Review of the Valuation Office Agency 2009
10 June 2009
Contents
Chapter no. Chapter title Page no.
1. Executive summary 1
2. Introduction 3
3. Prior options 5
4. Customer experience 7
5. Delivery to clients 11
6. Change management 17
7. Management and governance 21
8. Summary of recommendations 29
Annex A Terms of reference 31
Annex B Contributors 33
Annex C Representations 35
Annex D Implementation of recommendations from the 2005 Framework Review 57
Annex E 2009 Framework Review – team members and costs 71
Annex F Overview of role and structure of the VOA 73
Annex G Key Performance Indicators, targets and outturn – 2004/05-2008/09 75
Annex H New Framework Document 83
1. Executive summary
This review of the Valuation Office Agency was announced by the Financial Secretary to the Treasury on 9 December 2008 and has been carried out by its sponsor Department, HM Revenue and Customs (HMRC), in line with Cabinet Office guidance. The revised framework document is published today (Annex H to this report). This confirms that no changes need to be made to either the structure of the Agency or its home in government, nor should any of its functions be privatised. The work of the Agency is summarised in Annex F and a summary of the recommendations of this review can be found in Chapter 8. The Agency has a number of clients for whom it carries out a variety of statutory and other tasks. By value of funding, its major client is the Department for Communities and Local Government (CLG). It also works for the Welsh Assembly Government (WAG) and its sponsor department, HMRC. From 1 April 2009, the Agency absorbed The Rent Service (TRS), making the Department for Work and Pensions (DWP) a further major client.
We found that the customer focus was very high at all levels of the Agency. Frontline staff should be particularly commended for this. The Agency has improved customer satisfaction in each of the past five years, culminating in a satisfaction score of 93 per cent for 2008/09. The Agency has also begun some worthwhile customer-focused projects, including a new initiative to bring together all stakeholders with whom customers liaise over their Council Tax or Non-Domestic Rating bills. The aim is to work together to find ways of improving the customer experience. We very much support this initiative which will be taken forward with CLG and WAG support. The Agency has good formal relations with the professional valuation community and agents were generally complimentary about the professionalism of the Agency’s staff. However, views were more mixed about agents’ dealings with the Agency’s local Group offices where some inconsistency of services was found. We have made general recommendations to address this including for the Agency to review whether Group Valuation Officers’ autonomy has given rise to too great a variation in some aspects of customer service. We have also made some specific recommendations about the use of civil penalties for failure to submit Forms of Return to ensure that they are applied more consistently in future.
The Agency has made year-on-year improvements in delivering its key targets and has done so despite falling resources – staff levels have been reduced by more than 22 per cent over the past five years. A current priority is the 2010 revaluation of the Non-Domestic Rating lists and, to date, the Agency has exceeded targets for sending information to CLG and WAG. The amount of work it does to support HMRC has fallen in recent years, due to reduced demand from the client Department. The Commercial Services business stream’s work in the wider public sector has been growing but not to the degree envisaged by the 2005 Framework Review. To support its work with other government departments and local government, the Agency needs an information gateway with local authorities so that it is able to share information collected for the purposes of Council Tax and Non-Domestic Rating. We have heard much support for the integrity of both lists maintained by the Agency.
The Agency's World Class change programme came in for some criticism from staff and clients alike. We believe that its aims are right and that the individual projects have merit but we have nonetheless made some recommendations to strengthen governance and to re-examine the costs and benefits of the programme, including revisiting the business case. However, we believe that the biggest challenge for the Agency lies ahead with the prospect of tough spending rounds for the foreseeable future. We have recommended that the Agency should develop a future business operating model and supporting HR strategy to ensure that it can maintain its track record of delivery in a climate where the downward pressure on resources is even stronger. The current office and Group structure, which has been in place for many years now, may also need to be examined as part of this.
We can see scope for strengthening aspects of the Agency’s management and governance and the new Chief Executive should do this when appointed. The representation on the Agency’s management board should be changed to give a stronger balance to the core operational business. The non-executive directors are experienced and capable and we recommend that they should be given more sight of the business, including the World Class programme, so that their expertise can be used there also. Both internal and external communications could be improved and the new Chief Executive should make this an early priority.
Finally, we believe that the Agency has a good record of meeting its targets. We recommend a change to just one of the key performance indicators – on rateable value loss from the compiled list – which we believe should measure rateable value gain as well as loss. The staff in the Agency showed good morale and their skills are valued by customers and client departments. Although we have made some recommendations for improvement, we consider that the Agency is on the whole performing well and fulfilling its remit. If the forward planning work we recommend is undertaken, we believe that it will continue to perform well in the future.
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2. Introduction
The Valuation Office Agency (VOA) is an executive agency of HM Revenue and Customs (HMRC). According to the guidance set out by the Cabinet Office, sponsor departments should carry out an independent review of their agencies in line with Public Service Agreements (PSAs). Cabinet Office has moved away from its previous programme of “quinquennial reviews” and now states that reviews should be undertaken no more regularly than every three years or as business plans are rolled out.
The VOA was last reviewed in 2005. A summary of recommendations made by the 2005 Framework Review and progress in implementing them is at Annex D.
The present review was announced by the Financial Secretary to the Treasury, the Rt Hon Stephen Timms MP, on 9 December 2008. The Agency finds itself in quite a different climate today and much has happened since the last review. HMRC has been established by the Commissioners of Revenue and Customs Act 2005 (CRCA) and the rules set down in this legislation also govern the Agency. HMRC has become a leader across Whitehall in its work on customers and their interactions with the Department and with this in mind, the Financial Secretary asked the review team to pay particular attention to the Agency’s customer focus. From 1 April 2009, the Agency has taken on the function of The Rent Service (TRS), a former DWP executive agency, which brings with it its own culture and new areas of work. Externally, the VOA finds itself more regularly in the spotlight from the press and public with media campaigns raised externally giving a higher profile to issues around Council Tax (CT) and Non-Domestic Rates (NDR). Public and media interest in local taxation is likely to continue to be high, particularly in the current economic climate.
When the last review was conducted in 2005, the VOA’s sponsor Department, the Inland Revenue, was in the process of merging with HM Customs and Excise. The review was carried out specifically at that time to ensure that, shortly after the appointment of a new Chief Executive, the Agency and its framework were considered in light of the merger and the changes to the business plans that this would drive. This current review examines the Agency’s performance since the last review and concludes with a new framework document which was laid by Financial Secretary to the Treasury in the House of Commons library today.
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3. Prior options
Cabinet Office guidance states that, at the point of review, the sponsor department should assess whether the activities carried out by the Agency continue to support the objectives of the department, government and customers and whether the function should be carried out within a different organisational structure.
There was no strong push from any stakeholder to see the VOA dissolved or moved to another sponsor department but for completeness, the review team considered all the options.
The Chief Executive is, in common with other heads of agencies, the Accounting Officer for the Agency. The Chief Executive is accountable to the Chief Executive of HMRC and the Financial Secretary to the Treasury. The bulk of the Agency’s resources, staff and financial, are used by Local Taxation, the business stream which deals with Council Tax (CT) and Non-Domestic Rates (NDR) and from 1 April 2009, the former Rent Service (TRS) functions also form part of this work area. National and Central Services (N&CS) undertakes work for HMRC, DWP Jobcentre Plus and for Right-to-Buy purposes, as well as providing centralised and specialist minerals and building surveying services to all business streams. Funding for all this work comes from the respective policy-owning departments and the devolved administration. Finally, Commercial Services offers valuation advice on a consultancy basis to other areas of the public sector and it charges to cover its costs.
3.1 Function The function of valuing property for CT and NDR purposes will remain necessary for as long as we have taxation of property based on valuation in England and Wales. CLG and WAG have confirmed that this should continue to be the working assumption. We have received representations from a variety of stakeholders to support the current position where valuation is carried out by an organisation which is both independent of the tax administration and of policy arms of government. They also value this being a public sector organisation. The VOA is carrying out its function in an efficient and effective manner, delivering its targets with year-on-year improvements at lower cost (see Chapter 5 for more detail on its performance and business outcomes). We received no representations to suggest that these functions could be carried out more effectively or more cheaply if they were privatised and so we see no reason to recommend privatisation.
Previous reviews considered the question of whether to split the Agency. We have not heard any arguments for splitting it into two separate bodies, for example, splitting the core CT and NDR work away from other commercial or statutory functions, and have not found any evidence to support this course of action. The corporate services functions support all business streams and, while there is not currently a great amount of rotation of professional staff through the business streams, technology is shared across the Agency and this gives economies of scale. In common with the rest of government, the Agency has challenging efficiency targets which demand a smaller workforce. Remaining as a single entity gives more scope for staff redeployment and opportunities to work flexibly.
3.2 Sponsorship We also considered whether the Agency should move to a different sponsor department. The Agency works to two main clients – CLG and WAG – in respect to CT and NDR. The sponsor Department, HMRC, contracts for work with respect to valuation of property for taxation purposes (the largest part of which being valuation of estates for Inheritance Tax purposes and valuations for Capital Gains Tax and other tax enquiries), which will account for less than five per cent of the Agency’s total income in 2009/10.
Such a small share of the Agency’s business might make it appear odd that HMRC is the sponsor Department. All major stakeholders acknowledged that, if we were starting with a blank sheet of paper, it would be strange to design the structure we have today. However, our review starts from the current position. The impartiality of the Agency is clearly valued. We can find no evidence that the set up is detrimental to the Agency’s work. The Agency is fully part of HMRC’s contracts for IT and Estates services. Making machinery of government changes incurs actual and opportunity costs and these must be weighed against potential benefits were a new structure to be proposed. During the review, no one has suggested any benefits would accrue from a change to the current sponsorship.
The independent nature of the Agency – its separation from the Billing Authorities and CLG/WAG – was viewed by some to be a virtue. We received some comments from the professional community that the Agency had shifted from having a valuation focus to focusing on tax collection. We found no evidence to support this assertion. The current structure also means that the Agency works to a different government department from those that oversee the Valuation Tribunals – the Valuation Tribunal Service (VTS) is sponsored by CLG and the Valuation Tribunal Service for Wales by WAG. A clear separation between the Agency, which determines
5 valuations, and the organisation which reviews those valuations is seen as important. So moving sponsorship of the VOA to say CLG, could be seen to compromise this independence.
When considering moving sponsorship to CLG, it is important to remember that this Department only covers England while the VOA covers England and Wales for CT and NDR, and Scotland as well for taxation valuation purposes. WAG pointed out that were a move of sponsorship to be considered, they would need to look at whether a separate body should be established for Wales, adding to cost with duplication of corporate functions.
Through the Commissioners of Revenue and Customs Act 2005 (the legislation which set up HMRC), the Agency is able to receive from HMRC data which was obtained for taxation purposes. If the Agency were to move to a different sponsor department, new legislation would be needed to maintain the flow of information from HMRC to the VOA. New legislation would be a time-consuming procedure and would likely cause short- term difficulties for the Agency.
Weighing up the costs and benefits, we believe that better communications and cross-departmental/Agency working should achieve benefits such as giving closer links between the Agency and its main clients, including at Ministerial level, and building stronger links between the policy arms and the Agency. While moving to a new sponsor department would not cause any insurmountable problems, we believe that any benefits would be outweighed by the costs detailed above. We therefore recommend that the VOA remains an executive agency of HMRC.
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4. Customer experience
Since the time of the last framework review, government departments have received stronger encouragement to understand the needs of the customer better and for business plans to put customer service at the heart of policy making and delivery. In this context, the Financial Secretary to the Treasury asked us to pay particular attention to the VOA’s attitude towards its customers.
4.1 Customer journeys We were very interested to learn of the Agency’s initiative provisionally titled ‘Correct, Connect, Collect’ (CCC), in which it has worked with policy colleagues and local authority representatives to look at the entire journey that its customers take through the Council Tax (CT) and Non-Domestic Rates (NDR) processes. Together they have looked at mapping a variety of different journeys and the preliminary work has already highlighted the discrepancies between service levels in different geographical areas. For example, a snapshot from the VOA records shows that while the VOA deals with new properties to be entered on the CT list in an average of 11 days, the Billing Authorities take anything from 47 days to 191 days to notify the VOA that action needs to be taken.
HMRC has carried out extensive work on customer journeys – for example, for key events like moving into retirement or starting a new business – mapping how different groups of customers interact with the Department. The VOA has started to work with some Billing Authorities, the Local Government Association (LGA), CLG/WAG and other interested parties to consider how a customer interacts with ‘government’, in particular transactions such as appealing a CT banding. The initiative assumes that the maximum customer benefits can only be realised by all the delivery agents working collaboratively to achieve a defined customer experience in terms that are meaningful to the customer (rather than to the delivery agents). Early analysis has been undertaken of some customer journeys which has begun to highlight how each stage of the processes works, how long those stages take to complete, the variability of some of those stages and the overall impact as seen from the customer’s perspective. This analysis is beginning to show those areas in the delivery chain which, if made more efficient, might deliver the biggest benefits for customers. Although not as advanced as some of HMRC’s customer journey work, we believe that the CCC initiative is very welcome and should be carried forward. Indeed, WAG has already offered to run pilots with its Billing Authorities and CLG is looking into similar opportunities in England. In line with the new burdens doctrine1, the Government would need to fund in full the net additional cost to local government of any changes so that there would be no upward pressure on Council Tax. We consequently recommend that: • the Agency should complete the work on customer journeys that it already has in hand. Subsequently, CLG and WAG should take the leading role in defining work with the LGA, WLGA and Billing Authorities, in collaboration with the Agency and other delivery agents, including their representative organisations, to establish and share the key customer journeys and the ‘best practice’ duration for each journey; and • the Agency, working with the LGA, WLGA and other delivery agents and organisations, should analyse current performance against that best practice standard. The Agency should provide CLG and WAG with advice about what will be needed to close any gaps so that CLG and WAG can present operationally-based options to their Ministers, enabling them to make informed choices between ambition, cost and pace.
1 http://www.communities.gov.uk/localgovernment/localgovernmentfinance/newburdensdoctrine/
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4.2 Staff interaction with customers We tested views on customer focus with all stakeholders we saw – Billing Authorities, client departments, VOA staff, agents and professional bodies – and we are confident that the Agency does indeed have a strong customer focus. Frontline staff and their managers gave examples of working hard to explain to CT and NDR customers their CT bandings or how their rateable value (RV) was calculated. This was carried out by relatively junior staff, who have the challenging task of explaining valuation to customers when these customers may be confused about such concepts as the antecedent valuation date of 1991 for CT banding used in England, which may precede the age of their property. Similarly, unrepresented customers can find it quite a challenge to translate their RV into an NDR bill, particularly where transition or other reliefs apply. While everyone to whom we spoke knew the difference between their role and that of the Council or other parts of government, such as CLG or WAG, they were conscious that the customer does not see the difference between the VOA and the Council. Staff recognised the tension between potentially irritating a customer by simply passing the caller back and forth between them and the Billing Authority and the risk of treading on the Billing Authority’s area of responsibility, such as talking about reliefs to which the customer may be entitled. On the whole, we found that they worked hard to get this balance right and were able to offer helpful advice, for example recommending that a caller may like to ask the Billing Authority about small business relief as they seem to be a small business.
Staff dealt effectively with customers who have no understanding or interest in the VOA and Billing Authority boundary. We were also impressed at the many examples of good customer handling skills in which junior staff were receiving calls from initially angry and hostile customers – believing, sometimes through media campaigns, that they were paying too much CT. By the end of the call, the tone of the conversation had completely changed with the customer expressing thanks for the help and explanations given.
4.3 Relationships with professional bodies and agents The Agency has set up a number of structures for formal relationships with the professional bodies and the agent and business communities. These include the Professional Bodies Liaison Group and the National Ratepayers’ Forum, both of which meet between two and four times a year. The former discusses an agenda set by the professions while the latter encourages exchange of information with and involvement of ratepayers and their representatives in the rating system. A new ratepayer forum specifically for Wales has recently been set up and, at a local level, Group Valuation Officers (GVOs) – the statutory officer responsible for valuation decisions for CT & NDR taken in their local area – hold informal meetings to discuss area-specific issues. Both staff and agents found these very useful.
Several agents remarked that they felt more work was being done at a lower level within the Agency than had previously been the case. Many agents began their careers in the VOA and so understand how it had worked in the past. However, there were also concerns expressed about the experience of staff involved in negotiations around tribunal cases, with agents feeling they were not dealing with suitably qualified surveyors who could make decisions based on the evidence presented to them.
Having examined this through our field work, we agree that some work has been devolved to a more junior level but, with the development of mass-appraisal tools and with the availability of more information in the office, this is the right direction of travel. The professionally-qualified surveyors set the framework and do most of the work on the five-yearly NDR revaluation and also take on the more technically challenging casework. The agents themselves could not point to any specific instances where this change in approach had resulted in major problems for the agents, the Agency or the Valuation Tribunal Service (VTS) and therefore we do not suggest any changes. Indeed, we support this better way of working.
Agents also remarked that while many VOA staff had strong professional skills, they often lacked commercial awareness, neither understanding the businesses with which they were engaging directly nor how agents operate. More commercial awareness could benefit both the Agency and its customers and therefore the Agency should consider adding this into its training plans and opportunities.
4.4 Consistency across the Agency The experience customers receive of a national organisation such as the VOA should be the same regardless of where in the country the interaction occurs. However, the Agency’s customers, quite often large firms of agents who are themselves national concerns, raised the issue that that they do not always see consistent approaches across the Agency’s different Groups. Examples cited included the approach to programming of appeals and the use of civil penalties with regard to Forms of Return (FoRs).
Programming Before 2005, proposals challenging the initial entry in the list had to be submitted within six months of the rating list going live. Programmes were established to manage the resulting appeals, grouping together similar properties and locations to allow the VOA and agents to compare rental evidence in a meaningful way, and
8 also to group the workload for both parties. Changes to the rules about submission of proposals has meant that programming has not been as successful for the current 2005 list. The legislative changes mean that proposals can be submitted at any point (but only once in respect of any particular issue).
