Corporate report

Annual report of HM Land Registry 2016 to 2017: accountability report

Updated 12 September 2017

Applies to England and Wales

1. Corporate governance report

Directors’ report

Details of directors and boards

Board to HM Land Registry

The remit of the Board to HM Land Registry is to support, advise, challenge and provide guidance. The Board to HM Land Registry ensures good governance and public accountability, endorses the HM Land Registry strategy and assists the Chief Executive and Chief Land Registrar in his ultimate responsibility as Accounting Officer for the governance and performance of HM Land Registry.

The Board to HM Land Registry terms of reference which were first approved in 2012 were revised during 2015 and 2016.

The Board to HM Land Registry meets formally approximately 10 times per year, with additional meetings as and when required. It met 11 times in 2016 and 2017.

The Chair, the Chief Executive and Chief Land Registrar and the Director of Finance and Business Services also held quarterly meetings with UK Government Investments (UKGI).

Board to HM Land Registry membership

• Michael Mire (Chair), Non-Executive Chair (from 8 August 2016)
• Tim Franklin, Non-Executive Member and Senior Independent Director (Interim Chair from 1 April 2016)
• Catrina Holme, Non-Executive Member
• Gerard Connell, Non-Executive Member
• Leo Geddes, Non-Executive Member (to 30 September 2016)
• Graham Farrant, Chief Executive and Chief Land Registrar
• Claire Wren, Non-Executive Member (from 16 January 2017)
• John Peaden, Director of Operations
• Catherine Vaughan, Director of Finance and Business Services

Note: Mike Westcott Rudd attends as Board Legal Adviser.

Executive Board

The Executive Board is chaired by the Chief Executive and Chief Land Registrar and its members are HM Land Registry’s executive directors. The Executive Board is responsible for the delivery of HM Land Registry’s Annual Management Plan and for the day-to-day operational management of the organisation. The Executive Board meets on a monthly basis and met on 10 occasions throughout the course of the year.

Executive Board membership

• Graham Farrant (Chair), Chief Executive and Chief Land Registrar
• Craig Lester, Assistant Chief Executive (to 31 October 2016)
• John Peaden, Director of Operations
• Alasdair Lewis, Director of Legal Services and Deputy Chief Land Registrar
• Catherine Vaughan, Director of Finance and Business Services
• Caroline Anderson, Director of Human Resources and Organisation & Employee Development
• John Abbott, Director of Digital Services
• Mike Westcott Rudd, Board Legal Adviser

Attendees

• Nicky Heathcote, Head of the Chief Land Registrar’s Office

Audit Committee

The committee supports the Board to HM Land Registry and the Accounting Officer by seeking assurance on the risk management framework, the control framework, governance and compliance with policies, procedures and external standards and statutory requirements.

Audit Committee membership

• Tim Franklin (Chair), Non-Executive Member
• Gerard Connell, Non-Executive Member
• Derrick Palmer, Independent member of the Audit Committee

Attendees

• Graham Farrant, Chief Executive and Chief Land Registrar
• Catherine Vaughan, Director of Finance and Business Services
• Grahame Hughes, Head of Internal Audit
• Representative of the National Audit Office
• Representative(s) of UK Government Investments

Remuneration and Nomination Committee

The committee agrees pay strategy and authorises the annual pay review for HM Land Registry Senior Civil Service staff and agrees a strategy for succession to the Board to HM Land Registry and Executive Board.

Remuneration and Nomination Committee membership

• Catrina Holme Non-Executive Member
• Gerard Connell Non-Executive Member
• Caroline Anderson Director of Human Resources and Organisation and Employee Development
• Graham Farrant Chief Executive and Chief Land Registrar

Register of interests

A register of interests is maintained at HM Land Registry Head Office. See note 20 to the accounts for related party disclosures.

Personal data-related incidents

There were no personal data- related incidents reported to the Information Commissioner’s Office during the year.

Conflicts of interest

There are no conflicts of interest reported.

Other accountabilities

Health and safety

We have continued to develop the comprehensive health and safety management system we have in place to ensure compliance with legislative and regulatory requirements, monitor the adequacy of health and safety policies and promote continual improvement and awareness in this area.

There has been a focus on workplace risk assessments this year, with a complete review undertaken and assessments relaunched. A new online driving training package has been rolled out across the organisation and all staff have attended briefing sessions providing advice on actions to take in the event of an armed assault on one of our properties or other public spaces.

The total number of accidents reported by HM Land Registry staff at work was 117 with three accidents reported to the Health and Safety Executive under the Reporting of Injuries Diseases and Dangerous Occurrences Regulations.

We have retained our certification to OHSAS18001, the British Standard for health and safety management. This has been maintained following six-monthly audits by external assessors and provides assurance that we remain aligned with recognised best practice.

Service standards

Details of the service that customers can expect from us.

Welsh language service

Information about our Welsh language service.

Complaints

We recorded 2,464 complaints in 2016/17 compared with 2,088 in 2015/16.

The increase in the complaints recorded can mainly be attributed to greater consistency in the recording of customer feedback. Also an increase in feedback about:

• our speed of service on some types of application, the overall workload position and keeping customers informed about what we are doing to reduce processing times
• the transition to a new commercial provider for our scanning, processing and electronic delivery services, particularly concerning delay and quality issues

The overall proportion of upheld complaints was 40%. Customer feedback about delays in our processing of some registration applications was the most common area of upheld complaint, comprising 27% of the upheld total.

We developed and introduced new electronic tools and processes for complaint recording, reporting and analysis to further improve the consistency and quality of feedback recording and give improved insight. The roll-out of an updated staff training package on complaints handling and recording continued during the first quarter of 2016/17 to increase our people’s awareness of the importance of effective complaint handling and recording.

Use of our Customer Relationship Management tool has facilitated further opportunities to learn from and act on customer feedback and improve our overall service. Examples of this included enhancements to our:

• online guidance and information on GOV.UK to further improve the ease of navigation and clarity of information on certain types of application and fees

• guidance and processes to provide a better service to customers in resolving their enquiries/complaints about our scanning, processing and electronic delivery services. Also ensuring their feedback was acted upon by the commercial provider concerned

• online information on average completion times with the aim of being more transparent about our processing times across all types of application. Also the launch of a new tool for customers to query progress and request prioritisation of urgent applications online, without the need for them to call us

• Business e-services, to further improve its usability and accessibility and increase the number of application results, notifications and documentation delivered electronically. Also improving the way we notify customers their applications results are available.

Security incidents

Physical security is overseen by the Physical and Personnel Security Panel. There were 55 recorded incidents during the year, including one significant (Class 1) incident.

Statement of Accounting Officer’s responsibilities

Under Section 4(6) of the Government Trading Funds Act 1973 HM Treasury has directed HM Land Registry to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction referred to in note 1.1. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of HM Land Registry and of its income and expenditure, changes in reserves and cash flows for the financial year.

In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by HM Treasury, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis

• make judgements and estimates on a reasonable basis

• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed and disclose and explain any material departures in the accounts

• prepare the accounts on a going concern basis when appropriate to do so

HM Treasury has appointed the Chief Executive of HM Land Registry as the Accounting Officer for the trading fund. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding HM Land Registry’s assets, are set out in the Accounting Officers’ Memorandum issued by HM Treasury and published in Managing Public Money.

So far as I am aware there is no relevant audit information of which the auditor is unaware, and the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

As Accounting Officer I confirm that the annual report and accounts as a whole is a fair, balanced and understandable account of HM Land Registry’s operational and financial performance and I take personal responsibility for the annual report and accounts and the judgements required for determining that it is fair, balanced and understandable.

Governance statement

Scope of responsibility

As the Accounting Officer for HM Land Registry I have responsibility, advised by the Board to HM Land Registry, for maintaining corporate governance structures that support the achievement of HM Land Registry’s aims, objectives and targets, while safeguarding public funds and HM Land Registry’s assets.

