Wednesday, 10 December 2014

Did Oliver Morely deceive Parliament regarding keeper enquiry costs?

The House of Commons Transport Committee published on 1 September 2014 a document entitled 'Government motoring agencies - the user perspective'. The document make interesting reading and is available here.

Paragraph 43 of this report states as follows.

43. There are widely-held concerns that the DVLA profits from the sale of the data it holds on drivers. The Government’s motoring agencies set their fees at a level that will cover their costs (the VCA is required to make a small operating surplus). The DVLA told us it is currently making a loss from charging for the provision of information to parking companies. It charges £2.50 for each enquiry. It costs the DVLA £2.84 to process each request. The difference between income and cost for this service last year was a shortfall of around £700,000, which represents 0.1% of the DVLA's total costs. The DVLA should not subsidise private parking companies by providing data at a loss, if anything it should err on the side of making a small surplus. As it reviews its fees and income, the DVLA should consider whether efficiencies can be made to reduce the cost of processing these requests. If not, the DVLA should adjust the fee for the provision of personal data to ensure costs are covered. The DVLA should make clear on its website how the costs are calculated. It should also consider whether the enhanced provision of information to drivers, as recommended above, could be financed through the fee.
This information is partly sourced from a letter Oliver Morely, the Chief Exectivie of the DVLA, wrote. This letter is available here.

Part of this letter runs as follows.

I promised to also provide information about the charging arrangements for the release of vehicle keeper information. The DVLA makes no profit from charging for the provision of information to parking companies. We charge £2.50 for each enquiry. The current unit cost for processing such a request is £2.84 and is broken down as follows:

Direct costs £1.46

IT costs £0.78

Overheads and development costs £0.60

Total Unit Cost £2.84
Direct costs include staff costs and consumables and IT costs cover system scans that are variable on volume and relate directly to the release of vehicle keeper information. Overhead and development costs include contributions to organisational system developments, the finance and policy support functions as well as human resources and estates etc.
The difference between income and cost for this service last year was a shortfall of around £700,000, which represents 0.1% of the DVLA's total costs. The fee level was set some years ago and reflected the position at that time, but costs fluctuate. Typically over time individual DVLA services shift from slight surplus to slight deficit positions, particularly if apportionment rules or fixed cost bases shift. Due to these fluctuations and changes in the way that DVLA costs are apportioned, it is difficult to provide a cost comparison year on year. However, given the small scale of either the under or over recovery of costs on this service, the impact on the organisation has been negligible.

The Prankster notes this freedom of information request which states the basis for this unit cost is from the 2013/14 costing model.

Q. Please provide the time period from which this was calculated (eg
'This cost was calculated from data collected from 1 April 2011 to 131
March 2012).
A. The unit cost of £2.84 was calculated as a result of DVLA’s costing model to cover the 2013-14 financial year
The Prankster also notes this freedom of information request which gives the total income in 2013-14 from data sharing activities as £12.9m, and the total expenditure of £12.2m (giving a profit of 0.7m).

The Prankster further notes this DVLA publication, which shows who the data is shared with, and gives number of enquiries and the charge per enquiry.

Altogether in 2013-14 there are 9 different types of enquiry, and 27 different classes of organisation (some duplicated) accessing it. 
The following interesting information emerges for 2013-14
The total number of enquiries is 17,998,048.
Total enquiries by parking companies = 2,430,130
Total amount paid by parking companies = £6,075,325
Total enquiries by LA/TfL/Police/Gov = 10,200,707
Total amount paid by LA/TfL/Police/Gov = £0
Total enquiries of Electronic Vehicle Records = 13,260,563

Far from Parking companies being subsidised by the taxpayer, the true situation seems to be the other way round.

Parking companies make 13.5% of enquiries but pay 45.2% of the costs

The biggest category is LA/TfL/Police/Gov who made 56.7% of enquiries but pay nothing

The average cost per enquiry appears to be 0.67 pence, rather than the £2.84 stated by Oliver Morely. In fact, The Prankster struggles to see where the £2.84 comes from. There were 17,998,048 enquiries of all types. If they cost £2.84 each, this would cost £51.1m, far more than the actual £12.2m stated. There were 13,260,563 Electronic Vehicle Enquiries (the same type as parking companies make). If they cost £2.84 each this would cost £37.7m. The figures therefore do not add up.

The Prankster thinks this puts to bed the fiction that parking companies are being subsidised by the taxpayer. In fact, the parking companies are subsidising the taxpayer by £2.50 - 0.67 = £1.83 per enquiry.

Moreover, there does not appear to be a shortfall of £700,000. Rather, there appears to be a profit of £700,000 (5%). As the DVLA are not allowed to make a profit, they have renamed the profit to 'a contribution to Agency overhead costs'.
While DVLA is permitted to charge a fee for the release of information under the reasonable cause provisions, it is not permitted to profit from it. Although income was higher than costs in 2013-14 the remainder is a contribution to Agency overhead costs.
If all this data is correct, The Prankster wonders whether Oliver Morely has been deceiving The House of Commons Transport Committee and if so what should be done about this? There will of course be variations in cost between providing the different types of enquiry (for instance, some are paper based, some fax based, some telephone based and some use direct data links), but this does not seem sufficient to account for the discrepancy - especially as most parking company enquiries use direct data links which would appear on the face of it to be the cheapest solution.

The Prankster would also like Mr Morely to explain this sentence 'IT costs cover system scans that are variable on volume' which appears to be meaningless gobbledygook.

Happy Parking

The Parking Prankster


  1. There was a news article back in July '14 proclaiming the mythical £2.84

    "The DVLA acknowledged there was a shortfall in the cost."

    Fast forward now to December '14 and the DVLA feel compelled to speak to the press again,

    "The fees are set to recover the related administrative costs and this means that it is the applicant and not the taxpayer who funds this activity."

    Pick an answer below:-
    The difference in cost is explained as,
    a) The system is now more streamlined and therefore cost effective.
    b) Random figures are plucked from thin air to make assertions seem legitimate.
    c) Spokespersons have now been issued with fire retardant trousers with no extra cost to the taxpayer.

  2. As with any 'product' being sold, the costs are made of variable costs [ie x pence every time a new item is sold, and fixed costs [a one off cost not affected by the volume of sales].

    So the fixed costs must have been set way back when there were a lot less requests, and now that the violume has increased the unit cost [variable plus fixed] shou;ld have decreased significantly.

  3. I don't think DVLA could organise a booze-up in a brewery or even the main event in a brothel. Then again ............