The other complaint from agents is that the Agency's network applies variable degrees of flexibility around pre- Tribunal negotiations. For example, some staff may view ‘target dates’ as the absolute deadline for the end of negotiations, but others may continue to talk after the date if an agreement is likely to be made. We comment further in Chapter 7 on the latitude of the GVOs to interpret this guidance locally. However, given that the VTS is currently reviewing the procedures for programming 2010 List appeals, including the VTS taking a more prominent role in setting the timetable for appeals, we do not propose to make any recommendations on this subject.
Forms of Return We also found examples of inconsistency in using Forms of Return (FoRs). FoRs are sent to businesses from which information is required. Usually rental information is sought but other information can be required for those properties where the RV is set in a different way such as when it is based on turnover. FoRs are sent out as part of a revaluation but are also issued during the life of a list as part of maintenance work. FoRs are not issued automatically, valuation staff working within Groups (and the Specialist Rating Units) determine whether a FoR should be sent to a business. Staff also decide whether to invoke the civil penalty regime when a business fails to furnish the information requested within the specified time limits (usually 56 days). The Local Government Finance Act 2003 amended previous legislation to introduce a civil penalty regime. This civil penalty regime enables the VOA to impose penalties on businesses that do not supply the information it requires to maintain an accurate list. This regime has been successful in raising compliance. The Chief Executive’s Office issues guidance to Groups on the FoRs and use of the civil penalty regime.
However, our enquiries revealed a wide divergence of practices between Groups. We examined the period 1 April 2008 – 1 September 2008. Comparing the numbers of FoRs issued against the number of properties in that Group, we found that the lowest number issued during the period was 11 per cent while the highest was 30 per cent. Of the FoRs issued, we then looked at those that were deemed “essential” which, if no reply was received, would trigger a civil penalty. Here the range was even wider. The lowest was 0.26 per cent while the highest was 19 per cent. We would expect some variation across Groups. For example, more might be issued where a Group has struggled to obtain the amount of information it needs to set accurate RVs in some geographical areas or for some classes of business. But the wide variations we observed cannot be wholly explained by the nature of the properties in each Group. Although the reasons for these variations are not entirely clear, one issue seems to be that the guidance issued to Groups by the Chief Executive’s Office is not very clear and leaves scope for wide interpretation. Another view offered to us was that the number of FoRs which can be processed through the civil penalty regime is constrained by the capacity of the processing teams who manage them. VOA management told us that, unlike many other civil penalty regimes, the legislation introducing the FoR civil penalty regime made no provision for the Agency to retain from the civil penalty receipts an element to cover the administrative costs of operating the penalty regime. Instead all penalty receipts go into the consolidated fund. This seems to us to be an inherent distorting factor which weakens the effective operation of the civil penalty regime. We also believe that in operating the FoR process the Agency needs to be mindful of the potential criticism for placing an undue administrative burden on businesses if it seeks information which is not regarded as essential.
In our view the underlying presumption in operating the FoRs process should be that a FoR should be issued to a business only where the information sought is deemed essential. The presumption should also be that where a business fails to provide the requested information within the prescribed time frame the civil penalty regime should be applied. We therefore recommend that: • the VOA should explore with the Treasury the opportunities for retaining some of the FoR civil penalty receipts sufficient to cover the administrative costs of operating the regime; and • the Chief Executive’s Office should refresh and tighten its guidance on FoRs, ensuring a more consistent nationwide operation in the use of FoRs and the linked civil penalty regime.
4.5 Customer service ethos in the VOA In conclusion, we feel that we have met the Financial Secretary’s request and have tested the Agency’s attitude towards its customers. While improvements can always be made, and indeed we comment on the Agency’s proactive communications arrangements in Chapter 7 and suggest more that could be done, we found the frontline staff very focused on their customers and attuned to the needs and circumstances of individual CT and NDR payers. Formally, the Agency has embraced the Customer Service Excellence scheme (formerly known as Chartermark) and now all Groups have been accredited either with Chartermark or, as they become due for review, with the Customer Service Award. But we were pleased to see that this is not just something to which managers pay lip-service but is a thread running through the day-to-day work of all staff.
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5. Delivery to clients
The VOA is unusual in that it works to three main client departments, CLG, WAG and HMRC (and, from 1 April 2009, DWP became its fourth major client). By value, the overwhelming majority of its work is carried out for CLG, (in 2009/10 CLG will provide 71.7 per cent of the Agency's resources, DWP will provide 11.3 per cent, HMRC 4.6 per cent and WAG 4.5 per cent). The work of the Agency is outlined at Annex F. In essence: CLG and WAG require the maintenance of accurate Council Tax (CT) and Non-Domestic Rating (NDR) lists from which Billing Authorities issue bills and collect the taxation due; HMRC receives advice on property values to support a range of taxes including Inheritance Tax and Capital Gains Tax; DWP relies on the Agency’s work in connection with, housing benefit; and CLG also requires its work on fair rents. The major individual product from the Agency is the five-yearly revaluation of the NDR lists in England and Wales. In 2005, Wales also had a CT revaluation which was a major exercise successfully implemented in co-operation with WAG and the Welsh Billing Authorities.
5.1 Operational performance Each year the Agency publishes an annual report. These reports are available on the internet and detail business performance against its targets and the financial accounts. In the years since the last framework review, targets have been changed and new ones developed. Some targets have also been made more challenging, for example the target for the 2000 Rating List was to limit reductions to no more than 4.7 per cent of the compiled list, as shown in the accounts for 2004/05, whereas the target for the 2005 Rating List is to limit reductions to no more than 4.2 per cent. Annex G provides a summary of each year’s targets and outturn.
The Agency’s funding has also varied. For example, in Local Taxation staffing levels were expected to expand over the years from 2004 to 2007 to deliver the Council Tax revaluation in England which was subsequently postponed in September 2005 for at least the lifetime of the current Parliament (which also led to 4 related KPIs being dropped in 2005/06). The increase in 2007/08 reflects preparations for the revaluation for the 2010 Rating List. In 2008/09 there was an increase in commercial income and funding from The Rent Service (TRS). This makes an exact year-on-year comparison difficult. Nonetheless, we have tried to summarise the overall picture in the table below. From this it can be seen that there is a trend of improvements in delivery of KPIs, steadily improving customer satisfaction levels, while overall staffing numbers have fallen by more than 22 per cent over the five-year period.
2004/05 2005/06 2006/07 2007/08 2008/09 Key Performance Indicators: Met 10 4 8 9 10 Missed 3 4 1 2 1 Other targets: Met 20 21 16 11 8 Missed 8 4 3 8 10 Customer satisfaction Target 86 per cent 86 per cent 88 per cent 88 per cent 90 per cent Achievement 77 per cent 83 per cent 88 per cent 91 per cent 93 per cent Total turnover £204m £237m £207m £209m £210m Staff usage (FTE) 4955 5084 4428 4096 3840
5.2 2010 Revaluation of NDR The five-yearly revaluation of the NDR lists is a substantial task and one of the major deliverables that CLG and WAG expect from the Agency. Stretching targets have been set, not only to ensure the list comes into operation from 1 April 2010 with summary valuations issued to businesses around six months beforehand, but also to provide the client departments with valuations for a sizeable proportion of each of the classes (categories of properties and businesses) from as early as February 2009. This enables the departments to begin modelling in good time for consultation regarding the structure of the reliefs and the level of rate poundage (defined as the amount payable per £ of rateable value).
The Agency has now carried out many successful NDR revaluations and can be rightly proud of the way this one is being project managed. To date, all targets have been met and many have been exceeded. Every member of staff to whom we spoke, regardless of grade or job remit, was in no doubt about the importance of this piece of work. Centrally, the small project team was working well and good project management disciplines were being adhered to. In common with previous revaluation projects, the team has a plan to collect lessons learnt so that subsequent revaluations can be improved. For example, there will have been more prior agreements for the 2010 lists, the process whereby specialist teams in the Agency agree with businesses or their representatives how certain classes or locations will be valued, and indeed some teams have agreed the
11 actual values. This provides businesses with certainty about what their liability will be for the five years of the list, with no need to appeal, and cuts administrative costs in the future. For the Agency, such an approach is consistent with the ‘right first time’ ethos. We found that while the project team was aiming to secure prior agreements for many specialist properties and those properties on the central list, no ‘prior agreement’ targets had been set for the teams working on the revaluation within Groups. Some agents thought this was a missed opportunity as local teams were concentrating on meeting targets rather than sitting down to negotiate. The Agency has, however, had some success with a number of larger commercial ratepayers.
Summary valuations were first issued as part of the 2005 revaluation and these were well received by ratepayers and their representatives. The Agency will continue with this practice, issuing summary valuations in Autumn 2009 to a wider section of businesses. We noted that the Agency will be issuing summary valuations in paper form and on the internet. This seems to us to jar with other areas of government’s approach to electronic communications. As part of the post implementation review, we think the Agency should also look to reduce the administrative costs of a future revaluation by issuing summary valuations only in electronic format, where this method of engaging ratepayers is appropriate to the nature and size of the business.
Some agents have highlighted that maybe too much resource is being put into the revaluation and that current casework and maintenance of the 2005 list is being sacrificed. Speaking to Agency managers, it is obvious that there are less staff now working on current casework but, as we are getting to the end of the life of the list when numbers of appeals should be falling and as this is a relatively short but intense period which will soon be over, we do not have any comments to make about how the Agency should change its approach to the 2010 revaluation project.
We also noted there are substantial numbers of central and local government properties such as schools, hospitals and fire stations where agents are engaged by the relevant authority to challenge individual assessments. This means that agents’ fees are incurred by those authorities at a net overall additional cost to the taxpayer. Moreover, those engagements are usually at a local level rather than a regional or national level, losing fee-savings opportunities of economies of scale, and many of these agents showed no interest in striking ‘prior agreements’ which suggests a fee generation structure geared to sharing the benefit of any successful appeal against the lists. This seemed to us to be a poor use of public funds.
The 2010 rating lists are yet to be completed but in the 2005 lists around 64,000 premises involving some £3.6bn of rateable value (RV) related to central and local government. Since 2005, agents have challenged about 44 per cent of those assessments, representing some 62 per cent of the RV. We understand that by 31 March 2009, three-quarters of these appeals had been settled and, if the current pattern of settlements were to continue, their combined RV will be reduced by approximately £165m. We cannot be sure of the total agents’ fees generated from the appeals that resulted in a RV reduction; however, we are given to understand that fees paid by the public sector could be in the order of £25m.
If in future revaluations the relevant government departments such as Health or MOD ensured that the properties for which they or their delivery agents are responsible are dealt with on a national basis, perhaps appointing one agent to act for them, and instructed that agent to seek ‘prior agreement’ with the VOA, we believe that the initial valuations would be more accurate and that a substantial proportion of the above figure might not have to be funded by the taxpayer at each revaluation. However, for this issue to be addressed it would probably be necessary to do so in the wider context of setting departmental budgets and financial delegation policies, subjects which are beyond the scope of this review. We therefore make no recommendation but have drawn the issue to the attention of the Treasury.
5.3 Meeting the needs of client departments The VOA works closely with all client departments and, while we have seen some very good examples of this, such as when the Agency loaned a member of staff to CLG for a short-term, high-profile project where they could offer ‘on the ground’ experience to help with policy development, we believe that more could be done. It will only improve the Agency's relationships and standing with the client departments if it can enrich its understanding of their work and the priorities of their ministers to complement its technical and operational expertise. As time goes on and this learning has been captured and shared, the Agency will be able to maximise its input to ongoing rating and valuation policy development.
The 2005 Framework Review recommended that greater use was made of secondments and loans involving VOA staff to gain better insight into its client departments. We can see that some progress has been made on this and we recommend that this is also made a priority for the coming years, in particular we believe that the Agency should be proactive about encouraging interchange with key departments such as CLG, HMRC and WAG.
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5.4 Billing Authorities The VOA works closely with Billing Authorities to ensure a joined-up service to customers. It is important to remember that while the VOA is a national organisation, there are 330 Billing Authorities in England and 22 in Wales and each operates in a slightly different way. There is potential for a variety of different IT systems and processes for issuing bills or transmitting information and the Agency needs to be able to interact with all of them. This is no mean feat. We have seen examples of excellent close working relationships, due in no small part to the efforts of staff on both sides to understand the role of the other and explain their own position, and we have seen where systems interact in a seamless manner. We also have evidence of less constructive working relationships and difficulties when IT systems cannot ‘talk’ properly to each other and indeed various parts of the same local authority do not seem to work well together, let alone with the Agency.
The Agency tries to tailor its approach to individual Billing Authorities where possible and design processes with them (rather than impose changes upon them). Groups have service partnership meetings with Billing Authorities and these may be grouped within locations or individually. These arrangements seem to work well for both parties.
One of the change projects in the VOA is the centralisation project covered in Chapter 6 which aims to make efficiency savings and to promote a more consistent nationwide service by centralising some functions in a small number of locations in the UK. We think that both these aims are right and that the project should continue but that managers in the Agency and in the Billing Authorities must be conscious that this should not weaken customer service, either by removing the local link and local knowledge, or by losing the local relationships which are a key part of the success of the Agency’s work with Billing Authorities.
5.5 HMRC as a client As well as being the sponsor Department, HMRC contracts with the Agency for services on property valuation for the purposes of Inheritance Tax (IHT), Capital Gains Tax (CGT) and other tax investigations. On the former, the Agency and HMRC have co-located teams which work very closely together. These teams have shared IT capability and utilise a shared workspace to manage cases and provide updates to taxpayer customers if requested. Other areas of HMRC which commission work from the VOA include Large Business Services which is responsible for the 750+ largest businesses in the UK and Local Compliance who deal with the remaining businesses. The budget for the VOA and the Service Level Agreement (SLA) is managed by the Risk and Intelligence Services (RIS).
We have examined the process through which HMRC refers cases to the Agency and how that process is overseen and managed. We have also examined the Agency’s performance in this area for the first half of 2008/09 against the trend in previous years. The basis on which costs for each referral are attributed has changed from 2007/08 so making cost comparisons has been difficult. Nonetheless, the overall picture seemed to be that the number of cases referred to the Agency has been falling, as has the funding from HMRC for this work. The fall in the number of referrals is consistent with HMRC’s continuing efforts to improve risk targeting. The targets set for IHT referrals is a cost-to-additional yield ratio of 1:20 while for CGT it is 1:17. To October 2008, timeliness targets seemed to be broadly met or exceeded. Cost-to-additional yield ratio outtturns appeared to be 1:14 on IHT (non-agricultural cases) and 1:11 for CGT. Changes to the IHT threshold and the wider fall in property prices might explain the fall off against targets. But we have not seen any evidence to validate the extent to which this is the explanation. We therefore recommend that when HMRC and the Agency review the whole year’s outturn for 2008/09 the differences between the target and the outturn cost-to-additional yield ratios for IHT and CGT should be examined and, if necessary, suitable adjustments made to the targets set for 2009/10.
To date, the role of sponsor within HMRC has been very much split between RIS and Charities, Assets and Residence (CAR), the directorate with both policy and operational responsibility for IHT. With the exception of managing the SLA at a lower level, neither directorate has much provision for resource at senior level to manage the relationship nor challenge the services given, albeit that these seem to us to be satisfactory and meeting targets. We recommend that services provided to HMRC as a client should be managed by RIS on behalf of all HMRC business units. RIS should collate all business units’ requirements of the Agency, the costs, relative benefits, and mechanisms for monitoring and evaluating delivery. RIS should take the overall strategic view for HMRC, challenging the VOA and other business units accordingly, and HMRC’s annual requirement should be approved by the Director of RIS. Any additional support necessary at SCS level to fulfil this role properly should be drawn from the overall budget set for the Agency's services to HMRC.
5.6 Other public sector clients The Agency also has other public sector clients on an ad hoc basis as and when they contract for services. The VOA’s ‘Commercial Services’ business stream was formed in April 2008 through the separation of District Valuer Services (DVS) into National and Central Services (N&CS) and Commercial Services. Commercial Services provides valuation services to a variety of public sector clients, such as Local Authorities and NHS
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Trusts. These services include valuing property assets for disposal or asset registers and providing other services. The Agency tenders for contracts under public sector procurement rules. At the moment, these tenders are on a full-cost recovery basis following Treasury guidance, Managing Public Money.
5.7 Information sharing In the course of the review, VOA staff and Billing Authorities mentioned to us the problems that have arisen through data sharing constraints. Billing Authorities have a statutory obligation to provide the Agency with information that will ensure the accurate maintenance of the NDR and CT lists. As previously noted, the taxpayer often does not see or understand the distinction between local and central government. They feel that they are giving information to ‘the man from the Council’, regardless of whether that is a local government official or someone from the VOA. Frontline staff in both the VOA and Billing Authorities can be the object of callers' frustrations when customers are asked the same questions by a different bit of government. While staff handle this well, it is not an easy part of their job.
The Commissioners of Revenue & Customs Act 2005 brought together Inland Revenue and Customs and Excise to form the merged HMRC. In doing this, it appears to us that little separate consideration was given to the specific and different working practices of the VOA and its relationships with Billing Authorities. The taxpayer confidentiality strictures set out to protect information provided to HMRC for tax purposes also govern the information that the Agency receives in relation to CT and NDR which means that they cannot share any of this with their partners, the Billing Authorities. In practical terms, this leads to a position where the VOA may know the name of the occupier of a property, having inspected it to band it for CT purposes, but cannot pass this to the Billing Authority, which then needs to independently establish a name in order to send out the bill. This impediment seems illogical and damages the customer service that Billing Authorities deliver. Billing Authorities have reacted to this in different ways around the country and it has led to embarrassment for staff on both sides and strained relationships between the Agency and Billing Authorities. We recommend that a statutory Information Gateway is established between the Agency and Billing Authorities to allow information collected for the purposes of CT and NDR to be shared and that this is enacted at the first possible legislative opportunity.