HM Land Registry is a non-ministerial government department, a trading fund and an executive agency. Ministerial oversight is provided by the Department for Business, Energy and Industrial Strategy (BEIS). My duties as Accounting Officer are set out in Managing Public Money. I am accountable for performance and stewardship, guided by the Board to HM Land Registry, to the Secretary for State for BEIS with day-to-day responsibility delegated to the Parliamentary Under Secretary of State.

The main duties relating to maintaining the register of title to freehold and leasehold land and charges are defined in the Land Registration Act 2002 and those relating to Land Charges and Agricultural Credits are defined in the Land Charges Act 1975 and the Agricultural Credits Act 1928.

The Infrastructure Act 2015 widened the scope of HM Land Registry’s powers, enabling us to build on the property services we already provide. The legislation also provides that HM Land Registry will become the registering authority for the statutory Local Land Charges register in place of individual local authorities and will hold those records on a single digital register.

Purpose of the governance framework

The governance framework is designed to give assurance that HM Land Registry carries out its duties in a manner that fulfils the appropriate standards of effective internal control and risk management. It is based on processes designed to identify and prioritise the opportunities and risks to the delivery of HM Land Registry’s strategy, the strategic objectives and performance targets. The governance statement is designed to help the organisation achieve its objectives.

It is also designed to align with the strategic aims of BEIS and our statutory duties as set out in our Framework Document 2012, which is currently being revised. This framework has been in place throughout 2016/17 and up to the date of approval of the accounts. The new Framework Document will comply with the new Partnerships between departments and arm’s-length bodies: Code of Practice 2017.

Key elements of the governance framework

The governance framework includes:

• HM Treasury letter appointing the Accounting Officer
• Framework Document 2012 (currently being reviewed)
• Board to HM Land Registry terms of reference and minutes
• Audit Committee terms of reference and minutes
• Remuneration and Nomination Committee terms of reference and minutes
• other committee minutes and communication points
• ministerial endorsement of the direction of travel articulated in the Business Strategy
• delegations of budget
• non-financial delegation letters to members of the Executive Board
• delegations of financial authorities designed to reflect the external framework set and revised by the Cabinet Office, BEIS and UK Government Investments (UKGI)
• Executive Board-member led committees of the Executive Board

The Business Strategy 2013-2018 set out five-year objectives. That strategy is currently in the process of being replaced in the light of the Government’s commitments about HM Land Registry in the Chancellor’s Autumn Statement and the Housing White Paper ‘Fixing our broken housing market’.

The new strategy currently being developed is designed to challenge HM Land Registry to contribute effectively to improving the conveyancing process and the availability of housing alongside other government policy initiatives. Those objectives have been set in addition to the normal drivers to improve all aspects of business performance and set out an ambition to become the world’s leading land registry for speed, simplicity and openness of data. HM Land Registry is also aiming to achieve comprehensive registration by 2030.

HM Land Registry set itself seven key performance indicators for 2016/17 and has met its targets in most areas, including the quality of its processing of substantive applications, its unit cost, the availability of its external services and its customer satisfaction ratings. HM Land Registry has narrowly missed its key performance targets for the number of units processed per person per day set for the financial year 2016/17, which has contributed to increased delays in achieving the speed of service targets and the backlogs of work to be processed. Those backlogs have increased due to a variety of factors including a higher than forecast proportion of more time-consuming and complex applications. HM Land Registry is continuing to make steady progress to address this and to take measures to reduce backlogs even further. It is also delivering efficiency gains across the organisation.

HM Land Registry has just missed its targets for staff engagement and staff perception of the leadership within the organisation as measured against the annual Civil Service staff satisfaction survey undertaken every autumn. That survey was carried out in the context of the expected privatisation of the organisation. Now that the public sector status has been announced, more optimism exists as more recent internal surveys demonstrate. We have continued to make excellent progress in this respect and had exceeded the target by the year end, but not in the official Civil Service survey. We continue to challenge ourselves to meet that target in the Civil Service survey next financial year.

The Board to HM Land Registry

The Board to HM Land Registry recognises the importance of leadership to create an environment where performance and risk are managed effectively.

The Board to HM Land Registry consists of a Non-Executive Chair, four other non-executive members, including a representative from UKGI and three Executive Board members, being myself as Chief Executive and Chief Land Registrar, the Director of Finance and Business Services and the Director of Operations. The Board to HM Land Registry Legal Adviser also attends the meetings. The Board to HM Land Registry structure ensures a balance between executive and non-executive membership. During the year, the Senior Independent Director acted as Chair in interregnum to cover the gap between the departure of the existing Chair (Mark Boyle) and the arrival of the new Chair (Michael Mire).

The Board to HM Land Registry’s main role is to support, advise, constructively challenge and provide guidance to the Chief Executive and the Executive Board. It should also ensure that HM Land Registry is working within a framework of prudent and effective governance arrangements and controls which enable risk to be appropriately assessed and managed. As part of that function, the Board to HM Land Registry should endorse the key activities that HM Land Registry will need to undertake to meet the strategic objectives (set out in the Annual Plan published on GOV.UK), support the Chief Executive in ensuring the necessary financial and human resources are in place for it to meet these objectives, and regularly review performance in relation to agreed targets and delivery of the approved Annual Plan. The Board to HM Land Registry should also endorse HM Land Registry’s vision and values and ensure its obligations to BEIS, as its sponsor department, and all its stakeholders (including customers, employees and other government departments) are understood and met.

The non-executive members are independent of management. There were no examples of company appointments or consultancy arrangements held by them that could give rise to a potential conflict of interest with their responsibilities as members of the Board to HM Land Registry.

The Board to HM Land Registry purpose

In line with Cabinet Office guidance the Board to HM Land Registry is tasked with advising on, and supervising, five main areas:

• strategic clarity
• commercial sense
• talented people
• results focus
• management information

During 2016 and 2017 the Land Registry Board endorsed:

• changes to the way in which it operates in order to make better use of expertise to support strategic decisions;
• a medium-term financial strategy and the formal change programmes including the Local Land Charges Programme
• the ICT Strategy and the proposals for a new Customer Strategy
• progress against the Transformation Programme
• the approach to the major strategic issues affecting the delivery and content of the Business Strategy
• the controls for cyber security and the safety of HM Land Registry data
• exploring the potential for closer working links between HM Land Registry and Ordnance Survey
• how key performance indicators are presented and how HM Land Registry’s progress against them is measured

Committees of the Land Registry Board

Audit Committee

The Audit Committee supports the Board to HM Land Registry and the Accounting Officer by seeking assurances through information and reports over:

• the strategic framework and process for risk management, control and governance and this governance statement
• the accounting policies, the accounts and the annual report of the organisation, including levels of error identified, and management’s letter of representation to the external auditors
• the risk-based planned activity and results of both Internal Audit and External Audit
• the adequacy of management response to issues identified by audit activity, including External Audit’s management letter
• assurances relating to corporate governance requirements for the organisation
• counter-fraud policies, whistleblowing processes and the arrangements for special investigations
• ongoing compliance with the International Standards for the Professional Practice of Internal Auditing and the Public Sector Internal Audit Standards (PSIAS)

The Audit Committee also periodically reviews its own effectiveness and reports the results of that review to the Board to HM Land Registry.

Membership of the Audit Committee comprises non-executive members Tim Franklin (Chair), Gerard Connell and Derrick Palmer (Independent Member of the Audit Committee). The Director of Finance and Business Services, Catherine Vaughan, the Board Legal Adviser and I attend these meetings. The Head of Internal Audit is also present.

