House of Commons - Statistics and Open Data: Harvesting unused knowledge, empowering citizens and improving public services

Statistics and Open Data: Harvesting unused knowledge, empowering citizens and improving public services - Public Administration Committee Contents

3 Open Data and Economic Growth

The economic opportunity of open data

60. There is considerable evidence of the economic opportunity which could arise for the United Kingdom if more government data were made open. This potential is said to lie both in supporting the growth of new data-based businesses, and in improving the performance of existing businesses of all kinds. It is also acknowledged that wider access to more data and information will be disruptive to the structure of existing markets, leading to some firms winning and some firms losing. But our evidence suggests that, in all probability, consumers will gain.

61. In 2013 an independent Market Assessment of Public Sector Information by Deloitte assessed "the value of public sector information to consumers, businesses and the public sector in 2011/12 [as] approximately £1.8 billion (2011 prices)."[79] Deloitte also said that "the use and re-use of public sector information has much larger downstream impacts affecting all areas of society beyond the direct customer."[80] The study also estimated the "social value" of public sector information "on the basis of conservative assumptions," to be "in excess of £5 billion for 2011/12 (2011 prices)."[81]

Understanding the data marketplace - the two cultures

62. If government open data is to stimulate economic growth, it is vital that Government policy is based on a clear understanding of the market place for data as well as the benefits it can bring to the wider economy. Witnesses were clear that the United Kingdom enjoys several economic advantages in the field of open data. Stephan Shakespeare identified two phases in what he called "the digital revolution". The first had been the creation of "connectivity" between systems, and he said that "Silicon Valley was the huge winner of that first phase".[82] Now, however, he said that a second phase, based on data, was happening, and the UK "could be the leader in the second phase" because "we have here the most coherent, largest data sets, we have the expertise and we have a desire on the part of everybody to get this done."[83] Sir Nigel Shadbolt amplified that, saying that because of "the size and the relatively homogeneous nature of the UK, we have a real opportunity to show just how data-driven delivery of both economic and social value can happen."[84] Sir Nigel contrasted this with the United States which was "somewhat hamstrung by the fact that there is a large federal system; much of the valuable data lives inside states, and state law varies. Therefore, there is [for the UK] a real innovation opportunity."[85]

63. Mr Hurd said that there was now "an information marketplace" and that "Government is gradually waking up to the fact that we are sitting on something valuable and maybe we should share it."[86] Mr Hurd and Rt Hon Michael Fallon MP, Minister for Business and Enterprise, set out for us what the Government is doing to stimulate economic growth "through the exploitation of open data":

However our witnesses posed some questions about the usefulness of data.gov.uk. to the world outside Whitehall. The Open Data User Group told us that data.gov.uk's "main focus is on meeting central government departments' information publishing needs." ODUG also observed that it was "too early to say how widely this data is used."[88]

64. It was put to us by several witnesses that the UK Government had not understood the market for open data and the real opportunities which are opening up for the private sector. Sir Nigel Shadbolt was among those who argued for more active Government involvement. Acknowledging that, in some respects, the UK is "world leading" he cautioned that the "publish it and they will come" model is not quite enough".[89] Sir Nigel urged the Government to "generate a vibrant demand for open data."[90]

65. The Open Data Institute (OD I) was set up by the Government in 2012 with this imperative in mind. It states that its aim is "to catalyse the creation of new economic value from open data".[91] ODI described itself as "an open data success story that 19 other countries are looking to emulate".[92] ODI has supported a number of start-up companies in the field of open data, including OpenCorporates, the world's largest open database of companies, with data on 49 million companies.

66. We were also told that the pace on open data needed to be accelerated if this country were to become the international hub for the new industry. As other countries realise the economic potential of open data they could rapidly catch up with the UK, according to Mr Shakespeare, who said "To be the leader, we have to be very urgent about it."[93] Heather Savory said that "Government just does not understand the difference in pace between Whitehall [...] and the business world." Ms Savory expressed frustration at what she called the "glacial" speed with which Government was dealing with the 500 data requests that ODUG had made since 2012: "What these start-up companies want is if it is a 'no' because of private data issues, it needs to be 'no' tomorrow, because then they will go and do something different." There are, she said, "two cultures there."[94]

67. There was also evidence that Government was mistaken in trying to guess the direction of the data market. Tom Steinberg told us that:

68. The Government has set up or supported a number of initiatives and bodies which are intended to help UK business make the most of public sector open data. It is too early to say how effective they will be, but there is evidence that their work will be hampered unless Government acquires a better understanding of trends in the rapidly-moving marketplace for open data, where international competition to realise the economic benefits of key datasets is increasingly fierce.