Billing Authorities also hold information that the Agency needs, for example, to be able to notify the Agency of improvements to properties. They have statutory obligations to provide the Agency with such information and most authorities fully comply with these obligations and recognise that there is mutual benefit to all parties in doing so.
However, some authorities do not fulfil their obligation to provide information to the VOA. As a result, the Agency’s data on some properties can become out of date, leading to a poorer quality of service to the customers who occupy those properties, for example they may receive inaccurate advice or bills. This issue was identified by the previous two framework reviews in 2000 and 2005 so it is clearly a long-standing problem. Where such problems are encountered by the Agency, efforts are made locally to persuade Billing Authorities to comply but, ultimately, the Agency has no power to compel. In such cases, we believe that the Agency needs to develop and deploy a more structured escalation process, utilising the intervention of the Chief Executive's Office as necessary. CLG and WAG have an interest in the relationship between the Agency and Billing Authorities, so the Agency should agree these escalation processes with those client Departments.
More generally, we have observed that the relationships between Billing Authorities and the local VOA staff are usually based on personal contact rather than any formal processes. When this works well, a seamless service can be produced for the customer; however, when this breaks down, there seems to be no formal escalation route to take this forward. While we do not have examples of serious problems flowing from this to date, we feel that local staff would be better supported by a clear process and we recommend that a process should be established. Difficulties that cannot be resolved locally and that might impact on the VOA's overall performance should be brought to the attention of CLG and WAG.
5.8 Integrity of the list We tested with both client departments and selected Billing Authorities how much faith they had in the integrity of the CT and NDR lists. We found that there was a high level of confidence expressed by all parties, with acknowledgement that the lists get more and more accurate over time, and integrity is also strengthened by unsuccessful appeals. Revenue inspection work by the Billing Authorities, for which authorities have a statutory obligation, and referencing work by the Agency further strengthen the lists. In total, some 750,000 potential changes to the lists are actioned each year. The latter includes some risk-informed compliance activity to identify new properties or improvements to existing properties which may not have been picked up as part of routine notification or inspection work. For its part, the VOA undertakes this additional checking where it can but GVOs admitted that it was one of the few things that could be let slip in a prioritisation exercise as, by its very nature, it does not have associated high-level targets in the way that most of their other activities do.
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This ‘compliance referencing’ activity helps to ensure the comprehensiveness of the lists and has demonstrated in some locations that it can make some difference to the accuracy. It also helps to ensure a level playing field so that fully compliant businesses who pay the correct amount of business rates are not put at a competitive disadvantage against other businesses that do not pay rates or that pay much less than they should.
However, we were told of several examples in England where Billing Authorities had reduced the number of Revenue Inspectors and some had withdrawn them altogether. This is a matter for CLG/WAG. We believe that where the Agency has evidence of Billing Authorities not undertaking these statutory obligations it should draw those departments’ attention to such cases. CLG and WAG might want to consider reminding Billing Authorities of the statutory obligation to carry out revenue inspection. In any event, we believe that compliance referencing should form part of the annual discussions with CLG and WAG as client departments. Where the client departments are so minded after considering evidence, they could agree targets (and corresponding funding to the Agency) for specific levels of compliance referencing in specific areas. This should further enhance the accuracy and integrity of the list as well as ensuring fairness of the system, whereby all taxpayers are paying based on their correct RV. This might also be a useful counterweight to some of the trends we have seen where revenue inspection activity is being cut back.
5.9 Automated Valuation Model (AVM) The VOA developed its model for supporting mass appraisal of domestic property, the AVM, as part of the preparation for a revaluation of domestic property for CT purposes. The Government subsequently decided to put this on hold for at least the lifetime of this Parliament. The model was not used for the 2005 revaluation in Wales as it was not sufficiently developed at the time but could be used for a future revaluation.
Nonetheless the Agency has continued to maintain the model so it could be used if needed in the future. The model and its databases have provided the evidence base to inform policy decisions, such as costing the expansion of a regional airport by noting the values of properties that would be subject to compulsory purchase orders and compensation with new noise contours. Other analytical data has been used to understand redevelopment impacts in areas such as the Thames Gateway.
The model has been tested against international comparators – not that there have been any mass appraisals on the scale or complexity of the UK property market – and it performs very well against the standards and guidelines set by the International Association of Assessing Officers (IAAO). The Agency has also developed an adapted version which can be used to support banding decisions in relation to the current CT lists.
We have observed the model in action and seen that it is a powerful tool. However, we believe that its existence isn’t widely appreciated across Government and its value is not widely understood. It could be used to inform more policy decisions in a wider variety of areas. We also think that the AVM could be used to generate income by licensing the model to interested parties for a specified use. The Agency and its client departments would need to consider the commercially sensitive nature of the model and its underlying data sets but if this can be overcome, the Agency could gain an additional funding stream in the future.
5.10 Delivery focus of the VOA In conclusion, we can note that the Agency is very focused on its targets and delivery for its clients. Over the period since the last review, the Agency has made good progress in delivering better customer service, and achieving tighter targets on responses each year, and has done this with year-on-year cost reductions. Clearly at the heart of this is the need for strong, successful working relationships between the client departments and the Agency. The new Chief Executive should make it a priority to ensure that relationships with the client departments remain fully effective.
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6. Change management
The Agency’s ‘World Class’ vision was launched around the time of the 2005 Framework Review and was designed to put customer satisfaction at the heart of all that the Agency did, with a set of medium-term targets to measure progress. It is not, as some might see it, simply a collection of related change projects.
The World Class programme was set up to provide a governance framework. Among other things, the programme supports the Agency in improvements to the delivery of its targets and its capabilities. It comprises 17 projects and 8 studies. These include some core projects which are inter-linked and which we believe are worthwhile: • increased mobility of staff by providing them with IT kit which enables remote access to the Agency’s databases and allows them to update records following visits to properties, thus increasing flexibility and reducing the need for paper and the need to return to the office to key-in data; • digitisation of paper records, thus providing wider access across the Agency to those records, better accuracy and resilience, an improved ability to communicate electronically with customers and freeing up significant office space previously devoted to storage; • centralisation of many clerical functions conducted in local offices, providing economies of scale and standardisation of processes, enabling the nationwide provision of a consistent and high level of customer service; and • estates rationalisation to exploit the benefits of these projects.
The programme also includes ‘Business-as-Usual’ projects such as the 2010 Non-Domestic Rates (NDR) revaluation, and such things as refreshing the IT infrastructure, integration of The Rent Service (TRS) and improving the Automated Valuation Model (AVM). Broadly, the programme is expected to cost some £109m over the period 2007/08 – 2014/15 and deliver benefits of just over £84m (though nearly half of the costs and 17 per cent of the benefits can be attributed to the 2010 revaluation). While we have only been able to examine a few elements from this wide-ranging programme, some aspects gave us cause for concern.
6.1 Understanding and communications within the Agency We discussed the World Class programme in every meeting held with the Agency's local staff and managers. From this, a clear and consistent view emerged that staff and managers were, as noted above, very customer focused and committed to delivering targets. They were broadly supportive of the core projects outlined above. However: • they were unclear about the detail and pace of implementation, how elements link together, how it will affect posts and levels of customer service in their offices; and • they understood the programme to be about those core projects only and no one mentioned any of the other elements outlined above.
The programme has a communication strand which has been strongly supported by senior management, as the Agency rightly recognises that without staff and managers’ awareness and support for the programme it is unlikely to succeed. However, it is clear to us that communications to date have not achieved the level of awareness that we would have expected. We believe and recommend that the communication plan needs significant refreshment and enhancement. As part of this we also recommend that the Agency clarifies the scope and desired outcome for the programme. Specifically, it needs to decide whether the programme is intended to be a means of pulling together all projects and business delivery tasks in one place where they can be subject to programme/project management disciplines or is a programme of change projects delivering efficiencies and new ways of working.
6.2 The ‘World Class’ strap-line The term ‘World Class’ does not resonate positively with the Agency's staff we have seen nor with many external stakeholders. For some staff, the term jars when set against their perceived day-to-day experience of unreliable or slow IT infrastructure, lack of office equipment and tools, though in practice there have been improvements in reliability over recent years. Many of those staff understood and accepted the financial constraints associated with working in the public sector and acknowledged that they wouldn’t expect the office accommodation and state-of-the-art IT kit associated with ‘blue chip’ commercial organisations. So they were perplexed that a term, which was seen as having strong private sector connotations, had been adopted by the Agency. Many felt that it implied an ambition that could never realistically be fulfilled. Others noted that when compared to broadly similar valuation organisations in other countries, the VOA was by some measure the biggest and was already leading in many fields, raising the question ‘why have we set this as an ambition when we're already there?’ Some staff accepted that benchmarking could be useful but weren’t sure who they were meant to be benchmarking themselves against or how those results might be measured. At one level the
17 programme is certainly consistent with the Government’s commitment to working towards world class public services – and we have seen strong evidence of staff commitment to customer service. However, staff’s perception of the programme was that the ambition to be world class also relates to the organisation itself and this carries much less resonance. We have concluded from this that as part of the refreshment of the communication plan recommended above, we recommend that the term ‘World Class’ should be replaced with a strap-line which will resonate positively with the Agency staff and its stakeholders.
6.3 Governance While a governance framework for the programme has existed for some time, it lacks sufficient substance and rigour. The first OGC-style Gateway Review was only conducted in the summer of 2008, some years after the programme commenced. Project management capabilities within some projects have not been strong. In consequence standards of documentation, such as risk registers and implementation plans, have been of variable quality. Inconsistent standards such as those for quantifying costs and benefits and constructing risk registers, make it difficult for milestones and inter-dependencies to be properly identified and managed at a programme level. The lack of detailed plans and measures has also been noted by Internal Audit reviews of some projects. However, it is appropriate to acknowledge that the Agency had recognised these weaknesses before the framework review began and has brought in an experienced programme manager who is in the process of addressing these issues. The programme manager believes, in our view realistically, that it could take six months to pull together a picture across all the programmes which will sufficiently illuminate, for example, the benefits realisation plan, risks and issues and interdependencies. Until this work is completed, it will be difficult for the World Class programme board to gain a high level of confidence that the implementation plans are deliverable, to time and within cost, and that projected benefits will be realised. We therefore fully endorse the Agency’s current work to inject more rigour and enhanced project management capability urgently into the programme.
6.4 The business case for the World Class programme and its projects The business case we have seen (version 1 approved in May 2008) summarises the case for the programme and gives some high-level detail of the 17 projects within it. From the headline cost and benefits, the business case does not make an immediately persuasive case of value for money because it includes the 2010 NDR revaluation project which is costed at some £50m and produces few financial benefits that can be scored in the programme business case. The case for the investment in the 2010 revaluation is not in question as it is about meeting statutory obligations and delivering customer benefits rather than cost savings. And, as noted above, the revaluation project is on track. However, its inclusion in the programme business case distorts the overall picture and makes it difficult to see at programme level how the sum of the parts produces an attractive investment proposition delivering substantial benefits.
We have also examined the business cases for some of the projects within the programme. Those make a much better case for value for money when looked at individually. Nonetheless, the business cases seen lack the degree of rigour that we would normally expect to see, as compared to the business cases receiving approval under HMRC’s transformation programme. As we have noted at paragraph 6.3, the standards used to define costs and benefits vary across some projects. This makes it difficult to compare one with another and, looking across all the projects in the programme, it is not clear how the individual projects would rank on value for money terms. In our view, the businesses cases need to be re-constructed on a more rigorous and consistent basis so that reliable investment and prioritisation decisions can be taken across the programme as a whole and weighing one project against another. We therefore recommend that the programme-level business case and all project business cases should be quality assured by the Agency’s Finance Directorate to ensure robust investment appraisal.
6.5 Beyond the 2007 Comprehensive Spending Review Mirroring HMRC’s 2007 CSR settlement, the Agency has needed to accommodate a five per cent per annum reduction in its income. However, it did not gain access to HMRC’s Modernisation Fund and so has had very modest financial capacity to invest in modernising its systems and infrastructure. To date, the Agency has done well within these tight constraints, delivering performance improvements across its Key Performance Indicators (KPIs) and reducing costs, while also refreshing some of its supporting IT systems. But the current and prospective financial climate is very challenging. Furthermore the Agency’s current funding arrangements limit its scope for creating financial headroom for investment. In Budget 2009, the Chancellor announced new efficiency targets and an Operational Efficiency Programme which will challenge all government departments and their arms-length bodies to make efficiency savings in areas such as procurement and ‘the back office’. We therefore believe that the Agency should adopt a business planning assumption that the downward pressure on running costs will continue into the next Spending Review, at a level at least as challenging as in the current Spending Review if not greater. However, even if all the projects within the World Class programme deliver their full benefits on time, the new capabilities being developed (digitisation, centralisation of some functions and more mobile working) look insufficient to provide a sustainable financial and business operating model beyond the current Spending Review. So it is currently difficult to see how the Agency will be able to maintain its record of year-on-year improved business delivery beyond 2010 while continuing to reduce costs
18 by, say, five per cent each year. We are pleased to note that the need for this analysis has recently been recognised by the Agency’s management board, based upon analysis by the new Finance Director.
To address this challenge, the Agency will need to look hard at ways of reducing still further its corporate overhead costs, but it also needs to look for ways of taking further cost out of its key business processes, critically examining the major cost drivers against its current business targets and additionally considering all sources (and potential sources) of income. As part of this, the Agency may need to give consideration to weighting some of its current targets and possibly having differential targets (for example, gearing turnaround targets to the materiality of the tax at stake). Such analysis should be discussed with client departments which can weigh the trade-offs between potential cost savings against other implications and impacts associated with any modifications to policy or process.
For example, we have noted that whilst the Agency has successfully halved the numbers of appeals to 600,000 on the 2005 rating list through its ‘right first time’ initiative, just over 60 per cent of the appeals it did receive were unsuccessful. The Agency continues to seek to reduce the number of appeals through prior publication of and consultation on changes to RV at revaluation. We understand that in some countries the administration charges a fee for each appeal which is refunded if that appeal is successful. If there is evidence that a significant proportion of unsuccessful appeals are speculative, this might be one of the options the Agency and its client departments could examine to further reduce appeals, although consideration would need to be given to the disproportionate impact of a flat fee on small and medium-sized businesses.
Areas to examine could also include Council Tax (CT) where we were told that some offices receive significant numbers of telephone enquiries from customers regarding Band A properties. These calls are seemingly driven by customers seeking to reduce their bill despite already being in the lowest band. There may be more efficient ways of handling such enquiries while maintaining a good standard of service to customers.
While policy for these areas rests with CLG and WAG, the Agency has to think radically and engage with client departments armed with such analysis.
We therefore recommend that the Agency needs to: • develop a value for money model linking the Agency’s targets to cost drivers so that the Agency is in a position to have an informed dialogue with its clients about the impact on KPIs/targets of further cost reductions; • produce some robust investment propositions to allow for further strategic investment and customer-focussed process re-engineering across the directorates covering Local Taxation/Housing Allowances and National and Central Services to enable KPI delivery to be maintained; and • develop further office/accommodation restructuring options to reduce accommodation and associated overhead costs by, say, at least 20 per cent by 2013/14.
Finally, the conclusions of the work looking beyond 2007 CSR are likely to show a requirement for some modernisation funding. While recognising that HMRC itself faces some challenging financial targets through which it is having to make some difficult choices in funding change programmes, HMRC remains the Agency’s only source of capital so we recommend that HMRC commits to exploring with the Agency how appropriate modernisation investment might be secured (or redeployed from the Agency’s current budget following consultation with client departments) over the rest of the current Spending Review period and the next Spending Review.
We also recognise that the Agency may require access to resource (rather than capital) funding for investment, especially on costs associated with moving, retraining and redeploying any displaced staff, so we recommend that the client departments commit to exploring with the Agency how its current and future operating budgets might be redeployed into investment to reduce the longer-term costs for those departments.
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7. Management and governance
7.1 Governance by the sponsoring Department The Agency’s sponsor Department is HMRC and, as we have said in Chapter 3, we believe that this sponsorship should continue.
The last framework review in 2005 occurred during the early days of the formation of HMRC and during the intervening period HMRC’s top leadership and the governance structure have gone through a number of changes. At that time, the Agency’s Chief Executive reported to the Chairman of HMRC. Today, the Agency’s Chief Executive reports to HMRC’s Chief Executive.
Recommendations were made by the 2005 Framework Review to strengthen further the internal and external governance of the Agency. Annex D contains a detailed action plan of the specific recommendations and how they have been taken forward by the Agency. These included: strengthening the role of the Agency’s management board; improving liaison between the Agency and HMRC by appointing someone at HMRC Board level to be the contact point (sometimes referred to in Cabinet Office guidance2 as the “Fraser figure”); improve its liaison with WAG and ODPM (now CLG); and providing regular reports of the Agency’s performance to HMRC’s operating committee. Not all of the recommendations have been implemented. The improved liaison arrangements with HMRC were not sustained and HMRC’s operating committee, while it existed, did not receive regular reports from the Agency. However, we can report that more recently the Agency’s performance has been reported and monitored through HMRC’s performance management structure – the Quarterly Strategic Review (QSR) process. Indeed HMRC’s Central Finance function has commented favourably on the Agency’s performance through the QSR process.
The merger of the former Inland Revenue with Customs and Excise in 2005 has meant that priority has been given within HMRC to its own challenges and business needs. For example, when HMRC developed its transformation programme and bid to HM Treasury for modernisation funding, greater attention could have been given to the Agency’s long-term modernisation needs. In addition, as stated in Chapter 3, the senior customers in HMRC business units have neither proactively managed nor challenged those services they receive from the Agency. Another consequence is that some HMRC corporate policies have been imposed upon the Agency without due regard to the Agency’s own policies and business operations. For example, the HMRC internet access policy has prevented Agency staff from accessing local authority portals to view electronically planning applications which is one of their ways of processing Council Tax bandings. Another example seen was that the commercial side of the Agency has often been unable to exchange digital photographs of buildings with public sector clients.