Remuneration and Nomination Committee

Membership of the Remuneration Committee comprises myself and non-executives Catrina Holme (Chair) and Gerard Connell, advised by Director of Human Resources and Organisation & Employee Development Caroline Anderson. Its purpose is to ensure that remuneration and nomination arrangements, including senior pay strategy, support HM Land Registry’s aims and enable the recruitment, retention and performance of the executive team. It has met three times during this financial year.

Executive Board

The Executive Board assists me to lead and manage HM Land Registry to ensure the delivery of the objectives and business targets, the successful implementation of an approved Business Strategy, annual plans and compliance with the Framework Document. Through the mechanism of individual letters of delegation, members of the Executive Board handle the day-to-day running of HM Land Registry, including:

• monitoring KPIs and overall budget
• managing risks to the organisation
• taking financial decisions
• managing and controlling the trading fund
• dealing with customer issues
• escalating important issues to the Board to HM Land Registry for review

I continue to use a Leadership Group, drawn from the first-tier managers below executive board level, to help formulate and take forward some of the ideas and detail for policy and strategy around land registration and its associated activities and to support the change programmes. I have also held meetings with the Strategic Leadership Network, which comprised of almost 100 middle and senior managers, four times this year to enable their participation in strategic decisions and better communication of strategic initiatives throughout the organisation.

Transformation Board

The Transformation Board has been introduced, is working effectively and is monitored on a regular basis.

During the year the Transformation Board has prioritised resource allocation to critical change. It has used a maturing governance and decision framework for understanding business priority with improved control, more integrated financial monitoring through enhanced links with Finance teams and better governance over change activities. Use of a clear prioritisation model helps the Transformation Board to review the priorities against the organisation’s strategic aims alongside an expanded Portfolio Report which now tracks both business impacts and people implications. An Assurance Strategy has been implemented to oversee how the Transformation Board approaches its work and each of the portfolio risk registers is reviewed on a monthly basis following dialogue with each project and programme manager that is encapsulated in a monthly report.

The work undertaken provides better tracking of the projects’ implementation and of benefits realisation. These include the financial savings in the Coventry Office relocation, where surplus office equipment was sold or donated to charitable causes. Quarterly Leadership Group presentations by project senior responsible owners allow the Transformation Board and other senior leaders to see the breadth and progress of all programmes and projects. It also highlights interdependencies and opportunities between projects. A recent successfully delivered project has seen a new intranet launched which is much more interactive, easily searchable and user focused than its predecessor.

Commercial Governance Panel

The Commercial Governance Panel provides an additional layer of internal governance for expenditure on external goods and services over £100,000. The panel supports HM Land Registry’s delegations of authority, providing assurance to the Director of Finance and Business Services and Accounting Officer for all spending falling within their expenditure limits, overseeing significant contract awards and contract extensions and other changes. It ensures all expenditure and the proposed procurement route will deliver the best value for money and is compliant with public procurement legislation and Cabinet Office controls.

This body now performs a valuable role in bringing clarity to the procurement pipeline through the use of an annual procurement plan. Its scrutiny of spending proposals has led to a more disciplined and strategic approach to commercial decision-making. Frivolous spending has been eliminated and ‘value for money’ has been reprioritised to favour cost over excessive quality. During 2016/17 this was achieved by challenging proposed commercial arrangements. In some cases contracts offering best value have been extended to lock benefits in for longer periods. In other cases competition has been encouraged in areas that had traditionally been single-sourced.

Committee structures revised

The committees of the Executive Board are supported by a range of panels which are chaired by senior managers. An annual review of internal governance undertaken in November 2016 confirmed the effective working of the Commercial Governance and Data panels. The Data Panel was introduced in the last financial year to cover matters such as licensing aspects of the Information Management Committee work. The Data Panel also plays a vital role in proactively supporting the staged release of our data to meet Open Data and other government data objectives to defined quality standards and in overseeing changes to the way that data is published or supplied.

The implementation of recommendations from that internal governance review led to the introduction of two new panels as well as the creation of a new Local Land Charges Design Authority and enhanced decision-making by ensuring that minutes from both the Information Management Committee and the Register Protection Committee are routinely copied to the Executive Board. We are currently reviewing how best to extend the remit of the Design Authority to support the wider transformation programme.

The new Assurance Panel will provide independent oversight of the quality of the work we do to create and update our registers and also enhance oversight of our directorate risk monitoring processes and the breadth of governance matters covered by this statement. A new Cyber Panel will draw together experts across various parts of the organisation to provide holistic oversight of our work to understand the strategic cyber risk and proactively manage the cyber threats to the availability and integrity of our registers and the personal data about staff and customers that we also hold. Both of these panels are incorporated into the revised Governance Framework.

Statement on strategy update

Progress against the strategic targets is detailed in the Performance report, including the five milestones contributing to the strategy this year. In addition to these milestones the Local Land Charges Programme Outline Business Case was developed as described below.

Last year I revised the vision and values for HM Land Registry to provide a better strategic context for our operations and support staffing. All staff have now been appropriately briefed through a range of mechanisms, including a major communication programme called ‘Delivering our Business Strategy’, which sought to engage every member of staff in seven interactive web-based modules and a face-to-face group session chaired by a senior manager to help them all to understand the principles behind the strategy.

Attendance schedule for the Board to HM Land Registry, Audit Committee and Remuneration Committee

	Title	Period	Board	Committee	Committee
		(appointment relates to whole of the reporting year unless otherwise specified)	Board to HM Land Registry	Audit	Remuneration
Non-executive
Gerard Connell	Non-Executive Member		10/11	3/4	3/3
Tim Franklin	Non-Executive Member (and Senior Independent Director)	Interim Chair from 1.4.16 to 7.8.16	11/11	4/4	3/3
Leo Geddes (see footnote 1)	Non-Executive Member, UK Government Investments	Appointment ended 30.9.16	5/5	–	–
Catrina Holme	Non-Executive Member		9/11	–	3/3
Michael Mire	Non-Executive Chair	From 8.8.16	6/7	–	–
Derrick Palmer	Non-Executive Member (Audit Committee)		–	4/4	–
Claire Wren (see footnote 1)	Non-Executive Member, UK Government Investments	From 16.1.17	1/2	–	–
Executive
Graham Farrant	Chief Executive and Chief Land Registrar		11/11	4/4	3/3
Craig Lester (see footnote 2)	Assistant Chief Executive	Appointment ended 31.10.16	3/4	–	–
John Peaden	Director of Operations		10/11	4/4	–
Catherine Vaughan	Director of Finance and Business Services		10/11	4/4	–
Caroline Anderson	Director of Human Resources and Organisation & Employee Development		–	–	3/3
Mike Westcott Rudd (see footnote 3)	Board Legal Adviser		10/11	4/4	–

Notes:

1. UK Government Investments was represented at all Board to HM Land Registry meetings.
2. Craig Lester attended as an observer.
3. Mike Westcott Rudd attends as Legal Adviser to the Board.

Statement on ministerial decision

In the Spending Review and Autumn Statement 2015, the Government announced its intention to “consult on options to move operations of the Land Registry to the private sector from 2017”, which commitment was repeated in the Budget in March 2016. The consultation commenced on 24 March 2016 and closed on 26 May 2016. The Government’s response to the consultation is still to be published but the following statement was made in the Autumn Statement 2016.

“Following consultation the government has decided that HM Land Registry should focus on becoming a more digital data-driven registration business, and to do this will remain in the public sector. Modernisation will maximise the value of HM Land Registry to the economy, and should be completed without the need for significant exchequer investment.”

Since that announcement, HM Land Registry has undertaken a strategic review of its plans to ensure we continue to play our part in delivering the Government agenda. On 7 February 2017, the Department for Communities and Local Government published the Housing White Paper, which sets out in detail the Government’s housing agenda and commits HM Land Registry to aiming to achieve a comprehensive register by 2030. In addition, the Government is looking at actions to improve the visibility of information relating to arrangements used to exercise control over land. As part of that, the Government will investigate ways in which the Land Register can better reflect all interests in land with the ultimate aim of providing “a clear line of sight” across a piece of land setting out ownership, control and interests.

