But allowing you to get the information out there quickly and effectively.

Setting local information free really is the future.

It’s a start. The Free Our Data campaign is definitively non-political (we just want it done); but there’s a danger for the government of appearing to dither if it sits on this report. David Cameron is only talking about local government data, and not linked to mapped data (though to some extent, service measurement must be linked to location). But starting with more information from local government, free and standardised, for free reuse, is a big step.

Over to the Treasury. Who’s in charge there, then?