In practice, we have not seen any evidence to suggest that the absence of formal liaison arrangements between the Agency and HMRC have caused serious difficulties, though they might have avoided imposing some of HMRC corporate policies on the Agency that have had the unintended consequences outlined above. Liaison with CLG and WAG has been managed against a regular timetable. However, we believe that the liaison arrangements between the Agency and HMRC should be re-examined. Outside of the line- management relationship between HMRC’s Chief Executive and the Agency’s Chief Executive, there might be scope for designating a senior member of HMRC as the contact point between the Agency and sponsor Department. This figure could keep the Agency abreast of developments within HMRC and help in ensuring that the Agency’s interests are taken into account in internal HMRC policy and corporate service developments. He or she could act as a sounding-board for the Agency on matters of handling and political and ministerial sensitivity and, as necessary, provide an additional contact point within the sponsoring Department for the other client departments. The appointment of a new Agency Chief Executive will provide an opportune moment to help identify the precise remit for this new role. Accordingly we recommend that: • once a new Agency Chief Executive is in place, the Agency and HMRC should consider the appointment of a senior member of HMRC to act as contact and liaison point for the Agency; and • before HMRC corporate polices are imposed on the VOA, they should be considered in the light of the impact they would have within the Agency to ensure an appropriate ‘fit’ to the Agency’s core business and its executive agency status.
2 Sir Angus Fraser’s report to the Prime Minister envisaged a senior figure within a department acting as the main source of external advice on the performance of the Agency. More detail can be found in the Cabinet Office guidance at (http://beta.civilservice.gov.uk/Assets/exec_agencies_guidance_oct06_tcm6-2464.pdf)
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7.2 Internal governance The Agency is governed by a management board, made up of most senior staff and two Non-Executive Directors (NEDs) and is led by the Agency Chief Executive. The board has existed and met regularly since the last framework review. It receives regular reports on business performance and when that performance is reviewed twice yearly the operational field directors are invited to attend. The business performance packs seen by the management board are robust and well supported by information management systems. On the whole, we found this to be a robust and stable governance mechanism but there are some improvements that could usefully be made.
We believe that more could be done to broaden the management board’s view of issues across the Agency and in particular operational issues. For example, to date the board has not received regular updates on the Agency’s World Class programme. This lack of visibility probably isn’t an issue for the senior executives on the management board because they also sit on the World Class programme board. However, the NEDs do not sit on the World Class programme board which means the Agency’s change programme is not very visible to them. We suspect that had the NEDs been properly exposed to that programme, some of these weaknesses would have surfaced earlier.
Also, during the course of this review the issues around the revised rating assessments of ports were prominent and we were interested to understand when and to what extent the management board and audit committee had debated the issue. We were told that the issue was formally reported to the management board in the autumn of 2008, around the time of the Treasury Select Committee’s consideration of the Agency’s annual report for 2007/08 when it also asked questions on the ports issue. The audit committee’s visibility of the issue was on a similar time scale, geared to the updating of the Agency’s risk register (by which time the risk had crystallised). This has led us to question how the management board’s horizon scanning capabilities can be improved so that an appropriate degree of challenge can be exerted at a sufficiently early stage to enable the eventual outcome of issues to be appropriately influenced.
First, we believe that some useful adjustments could be made to the Agency’s Key Performance Indicators (KPIs) which might more readily flush out odd trends and developments about which the management board might ask questions. We say more about this below. Second, we believe that the balance of executive membership of the management board needs to be changed away from the current majority of corporate service representatives (currently five members) towards business representatives (currently three members). Specifically, to date only one member on the management board represents the Local Taxation business stream, which accounts for about 85 per cent of the Agency’s business. The interim Chief Executive has made some temporary changes. However, we believe that the old arrangement needs to be permanently broadened to include one of the Local Taxation policy directors (to bring to the table more detailed analysis about objectives, design and what is meant to happen) and an operational field director (who can bring views on the practical operational challenges and what actually happens at the frontline). These additional contributions might more readily expose the natural tensions that exist in the business and produce a richer range of views from which other members, especially the NEDs, might trigger questions and insights to the wider benefit of the board and Agency. To make room for more business representation, some corporate service representatives should stand down and attend only for their subject items. We do not have a view about which members should stand down other than being clear that the Finance Director should remain a permanent board member, nor do we have views about which particular policy and field directors should join. Accordingly we recommend that: • the management board should receive regular reports on the Agency’s change programme; and • the balance between business representation and corporate services representation should be reviewed and the business representation on Local Taxation strengthened by adding a policy and an operational field director.
7.3 Targets and measures for business performance The Agency has developed a sophisticated and multi-layered range of KPIs, targets, scorecard targets and measures. These are supported by structured assurance and reporting activities which test compliance with processes and quality of outcomes. Further assurance on the integrity of the performance reporting and monitoring system is gained from regular independent audits by HMRC Internal Audit which samples and tests transactions. The Agency has in place a good programme of monitoring, reporting and management review, culminating in top-level performance reports on a quarterly and annual basis to the management board, client departments and HMRC. During the review, we have tracked the audit trail from local offices through to aggregation and to top-level reporting to client departments and HMRC and to the Agency’s annual report. We have also examined the in-house audit activities undertaken by the Business Improvement and Support (BIS) team within Local Taxation and that undertaken by Internal Audit. We have concluded that the Agency’s performance monitoring and reporting systems are robust and its quality control, assurance and management control systems are rigorous. The summary performance reports provided to the Agency’s client departments are therefore well supported with strong audit trials and accordingly those departments can place a high level of reliance on the those reports. This is an area of clear strength for the Agency.
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RV loss However, as mentioned above, we believe that there is scope for further improvement. A prominent KPI for Non-Domestic Rates (NDR) is ‘to contain reductions in the 2005 rating lists to a maximum of 4.2 per cent of the total compiled list rateable value, over the entire life of the lists’. The Agency has been meeting this KPI. Indeed, a number of prominent external valuation professionals have remarked that the Agency’s performance in this regard is impressive, comparing well to international comparators, especially given the diverse range of properties in England and Wales that the Agency is expected to assess. They also suggested that this ‘leakage’ target is probably approaching the point at which further improvements could only be achieved at disproportionate cost. We have seen no reason to challenge that view. The KPI is also rational because it is aimed to protect the tax take. Nonetheless we see two arguments to support some broadening of this KPI.
First, the Agency’s underlying imperative stemming from the 2000 Framework Review is the ‘right first time’ ethos. In other words, the Agency and the professional valuers within its ranks strive to get the right valuation. This seems slightly at odds with a KPI which measures success only in terms of minimising the aggregation of those valuations which are subsequently revised downward. A KPI more in keeping with the ‘right first time’ ethos would also monitor valuations that subsequently prove to be too low. It could be argued that the current KPI encourages the valuer to adopt a low valuation so as to reduce the prospect of appeals against that valuation (the Agency is trying to reduce the number of appeals) and also to minimise the RV loss should any appeal prove to be successful. Indeed, some stakeholders have suggested to us that some parts of the list have rateable values (RV) lower that they should be, although this was only anecdotal. It is important to note that we have found no material evidence to support these suggestions. Nonetheless we believe that the current KPI has the potential to encourage overly conservative valuations and is somewhat inconsistent with the ‘right first time’ ethos.
Second, as we have noted earlier, while this framework review was being conducted the ports issue was prominent. One of the criticisms levelled at the Agency is that it was slow in recognising the gravity and impact of the issue and that it took too long to produce revised valuations for all the port occupiers and owners. We were interested to understand to what extent the ports issue was visible through the Agency’s KPIs . The most relevant KPI is the RV loss target referred to above. The changes in RV seen by some of the port occupiers and owners are very significant. However, 4.2 per cent RV loss on the total list3 equates to about £2 billion. The result of the Agency’s review of ports was to increase the total RV for all ports in England from £201m to £211m. Though large in themselves, the RV changes involved in the issue are far too small to register on the Agency’s KPIs. This begs the question of whether the KPIs are adequate if such a very significant nationwide issue like ports wasn’t visible through them. Our conclusion is that this RV loss KPI needs to be developed to track gain as well as loss and to be supported by subsets to monitor material geographic and trade sectors swings that might otherwise be masked by the large numbers involved. Accordingly we recommend that the Agency's KPI on containing RV loss to no more that 4.2 per cent over the life of the list should be broadened to monitor RV 'swing', for example to include gain as well as loss. The KPI should also monitor 'swing' at trade sector and geographic levels, where these exceed a certain threshold, and should look ahead, so as to help the management board identify problems in advance. These changes should be introduced for the 2010 list. This would also assist the management board in its horizon-scanning role mentioned above.
List integrity Another area where we believe that the Agency should develop its KPIs is in relation to the integrity of the CT and NDR lists. As we have said in Chapter 5, confidence in the lists is high among the professions and Billing Authorities that we have spoken to. We have also been impressed at the quality assurance work undertaken on list ‘maintenance’ work within the Agency. However, list compilation-related assurance work apart, this quality assurance work bites only on those hereditaments where casework is necessary and doesn’t touch the vast majority which remain largely undisturbed from one revaluation to the next. We believe that there may be scope to enhance the confidence in the integrity of the CT and NDR lists still further by supplementing the existing quality assurance activity with a wider integrity testing programme using statistical sampling techniques. We envisage that the VOA could design and apply on a regular basis an additional assurance test on the integrity of the rating lists and CT list by randomly checking the RV and CT banding of a sample of hereditaments, sufficient to gain a statistically valid assessment of the integrity and accuracy of the lists. The sample size and technique should be designed by Internal Audit and testing should be undertaken by suitably qualified members of the BIS team or by an appropriate peer review process. Internal Audit should also assure the statistically supportable conclusions that can be drawn from the testing. We therefore recommend that the VOA should design an additional assurance test on list integrity based upon statistical sampling techniques and explore with CLG and WAG how such a programme could be applied.
3 Total Rateable Value of the initial compiled List at April 2005 was £48.5 billion
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7.4 Group Office structure Although the Agency restructured its District Valuer Services from April 2008 into National & Central Services (N&CS) and Commercial Services, the network structure of some 80-odd offices across 21 Groups in Local Taxation, which delivers the Agency’s core business on CT and NDR, has remained largely stable for the last 10 years. However, as the Agency makes progress in digitising its data, centralising processing functions and, through the mobilisation project, reducing its dependency on permanent offices, the number of network staff that need physical proximity to the hereditaments they value is decreasing. Greater use of the Automated Valuation Model (AVM) could reduce this dependency still further. The Agency’s scope to rationalise its office network is therefore increasing. As part of this, we believe that it would be sensible to review the Group structure to ensure that the number of local management commands, the Groups and offices, is optimal. This should enable further estate rationalisation and efficiency savings opportunities and should be done in the context of refreshing workforce change and HR plans about which we comment later.
7.5 Empowerment of local managers vs delivering a consistent service Another important consideration to weigh in determining the optimal office network structure is how best to deliver a consistent service to specified standards across the country. As we have mentioned in Chapter 4, a number of stakeholders have remarked to us that they experience inconsistencies between different Groups, for example in handling rating appeals where some Groups are prepared to continue discussions after the ‘target date’ while others are not. Some stakeholders have offered the view that these inconsistencies stem from the statutory role of Group Valuation Officers (GVOs) through which they have discretion to ignore ‘guidance’ from the Chief Executive's Office. Another factor might be that guidance from the Chief Executive’s Office to Groups is insufficiently clear, leaving Groups to make sense of the ambiguity in the guidance as best they can. In any event, the result is inconsistencies seen by the customers and this outcome needs to be factored into both the design of the office network structure and the delegation policy to the Group structure from the Chief Executive’s Office.
We note that on 1 October 2009, the existing 56 separate Valuation Tribunals in England will be abolished and the Valuation Tribunal for England established as the single tribunal for NDR and CT appeals with jurisdiction covering England as a whole. This should achieve a more consistent service across the country. There may be lessons for the Agency here. However, in the first instance we recommend that the Chief Executive’s Office should review the guidance relating to the key events impacting on customers. The degree of prescription given to Groups should be carefully framed to deliver a consistent service nationally. Implementation of that guidance should be regularly monitored and Field Directors should hold Groups to account for unwarranted departure from that guidance and/or take responsibility to refer back to the Chief Executive’s Office guidance that is found to be insufficiently clear, unworkable or produces undesirable results.
7.6 The staff perspective We have already commented in Chapter 3 on the strong customer service ethos shown by all the groups of staff that we interviewed during the review. During these meetings, we were also interested to explore other issues such as morale, management, skills and training. We also probed understanding and staff buy-in to the various changes going on within the Agency which we have covered in Chapter 6.
As part of our preparation for the review we gathered and analysed a good deal of information. This included the results of the most recent staff survey, a subject also examined by the Treasury Select Committee at its hearing on 15 October 2008. The Committee noted that staff satisfaction in the Agency was ‘worryingly low’ and observed that low staff morale is a risk to the quality of service delivery, though in its response the Government noted that staff satisfaction had risen from 53 per cent in November 2007 to 58 per cent by June 2008 with staff commitment reaching 70 per cent. We held 36 meetings with staff at various grades and local managers across eight offices including staff from all three business streams and the picture we saw was a fairly consistent one. Naturally there were a few negative comments about such issues as pay and location or grade-specific issues. However, the overwhelming picture was one of strong commitment to the work and to their team colleagues and office. There were some concerns about how some media campaigns about CT had whipped up some negativity (and occasionally hostility) in some of the customers they were dealing with, which sometimes resulted in junior staff enduring unjustified abusive behaviour. We were struck by the staff's efforts to rise above such difficulties and to focus positively on their day-to-day delivery of achievements, demonstrating high commitment to customer service. Staff knew their targets, knew why they mattered, and were taking pride in showing that they could meet them. In conclusion, staff morale seemed to us to be good.
7.7 Staff management Staff in the Groups seemed to identify closely with their office and teams. They had clarity about reporting lines and accountabilities and we picked up no issues of real concern. A reorganisation took place from April 2008 which created N&CS from the former District Valuer Services (DVS). Staff from these business streams continue to be co-located with Local Taxation staff while managed outside the GVO structure. This
24 arrangement seems to run smoothly with colleagues in different line management chains working alongside one another in harmony.
The reorganisation of DVS also saw the introduction of matrix management arrangements where staff might be ‘tasked’ by one or more managers and line managed by another. Those we met had a mixed range of views on this. The staff who were able to explain clearly the purpose and practice of the matrix management arrangements seemed the most content while, unsurprisingly, those who were unclear were more sceptical. The key issue seemed to be effective communications. In any event, all staff we saw noted that the system was still new and felt it needed to be given time to prove itself.
7.8 Skills and capabilities The Agency has set itself a target of training staff to a specified level within six months of starting a new job. The management information shows that this target is being achieved across all areas. That is an excellent achievement but we also wanted to test the Agency’s performance on training and development in our meetings with staff to see if the management statistics were consistent with their views. Here the picture was a uniform one. There was consensus that the training, including on-line learning and ‘on-the-job training’ from colleagues, was accessible, readily available and fit for purpose. There was general agreement that opportunities to study for professional valuation and surveying qualifications were good. The Agency’s introduction of opportunities to gain professional qualifications in management has also been well received, though some participants noted that the study commitment required can be quite a stretch while also having tight business targets to meet.
Prior to our meetings with staff we had noted that the staff survey results were consistently lower across all business areas when staff had been asked about the prospects for progression when compared to otherwise generally favourable responses to the rest of the survey. Consequently, we probed this area during our meetings. A mixed range of views emerged. On the Agency’s progression paths, some staff were very supportive of the introduction of assessment centres for selection to Band 2 (Civil Service Grade 7) and of competency-based promotion tests, while others felt that these new processes didn’t give sufficient weight to technical skills and experience. This gave rise to questions about career paths. For example, Band 3 posts are held by professional surveyors who have largely reached that position through a technical route, yet to succeed at an assessment centre staff management skills need to be displayed which Band 3s told us are often difficult for them to gain. Conversely some Band 4 line managers, who do have the staff management experience, perceive limitations to more senior posts which require technical qualifications. It wasn’t clear to us how deliberately or tightly these career paths have been designed to support a particular business operating model. We return to this below.
More broadly, there was some concern that, compared to the period of expansion when the Agency was gearing itself to conduct a CT revaluation in England, the number of promotion opportunities had fallen in recent times, particularly for those staff unwilling or unable to move to another office. However, these concerns were moderately expressed and staff seemed to understand and accept the reasons for the reduction in promotion opportunities. It was also pointed out to us that some people are very happy doing the job they have and don’t necessarily seek promotion. For them this question in the staff survey seemed to be based on a false premise and that while they might respond to it by saying that the prospects of their progression are low, that doesn’t mean they are unhappy or frustrated. The Agency might want to give further consideration to this question in future surveys.
7.9 Impact of de-skilling Another theme that emerged from our meetings was that some people, typically among those who had been in the Agency for many years, felt that some of the valuation decisions in Local Taxation were now being made by more junior and less technically-qualified staff as compared to the practice of some years ago. They felt this was a backward step. As we have noted in Chapter 4, this ‘de-skilling’ concern was also raised with us by many of the agents who lamented the trend.
It is clear that the grading mix of the professional ‘valuer’ has been progressively diluted for many years. We have therefore tried to ascertain whether this trend has resulted in any visible or measurable impact, for example in terms of loss of quality. We found no evidence that this has occurred. We have concluded that the observed trend is consistent with the deliberate shift in Local Taxation towards mass appraisal and the evidence shows that it has been achieved without material detriment to quality or delivery of targets (and indeed results have been quite the opposite). That the Agency has been able to maintain quality and delivery in its major lines of business – CT and NDR – at lower cost is an achievement of which the Agency should be proud.