Local Land Charges – statement on governance

The Infrastructure Act 2015 provides the basis on which HM Land Registry can become the registering authority and hold the statutory Local Land Charges register in place of the 326 English local authorities. I am satisfied that the governance and risk management arrangements for the programme are appropriate and proportionate. I base this conclusion on the Infrastructure and Project Authority‘s (IPA) (formerly the Major Project Authority) reports which gave the programme an amber Delivery Confidence Assessment rating in November 2016 and made 11 recommendations to assist HM Land Registry with preparing for actual delivery. HM Land Registry is addressing those recommendations and reviewing progress against them monthly. I also receive progress reports and assurances from the programme senior responsible owner. This involves monthly reporting to the LLC Programme Board and complete review of all risks, including the associated strategic risk, on a quarterly basis.

Information about quality of data

The Performance Panel of senior managers established in the last financial year enhances the scrutiny of organisational performance and leads developments to better use the available performance data. Performance is now reported to the Executive Board monthly with the additional intelligence gained by a prior review by the Performance Panel.

Financial performance is monitored and reported using monthly reports based on our financial system. During the year I introduced monthly “snapshot figures” reports which provide early sight of the month-end position in advance of the full monthly financial reports. There is a procedure for setting annual budgets and reviewing financial performance and full-year forecasts. Quarterly forecast reviews are in operation giving the Executive Board and Board to HM Land Registry appropriate oversight and assurance and monthly updates are provided via the Chief Executive’s monthly report to the Board to HM Land Registry.

HM Land Registry operates a number of models critical to its core business. These include models to forecast intakes and fee income; an operational forecast model for workload, resources and backlog; models to support standard management and financial reporting. These models are subject to challenge and forecasts and are reported to and reviewed by the Executive Board and the Board to HM Land Registry. During the year we added a new financial model, which was created to input to the Local Land Charges Programme business case.

During the year we used a revised operational modelling and planning tool (for establishment control intended to improve planning for the allocation of resources to workload and better evaluation of resource requirement linked to our forecast intakes and people budgets) but the tool was found not to be as robust as we require it to be. Work has commenced on improving this detailed operational resourcing model to address identified weaknesses we have surfaced through its use.

Whistleblowing – statement of arrangements and results

The sponsoring Executive Board member is the Director of Legal Services. No new whistleblowing cases were reported in year. During 2016/17 the whistleblowing process was the subject of an Internal Audit report and the recommendations from that audit have been fully implemented. The audit found that although the whistleblowing policy and procedure is compliant with government policy and best practice, more was required to ensure staff and line managers were aware of the policy and actions have now been taken to ensure this.

Risk

Framework for risk management

HM Land Registry follows HM Treasury Orange Book risk management principles. These principles formed a key element in the establishment of a new risk management framework, strategy and standard which was developed during 2015/16. These significant changes, designed to ensure a controlled and consistent two-way flow of risks between strategic and directorate level, have been implemented in planned stages over the last two years and the last phases of which are now being implemented, with a single risk register established this year for all directorates apart from Information Systems whose risks are currently being added. Attention will then turn to the further integration of details of programme and project risks considerations into the more transparent directorate and strategic risk planning.

The Board to HM Land Registry, Executive Board and Audit Committee all consider strategic risks. The Board to HM Land Registry Legal Adviser acts as the Executive Board’s risk champion. The strategic risks are reviewed quarterly and key changes flagged to the Executive Board; in addition a more thorough risk review is completed each quarter facilitated by the Risk Manager. Lead indicators are monitored to provide early warning of changes in strategic risk which are then acted upon.

Key strategic and programme risks

Significant improvements have been implemented in the way that we manage our key strategic risks over the last year providing a more holistic overview of the strategic risks better aligned to the lower level directorate and project risks. There are currently 14 strategic risks. There is now significant emphasis on the risks around cyber security, financial planning and legacy systems.

The highest priority this year has been our people risk given the challenges we faced and still face with succession planning and recruitment. The impact of this risk has been proactively managed with the introduction of our People Strategy and Estates Strategy, along with our development of our tactical recruitment plan, leaving us in a much stronger position to fill key vacancies. Stability in the Executive Team has also been maintained through 2016/17.

In addition to the strategic risks, the Transformation Board maintains and reviews a cross-directorate risk register relating to the delivery of HM Land Registry change initiatives. The LLC Programme Board maintains and regularly reviews a similar risk register for the LLC Programme.

Framework for control and risk management

The evaluation of second-tier risks at directorate level identified key risks around backlog of work and people challenges regarding training and development for our new recruits and apprentices. These risks are being carefully monitored and are being fed into our refreshed Business Strategy. A supportive and dynamic relationship is maintained between the Head of Risk Management and business stakeholders.

As Accounting Officer I maintain oversight of strategic risks managed by the Executive Board and seek assurances on directorate risk management to afford the opportunity for escalation. Risk management systems are designed to be proportionate and effective in relation to relevant risks. The Risk Management Strategy ensures that risks are effectively mitigated at all levels of the organisation.

I am also assured by the work of the Information Management Committee, the Register Protection Committee, the People Committee and the Health and Safety Panel, all of which play an integral part in the overall risk management matrix. Management of the financial risks, information risk, risk to the Land Register, fraud risk and health and safety and statutory duties are managed by these committees with escalation to me as appropriate, at the discretion of the relevant director for each committee, but informed by their letters of delegation.

I am informed on the effectiveness of operational controls to manage risk, safeguard assets and ensure effective use of resources through a framework of controls which includes reporting at local and organisational level. Performance information is structured to ensure issues requiring management action are reported appropriately.

Information and cyber risk

Information risk is managed through the Information Management Committee led by the Senior Information Risk Owner (SIRO) and Board Legal Adviser. The SIRO is assured by information risk returns carried out by our Information Asset Owners (IAOs) and fully documented asset descriptions. Our IS Risk Management Process and Policy have been independently audited, validated and accredited through CMMI, ISO20000 and ISO27001 and the Cabinet Office Cyber Defence Capability Assessment Tool (CDCAT). I am assured by accreditation in respect of Public Service Network Code of Connection and Information Assurance Maturity Model (IAMM) where our scores have improved including among external suppliers where 74% of suppliers are achieving level 3 maturity.

Protecting information

All staff are required to complete the appropriate levels of the Responsible for Information (RFI) module on Civil Service Learning (CSL) on an annual basis. In 2016/17 we have augmented this RFI learning with additional in-house material to improve awareness of risks associated with collaborating in the cloud and emails sent to insecure accounts. Contractors are also obliged to sign a non-disclosure agreement.

We have been certified to ISO27001, the international standard for information security management, for almost 14 years. The standard works on a three-yearly recertification cycle and we were recertificated in March 2017.

The standard is comprehensive and includes IT security, physical security, information management, business continuity and risk management.

Data losses

There were no personal data-related incidents reported to the Information Commissioner’s Office during the year.

Response to HMRC tax compliance review

During the year HMRC concluded its audit of HM Land Registry records to ensure the organisation was meeting its tax obligations as an employer. The relationship with HMRC was proactively managed, with all information and data provided to the auditor in a timely and proactive way. A one-off retrospective tax liability of £555,277.36 was agreed (£544,048 plus interest charges of £11,172).

HMRC’s penalties can be reduced based on how an organisation responds to the audit and how it remedies the issues identified. I am able to report that HMRC has agreed the maximum possible reduction should be applied and while the maximum penalty due is 15% of the tax and National Insurance contributions (NIC), this payment was suspended as proactive changes have been implemented to the suite of existing policies and procedures. The methodology designed by HM Land Registry has been cited by HMRC as best practice. We have summarised this approach and passed it to HMRC and other departments for their use. We have also introduced a monitoring and auditing process for travel and subsistence, including oversight by the People Committee, to ensure ongoing compliance.