Charging for data

69. The economic effects of charging for government data have been central to our inquiry. Governments of all parties have a long history of charging for data, and several witnesses accepted that there was an argument for this in some cases. Stephan Shakespeare told us "Things that have a very specific value that may be costly to make available you could charge for, so I do not believe that all data necessarily must always be free".[96] Sir Nigel Shadbolt acknowledged that "We can imagine the value-added services that people would sell out of the back of good data are certainly chargeable, and the Met Office is a good example. Its advanced climate-prediction models are sought after around the world and paid for."[97]

70. However, many witnesses argued that the UK economy would only benefit fully from the wider use of government data if charges were reduced or eliminated. Owen Boswarva said that "open data has considerable potential to create fairer markets, by removing information asymmetries and increasing liquidity so that participants can negotiate transactions on a more equal footing"[98]. He believed therefore that "Charging for publicly owned datasets, particularly when the data holder has a monopoly, tends to skew the markets that rely on that data in favour of larger participants that can most easily absorb licensing fees."[99]

71. Ministers used a number of arguments in defence of current charging policies. Mr Fallon said "there is some very up-to-date information that has a cost in collection that large companies are perfectly content to pay for because it has been collected by authoritative agencies." The Minister said he believed it to be "right that the taxpayer should see some reimbursement for those costs."[100] Mr Fallon also argued that open data could be "immediately swallowed up [...] by big global companies" such as Microsoft and Google with the benefit not accruing to the UK economy.[101] Mr Fallon said that he had not seen any evidence that charges for address data were hampering the growth of SMEs: "these are charges that the market is bearing quite comfortably."[102]

72. ODI responded to the argument that "companies (particularly big multinational companies) should pay for data that is created by government" by commenting that this was to misunderstand "the modern networked economy and the transformative value of open data. The barriers in the use of government data by all types of organisation are not so much about paying fees as the licensing restrictions associated with closed data."[103]

73. The ODI continued that "With an early mover advantage, the UK stands to benefit from the adoption and use of its open data by business, including by big multinational companies." Government should therefore "welcome the exploitation of its free, open data, by large multinationals, because of the investment that also brings."[104] The ODI also rejected the idea of differential charging between large and small companies because it was

superficially appealing but fundamentally misunderstands the economics of data. We will get the most benefits from data when it can flow freely to where it is needed, whether that flow takes it through large or small companies.[105]

74. At a time when Government spending is under severe pressure, there is certainly a need to consider how to pay for open data. We heard a suggestion for alternative ways to fund it from ODUG, who said that where data is generated

106

75. A radical new approach is needed to the funding of government open data. Charging for some data may occasionally be appropriate, but this should become the exception rather than the rule. A modest part of the cost to the public of statutory registrations should be earmarked for ensuring that the resultant data - suitably anonymised if necessary - can become open data. Data held by the Land Registry and car registration data held by DVLA and, indeed, Care.data held by the NHS are among relevant examples.

Trading Funds - heroes or villains?

76. Many, though not all, of the data charges now levied by Government are the responsibility of Trading Funds - Companies House, Land Registry, Met Office and Ordnance Survey. Trading funds are defined by the Treasury as "public corporations [whose] activities are not consolidated with their sponsor departments' business. They must finance their operations from trading activity."[107]

77. We heard conflicting evidence about the economic impact of these funds in relation to data. Paul Malyon, a manager for Experian plc, the information services group, and a member of the Open Data User Group, but speaking personally, was critical of the impact of trading funds. He called for the trading fund model to be "abandoned."[108]

78. Tom Steinberg argued that "the significant role the trading funds play in the modern economy should mean that they are regulated independently, by a powerful equivalent to an entity such as Ofgem or Ofcom."[109] He believed that "independent, robust regulation is necessary because the senior management of trading funds face systemic incentives to behave in a manner that is bad for the wider economy."[110] The ODI commented that "However well regulated, licensing public sector information on commercial terms necessarily restricts its use, curtails innovation and distorts competitive markets downstream."[111]