7.10 HR and succession planning The consequence of Groups needing fewer highly-qualified and experienced valuers and surveyors as compared to years gone by means Local Taxation may not be as well placed as it once was to provide the
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‘feedstock’ to the Specialist Rating Units and to other specialist areas. All these units still need a rich mix of highly-qualified and experienced professionals. We have also received views that in order to sustain some of the skills in the specialist units and support the planned growth of Commercial Services, the Agency will have to increase its external recruitment and that might mean having to flex the Agency’s current pay and grading model. We were also told that the expansion of Commercial Services is good for the Agency because it provides staff with the opportunity to build their skill base adding a commercial dimension, and the Agency will reap the benefit of those additional skills when those staff return to its core business streams. However, staff motivated to work on the commercial side of the business with its varied different challenges, which they clearly enjoy, may not want to return to routine rating work. While it is still early days under the new structure, we did not find any examples of staff rotating back to Local Taxation on our visits. Finally, as we have noted in Chapter 6, the Agency is likely to face some serious funding challenges in 2010 and beyond which could potentially require it to take out cost beyond natural wastage. A more rapid expansion of Commercial Services might mitigate some of this, but not by much. We were therefore interested to see how these trends and issues were being addressed in the Agency’s HR and succession plans. The HR Department has shared with us the draft of its latest HR strategy and this addresses many issues that we would expect to see in such a plan. However, it does not address the long-term position or the issues we have outlined above. We believe it should. But of course to do this successfully, the HR Department will require a heavy input from the business. The business streams will need to articulate, to a good level of detail, their forecast requirements for some years ahead because a HR strategy can only be as good as the business strategy that it supports.
We therefore recommend that: • the Agency develops an Operating Model for 2010 and beyond which can cope with a range of funding and business requirement assumptions; • as part of this the Agency should develop a clear staffing requirement by grade/skill set, location and quantity covering all business and corporate support streams; and • the HR Department should develop a supporting HR strategy and manpower and succession plan, showing transition paths from the current staff profile to the new, revisiting career paths and pay and grading structures as necessary. In this, the Agency should place particular importance on developing plans to ensure that all the key specialist and professional posts can be filled in the years ahead.
7.11 The Agency’s supporting infrastructure The Agency’s IT infrastructure dates from 1989 and needs refreshment, as does its Windows 2000 and Office 2000 desktop applications which are currently inhibiting the Agency’s use of the latest Computer Aided Design (CAD) software packages. Under guidance of the new Chief Information Officer (CIO) a technology re-fresh programme is being undertaken this year and next. Some infrastructure refreshment is awaiting a more detailed analysis on current use. A fact-finding study into testing demand and system performance in local offices is nearing completion which will enable this refreshment to be fine tuned.
The new CIO has also commissioned work to ensure that application documentation, procedures and support follows best practice. The integration of The Rent Service (TRS) with its bespoke systems, which have been developed and are supported wholly in-house, are also going through this process to ensure that they can be properly supported and can fully meet today’s security standards.
Work is also going on to strengthen the skill sets of the Agency’s in-house IT capability, for example to better support new business developments. As part of all this, the CIO and his team are currently developing an IT ‘road-map’ to 2011 and beyond. This should be a useful input to the work we have recommended above.
7.12 Communications We have made specific observations about communications relating to the World Class programme where there is clearly more work to be done. Elsewhere, the Agency’s internet site has attracted complimentary remarks, for example for its online CT bandings and NDR tools, though we have noted that the content of the ‘Latest News’ section contained out-of-date items for a considerable period during our review. For internal communications, we understand that within the Agency the Communications Team’s function is to develop ‘tools’ for use by the business streams but this is issued as guidance only. There is no mandation to follow best practice. We have also found that it can be rather tricky to access some of the material on the intranet.
The Communications Team also handles the Press Office, staff survey and ‘customer insight’, yet the customer satisfaction survey process is handled by a different team – ‘Customer Services’ in Local Taxation. This other team also deals with Freedom of Information (FoI) requests and Parliamentary Questions (PQs). CLG noted that the Agency’s performance on handling PQs had improved recently. The separation of these functions seemed to us to be rather odd, for example creating an organisational impediment to the Agency gaining a complete view of the customer and to focussing its communication efforts.
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Looking more widely than the communications teams, client departments commented that the Agency can handle reactive communications with ratepayers well – both as direct enquiries and also through its communications fora – but struggles with more proactive communications. The former Chief Executive acknowledged last year to the Treasury Select Committee, in talking about the ports issue, that its communications with ratepayers could have been improved. We believe this is also true on occasions for its communications to the client departments and Ministers.
The Agency has a collection of useful communication tools. However we could only find a very old communications plan and this clearly needs to be refreshed. The Agency could benefit from a coherent communications strategy. When developing the strategy and refreshing plans, we believe that there needs to be some thinking done within the Agency about what ‘success’ looks like both in terms of internal and external communications. Moreover, given the current political and media sensitivity surrounding CT and NDR, we think that the Agency should involve CLG and WAG in this debate. In the light of that debate, the Agency should have a clearer view about the optimal organisational model, accountability arrangements and skill sets it needs to put in place to ensure that internal and external communication needs are effectively delivered. We therefore recommend that the new Chief Executive should make it a priority to assess the Agency’s internal and external communications capability and make changes, structural and otherwise, to achieve significant improvement in this area.
7.13 The Corporate Picture In conclusion, while we have made some recommendations to strengthen governance and to develop and enhance some key business measures, this should not detract from the wider and generally positive picture. The overall impression that we gained from the review is that the Agency has sound structures and mechanisms in place to oversee its business delivery and to manage itself, and enjoys the support of well- trained and committed staff.
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8. Summary of recommendations
1. We recommend that the VOA remains an executive agency of HMRC. (3.2)
2. We recommend that: • the Agency should complete the work on the customer journeys that it already has in hand. Subsequently, CLG and WAG should take the leading role in defining work with the Local Government Association, the Welsh Local Government Association and Billing Authorities, in collaboration with the Agency and other delivery agents including their representative organisations, to establish and share the key customer journeys and the ‘best practice’ duration for each journey; and • the Agency, working with the LGA, WLGA and other delivery agents and organisations, should analyse current ‘performance’ against that ‘best practice’ standard. The Agency should provide CLG and WAG with advice about what will be needed to close any gaps so that CLG and WAG can present operationally-based options to their Minister enabling them to make informed choices between ambition, cost and pace. (4.1)
3. We recommend that: • the VOA should explore with the Treasury the opportunities for retaining some of the Forms of Return (FoR) civil penalty receipts sufficient to cover the administrative costs of operating the regime; and • the Chief Executive’s Office should refresh and tighten its guidance on FoRs, ensuring a more consistent nationwide operation in the use of FoRs and the linked civil penalty regime (4.4)
4. We recommend that secondments to client departments are made a priority for the coming years, in particular we believe that the Agency should be proactive about encouraging interchange with key departments such as CLG, HMRC and WAG. (5.3)
5. We recommend that when HMRC and the Agency review the whole year’s outturn for 2008/09 the differences between the target and the outturn cost-to-additional yield ratios for Inheritance Tax and Capital Gains Tax should be examined and, if necessary, suitable adjustments made to the targets set for 2009/10. (5.5)
6. We recommend that services provided to HMRC as a client should be managed by Risk & Intelligence Service on behalf of all HMRC business units. (5.5)
7. We recommend that a statutory Information Gateway is established between the Agency and Billing Authorities to allow information collected for the purposes of CT and NDR to be shared and that this is enacted at the first possible legislative opportunity. (5.7)
8. We recommend that an escalation process should be established where difficulties in the relationship with Billing Authorities cannot be resolved locally. Where the difficulties might impact on the VOA's overall performance, they should be brought to the attention of CLG and WAG. (5.7)
9. We recommend that the communication plan for the Agency’s change programme is significantly refreshed and enhanced. (6.1)
10. We recommend that the Agency clarifies the scope and desired outcome for the World Class programme. Specifically, it needs to decide whether the programme is intended to be a means of pulling together all projects and business delivery tasks in one place where they can be subject to programme/project management disciplines or is a programme of change projects delivering efficiencies and new ways of working. (6.1)
11. We recommend that the term ‘World Class’ should be replaced with a strap-line which will resonate positively with the Agency's staff and its stakeholders. (6.2)
12. We recommend that the programme-level business case and all project business cases should be quality assured by the Agency’s Finance Directorate to ensure robust investment appraisal. (6.4)
13. We recommend that the Agency needs to: • develop a value for money model linking the Agency’s targets to cost drivers so that the Agency is in a position to have an informed dialogue with its clients about the impact on KPIs/targets of further cost reductions;
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• produce some robust investment propositions to allow for further strategic investment and customer- focussed process re-engineering across Local Taxation and National and Central Services to enable KPI delivery to be maintained; and • develop further office/accommodation restructuring options to reduce accommodation and associated overhead costs by, say, at least 20 per cent by 2013/14. (6.5)
14. We recommend that HMRC commits to exploring with the Agency how appropriate modernisation investment might be secured (or redeployed from the Agency’s current budget following consultation with client departments) over the rest of the current Spending Review period and the next Spending Review. (6.5)
15. We recommend that the client departments commit to exploring with the Agency how its current and future operating budgets might be redeployed into investment to reduce the longer-term costs for those departments. (6.5)
16. We recommend that: • once a new Agency Chief Executive is in place, the Agency and HMRC should consider the appointment of a senior member of HMRC to act as contact and liaison point for the Agency; and • before HMRC corporate polices are imposed on the VOA, they should be considered in the light of the impact they would have within the Agency to ensure an appropriate ‘fit’ to the Agency’s core business and its executive agency status. (7.1)
17. We recommend that: • the Agency's management board should receive regular reports on the Agency’s change programme; and • the balance between business representation and corporate services representation on the Agency's management board should be reviewed and the business representation on Local Taxation strengthened by adding a policy and an operational field director. (7.2)
18. We recommend that the Agency's KPI on containing RV loss to no more that 4.2 per cent over the life of the list should be broadened to monitor RV 'swing', for example to include gain as well as loss. The KPI should also monitor ‘swing' at trade sector and geographic levels where these exceed a certain threshold, and should look ahead, so as to help the management board identify problems in advance. These changes should be introduced for the 2010 list. (7.3)
19. We recommend that the VOA should design an additional assurance test on list integrity based upon statistical sampling techniques and explore with CLG and WAG how such a programme could be applied. (7.3)
20. We recommend that the Chief Executive’s Office should review the guidance relating to the key events impacting on customers. The degree of prescription given to Groups should be carefully framed to deliver a consistent service nationally. Implementation of that guidance should be regularly monitored and Field Directors should hold Groups to account for unwarranted departure from that guidance and/or take responsibility to refer back to the Chief Executive’s Office guidance that is found to be insufficiently clear, unworkable or produces undesirable results. (7.5)
21. We recommend that: • the Agency develops an Operating Model for 2010 and beyond which can cope with a range of funding and business requirement assumptions; • as part of the Operating Model, the Agency should develop a clear staffing requirement by grade/skill set, location and quantity covering all business and corporate support streams; and • the HR Department should develop a supporting HR strategy and manpower and succession plan, showing transition paths from the current staff profile to the new, revisiting career paths and pay and grading structures as necessary. In this, the Agency should place particular importance on developing plans to ensure that all the key specialist and professional posts can be filled in the years ahead. (7.10)
22. We recommend that the new Chief Executive should make it a priority to assess the Agency’s internal and external communications capability and make changes, structural and otherwise, to achieve significant improvement in this area. (7.12)
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Annex A Terms of reference
Research: To identify all relevant stakeholders and invite written observations or responses on the performance of the Agency in relation to: • customer service • efficiency and value for money • quality of delivery • input to the policy process • effectiveness of communications and customer engagement • use of information technology • staff development and motivation • quality and effectiveness of management and leadership To review and analyse such published material about the Agency as may be readily available and which has a bearing on the aspects of its performance identified above To establish the extent to which the recommendations made in the course of the 2005 Review have been acted on and obtain explanations for any actions not having been completed Using all of the above data together with such other information as is required
Prior Options: To assess the extent to which the activities of the VOA continues to support the objectives of its: • sponsoring Department, HM Revenue & Customs , • principal Government customers, in particular Communities & Local Government, and the Welsh Assembly Government, and from April 2009 the Department for Work and Pensions • wider customers If so, whether there are more effective delivery options for those activities. And if an Agency remains the best delivery mechanism, whether HM Revenue & Customs is the most appropriate Departmental sponsor.
Evaluation: To assess the Agency’s track record in achieving • its aims, objectives and priorities (as set out in the 2005 Framework Document and its annual Forward Plans); and • key targets in the years 2005/6-2008/9; • and to identify the causes of any shortfall;
To evaluate whether the Agency’s aims, objectives and priorities remain appropriate given the outcomes sought by clients and other stakeholders, or might be refined or improved; To evaluate whether the Agency’s strategies and investment plans for the future improvement of services are sufficiently robust and in line with the policy Departments' business direction, obligations to Ministers, and achievement of relevant PSAs; To evaluate the adequacy of the arrangements for flows of management information and advice to the parent Department, other major customers, and Ministers To evaluate the adequacy of the arrangements for accountability and governance
Framework: In the light of the evaluation and analysis of prior options, to consider what changes, if any are required to the VOA’s Framework Document and any relevant legislation.
Report: To make a report to the Financial Secretary to the Treasury by 31 May 2009 including any recommendations for change.
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Annex B Contributors
HMRC
Dave Hartnett – Permanent Secretary for Tax Naomi Ferguson – Director, Local Compliance Simon Norris – Local Compliance – Operations & Policy Manager David Richardson – Director, Charity, Assets & Residence Freda Chaloner – Director, Large Business Service Mike Wells – Director, Risk & Intelligence Service Simon Hopkins – Director, Financial Planning & Analysis Ian Hardie – Corporation Tax & VAT – Corporation Tax Products & Large Business Stephen Banyard – Director, Business Customer Unit Melvyn Neate – Director, Internal Audit
VOA
Dawn Johnson – Non-Executive Director Jane Earl – Non-Executive Director A selection of senior managers and members of the management board A selection of staff from all grades and business streams located in offices within the following Groups: Sheffield Group Wessex Group South Wales Group Birmingham Group and London North Group A selection of staff based at the Chief Executive’s office
HMT
Nicole Kett – Head of Tax Administration & Compliance Edward Troup – Director, Business & Indirect Taxes Mark Neale – Managing Director, Budget, Tax & Welfare
OGDs
Lindsay Bell – Communities & Local Government Graham Duncan – Communities & Local Government Hugh Grover – Communities & Local Government Katie Willison – Communities & Local Government Richard Harries – Communities & Local Government Bill Hern – Department for Work & Pensions
Ministers
Rt Hon Stephen Timms MP – Financial Secretary to the Treasury Rt Hon John Healey MP – Minister for Local Government
Unions
National VOA Reps from Public Commercial Services and Prospect (Association of Valuation Office Valuers)
Others
David Powell – Welsh Assembly Government David Fletcher – Welsh Assembly Government Stephen Jones – Local Government Association David Maddison – Local Government Association Norman Foster – The Rent Service
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David Magor – Institute of Revenues Rating and Valuation Charles Partridge – Lambert Smith Hampton Alan Bronte – Director of Valuation L&PS Northern Ireland Blake Penfold – Chair of The Rating Sub-committee, Royal Institution of Chartered Surveyors Tom Dixon – President of Rating Surveyors Association Mark Higgins - President designate at the time now President of Rating Surveyors Association Representatives from GL Hearn Representatives from Lawrence Tattersall Representatives from Gerald Eve Roger Littlewood – Halifax Bank of Scotland plc Tony Masella – Valuation Tribunal Service Douglas Gillespie - Scottish Assessors
Representatives from Cardiff City Council Representatives from Newport City Council Representatives from Kingston upon Hull City Council Representatives from Sheffield City Council Representatives from Southampton City Council
Steering Group Members
Dave Hartnett – HMRC & Chair of Steering Group Mike Wells – HMRC David Richardson – HMRC Nicole Kett – HMT David Fletcher – WAG Graham Duncan – CLG Ilona Blue – DWP Andrew Hudson – VOA David Park – VOA Roger Littlewood – HBOS
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Annex C Representations
Summary of Responses from The Questionnaire for the Review of the Valuation Office 1. Describe your dealings with the Valuation Office Agency (VOA)
We received questionnaires from a wide range of sources including tax payers, agents, rating surveyors and local authorities.
4 2. How do you usually deal with the VOA?
By letter 5 By phone 10 By email/online 12
Other = meetings, fax
3. If you don’t usually use electronic services offered by the VOA, what would encourage you to do so? On the corporate side we do use email. However for confidentiality reasons we also correspond by post.
I prefer to speak to someone who has the knowledge, ability and authority to deal with my queries.
4. How easy are the VOA processes to use?
Very easy Fairly easy Somewhat Very 1 10 difficult 1 difficult
Comments Not aware of specific processes. From a corporate perspective, we often agree the process to agree a valuation. Admin procedures, particularly programming (somewhat difficult) Electronic (Very easy)
5. How satisfied are you with the service provided by the VOA? Comments All these are highly variable on the different Valuation Offices that we deal with.
5.1 Quality of response Very Satisfied Dissatisfied Very satisfied 8 5 dissatisfied
5.2 Timeliness of response Very Satisfied Dissatisfied Very satisfied 1 8 3 dissatisfied
Comments
4 A number of representations were received on the topic of Stamp Duty Land Tax. These were too specific for the review to deal with and they were therefore passed to the Director of Excise and Stamps in HMRC.
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Length of time for emails and phone calls to be responded to.
5.3 Value for money Very Satisfied Dissatisfied Very satisfied 6 4 dissatisfied
Comments From the perspective of the taxpayer, we do not know what they cost, they do not appear very efficient or to have sufficient resources to deal with valuation queries promptly.
6. If you have a query or problem with the VOA’s services, how easy is it for you to resolve? Very easy Fairly easy Somewhat Very 6 difficult 7 difficult
Comments We have a direct contact at senior level who is approachable.
Fairly easy with the exception of programming.
Fairly easy, although dependant upon VO concerned.
7. How customer focussed do you think the VOA is?
Very Quite Not very Not at all customer customer 4 customer 6 focussed 2 focussed focussed focussed on the customer
Comments Yes for it’s paymasters but not necessarily so much for its clients, the rate payer (Quite customer focused). Depends on who you consider to be the customer.