Response to Alexander Review and guidance for off-payroll contractors and revised recruitment processes

HM Land Registry continues to monitor the systems and procedures relating to off-payroll contractors to comply with changing requirements to provide assurance that all contractors engaged by HM Land Registry are complying with appropriate tax and NIC regulations. I am assured that all of our most senior staff are now on payroll and we comply with the Alexander Review in this regard.

My HR Directorate have responsibility for off-payroll contractors. They are supported by close oversight in Finance who contact all relevant contractors for assurance at the appropriate trigger points. Scrutiny of the oversight has been delegated to me as Accounting Officer at HM Land Registry.

I am assured by the Director of Finance and Business Services and the Director of HR and Organisation & Employee Development that HM Land Registry now has in place robust processes for ongoing monitoring of all off-payroll contractors and for seeking the relevant tax and NIC assurances on a rolling basis and for adjusting to the new payroll arrangements being brought in on 1 April 2017. An Internal Audit in April 2017 gave this process substantial assurance. It also concluded that appropriate action had been taken to ensure compliance with BEIS requirements and new tax legislation for the forthcoming year.

Action taken to improve service speeds

As in the previous financial year, HM Land Registry has continued to experience significantly higher levels of intake above the level forecast month by month during 2016/17, despite post-Brexit predictions of reduced activity in the housing market. One consequence of the continuing high levels of intake has been a slower than anticipated reduction in the levels of work not completed within our speed of service targets. The plans for 2016/17 were specifically designed to meet new internal service standards and reduce the backlog to no more than seven working days’ worth of intakes by March 2017.

Resource deficiencies in frontline staff have been somewhat eased by the successful recruitment of 300 full-time equivalents in the first half of the year followed by the recruitment of further staff on fixed-term appointments in January 2017. Over the coming months, most of those fixed-term appointees will be retained for a further period beyond their initial contractual term and a further tranche of apprentices will be required in the first quarter of the next financial year. Tranche 2 apprentices with Operations (apprenticeships due to mature in October/November 2017) will also be retained as permanent employees.

Although we are currently employing greater numbers of staff to assist us to deliver our services, we have made use of mechanisms to enable us to flex our staffing requirements in the future through the use of casual and fixed-term appointments and the employment of apprentices.

An integrated approach to 2017/18 business planning and budgeting has allowed for a greater focus on building the 2017/18 establishment figure to meet business needs and a tactical plan for the year ahead is being created. This will help ensure we have the staff we need when we need them without increasing the permanent headcount. In addition, work has been prioritised around the digitisation of our most straightforward transactions to be handled electronically, releasing more casework staff to process the more complex applications.

Despite these measures, we have not been able to meet the targets but continue to strive to make reductions in the backlog and develop plans to manage this going forward.

Litigation (tribunal cases)

There have been no cases in 2016/17.

Sources of assurance

Infrastructure and Project Authority (LLC)

The Local Land Charges Programme is a significant programme subject to review by the Government’s IPA. The first draft of the programme business case is under consideration.

In November 2016, the IPA undertook a Gateway 0 Review resulting in an amber Delivery Confidence Assessment (DCA). This built on the ’Assurance of Action’ Review undertaken in January 2016 which also gave an Amber DCA, improving on the red/amber assessment given in August 2015 as we move forward with the development of our plans.

Cyber defence

As part of the central government oversight of cyber security matters, the Office of Cyber Security and Information Assurance (OCSIA) was created to support the National Security Council to determine priorities in relation to securing cyberspace. In November 2015 HM Land Registry started working with them as part of a collective government cyber security programme. This led to the first–time review of our cyber security position using the CDCAT in respect of the critical national infrastructure data we hold. That data comprises the Land Register, the Bankruptcy and Land Charges registers and the Agricultural Credits Act registers.

Already benchmarked as in the upper quartile, subsequent external assessment using CDCAT has confirmed that significant progress has been made as a result of the Cyber Security Project due to be completed in June 2017. The newly created Cyber Panel will take responsibility for the holistic oversight of our continuing initiatives to improve against the escalating requirements of this external assessment process, and maintain them as we digitise our services and products. The Cyber Panel will also oversee our plans to improve our understanding of cyber threats within all levels of our procedures, processes and across our work through our permanent and temporary staff, contractors, suppliers and partners so that we can ensure account is taken of the cyber threat landscape across all levels and types of decision-making. This will include investment in tailored cyber training and education programmes in addition to the use of central government guidance, educational resources and networks and internal assessment activities in between our formal external assessments. We have already developed an in-house capability to undertake those assessments.

Central controls

My role as Chief Executive and Chief Land Registrar is to carry out the role of Chief Land Registrar referred to in the Land Registration Act 2002, the Land Charges Act 1972 and the Agricultural Credits Act 1928 and the Local Land Charges Act 1975 as amended by the Infrastructure Act 2015. The Chief Executive is responsible for keeping the registers established for the purposes of those Acts and has all the powers, responsibilities and duties conferred and imposed on the registrar by those Acts and by the rules and other secondary legislation made under them. In carrying out those specific operational functions the Chief Executive is not subject to any ministerial control or direction, although is subject to supervision by the court through the judicial review jurisdiction.

Notwithstanding that contextual framework, HM Land Registry also operates within the delegations framework as defined by the Cabinet Office for arm’s-length bodies and the specific delegations authorised by officials at BEIS. There is also a requirement to work with the Government Digital Service to ensure that product releases conform to standards in terms of security, effectiveness and consistency. Before products are released as betas, HM Land Registry must submit products and comply with the conditions specified by the Government Digital Service.

Financial management reporting

I am informed on HM Land Registry performance through the monthly financial reports from my Director of Finance and Business Services which includes analysis of forecast workload intakes and the likely impact on revenues needed to finance the operational activities. During the year my Director of Finance and Business Services has led the response to the CIPFA Financial Management Model report leading to enhancements in the quality of management reporting, enhanced support and ensuring the skills within the directorate are more appropriate to the demands of the organisation. A Direction of Travel review was undertaken by CIPFA in January 2017 which demonstrated that we have made significant progress and are now assessed as being in the top quartile of around 50 organisations assessed by CIPFA.

Procurement assurance

I am assured by the Chief Procurement Officer, regarding specific procurements, that procurement activities are conducted in line with Cabinet Office and Treasury guidance and that senior managers have complied with these and HM Land Registry-specific procurement guidelines.

In December 2015 HM Land Registry signed a five-year contract with a new supplier to deliver our scanning service. Initially there were significant issues with the supplier’s performance and key deliverables were not being met. However we worked with them and supported them so their performance improved over a few months. The contract is now being delivered. Robust contract management steps are in place to closely monitor performance.

Performance reporting

In addition to the monthly financial reports from my Director of Finance and Business Services I receive information on operational performance through a performance hub, which is compiled from wider performance data received and reviewed by the Performance Panel before its submission monthly to the Executive Board. I also receive update papers and presentations from management teams to me and my Executive Board.

I regularly visit the operational offices and Head Office groups, as do all the other members of the Executive Board, and we receive feedback on organisational performance and other issues of concern to our staff from colleagues at all levels of the organisation.

The operational visits provide vital feedback on the backlog position and speed of service outcomes. I also meet with a range of external stakeholders through planned visits, regular meetings and formal stakeholder engagement groups.to understand their concerns and operational context.

In reporting performance against the original 2013-18 Business Strategy targets, it is now clear that we will meet the majority of our five-year targets, or have done so already, but the overall efficiency target of 60% improvement will not be met. Our performance is likely to represent a 45% efficiency improvement which is, in itself, a huge efficiency gain.