79. Mr Fallon later provided the Committee with details of the fees charged and revenue received by the trading funds who are members of the Public Data Group (PDG).[112] These depended on a variety of factors but examples given included £264 a year charged by the Ordnance Survey for data to help an estate agent to map properties and analyse sales trends and between £500 and £5000 for various types of access to the patent or trade mark databases of the Intellectual Property Office. For data supporting a four hectare building development in central London the charge quoted is £45. Revenues for data in 2012-13 ranged from £43,342 for the Intellectual Property Office to £140 million for the Ordnance Survey, of which we were told "a limited amount" is revenue from services as well as data.[113]

80. Despite their financial imperatives, Trading Funds give some limited help to a number of small businesses by making data available either free or at reduced rates. Ministers cited individual cases of Trading Fund support for SMEs and applications developers, including the Ordnance Survey's Developer Licence for its paid-for products.[114] We were told that since April 2011 over 600 organisations had taken one of the OS's suite of developer licences to explore a range of paid-for datasets for free. Despite its concerns about charging, ODI believed that the Trading Funds were moving towards "an open model, supported through registration fees." The ODI concluded "There is no inherent reason why Trading Funds can't also be leaders in open data."[115]

The value of core reference data

81. We repeatedly heard evidence that, despite the best efforts of government Departments and public bodies, much more needed to be done to encourage the use of public sector data in support of economic growth. Many witnesses urged action on data which can help link up other information and make innovation easier. ODUG explained that "While the release of individual data sets is valuable, some data is essential to make other data sets meaningful. This is sometimes referred to as "Core Reference Data", items of data which will be used across many data sets as identifiers to show what a record relates to."[116] The examples given by ODUG included: addresses with postcodes and geo-coordinates; geographical codes for statistical or administrative areas; company registration numbers; VAT numbers; and NHS numbers.

82. Stephan Shakespeare said that of "things that are of value potentially to everybody, there is a very strong case for making them free."[117] Sir Nigel Shadbolt gave us an historical example of what he believed to be the transformative economic value of such core material - the release by the United States of its meteorological data, which he said had encouraged the creation of the secondary insurance market for weather data in the US, now worth $8 billion.[118] Jil Matheson, the National Statistician, emphasised the special value of a reliable and comprehensive national address register, saying that it was "fundamental to effective statistics and to open data—and lots of other purposes too—that there is a high-quality, widely used, available and accessible address register."[119]

83. Many witnesses reserved special criticism for government policy in relation to the postcode address file (PAF) which was privatised recently with the Royal Mail. Sir Nigel Shadbolt explained its importance, saying that the file "was, potentially, a common good [...] Almost every conceivable new advance in delivery of services uses digital capability; everything happens somewhere, everything gets delivered somewhere, whether it is blue light services or commercial innovation."[120] The Danish Government, which released their address file as open data, estimated the return on investment of making theirs publicly and openly available as "up to 40 times what it is costing them to release it."[121]

84. ODUG said that the decision to allow Royal Mail to take the PAF into private ownership as a commercial data set, and for Ordnance Survey to participate in the creation of GeoPlace LLP as a trading Value Added Reseller of PAF, appeared to "fly in the face of any Government commitment to Open Data."[122] Ms Matheson said that her interest as National Statistician was "to make sure that the PAF is maintained and is available and accessible to us, of course, but, beyond that, to all users."[123]

85. Mr Fallon defended the Government's decisions on the PAF, saying that it was "an integral part of the Royal Mail; it is a fundamental operating asset on which the business depends. It is the Royal Mail that collects the data and makes sure it is up to date."[124] Mr Fallon went on: "Royal Mail incurs considerable costs in collecting and maintaining this data and keeping it up to date. It is only reasonable that they should be able to recover some of those costs from the companies that use this data."[125]

86. Ministers noted that in July 2013 Royal Mail announced that it would allow "independent micro-businesses to have free access to the PAF for one year [...] In extending this offer to micro-businesses, Royal Mail will already be reaching 83% of UK SMEs."[126]

87. Jacqui Taylor, CEO of FlyingBinary, a company closely involved in open data work across Government, doubted the value of this package, saying that "a free PAF for micros SMEs is no help."[127] This they say is because "it can take months to bring a product like this to market and there is no guarantee on future prices of PAF data once Royal Mail is in private sector hands."[128]