8. Are there any improvements that you would like to see in the VOA? The responses have been summarised and grouped in categories.
Commercial awareness & professionalism of staff.
To ensure it has more professional staff who are qualified valuers and understand the market. The advanced computer modules are only a tool not the valuer which it has come to be for too many staff.
VOs to be more commercial in their dealings and understand the financial impact of their actions or lack of them on ratepayers. Further improvement required in identifying proposals / situations where early action is required.
Employ more commercially aware people.
Caseworker – sometimes appear inexperienced and little understanding of how market works. Can be too easily led by what computer values at or says! Please note this is NOT always the case and many offices have an excellent caseworker teams.
More knowledgeable staff, knowing how the market works, dealing with FOR’s.
Better quality of response on some invalidities – not consistent.
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Better quality front line staff able and authorised to take decisions without interference from higher levels of management.
Improved responsiveness – replies to emails are often long delayed.
Staff dealing with appeals should have a greater in depth knowledge of rating.
There has been a degeneration of professional standards in the valuation of property, because of the cost cutting.
Programming and appeals.
To have better programming resources for dealing with appeals and for VOs to seek postponements when they are responsible for the delay.
Programming by location or reason rather than date proposal received.
Programming – increased consistency between offices and a procedure that is agreed and set up by agents and VO’s. This list it was set up by and for the VO, with perceived little consideration for agents/ consultants.
Liaison between VO and RSA Group Valuation Coordinators in agreeing sensible spread of work over sensible scale.
Automatic relinking of appeals when previous cases settled.
Better programming to reflect properties left in old programmes after the Programming date / VT date passed – these to be reprogrammed.
Major overhaul of programming of Rating negotiations – many Appeals suffer long delays before allocation to a programme, the allocations do not appear to be thought through and there is no consultation with the Ratepayers or their agents.
Timeliness & communications.
A more timely response to enquiries, greater openness and transparency, especially where there are differences in valuation opinions.
A more pragmatic and flexible approach regarding sample sizes and information requests, especially when considering low risk entities.
The VOA targets for answering telephones and dealing with written correspondence are of little value when the majority of calls and correspondence are now made to direct lines and to individuals electronically which are not monitored for customer satisfaction surveys.
Some offices appear to have constant problems with fax lines.
VOA to reflect on its website when they issue Transitional Certificates.
Faster referencing of new buildings and of changes to hereditaments especially when ratepayers will evidently suffer financially due to dilatory inspections.
More frequent on site property inspections to keep assessments up to date-problems arise with backdating of increases due to property changes not being picked up for several years.
Technical & management.
For the VOA to be left to carry out its function professionally and independently without interference.
Considered Valuations – generally withdrawal forms are automatically sent out with no consideration
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of the value. Once reviewed or considered there can be often obvious anomalies to survey or value.
Staff appear to have far too many appeals to deal with at any one time and are unable to give adequate time to consider them.
Full details of the rental evidence/valuation scales for bulk classes adopted to be available on line. The current valuation schemes on line are not detailed enough to be much use.
Non-bulk valuations to be available on line. Now appeals have to be lodged in order to elicit details of the valuations supporting the subject property and comparables.
On line VOA Instructions and valuation practice notes to be kept up to date and applied consistently by local offices.
Less offices and more clarity of structure within the organisation. There are so many people and different places that you often feel like you’re going round in circles trying to contact someone.
The current culture of year on year cost cutting, since becoming an Agency, and denial of its effects by the senior management, have led to a demoralised workforce.
In the present climate it is considered that the bonus payments to all VOA staff should cease immediately.
9. If you have any further comments for the review please let us know. The responses have been summarised and grouped in categories.
Commercial awareness & professionalism of staff.
There appears to be no acknowledgement or recognition of commercial pressures in particular cost to the tax payer, in resolving issues.
Valuers within the SRU tend to be a lot more pragmatic and decision making than their contemparies within local offices.
Increased commercial awareness of how private sector works and how best to integrate both public / private sector targets and considerations.
What the VOA seems to unable to appreciate is that someone has to pay the bill whilst errors are being sorted out and this causes ratepayers budgetary problems.
Many of the VOA staff I deal with do their best to be helpful and carry out their functions properly.
Timeliness & communications.
The VOA has much to commend it with the progress it has made on electronic communication in recent years and the provision of summary valuations on most classes of property. Further investment in electronic communication, eg polling and publication of rental evidence, should result in less appeals, more effective use of resources, and reduced administration costs for all parties. This would then lead to more regular revaluations to reflect market conditions and less unfairness for ratepayers.
Responses received from case workers does vary, this seems dependent on relationship, those I deal with regularly get forms to me very quickly, case workers that I do not really have much contact with sometimes require 3 or 4 requests!
Some VOs sometimes telephone to find out rent reviews, etc on properties, it is more helpful to us if they issue FORs rather than telephone. Some VOs are helpful when we ask for short extensions on the deadlines (Valid reasons) but some are not.
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On a whole most of the staff I have spoken to have been very courteous and helpful.
I have had problems when phoning VO offices with being put through to the section that deals with registration of electronic appeals. I am always asked the location of the property, then put through to the local office, to find I have been put through to the wrong person. Have had instances of being transferred 4 or 5 times before reaching the right person.
Technical & management.
Who do VOA see as their customer? It seems to us, as tax payers, very much to be HMRC. The approach adopted by VOA appears to be weighted to producing beneficial outcomes for HMRC. We as tax payers are asked, and are obliged to provide all supporting documentation. Yet all we see is the valuation from VOA not any of the workings or assumptions that support that valuation.
There seems to be a significant shortage of resources such that often very substantial delays occur. Given the increased workload for VOA this is a concern for us as a tax payer as reaching agreement with HMRC is likely to be delayed leading to greater uncertainty as to our tax position.
The vast majority of the staff are courteous and seek to provide the required service. However the sheer volume of appeals to be dealt with on many programmes is de-motivating for staff who feel they are on a treadmill and results in the system becoming less efficient and effective with the backlogs which arise. Better programming and use of resources required.
Some offices are very helpful and will look up something not in their area (ie outside their group) if I have had problems getting though to the local office.
The impression we receive is that capable senior staff need to be released to deal with volume ‘coal- face’ professional work. Those in SRU teams should be fully available to do a full range of other professional work.
Clerical and referencing staff should not be dealing with work that they do not have the authority to sign off.
It is evident that the VOA has cut back on its inspection of properties and it is my experience that incorrect RVs are resulting from this practice.
The attitude seems to be that it is up to the ratepayer to tell the VO if there is an error rather than effort being put in to getting RVs correct before VONs are issued.
It is evident that staff visit a property for a recent extension and fail to pick up other changes which have taken place some time before.
The 2010 Revaluation should be cancelled because the VOA has insufficient staff of professional and technical experience to maintain the integrity of the new rating list in the climate of the collapsing property values. Also there will be substantial cost savings, if the 2010 revaluation is cancelled.
As a UK taxpayer, it is important that the current certainty of the business rates payment streams based on a settled 2005 Rating List is maintained. There will be unjustified huge cost and tax risks if the 2010 Revaluation is implemented.
General comments for the Framework Review
Confusion of the role of the VO amongst Ratepayers in the media & local community. Relationship building as part of GVO role - engagement with stakeholders & wider community, especially businesses & emerging or established BID's. Expansion of Local Ratepayer Forums to other areas of England & Wales. Enhance links with Billing Authorities, especially to address inconsistencies in relation to exchange of data & general co-operative working relationships at local level. Billing issues - although not strictly the concern of the VOA, the frequent occurence of incorrect or
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erroneous Demand Notices would appear to indicate that the VO could assist in providing greater clarity of data & timeous scheduled amendments to the Rating List. Encourage wider use of the Internet as a medium by which GVO's can reach the wider community, hence providing a more regionalised/localised focus on Revaluation & other Rating & Council Tax issues. Use of interactive presentation methods on structure & operation of the Rating system to aid Ratepayer understanding of processes which may lead to a decrease in the number of abortive appeals. Concern over disharmony between operation of the Rating system between England/Wales & Scotland. This is particularly frustrating for UK-wide ratepayers as the disparity in (for example) valuation schemes & methodology appears to create marked diffrences where non should exist. We are aware of the cross-border programme of harmonisation but see little or no evidence of progress. Perhaps this is an issue which can only be resolved by national legislation? Expansion of VO services to all current & potential public sector clients.
Suggestions for improvement in the Rating system
Introduce voluntary self-assessment of Rating Assessments; national multiple business ratepayers would be particularly receptive to such a change, given the opportunity to achieve a fair & acceptable assessment without recourse to time-consuming & costly appeals. More frequent Revaluations - perhaps once every 3 years as a minimum. This would aleviate swingeing changes in assessments that is experienced between one Revaluation & the next & would enable a closer relationship between the Antecedent Valuation Date & the Effective Date In view of the billing discrepancies described above (in a survey undertaken in 2007, it was found that over 60per cent of Demand Notices issued by Billing Authorities were technically incorrect & legally unenforceable), perhaps the VOA could also become the national collection Agency for Business Rates? Billing Authorities have no incentive to ensure correctness, etc. (& indeed, employ few people to adMinister this system) as they merely collect rates on behalf of central government & receive a proportion which often has little or no bearing on the amount collected. This would assist Ratepayers in clarity & provide a clearer & more accountable process. VOA to provide dedicated resource to extend the current VO Ratepayer Contact scheme & to encourage pre-List discussions prior to every Revaluation.
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REVIEW OF VALUATION OFFICE AGENCY (VOA) FRAMEWORK DOCUMENT 2008/9: SUBMISSION BY PROSPECT AND PCS
INTRODUCTION
This submission is by the two unions representing members in the VOA. The unions are the Association of Valuation Officers Valuers (AVOV) Branch of Prospect and the Public and Commercial Services Union (PCS).
The terms of reference and modalities for this review lead us to believe that this is a comprehensive review more akin to those carried out in 1995 and 2000 and unlike the lighter touch review carried out in 2005. It is because of this we have put together a fuller submission
BACKGROUND
This review comes at busy period in the lifecycle of the VOA. In the process of completing the 2010 Non Domestic Rating Revaluation. Dealing with changes to Council Tax appeal processes. Operating a restructured DV Services model for the first year. Moving ever nearer to centralisation of some processes.
Since the 2005 Review the VOA has made significant progress on a number of fronts Proportionately reducing appeal workloads whilst investing in compiling and maintaining more accurate and comprehensive rating lists. Improved timeliness for both Rating and Council Tax maintenance. A greater focus on a risk based approach to taxation work, plus improving timeliness. We have demonstrated improvements as a key provider of valuation services to the public sector in a competitive marketplace.
Part of this success has been achieved because of the constructive relations that have (generally) existed between VOA management and its two trade unions. Building on these relations will continue to be crucial in the success of the VOA going forward.
This review comes after a period of sustained political pressure on Council Tax and is now joined by political pressures regarding Non Domestic Rating, especially on Empty Property Rates, Ports and potentially the Revaluation itself. These pressures have a demoralising effect on members, and can potentially be debilitating to the way the VOA operates if management do not ensure that decisions are taken for the right reasons for both staff and the public. We are concerned that this Review does not make recommendations on the medium/longer-term future of the VOA with undue influence from short-term political difficulties.
The VOA as an Agency
The VOA brings together a number of different strands of valuation and property related work for a range of different client bodies in the public sector. It also provides significant policy advice in key areas, especially taxation; however the vast majority of its activities are operational in nature. Therefore an Executive Agency seems an appropriate model to enable these activities to be grouped together within one organisation. It is difficult to see hardly any case to change the VOA’s status, and our view is that there does not appear to be any momentum behind a change of status.
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We think this also applies to the funding basis for the VOA. It is difficult to see how any major change (e.g. Trading Fund) would benefit the vast majority of the VOA’s operation; it would cause uncertainty and potential risk to the delivery of key targets and services, not least due to the need to devote resources and time to implementing change.
The VOA is an Agency of HMRC. We recognise that HMRC contributes only a small minority of the VOA’s funding, nonetheless it is hard to see that shifting the VOA to another parent Department would result in any improvements to the services the VOA currently provides. It is our view that if a change were to happen it would inevitably result in the break up of the VOA as an entity and the government would lose the focus of a single dedicated valuation organisation, including synergy for costs and functions, at the same time when this is being enhanced with the transfer of functions from The Rent Service.
This is not to say that communications and lines of responsibility could not be improved between the VOA and its key stakeholders. (Principally DCLG and WAG) It may now be appropriate to review the channels for, and expectations of, communication processes. We believe that HMRC remains the best available parent Department for the VOA; moreover there is clearly a need to look at how this relationship develops over time including areas of autonomy available to the VOA and a clearer understanding of the VOA’s differences where HMRC is developing policy that is intended to apply to the VOA.
There would also be a benefit to government services, including the performance of the VOA, if further progress were made across the various government bodies in relation to sharing of property data. We recognise the sensitivities in this area, but the lack of progress impacts on the efficiency and effectiveness of government activity as well as increasing data collection costs.
Local Taxation
Non Domestic Rating
The key to building on the progress made in recent years is to embed the move towards compiling and maintaining accurate and comprehensive rating lists and to continue to move away from ‘repair’ based activity, mainly appeals. There are a number of elements that we believe would help build such progress:
Bringing together the current, often disparate, activity based focus of appeals, maintenance and revaluation and instead to identify key overall responsibilities and ownership, at different levels, for the different valuation based schemes that make up the rating lists.
Ensuring that the VOA is able to identify and retain sufficient professional surveying capability and expertise, especially in those high profile and specialist areas where the greatest RV is at risk.
Continuing a focus on compliance activity, derived from market intelligence, to ensure comprehensive and credible rating lists.
Achieve closer working of Group and Specialist Units by using cross Group and Unit mechanisms to agree common approaches and share expertise.
To move toward more frequent revaluations to further improve the quality of the list whilst at the same time reducing the focus on appeals.
To look very closely at revaluation timetables, particularly the relationship between valuation dates, the date a list begins and the dates that valuations are required by DCLG. A better fit here would ensure that rating lists are based on the most recent market evidence.
To ensure that moves toward centralising any NDR processes are only taken forward after vigorous testing and where a clear improvement can be demonstrated. It is also unacceptable to our members to create local office wastelands. The only way forward being a balanced and measured approach over time. This would entail careful job design in the Network Support offices as well as improved case- work support in the Local offices.
To look at the administrative and listings side of Valuation Tribunal activity to see if it can be better harmonised with the VOA’s programming policy – when VOA resources are stretched an uncoordinated approach does neither the VOA, Tribunals nor ratepayers any favours in dealing with cases.
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Council Tax
The decision to postpone the Council Tax Revaluation lost a genuine opportunity to reform and improve the basis of the Tax. To further put off such a Revaluation is only storing up trouble for the future and this should be a matter for urgent consideration.
In addition to the trouble ahead the absence of a revaluation compounds the problem of maintaining fair, equitable and readily understandable lists at present. This includes the many alterations (e.g. significant modernisation) to properties since 1993 that have not been reflected in bands, the problem of banding properties where the type of market did not exist in 1993, as well as ongoing difficulties over correcting lists as a result of the various decisions that have been taken over the years.
As for NDR processing work any move to centralising Council tax work can only be on a careful basis and over time and with similar caveats applying.
Even in the absence of a Revaluation, we believe that the VOA must not lose the gains made by developing the Automated Valuation Model and establishing the VO as a world leader in cutting edge valuation technology. Since the postponement, the VOA has made some progress in the wider use of AVM technology beyond Council Tax, and this progress could be taken significantly further and there should be more openness around the AVM capability.
Funding, Resources and Targets
Any improvements on Rating and Council Tax are put at risk by further cuts in the VOA’s funding from DCLG and WAG. We understand that the current climate is difficult but the VOA’s resources cannot continue to be cut indefinitely without serious risk to providing accurate and comprehensive lists. Fundamentally taxpayers and ratepayers want a list that is as fair as possible, and at the same time DCLG and WAG want a comprehensive and stable tax base. This can only be achieved with sufficient investment.
The current basis used by the VOA to resource Local Tax work, is by making arbitrary cuts to a historic staff in post figure. The VOA needs to develop a better model that identifies the capacity needed to do the work required both by the client and more importantly that required of the Valuation Officer by statute. The compilation and maintenance of lists needs to be based upon market intelligence backed up by compliance referencing. This would reduce the "Tax Gap" far more than the current method of funding.
We are also concerned at the proliferation of targets. Very often for Rating and Council Tax a disproportionate concentration on numbers or timeliness could act against wider aims. We believe it is more important to put accurate assessments into valuation lists, whether at revaluation or general list maintenance, even if this costs our time at this stage, rather than having to put things right on appeal, with consequent RV and banding reductions. This is also what most ratepayers and taxpayers seem to want us to do (a stated aim of the CBI) especially with higher profile and higher value properties for Non Domestic Rating. This would therefore lead to target setting based on outcomes (e.g. accuracy, fairness, stability and completeness of lists) and not individual outputs.
DV Services
Substantial restructuring came into effect in April 2008; it may therefore be too early to judge the effects of this on the operation of this part of the VOA. The new structure does provide for a clearer focus of professional surveying resource, especially at higher levels, on valuation work, thus potentially bringing about better client relations and market knowledge.
We welcome the development of a new public sector valuation service, including the Energy Certificate work. This new range of services offered by the VOA can be further developed over time, within the remit for Commercial Services work being clearly codified by the Commissioners for Revenue and Customs Act (CRCA) 2005. Nonetheless there are a number of points that should be considered as part of any review:
Significant anecdotal evidence regarding the new matrix structure suggests there is confusion about the responsibilities between the Resource and Sector sides. It is not clear at this stage if it has helped greater flexibility between Sectors. We consider that this structure should be reviewed urgently.