Internal Audit and opinion

The annual opinion of the Head of Internal Audit is: “Based on the work completed by Internal Audit during 2016/17, I am able to provide reasonable assurance that the HM Land Registry framework of risk, control and governance has enabled the satisfactory achievement of its business objectives, and that key risks are generally being effectively managed”.

Graham Farrant
Accounting Officer
Chief Executive and Chief Land Registrar
11 July 2017

2. Remuneration and staff report

Policy for senior civil servants

The remuneration of senior civil servants (SCS) is set by the Prime Minister following independent advice from the Senior Salaries Review Body.

In reaching its recommendations, the Review Body has regard to:

• the need to recruit, retain and motivate suitably able and qualified people to exercise their different responsibilities

• regional/local variations in labour markets and their effects on the recruitment and retention of staff

• Government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services

• the funds available to departments as set out in the Government’s departmental expenditure limits

• the Government’s inflation target

The Review Body takes account of the evidence it receives about wider economic considerations and the affordability of its recommendations.

The salary of the Chief Executive and Chief Land Registrar is set by BEIS. The Remuneration Committee, acting on the authority of the Board to HM Land Registry, considers pay recommendations provided by line managers and decides the distribution of performance pay in the annual pay review for HM Land Registry senior civil servants, in accordance with Cabinet Office guidance.

Both base pay and non-consolidated performance related awards are dependent on performance, which is assessed through an annual appraisal system for senior civil servants.

Pension liabilities

Details of the treatment of pension liabilities are available in note 1.7 and 4.4 to the accounts and in the Remuneration and staff report.

Policy for other civil servants

Pay for HM Land Registry employees who are not in SCS grades is determined each year following negotiation and consultation between HM Land Registry and the unions, and is subject to approval by the Secretary of State, taking into account guidance issued by HM Treasury.

Service contracts

The Constitutional Reform and Governance Act 2010 requires Civil Service appointments to be made on merit on the basis of fair and open competition.

The Recruitment Principles published by the Civil Service Commission specify the circumstances when appointments may be made otherwise.

Unless otherwise specified, all the directors covered by this report hold appointments that are open-ended and are subject to a notice period of three months. Early termination for the directors on open-ended service contracts, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commission.

Land Registry Board Chair

Michael Mire was appointed as Board to HM Land Registry Chair on 8 August 2016, for a period of three years. Tim Franklin acted as Interim Board to HM Land Registry Chair from 1 April 2016 until Michael Mire took up his appointment.

Assistant Chief Executive

Craig Lester’s appointment as Assistant Chief Executive ended on 31 October 2016.

Non-executive members

Leo Geddes’ appointment ended on 30 September 2016. Claire Wren was appointed on 16 January 2017. She represents the interests of UK Government Investments (UKGI) and does not receive any remuneration from HM Land Registry. In the interim, between appointments, UKGI sent a representative to Board to HM Land Registry meetings to ensure their interests were represented.

Off-payroll disclosure

Off-payroll engagements as at 31 March 2017, for more than £220 per day and that last for longer than six months.

	2016/17	2015/16
Existing engagements as of 31 March 2017	13	10
Of which existing:
– for less than one year at time of reporting	10	6
– for between one and two years at time of reporting	2	3
– for between two and three years at time of reporting	1	1
– for between three and four years at time of reporting	–	–
– for four or more years at time of reporting	–	–
Off-payroll engagements, or those that reached six months in duration, between 1 April 2016 and 31 March 2017, for more than £220 per day and that last for longer than six months
New engagements, or those that reached six months in duration, between 1 April 2016 and 31 March 2017	12	14
– of which include contractual clauses giving the department the right to request assurance in relation to income tax and National Insurance obligations	12	14
– for which assurance has been requested	12	13
Of which:
– assurance has been received	12	13
– assurance has not been received	–	–
– have been terminated as a result of assurance not being received	–	–
Off-payroll engagements of board members and/or senior officials with significant financial responsibility between 1 April 2016 and 31 March 2017
Off-payroll engagements of board members and/or senior officials with significant financial responsibility during the financial year	–	–
Individuals who have been deemed “board members, and/or, senior officials with significant financial responsibility” during the financial year. This figure should include both off-payroll and on-payroll engagements	10	11

Expenditure on consultancy

	2016/17	2015/16
	£’000	£’000
Cost of consultancy	834	512
Total	834	512

Salary and performance pay 2016/17 – executive directors (see footnote 1)

	Salary	Performance pay	Benefits in kind	Pension benefits (see footnote 2)	Total
	£’000	£’000	To nearest £100	£	£’000
Graham Farrant Chief Executive and Chief Land Registrar	190 – 195	–	–	–	190 –195
Craig Lester (see footnote 3) Assistant Chief Executive	45 – 50	–	–	43,000	90 – 95
Craig Lester (see footnote 3) Annual equivalent	(90 – 95)	–	–	–	(90 – 95)
John Peaden Director of Operations	95 – 100	10 – 15	–	33,000	140 – 145
Alasdair Lewis Director of Legal Services and Deputy Chief Land Registrar	95 – 100	–	–	21,000	115 – 120
Catherine Vaughan Director of Finance and Business Services	125 – 130	10 – 15	–	49,000	185 – 190
Caroline Anderson Director of Human Resources and Organisation & Employee Development	90 – 95	5 – 10	–	36,000	135 – 140
John Abbott Director of Digital Services	115 – 120	–	–	64,000	180 – 185
Mike Westcott Rudd (see footnote 4) Board Legal Adviser	80 – 85	–	–	11,000	90 – 95

Notes:

1. Audited.
2. The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights.
3. Craig Lester’s appointment ended on 31 October 2016.
4. Mike Westcott Rudd was appointed as Board Legal Adviser on 1 April 2016.
5. None of the directors paid into a stakeholder pension.

Salary and performance pay 2015/16 – executive directors (see footnote 1)

	Salary	Performance pay	Benefits in kind	Pension benefits2	Total
	£’000	£’000	To nearest £100	£	£’000
Graham Farrant (see footnote 3) Chief Executive and Chief Land Registrar	160 – 165(part year)	–	–	29,000	185 –190
Annual equivalent	(190 – 195)	–	–	–	(190 – 195)
Craig Lester (see footnote 4) Assistant Chief Executive	20 – 25	–	–	27,000	45 – 50
Annual equivalent	(100 – 105)	–	–	–	(100 – 105)
John Peaden (see footnote 5) Interim Chief Executive and Chief Land Registrar	15 – 20	–	100	–	15 – 20
Annual equivalent	(105 – 110)	–	–	–	(105 – 110)
John Peaden (see footnote 6) Director of Operations	80 – 85	10 – 15	–	72,000	165 – 170
Annual equivalent	(95 – 100)	–	–	–	(95 – 100)
Alasdair Lewis Director of Legal Services and Deputy Chief Land Registrar	95 – 100	0 – 5	–	30,000	125 – 130
Catherine Vaughan Director of Finance and Business Services	120 – 125	–	–	49,000	170 – 175
Annual equivalent		–	–	–
Maggie Telfer (see footnote 7) Acting Director of Operations	10 – 15	–	–	47,000	60 – 65
Annual equivalent	(85 – 90)	–	–	–	(85 – 90)
Caroline Anderson Director of Human Resources and Organisation & Employee Development	90 – 95	0 – 5	–	36,000	120 – 125
Rowland Coombs Director of Information Systems	75 – 80	10 – 15	–	29,000	115 – 120
Paul Dowse (see footnote 8) Acting Director of Strategy	5 – 10	–	–	30,000	35 – 40
Annual equivalent	(80 – 85)	–	–	–	(80 – 85)
John Abbott (see footnote 9) Director of Digital Services	20 – 25	–	–	–	35 – 40
Annual equivalent	(115 – 120)	–	–	–	(115 – 120)
Jon Parry (see footnote 10) Interim Director of Digital Services	180 – 185	–	–	–	180 – 185
Annual equivalent	(240 – 245)	–	–	–	(240 – 245)

Notes:

1. Audited.
2. The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation or any increase or decreases due to a transfer of pension rights.
3. Graham Farrant was appointed as Chief Executive and Chief Land Registrar from 1 June 2015.
4. Craig Lester was appointed Assistant Chief Executive from 11 January 2016 for a period of 12 months.
5. John Peaden stood down as Interim Chief Executive and Chief Land Registrar on 31 May 2015.
6. John Peaden resumed his position as Director of Operations from 1 June 2015.
7. Maggie Telfer stood down as Acting Director of Operations on 31 May 2015.
8. Paul Dowse stood down as Acting Director of Strategy on 30 April 2015.
9. John Abbott was appointed Director of Digital Services from 25 January 2016.
10. Jon Parry stood down as Interim Director of Digital Services on 24 January 2016.
11. None of the directors paid into a stakeholder pension.