88. Some government datasets are of huge direct value to the economy. Ministers and the Royal Mail have made a number of promises about the continued accessibility to small businesses and others of the Postcode Address File (PAF). Evidence we have received casts doubt on the credibility of such assurances. The Postcode Address File (PAF) was included in the sale to boost the Royal Mail share price at flotation. This takes an immediate but narrow view of the value of such datasets. The PAF should have been retained as a public data set, as a national asset, available free to all, for the benefit of the public and for the widest benefit of the UK economy. Its disposal for a short-term gain will impede economic innovation and growth. This was an unacceptable and unnecessary consequence of privatisation, and is at odds with the Minister's general argument that open data should not be "swallowed up [...] by big global companies."

89. The sale of the PAF with the Royal Mail was a mistake. The Government must never make a similar mistake. Public access to public sector data must never be sold or given away again.

Licensing restrictions

90. Licensing restrictions on government data were seen by some as hampering business growth. Several witnesses emphasised the importance to businesses of government making data fully available for re-use, via the arrangements for open licensing. Heather Savory said that "There are a lot of published data sets that, until you actually go and look at them, you think you are going to find under the open government licence, and then you find they are not or they are not quite. [...] they are not fully open for use and re-use. It means they are not free. It means that there are licensing conditions attached to them."[129] Dr Rufus Pollock said that unless the Open Government Licence was used to release data "there is this silly thing where you get the data, but you are not allowed to give it to anyone else without permission [...] you get something under FOI and you are not allowed to give it to others, which is bizarre."[130]

91. There was also some evidence of frustration in the private sector about access to key government data being restricted or denied altogether. The Demographics User Group represents 14 major commercial companies which "make extensive use of government statistics and geographical data to understand local markets and consumers".[131] The Group noted the arrangements made through the Public Sector Mapping Agreement for public sector bodies to have free access at the point of use to Ordnance Survey's mapping and the National Address Gazetteer, as well as the PAF.[132] But the Group described as "iniquitous" the fact that the agreement does not extend to other users such as business, or charities.

Ensuring fair access

92. Access was also an issue in relation to the four new Administrative Data Research Centres, set up with Department for Business, Innovation and Skills funding to enable research based on linked data between government departments. At present access is to be limited to academics only. We asked Mr Fallon whether private and other bodies could have access to it in future. The Minister said that "I think you could make a case for allowing access to anonymised Government-held data to inform commercial decisions and improve, for example, the effectiveness of business investment."[133]

93. There is concern about the attitudes of the research councils, and academic researchers in general, to government data. The Government needs to make the case for giving privileged academic access to the new government data, when it should be more widely available. It has, after all been funded by tax payers.

General conclusions on open data and economic growth

94. The UK Government was an early mover on government open data, but other Governments, watching the UK with interest, are catching up fast. If the Government does not take the opportunities offered, there is a risk in the UK that businesses with growth potential will be deterred by fees for data, and by legal and administrative barriers, while other countries are developing their data industrial base and stealing a lead over the UK. It is short-sighted in the extreme for Government to seek to maximise fee income from data while those fees penalise in particular small companies that can prove the most innovative, and which could establish the UK as global leader in this new economic sector.

95. Core data needs to be released fast and, above all, free so that businesses (for example apps developers) can use it along with other data to make progress. To this end the Government should in particular pledge that the data held by GeoPlace LLP, a company owned by Ordnance Survey and the Local Government Association, will remain in public ownership.

96. Departments should be required to list all the surveys conducted and administrative systems in operation to allow the public to see what data might be produced, and should provide to Parliament and the public a prompt and clear account of all revenues from any data sale.

97. The Government must work closely with business and nurture new open data enterprises by providing the environment they need to grow. The Open Data Institute is a welcome recent development. It has worked to help develop some start-up businesses based on open data and has been a hub for knowledge, but its impact is far from clear and now needs to be felt more widely.

79 Department for Business, Information and Skills, Market Assessment of Public Sector Information, written by Deloitte May 2013, p10 Back

80 As above Back

81 As above p11 Back

82 Q89 Back

83 Q90 Back

84 As above Back

85 As above Back

86 Q137 Back

87 Nick Hurd MP and Rt Hon Michael Fallon MP (OD 28) Back

88 Open Data User Group (OD 14) para 7.1 Back

89 Q83 Back

90 As above Back