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We were given to understand at the outset of this matrix structure that the resource side would greatly benefit members working within the sectors. This appears not to have happened at all. Also problems with performance and development of staff, including performance management processes not being operated satisfactorily (picked up in the IIP accreditation report,)
The casework support situation gives members concern in DVS. Those that do the support work feel that their work is under threat as their numbers are diminished, plus the caseworkers that need their support to be fully effective in their roles feel aggrieved, because they feel that their needs to do an efficient job are being ignored.
Need to reconsider if the HMRC and other Statutory Sector work (part of N&CS) is sensibly placed within the matrix management structure. It does not seem to deliver any obvious benefits to these work areas and there is potential confusion between different Directorates operating one matrix system.
We consider that National Tax work should focus on outcomes rather than volumes and that the risk/yield based approach should be developed with the relevant resources being deployed appropriately.
The TRACS time recording system, is an essential tool for DVS work, but now seems to exert a disproportionate effect on the management of DVS work (as well as the matrix management problems) Members across DVS complain about excessive monitoring, so to ensure user acceptance we believe that this also needs to be reviewed.
Overall we believe it is essential for government to have at its disposal, a public sector valuation service, to fulfil an ‘intelligent customer’ role as well as to provide necessary reassurances about the way public money is used. Placing DV Services within the VOA allows the benefit of wider valuation expertise and market data to be realised. The continuance of a commercial services team is vital to support the dwindling resources made available for National Taxation work. Expertise in capital valuations (especially of property exempt from Local Tax such as agricultural property) would diminish if other work was not available to maintain the skills base. The remit for the VOA’s work in this area was firmly established by the CRCA 2005 and we do not believe that this is the time to consider any changes as there is no evidence that such a change is necessary. The benefit of wider valuation expertise will only be fully realised if there is a greater sharing of that expertise in practice. This happens to some extent amongst specialist valuers, but there is not as much rotation between different areas of the VOA elsewhere. The VOA should more actively address this point. This would also go a long way towards ensuring that Commercial Services does not become more remote from the rest of the VOA as there would be a greater perception of an integrated organisation.
Leadership and Staff
Whilst it is not part of the review to specifically look at pay, this is a key factor in staff motivation. Of course pay has been a real problem across the civil service more generally and in that sense the VOA is unlikely to be shielded from wider problems. However, until the particular structural problems with VOA pay are properly dealt with, this will continue to be a cause of grave dissatisfaction and low morale amongst our members in every pay band.
In this context it is worth restating a conclusion reached by the Treasury Select Committee in its recent report on the work of the Chancellor’s Departments – which said:
“Low staff morale is a risk to the quality of service delivery. We note that staff satisfaction in the Valuation Office Agency is worryingly low. We will continue to monitor management’s performance in improving staff morale and safeguarding the delivery of services.”
The VOA must provide a clear picture of the career routes available for all Pay bands. These need to include opportunities to develop technical and surveying skills as well as management potential. The Graduate Valuer scheme and the CEM and IRRV routes all have a part to play to ensure the VOA has access to a wide range of available talent for the future. The VOA needs to improve its succession planning and should begin by identifying the capacity needed. This is equally true for specialist surveyors as it is for managers.
Conclusion
Fundamentally the VOA has been an organisation that delivers. This has been the case throughout a series of changes to the property services it provides, to the organisation and to its funding regime. However this does
44 not mean that things should not change or that there is no more work to be done and no further progress to be achieved.
On the Non Domestic Rating side there is still a huge challenge to build on the move away from an appeal culture with up front investment into a list that is comprehensive and accurate. This may well be placed at risk during the defence of the 2010 list, because of the adverse property conditions surrounding the valuation date of 1 April 2008.
On Council Tax, in the absence of political direction on Revaluation, the VOA needs to ensure that it maintains a responsive service, whilst at the same time maintaining confidence in a list (albeit 16 years old) as robust and consistent as possible.
On DV Services there is a need to develop a wider range of services for the public sector, based on the fundamental advantages of being a trusted public sector provider.
On Centralisation the VO needs to move forward with great caution as the right balance is a difficult place to find.
Crucial to all of this is funding and investment. This includes maintaining capacity, and recognising the risks from the defence of the 2010 list and the dangers to the credibility of the VOA and Rating, as a property tax, if this is not successfully achieved. It also includes an acknowledgement of tax risks being taken with any further cuts to HMRC funding. There is a need to build upon the progress towards greater predictability of medium term funding levels as this is crucial to planning and investment proposals.
We have made a number of suggestions in this submission for things that should be considered as part of the Review. We believe that implementing some or all of them would not only improve the experience of life in the VOA for our members, but also help the organisation to achieve and provide a better and more responsive service that the public rightly expects.
Jerry Bromfield Gwenda Binks Secretary Valuation Secretary AVOV Branch PCS Prospect
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27 February 2009
Dear Karen
2009 Valuation Office Agency Review
The British Property Federation is the voice of property in the UK, representing businesses owning, managing and investing in property. This includes a broad range of businesses comprising commercial property developers and owners, financial institutions including pension funds, corporate landlords, local private landlords and those professions that support the industry, including law firms, surveyors and consultants.
We welcome the opportunity to provide input to the framework review of the Valuation Office Agency and set out below the comments we have received from members in response to this review.
Customer service
There is a need for the VOA to be professional and responsive so that where valuations need to be agreed, they can be processed promptly. In the past the VOA has not always responded within a reasonable time and there have sometimes been excessive delays in agreeing values, resulting in significant inconvenience to both taxpayers and tax inspectors.
There is a wider issue with the referral of valuations to the VOA. As a general matter, relatively few valuations should need to be referred because: (i) there is an onus on the taxpayer to use appropriate values in self- assessment tax returns; and (ii) professionally produced external valuations are often available to be used for tax purposes, which should not have to be referred to the VOA.
We understand that it was previously the practice of HMRC to refer the valuation of any asset of significant value to the VOA, but that HMRC guidance on this point has changed and now valuations prepared by external valuers should not generally need to be referred to the VOA by tax inspectors. We understand that it is appreciated by those in the property industry who use external valuers for tax valuations that tax inspectors generally follow this guidance.
Efficiency and value for money
SDLT returns
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There are a number of questions on SDLT returns which have little or no bearing on the assessment or collection of the tax, but are part of a data collection exercise on the part of the VOA. These questions are time consuming to complete for taxpayers and their advisors, are far more wide ranging than was the case prior to 2003 when Particulars Delivered forms were required and frequently duplicate information that could be obtained from HM Land Registry – there is also therefore a duplication of the information provided by taxpayers: once on Land Registry forms and once on SDLT returns.
On the assumption that this data is essential to the work of the VAO, is it really necessary to obtain it directly from taxpayers within a tax return (with the consequent liability that entails) when: (i) in many situations the VOA could obtain it from HM Land Registry; and (ii) the VOA has power to require owners and occupiers to provide them with information relevant to rating by way of a Form of Return?
The same point applies to the requirement to provide a detailed schedule of leases on transactions in superior interests (for example the sale of a freehold building subject to multiple occupational leases). The data on the leases will, in many situations, have already been notified on the grant of the lease. It should not be necessary – and it is a real burden in compliance and cost terms – to collect the data for a second time simply because an unrelated SDLT transaction has occurred.
Effectiveness of communications and customer engagement
Valuation of goodwill
The Royal Institute of Chartered Surveyors has recently published two letters that it has sent to the VAO regarding the practice note on the valuation of goodwill on the sale of a business as a going concern.
We understand there is widespread concern that the VOA went ahead and published its practice note before the consultation on it had been concluded and that its view is so different from that of the RICS (as well as many businesses and their advisers) on how such valuations would be carried out under existing market practice.
The level of communication between the VOA and stakeholders has in the past been very good and we are therefore disappointed that on this occasion the practice note was published without appropriate consultation.
National Ratepayers Forum
We should note, for completeness, that the National Ratepayers Forum has proved to be an excellent means of disseminating information to the ratepaying community and their advisors and demonstrates a very welcome attitude that the VOA seems to have regarding external communications.
If you would like any further information on the points I have set out above, please feel free to get in touch with me. We would welcome the opportunity to support any HMRC or VOA initiative to address any of the matters discussed in this letter.
Yours sincerely
Peter Cosmetatos Director - Finance & Investment British Property Federation
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20 March 2009
Dear Ms Walker,
Valuation Office Agency Framework review
Comments by the Royal Institution of Chartered Surveyors
We welcome this opportunity to comment and assist with this quinquennial Framework review of the Valuation Office Agency (VOA). We are happy for our comments to be made public. Our comments refer to the work of the VOA in England and Wales only.
Introduction
The Royal Institution of Chartered Surveyors (RICS) is regulated by its Royal Charter with the objective of promoting the public good. This requires RICS to comment independently on matters relevant to its profession. The RICS numbers over 140,000 members who work in both the public and private sector and cover all aspects of land, property and construction. Over 1,000 (see Section 1) of our members work in the Valuation Office Agency.
General Comments
From the taxpayers’ viewpoint, the service provided by the VOA is generally a professional and effective one. Over recent years the VOA has made considerable progress in improving the accessibility of the rating system to taxpayers. In particular the VOA has made effective use of electronic communication with stakeholders. All this has been achieved against the background of required annual efficiency improvements. However, we are concerned that seeking further annual cost savings may now be impinging upon the quality of service provided by the VOA. We comment further on this below.
Specific Questions
We respond below to the specific questions attached to the Framework review document.
1. Describe your dealings with the Valuation Office Agency (VOA)
RICS members have a substantial number of dealings with the VOA, particularly in relation to detailed and technical valuation matters. Members advise their taxpayer clients or employers on property valuations for all tax purposes, Inheritance Tax, Capital Gains Tax and Rating and in future they will be increasingly advising on SDLT (particularly in respect of commercial leases) and rental valuations under Schedule 15 Finance Act 2004. Whilst the proposed Council Tax revaluation has been cancelled, the maintenance of CT valuation lists continues to give rise to challenges to valuations. Members also advise clients on valuations for Compulsory Purchase and Compensation. In the majority of cases the advice to clients is followed by negotiations with the VOA. Two members of the Lands Tribunal (which hears all valuation disputes between the State and the public) are members of the RICS. More than 1,000 (See introduction) RICS members are directly employed by VOA.
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2. How do you usually deal with the VOA?
RICS members deal with the VOA using all forms of communication - post, telephone, email and online and meet frequently in person with VOA representatives. Electronic communication has increased substantially since the last Framework review and its use has offered saving both the VOA and to taxpayers and their advisers. We set out below some detailed comments specifically relating to electronic communication.
3. If you don’t usually use electronic services offered by the VOA, what would encourage you to do so?
RICS members make extensive use of the electronic services provided by the VOA. We would like to see further progress to "polling" of information to exchange information directly between servers, rather than the present "parsing" system of exchanging information. Please see our detailed comments below on electronic communication.
4. How easy are the VOA processes to use?
The VOA's processes are very easy to use but have been designed with the unrepresented ratepayer in mind. However, the vast majority of appeals are made by agents on behalf of ratepayers and some of the VOA's processes do not reflect this. Our detailed comments below expand upon this point.
5. How satisfied are you with the service provided by the VOA?
5.1 Quality of response
Whilst in the substantial majority of cases we are satisfied with the quality of response, we are concerned that the need to make year-on-year savings in operational costs has lead to a loss of experienced professional staff. In some cases this has resulted in matters being handled by staff without the necessary experience to deal with the matter concerned. This, in turn, has resulted in situations where "process" has been put before "outcome". This can lead to a slavish adherence to system generated processes rather than a proper understanding of the issues - the "computer says no" response.
One of the consequences of this has been a perceived loss of independence of VOA professional staff. Where the system generated valuation is presented as being inevitably correct, sometimes in the face of clear evidence to the contrary, it can lead to the view that the VOA views its role as one of "defence of the rating list" rather than one of establishing the correct outcome. The use of the expression itself reinforces this perception. This may be a reason for the tension that we sense between Chief Executive’s Office and VOA staff in local offices, which manifested itself most noticeably in industrial action last year. We believe that CEO needs to work harder to engage directly with local offices rather than through printed or electronic communications. There are many examples of instructions issued in written form by CEO which are simply ignored at local level. Whilst we recognise and applaud the quantitative and qualitative enhancements to the VOA’s website, including improved search facilities and availability of summary valuations, we are concerned that the same cannot be said for its own internal systems, which are used to manage the rating system and rating appeals process. We are aware of instances whereby proper effect could not be given to alterations to the Rating List because the VOA’s computer was not programmed to permit them. In other cases, complex VOA procedures had to be put in place in order to allow for alterations to occur and to permit billing authorities to interpret their effect properly. In particular, we have in mind what the VOA refers to as ‘Minor Rating List alterations’ and ‘Historics’. These complex procedures were not always followed accurately, which led to billing inaccuracies. In turn, this has led to a new industry of rating audit companies who charge ratepayers to correct such errors, which would suggest would never have arisen had adequate resource been afforded to the VOA’s IT systems.
5.2 Timeliness of response
The VOA generally adheres satisfactorily to published and established timescales. Acknowledgement of correspondence is usually very prompt but it can then be a long time before the substantive matter is
49 addressed. There are still too many instances of delay in responding to proposals made by ratepayers to split or reorganise assessments following changes to the extent of accommodation they occupy. This leads to unfairness since billing authorities are obliged to require payment based upon assessments that no longer correspond with the facts on the ground.
We do, however, have two other important points with would make in regard to this matter. Firstly, we are concerned that VOA staff resources have been diverted recently to work on the 2010 revaluation. This has been to the detriment of timeliness in dealing with 2005 rating list matters. The second difficulty arises as a result of the VOA’s QA procedures. These are carried out after an agreement has been reached. This has led to situations where "agreed" valuations have fallen foul of the VOA’s QA procedures. Unfortunately it was not made clear to the Agent that the “agreement” was on the “basis that it was subject to QA”. This causes considerable embarrassment to the Agent who has to explain to his client that the VO has withdrawn from a settlement he understood was final. This creates a very unhelpful situation which, at worst, can lead to unnecessary VT hearings. QA audit is an important part of the VOA procedure, however it is most important that a VO valuer entering into an agreement which he has reason to believe might fail the QA checks, warns the Agent of this possibility; making it clear that agreement is dependent upon QA approval. We have experienced delay in rating list being altered following directions being issued by VT’s or a Consent Order issued by the Lands Tribunal.
5.3 Value for money
The VOA has made year on year cost savings which have resulted in major "value for money" improvements in the service. We are however very concerned that these savings are being achieved by shedding experienced professional staff. We identified this difficulty in our response at 5.1 above.
6. If you have a query or problem with the VOA’s services, how easy is it for you to resolve?
Generally a reference to the relevant Customer Services Manager will produce a full and detailed response to any query or problem.
The exception to this has been in respect of the problems that have arisen with the "programming" of appeals in the 2005 Rating List. The application of appeals programming to the 2005 lists has been target driven by the VOA. The role of the VOA as a party to appeals, but also as the body responsible (at first instance at least) for deciding when appeals are to be dealt with, has resulted in inequity to taxpayers and, in some cases, to accusations of manipulation of the system by the VOA. Queries and problems with the "programming" of appeals in the 2005 rating list have proven very difficult to resolve.
7. How customer focussed do you think the VOA is?
The VOA has made considerable efforts over the last few years to focus upon its customers and has very largely succeeded.
The VOA and Ministers make much of their need to communicate with their customers, however in the rating field it must be remembered that approximately 98per cent of all appeals by value and 92per cent by number are lodged by agents (many of whom are Chartered Surveyors) on behalf of their clients. It follows that whilst the non-domestic ratepayer might be said to be the ultimate customer for the VOA, in reality this means that it is with the agents or their professional bodies that the VOA must work if the rating system is to be adMinistered successfully.
The VOA makes a serious and consistent effort to liaise with agents through the Professional Bodies Liaison Group (PBLG), which it chairs, and which meets on average between 2 and 3 times a year between revaluations and more frequently in a revaluation year. The professions are represented by rating practitioners who are members of the three professional bodies comprising the RICS, RSA, and IRRV (the "PB's"). Full and frank discussions take place regarding matters of general professional concern, including unexpected valuation or administrative difficulties, such as those created by the outbreak of “Foot and Mouth”; ideas for improving the efficiency of the rating system; and changes both proposed and implemented in the operation of the VOA.
The VOA makes a conspicuous effort to involve the non-domestic ratepayer through the National Rating Forum (NRF), which meets slightly less frequently than the PBLG but not less than twice a year. The views of
50 businesses large and small are represented by the CBI, IoD, NFSB, and FSBA as well as by a large number of business and trade associations from banking to the motor trade. The CLG, WAG, VTS, VTS Wales and the LGA as well as representatives, as may be required, from a number of other Government Departments attend these meetings. The PB's also send representatives.
Whilst the PBLG and the NRF both discuss broadly the same subjects, not surprisingly the nature of the discussions at the PBLG tend to be of a technical nature whilst those at the NRF are more general. It has been suggested that it would be more appropriate for the CLG/WAG to host meetings off the NRF, however it is clear that the VOA is better placed being at the hub of rating in England and Wales and is more closely connected because of the appeal system to ratepayers associations than are the CLG or WAG, and fulfils this role admirably.
The VOA responds quickly either during a meeting or subsequently to concerns raised and a summary of the proceedings is published on The VOA website.
The VOA has experimented with Local Ratepayers Forums (LRF). These have been established in the North East of England, North Wales and in the South West. It was intended that these forums should duplicate as far as possible the discussions conducted at the NRF. Interestingly these forums included, unlike the NRF, actual ratepayers. It is not surprising that attendance at these meetings has been intermittent. This we would suggest is due to the fact that rating normally only appears as a major concern on a ratepayers business radar either at or in the lead up to a general revaluation or when a local or national event, for example the Foot and Mouth outbreak, or the opening of a major new retail outlet becomes a matter of immediate concern.
The VOA has made very considerable headway in de-mystifying the rating process. The information which is now publicly available via its website which explains, in most cases, the build up of individual valuations and the valuation scheme developed by the Agency when preparing individual valuations. The Agency has made it clear that when it published valuations for the 2010 lists and it is unable to display the valuation on its website, either due to the size or complexity of a valuation or because the information on which is based is confidential, that it will provide the ratepayer or his authorised agent full details of the valuation and its approach. The Agency also publishes its rating manual and any interested ratepayer or his agent can read the guidance provided by the Agency to its staff and using the data available on the VOA website follow the whole valuation process.