Salary – non-executive members (see footnote 1)

	2016/17	2015/16
	£’000	£’000
Mark Boyle (see footnote 2) Non-Executive Chair	–	60 – 65
Michael Mire (see footnote 3) Non-Executive Chair	35 – 40
Tim Franklin Non-Executive Chair (see footnote 4) Non-Executive Member (see footnote 5)	30 – 35	20 – 25
Catrina Holme Non-Executive Member	20 – 25	20 – 25
Leo Geddes (see footnote 6) Non-Executive Member	–	–
Claire Wren (see footnote 7) Non-Executive Member	–	–
Gerard Connell Non-Executive Member	20 – 25	20 – 25

Notes:

1. Audited.
2. Mark Boyle’s appointment as Non-Executive Chair ended on 31 March 2016.
3. Michael Mire was appointed as Non-Executive Chair on 8 August 2016.
4. Tim Franklin acted as Non-Executive Chair from 1 April 2016 until Michael Mire took up his appointment.
5. Tim Franklin resumed his appointment as Non-Executive Member and Senior Independent Director on 8 August 2016.
6. Leo Geddes’ appointment ended on 30 September 2016.
7. Claire Wren’s appointment started on 16 January 2017. She is a full-time employee of the UKGI; she receives no additional remuneration from HM Land Registry in relation to her role as a Non-Executive Member.

Salary

‘Salary’ includes gross salary, reserved rights to London weighting or London allowances, recruitment and retention allowances and any other allowance to the extent that it is subject to UK taxation. The tables on pages 80 to 81 are based on accrued payments made by HM Land Registry and thus recorded in these accounts.The monetary value of benefits in kind covers any benefits provided by Land Registry and treated by HM Revenue & Customs as a taxable emolument.

Benefits in kind

The monetary value of benefits in kind covers any benefits provided by HM Land Registry and treated by HMRC as a taxable emolument

Performance awards

Awards are based on performance levels attained and are made as part of the performance review process. The awards reported relate to the performance in the year in which they were paid to the individual. Therefore the awards reported in 2016/17 relate to performance in 2015/16 and the comparative awards reported for 2015/16 relate to performance in 2014/15.

Pension benefits (see footnote 1)

	Real increase in pension and lump sum at 60		Total accrued at March 2017		Cash equivalent transfer value (CETV) at 31 March		Real increase in CETV after adjustment for inflation and changes in investment factors
	Pension	Lump sum	Pension	Lump sum	2017	2016
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Graham Farrant (see footnote 2) Chief Executive and Chief Land Registrar	–	–	–	–	–	–	–
Craig Lester (see footnote 3) Assistant Chief Executive	0 – 2.5	2.5 – 5.0	35 – 40	95 – 100	639	606	27
John Peaden Director of Operations	0 – 2.5	5.0 – 7.5	50 – 55	150 – 155	1,161	1,079	33
Alasdair Lewis Director of Legal Services and Deputy Chief Land Registrar	0 – 2.5	2.5 – 5.0	40 – 45	120 – 125	907	847	20
Catherine Vaughan Director of Finance and Business Services	2.5 – 5.0	–	5 – 10	–	60	33	17
Caroline Anderson Director of Human Resources and Organisation & Employee Development	0 – 2.5	–	5 – 10	–	96	66	22
John Abbott Director of Digital Services	2.5 – 5.0	–	5 – 10	–	82	48	24
Mike Westcott Rudd Board Legal Adviser	0 – 2.5	0 – 2.5	30 – 35	90 – 95	696	681	11

Notes:

1. Audited.
2. Graham Farrant chose not to be covered by the Civil Service pension arrangements during the reporting year.
3. Craig Lester’s appointment as Assistant Chief Executive ended on 31 October 2016.
4. No director paid into a stakeholder pension.

Civil Service pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others Pension Scheme or Alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined Alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: three providing benefits on a final salary basis (classic, premium and classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 will switch into alpha sometime between 1 June 2015 and1 February 2022. All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 3% and 8.05% of pensionable earnings for classic (and members of alpha who were members of classic immediately before joining alpha) and between 4.6% and 8.05% for members of premium, classic plus, nuvos and all other members of alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years’ initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on their pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is up-rated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate is 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is a stakeholder pension arrangement. HM Land Registry makes a basic contribution of between 3% and 12.5% up to 30 September 2015 and 8% and 14.75% from 1 October 2015 (depending on the age of the member) into an approved stakeholder pension product chosen by the employee from a panel of providers. The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). HM Land Registry also contributes a further 0.8% of pensionable salary up to 30 September 2015 and 0.5% of pensionable salary from 1 October 2015 to cover the cost of centrally provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earnings in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes, but note that part of that pension may be payable from different ages.)

Further details about the Civil Service pension arrangements.

Cash equivalent transfer values

A cash equivalent transfer value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The CETV figures include the value of any pension benefit in another scheme or arrangement that the individual has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax, which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Reporting of Civil Service and other compensation schemes – exit packages (see footnote 1)

Exit package cost band	Number of compulsory redundancies		Number of other departures agreed		Total number of exit packages by cost band
	2016/17	2015/16	2016/17	2015/16	2016/17	2015/16
£0–£10,000	–	–	–	2	–	2
£10,001–£25,000	–	–	–	2	–	2
£25,001–£50,000	–	–	–	1	–	1
£50,001–£100,000	–	–	2	–	2	–
£100,001–£150,000	–	–	–	1	–	1
£150,001–£200,000	–	–	–	–	–	–
>£200,000	–	–	–	–	–	–
Total number of exit packages	–	–	2	6	2	6
Total cost	–	–	£154,035	£186,918	£154,035	£186,918

Note 1: Audited.

There were no ex-gratia payments to directors in 2016/17 (2015/16: none).

Compensation for loss of office

Redundancy and other departure costs have been paid in accordance with the provisions of the Civil Service Compensation Scheme, a statutory scheme made under the Superannuation Act 1972. Exit costs are accounted for in full in the year of contractual agreement to depart. Where applicable, the additional costs of buy-out of reduced pension benefit are met by HM Land Registry and not by the Civil Service pension scheme. Ill health retirement costs are met by the pension scheme and are not included in the table.

Pay multiples (see footnote 1)

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation’s workforce.

Total remuneration includes salary, non-consolidated performance-related payments and benefits in kind. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

	2016/17	2015/16
Band of highest paid director’s total remuneration (£’000)	190 – 195	190 – 195
Median total (£)	25,797	29,624
Remuneration ratio	7.5	6.5

Note 1: Audited.

In 2016/17 no employees received remuneration in excess of the highest paid permanent director. Remuneration ranged from £190,000 – £195,000 to £15,000 – £20,000 (2015/16: £190,000 – £195,000 to £15,000 – £20,000).

Use of the remuneration of an interim member of staff appointed in March 2017 on a short-term basis to provide expertise in a key role would distort the remuneration ratio over the longer term, and therefore has not been shown above.

Staff report

	2016/17	2015/16
As at 31 March
Number of employees (including fixed-term appointments)	4,862	4,486
Permanent full-time equivalents	4,148	4,035
Number of apprentices	277	119
Number of temporary/contract staff	32	18
Average sickness days per employee	6.4	6.3
Average number of training days per employee	5.9	7.1
Training days per apprentice	31.3	30
Training spend as percentage of salary bill	3.9%	2.8%
Female employees	60%	60%
Employees working part-time	35%	36%
Employees from ethnic minorities	4%	5%
Employees who report they have a disability	9%	9%

Staff costs for 2016/17

	Permanent staff	Apprentices	Others	Total
	£’000	£’000	£’000	£’000
Salaries	130,386	5,433	4,312	140,131
Social security costs	13,401	109	223	13,733
Other pension costs	24,285	949	387	25,621
Total staff costs	168,072	6,491	4,922	179,485

Gender analysis at 31 March 2017

	Male	Female	Total
Non-executive members	3	2	5
Executive directors	4	2	6
Senior Civil Service – band 2	4	1	5
Senior Civil Service – band 1	6	4	10
Permanent employees (not including SCS)	1,684	2,644	4,328
Apprentices	112	165	277

Some Senior Civil Service employees are also directors and are included in both categories.

Resourcing

Our recruitment procedures are conducted on the basis of merit following fair and open competition in accordance with the Civil Service Commissioners’ Recruitment Principles, and are subject to internal and external monitoring. All our job opportunities are subject to the Guaranteed Interview Scheme which assures that disabled people will progress to the next stage of the selection process if their application meets the minimum criteria. It is our policy to ensure that any tests used do not discriminate against disabled candidates.

See also Caroline Anderson, Director of Human Resources and Organisation & Employee Development

Recruitment

We recruited a total of 584 members of staff.

In support of our core service standards and to supplement our substantive workforce a number of short-term fixed-term appointments were made, allowing our more experienced staff to focus on more complex core registration activities.

Off-payroll contractors have also been used to meet short-term needs in more specialist areas, and information regarding compliance and disclosures are included in the off-payroll disclosure table.

A very small number of voluntary exits have enabled the organisation to release people with skills that are no longer required and refresh small specialist areas of the workforce.

Health and wellbeing

We have continued to deliver initiatives to support employees and the organisation. Highlights for 2016/17 include:

• the availability of an Employee Assistance Programme to provide employees and managers with comprehensive and effective support 24 hours a day
• cross-HM Land Registry promotion and participation in the Time to Change, Time to Talk mental health day and Mental Health Awareness Week
• delivery of a range of forums providing line managers with guidance and advice on supporting staff dealing with mental health issues, bereavement and serious illness

Ongoing staff wellbeing is promoted through a combination of the following key activities.

• Health screening sessions providing staff with the opportunity to check blood pressure, body mass index and cholesterol.
• Promotion and participation in a cycle to work scheme.
• Provision of an occupational health service, with an associated health and wellbeing website and monthly promotional material on health issues.
• Promotion of key wellness awareness events through departmental health campaigns promoting healthy lifestyle choices.

Capability

See also Caroline Anderson, Director of Human Resources and Organisation & Employee Development

Employee involvement

We continue to engage both informally and formally with staff and their representatives.

Chief Executive and director blogs have been issued during the year on a weekly basis and our staff have been encouraged to respond to these with the aim of creating open and honest dialogue and exchange of views.

Managers are expected to have regular monthly discussions with individual team members to openly discuss employee performance, ideas for improvements to working practices, wider organisational issues and any employee concerns.

We meet regularly with our trade unions. The Chief Executive and members of his team formally meet representatives at the Departmental Whitley Council meetings twice a year. There are structures in place for local Whitley meetings, and unions are consulted on specific issues.

Informal six-weekly dialogue between the Chief Executive and trade union leads has continued during the year. Day-to-day operation of employment relations is managed through weekly engagement and consultation meetings between senior management and departmental trade union representatives.

During the year we have again seen positive improvements in HM Land Registry’s engagement scores in the Civil Service People Survey, and regular internal surveys held during the year have shown that these improvements have been maintained. We continue to be committed to further improvements in engagement and an executive lead has responsibility for an engagement key performance indicator and action plan to create an environment where staff and managers feel valued and connected.

Constructive discussion with unions at both departmental and local level, in addition to encouraging staff involvement on other committees (including health and wellbeing, social and sports, diversity and charity), and directors’ visits with question and answer sessions, are all essential in ensuring our employees’ views are heard and understood.

3. Parliamentary accountability and audit report

Fees and charges

			2016/17			2015/16
	Income	Total costs	Surplus	Income	Total costs	Surplus
	£’000	£’000	£’000	£’000	£’000	£’000
Registration of title	299,591	237,240	62,351	284,196	249,120	35,076
Land Charges and Agricultural Credits	6,267	1,429	4,838	6,193	1,516	4,677
Commercial	5,567	3,326	2,241	4,983	3,548	1,435
	311,425	241,995	69,430	295,372	254,184	41,188

Audited.

HM Land Registry applied cost allocation and charging requirements as set out in HM Treasury guidance.

However, due to the demand for our services exceeding our expectations the recommended rate of return has been exceeded.

Special payments

	2016/17		2015/16
	Number of cases	Value of payment	Number of cases	Value of payment
		£’000		£’000
Number of special payments over £300,000	–	–	–	–

Audited.

Graham Farrant
Chief Executive and Chief Land Registrar
11 July 2017

4. The Certificate and Report of the Comptroller and Auditor General to the Houses of Parliament

I certify that I have audited the financial statements of HM Land Registry for the year ended 31 March 2017 under the Government Trading Funds Act 1973. The financial statements comprise: the Statement of Comprehensive Income, Statement of Financial Position, Statement of Cash Flows, Statement of Changes in Reserves and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration and Staff Report and Parliamentary Accountability disclosures that is described in that report as having been audited.

Respective responsibilities of the Chief Land Registrar and auditor

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Chief Land Registrar as Accounting Officer is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. My responsibility is to audit, certify and report on the financial statements in accordance with the Government Trading Funds Act 1973. I conducted my audit in accordance with International Standards on Auditing (UK and Ireland). Those standards require me and my staff to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to HM Land Registry’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by HM Land Registry; and the overall presentation of the financial statements. In addition I read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by me in the course of performing the audit. If I become aware of any apparent material misstatements or inconsistencies I consider the implications for my certificate.

I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Opinion on regularity

In my opinion, in all material respects the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Opinion on financial statements

In my opinion:

• the financial statements give a true and fair view of the state of HM Land Registry’s affairs as at 31 March 2017 and of its retained surplus for the year then ended
• the financial statements have been properly prepared in accordance with the Government Trading Funds Act 1973 and HM Treasury directions issued thereunder

Opinion on other matters

In my opinion:

• the parts of the Remuneration and Staff Report and Parliamentary Accountability disclosures to be audited have been properly prepared in accordance with HM Treasury directions made under the Government Trading Funds Act 1973
• the information given in the Performance Report and Accountability Report for the financial year for which the financial statements are prepared is consistent with the financial statements

Matters on which I report by exception

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff, or
• the financial statements and the parts of the Remuneration and Staff Report and Parliamentary Accountability disclosures to be audited are not in agreement with the accounting records and returns, or
• I have not received all of the information and explanations I require for my audit, or
• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Report

I have no observations to make on these financial statements.

Sir Amyas C E Morse
Comptroller and Auditor General
National Audit Office
157-197 Buckingham Palace Road
Victoria
London
SW1W 9SP

12 July 2017