Whilst it could be argued that the VOA should make a greater effort to communicate with ratepayers on the ground, it is difficult to see how they can do so more effectively bearing in mind the very high percentage of appeals which are handled by agents. We would not wish to discourage the VOA from its efforts to de-mystify the rating system and believe that it should respond either in correspondence or in open forums to matters of local (or indeed) national concern, we have doubts as to whether the Agency is obtaining value for money in its attempts to establish LRF's.
Agents make considerable efforts to ensure that the rate paying public and their clients are fully informed as to how the rating system works as well as explaining the opportunities available to the ratepayer to check reduce or mitigate his rate liability. It is likely that communication between the ratepayer and his agent is far closer and more effective than that between the VOA and the ratepayer. If the VOA wished to overtake the agents in this regard, it would need a considerable increase in its financial and manpower resources. Indeed it is arguable that this expenditure would to a considerable extent be abortive since the VOA has confidence in its own valuations whilst the ratepayer has to rely on his agent to confirm or otherwise the veracity of the VOA’s valuation.
If there is a failure in the VOA's customer focus, it is because taxpayers will be concerned with rate liability issues rather than just valuation ones. The VOA is, perhaps understandably, reluctant to comment on or involve itself in liability matters. An example of this is the importance of "certification" of Rateable Values and its effect on rate liability. The VOA does not maintain a full and searchable register of certified values and its representatives are reluctant to comment on the effect of certification on rate liability, yet it is liability that will be the main concern of taxpayers and their representatives. A training programme to give the caseworkers an adequate understanding of the complicated transition system is needed to ensure that they know the tax liability consequences of their actions. At the present time VOA staff do not advise ratepayers as to the effect of transition on their liability but if the VOA is to succeed in its aim of reducing the number of appeals by agents it will have to be prepared to discuss directly with ratepayers the effect of transition on their liability. This is especially important given the planned introduction of a further small business rate relief scheme in April 2010.
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The VOA can improve its customer focus in this respect. However, the ultimate responsibility for creating an efficient and "joined up" system rests with Government and it is this area that is principally deficient at present.
8. Are there any improvements that you would like to see in the VOA?
In addition to the comments made elsewhere in this response, we put forward the following further suggestions:
We are concerned that there may be a lack of clarity in the understanding by VOA staff of the different roles of the statutory Valuation Officer and the role of an expert witness giving evidence to a judicial or quasi-judicial body. This has been brought into particular focus by the recent publication of a new RICS Practice Statement and Guidance Note for "Surveyors acting as expert witnesses". We suggest that further guidance and training for VOA staff that are likely to appear as expert witnesses would be beneficial.
We support the concept of "prior agreement" of assessments for the 2010 revaluation. Experience suggests that if this is to be achieved successfully, then the VOA system of "targets" and "credits" may need to be adjusted to allow for this.
9. If you have any further comments for the review please let us know.
We have no further comments but, as the main professional body representing property valuers, we would welcome the opportunity for a meeting to discuss any aspects of the review in respect of which we may be able to make a helpful contribution.
Nadia Nath-Varma Senior Policy Advisor Public Affairs Department Royal Institution of Chartered Surveyors 12 Great George Street Parliament Square London SW1 3AD
(T) 020 7695 1720 (F) 020 7334 3846 (E) [email protected]
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Appendix regarding use of information technology from RICS
The VOA has made very commendable efforts to make use of the opportunities provided by advances in IT to achieve a number of significant goals.
It has published electronically details of most current valuations (See above) It has published full details of the scheme of valuation used to support its valuations (See above) It has published electronically its Rating Valuation Manual, enabling the ratepayer to understand the valuation process as it relates to his property (See above). It has published its code of measurement practice It has created the facility for ratepayers of their agents to lodge an appeal electronically through its website (See below). It has worked with the 3PBs to develop the ability for larger rating practices to facilitate communication between the agent’s server and the VOA’s server. (See below) It has worked with the 3PBS and the VTS to extend this facility to include the full service provided by the VTS, bringing the whole appeal procedure into the 21st century, reducing costs and increasing efficiency. (See below).
Whilst the rating is a taxation system which has been in existence for over 400 years, and the law and practice supporting it has evolved almost continuously since that time, the administration of the tax had changed very little; only progressing from quill pen and parchment, via, pen and paper to typewriters and word processors. The system was inefficient, slow, subject to human error, expensive and as it used vast quantities of paper unacceptable in today’s green world. Put simply it was no longer “fit for purpose”.
VOA saw the need, as the 2005 Rating Revaluation approached to develop “e” communication in the arena of rating appeals and introduced a facility for ratepayers or their agents to lodge proposals electronically. Whilst this facility was ideal for ratepayers or agents making a small number of appeals, it did not satisfy the requirements of major rating practices where there was an essential need to link the proposal process and the consequential appeal documents to the data in their own servers. It rapidly became clear that unless a solution could be found to overcome this difficulty, major agents would continue to make proposals manually negating the advantages to the Agency of electronic data transfer.
This short coming in the VOA’s electronic plans became apparent in the lead up to the 2005 revaluation, and the Agency together with Cap Gemini, its software consultants, worked hard with the 3PBs, and their consultants to engineer a solution.
Changing the method of communication from paper to electronic medium brought immediate savings in staff, postage, paper, and storage space; however the biggest improvement has been in operational efficiency. Any manual process is subject to human input error. This is particularly true where the work is repetitive. A fully electronic system only requires staff in the VOA to check a proposal (appeal) on receipt for validity or to correctly identify the hereditament where it appears to the VOA computer system that the submitted proposal is unclear. The use of agreed protocols has automatically reduced the number of proposals (appeals), received by the VOA, which are unclear and need manual investigation to enable the VOA to properly process the document. It has at the same time significantly reduced the time spent in trying to resolve incorrectly entered data. The elimination of input errors has significantly reduced the requirement to check data or to rectify mistakes.
Agents have to monitor every proposal to ensure that the VO has received it, and all further communications have to be logged, entering programme dates, the date of the Valuation Tribunal etc. This is expensive in staff time, prone to input error and requires the storage of all documents issued by the VOA. The introduction of electronic communication has automated and vastly enhanced this process. Whilst it is difficult to be precise, the savings and efficiency gains in an agent’s office should broadly replicate those in the VOA. (See below)
Whist electronic communication between the VOA and agents became operational on 1st April 2005; communication between the agent and the Valuation Tribunal Service (VTS) continued to be on paper. The Service is a far smaller organisation than the Agency and for awhile a lack of resources prevented the development of further electronic communication. The VOA has provided assistance and advice from its own experience to help overcome these difficulties and from November 2008 the system has been full integrated. All proposals severed electronically on the VOA from that date have been dealt with electronically by the VTS.
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The electronic world continues to evolve and both the VOA and VTS are working closely with the 3PBs to enhance the system. The speed with which enhancements can be introduced is understandably controlled by financial constraints in both the public and private sectors. There are plans to enhance the systems operational efficiency, and to make it compliant with the both the PISCES and UPRN protocols.
When the PB's, the VOA and VTS embarked upon the introduction of electronic communication they anticipated major financial savings. These have been achieved; estimated cash savings throughout the profession are in excess of £15 million per annum, however these pale into insignificance when compared not only with the consequential improvements in operational efficiency but more importantly with opportunities to add value to the advice and service provided to clients from the increased accuracy of a computer data base automatically populated with the latest information through the electronic communication process.
The electronic rating project is a prime example of what can be achieved when government Departments and professional organisations such as the 3PB's work together. Good will, first class communication and a joint desire to drive through significant improvements in the system has delivered momentous improvements.
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The Rating Surveyors’ Association T M Dixon RD BSc FRICS IRRV (Founded 1909) President The Rating Surveyors’ Association c/o Sanderson Weatherall Elsley Court 20-22 Great Titchfield Street London W1W 8BE [email protected] Tel: 020 7851 2103
19th March 2009
Dear Sirs
FRAMEWORK REVIEW OF THE VALUATION OFFICE AGENCY RESPONSE BY THE RATING SURVEYORS’ ASSOCIATION
The Association is a professional organisation representing the interests of experienced chartered surveyors who specialise in the field of business rates. This Association was founded in 1909 and has over 400 members drawn from private practice, and other corporate bodies such as the Valuation Office Agency, and Local Authorities.
Our primary function is to work with the various bodies responsible for the rating system – The Department for Communities and Local Government, The Valuation Office Agency, Local Authorities and The Valuation Tribunal Service, with a view to improving the business rates system to the benefit of those employed in this sector. We actively pursue this objective, keeping our members up to date on relevant issues, encourage their participation on all aspects of our work, and organise social events to bond people of like minds.
General Observations Whilst this response seeks to identify areas where the Agency’s service may be improved our Association considers that as a generality the Valuation Office Agency provides a professional, effective and customer aware service in its present form. Accordingly we would not wish to see any radical changes in its mode of operations. We comment in detail as follows:-
Staffing Whilst the Agency is the largest single employer of chartered surveyors in the country, it is relying increasingly on non-chartered surveyor staff to deal with valuation matters. This can cause difficulties particularly with staff of limited experience. However we are aware that the Agency has invested very considerably in vocational training programmes developed in conjunction with the Institute of Revenues Rating and Valuation and we believe that when fully developed these will provide an excellent avenue for competent professional qualification. In the meantime there may be a need for greater supervision of less experienced or less qualified staff dealing with Valuation matters.
We perceive that there is a general shortage of staff dealing with rating appeals and this can at times frustrate the settlement process. In particular the use of part time staff in specialist roles can generate significant delay and frustration. It is also often difficult to trace which member of staff in which office is dealing with a particular appeal, and there is currently no point of contact to resolve this problem.
Programming This has been an unsatisfactory aspect of the 2005 Rating List and new criteria are already being investigated for the 2010 Rating List. In particular there has been a noticeable reduction in the programming and Tribunal listing of rating appeals while the Agency concentrates on the 2010 revaluation. This is not in the interest of ratepayers who wish to see early resolution of their appeals, especially in recessionary times. We believe that greater involvement in the process by the Valuation Tribunal Service is a way forward, but mutually acceptable
55 protocols have yet to be established. Priority should be given to this matter so that the revised process can be in place in good time for the revaluation next year.
Lodging of Appeals Whilst the electronic processes recently introduced have worked commendably well, there is considerable frustration at the number of proposals unreasonably treated as invalid. The acceptance process requires higher level professional scrutiny, and cannot be dealt with satisfactorily at junior clerical level. We also consider that the requirement to provide the current rent for a property as part of a valid appeal process is of little practical assistance and gives rise to considerable administrative frustration and excessive cost.
VOA’s IT System Whilst we recognise and applaud the quantitative and qualitative enhancements to the VOA’s website, including improved search facilities and availability of summary valuations, we are concerned that the same cannot be said for its own internal systems, which are used to manage the rating system and rating appeals process. We are aware of instances whereby proper effect could not be given to alterations to the Rating List because the VOA’s computer was not programmed to permit them. In other cases, complex VOA procedures had to be put in place in order to allow for alterations to occur and to permit billing authorities to interpret their effect properly. In particular, we have in mind what the VOA refers to as ‘Minor Rating List alterations’ and ‘Historics’. These complex procedures were not always followed accurately, which led to billing inaccuracies. In turn, this has led to a new industry of rating audit companies who charge ratepayers to correct such errors, which we would suggest should never have arisen had adequate resource been afforded to the VOA’s IT systems.
Forms of Return It is essential for the Valuation Office Agency to receive detailed rental information to enable it to carry out its statutory duties satisfactorily. However we believe the enforcement of the 56 day period by daily fines is inappropriate, particularly in a system which is far from perfect in administrative terms. We believe most strongly that fines should only be imposed where there is a clear wilful refusal to provide the information requested, in accordance with the undertakings given to the professional bodies when the civil penalty was introduced.
Structure We believe the independence of the Valuation Office Agency, both actual and perceived, is essential to its continued success, and on balance we believe that the present structure of its relationships with the Treasury and the Department for Communities and Local Government provide adequate checks and balances for this. However we are concerned that the increasing use of key performance indicators can pressurise staff into producing results which may be incompatible with proper objectivity and independence in their work. This may be a reason for the tension that we sense between Chief Executive’s Office and VOA staff in local offices, which became most noticeably manifest in industrial action. We believe that CEO needs to work harder to engage directly with local offices rather than through printed or electronic communications. There are many examples of instructions issued in written form by CEO which are simply ignored at local level.
Impact of Valuation Office Actions Whilst we sympathise with the Agency’s reluctance to become involved in issues of liability and collection, the current complexity of the rating system demands that valuation officers should be aware of the financial implications on taxpayers of the actions they are taking. As the recent unacceptable developments in relation to port hereditaments have clearly indicated, a failure to do so can have catastrophic financial results on businesses, for which the Agency must bear some responsibility. Failure to address this issue will inevitably result in the Agency coming into disrepute, and may call into question the validity of business rates as a tax.
We will be happy to expand on any of these observations if this would be of assistance.
Signed
Tom Dixon President
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Annex D Implementation of recommendations from the 2005 Framework Review
Performance
No Ref Recommendation
1 8.67 Provided HMRC is able to put sufficiently robust contingency arrangements in place at the time of the next Spending Review (SR), that the VOA should be given a two/three year indicative budget for HMRC’s calls on VOA’s services covering the SR period the VOA continue to approach its other major clients and establish the appropriate levels of funding for the SR period and the VOA should be allowed limited end-year flexibility within, but not beyond, each SR period.
Action
The Valuation Office Agency’s (VOA’s) Service Level Agreement (SLA) with HMRC for provision of valuation advice and assistance in connection with the capital taxes provides for a line of sight on future funding, allowing planning of resource and effort. Indicative funding levels for the CSR07 period have also been provided by the VOA’s other major clients, again enhancing its ability to plan ahead.
End year flexibility arrangements for capital have been agreed with HMRC, who provide all funding for this purpose (costs of capital then being recovered through charges to individual clients). The availability of such funding falls to be considered within the context of HMRC’s access to wider end year flexibility, which is subject to normal HMT scrutiny on the basis of need and realism, having regard also to the wider fiscal position.
No Ref Recommendation
2 4.47 That the VOA should seek to benchmark its performance against other service providers, both domestically and internationally;
Action
The VOA commissioned research from the International Property Tax Institute (IPTI) to find appropriate valuation agencies with which to benchmark its main activities and to invite those bodies to provide data - where appropriate on a confidential basis - so that comparisons could be made. This survey and benchmarking work was carried out by IPTI in three phases during 2005, 2006 and 2007. IPTI obtained data inter alia from valuation agencies in the USA, Canada, Australia, New Zealand, Hong Kong, and South Africa. In addition, some benchmarking work was undertaken by the Internal Audit Office in respect of countries within the British Isles. The results of these benchmarking exercises informed consideration both of the formulation of targets for the Agency and the design and implementation of the VOA’s world-class programme. The information supplied by these organisations was on the basis that it was confidential and would not be made public. This explains why the reports prepared by IPTI and IAO have not been published.
The VOA maintains contact with overseas valuation agencies to keep up to date with the latest developments in customer service and the use of technology, and to help improve value for money, and will continue to encourage sharing of benchmarking data to inform its own targeting.
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No Ref Recommendation
3 4.46 That the whole of the VOA, but DV Services in particular, should make continued efforts to improve the timeliness with which services are delivered to VOA customers by increasing efficiencies and streamlining work-flows and processes wherever possible;
Action
Significant improvements in timeliness have been made across the VOA’s main work streams as a result of reviewing systems and processes and reflecting customer needs. This work is ongoing, with a particular focus on an “end to end” view from a customer perspective. 1. Local taxation work:
Overall timeliness has improved progressively since 2004/5 as a result of a series of measures. These include:
• “end to end” process reviews for list maintenance work, with streamlining and identification and adoption of best practice • a strong focus on “"right first time"” valuations coupled with improved information and guidance for council tax payers and ratepayers – this includes the issue of individual “summary valuations” following the 2005 Revaluation, which has been reflected in a reduced number of formal appeals.
The following figures summarise the position:
KPI/Agency 2004/05 2008/9
List Maintenance Target Target
To clear 95% of reports within 3 months (90 To clear Rating reports within an average of days) & 95% of reports for new domestic 12 working days, properties within 2 months of receipt Council tax reports within an average of 14 working days for England and 12 working days for Wales
Results Result
96% - Rating reports (24.9*) 10 days - Rating reports 98% - All Council Tax reports (26.3**) 11 days - Council tax reports England 95% - Council tax - new properties 11 days - Council tax reports Wales
*Estimated equivalent in average working days – for comparison purposes ** Estimated equivalent – all Council tax reports
Appeals Target Target To provide a considered view within 2 To provide a considered view within 2 months of receipt for all council tax proposals months of receipt for 98% all proposals (appeals) (appeals)
Results Result
60% 95% - Rating
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93% - Council Tax
Between 2000 and 2005 rating lists the average time to clear a rating appeal (i.e. the period from date of receipt to date of rating list update) has also improved significantly:
2004/05 2008/9
(2000 Rating List appeals) (2005 Rating list appeals) Average working days Average working days
440 229
2. HMRC work
Significant improvements in timeliness have been made in relation both to capital gains tax (CGT) work and inheritance tax (IHT) work, again by process reviews – a particular contributor to the gains in timeliness for IHT work has been the continuing development of the Initial Appraisal Unit (IAU) in Nottingham, which will continue to drive down elapsed times and support achievement of this key World Class target see also 7.21 (9) Experience gained is being applied more widely, with some non-IHT valuation work being registered at the IAU. And since November 2008 all HMRC work has been directed to specialist teams, building on the organisational changes implemented from April 2008 when the former District Valuer Services business stream was split. In addition, greater use of electronic data and file sharing through the Agency’s digitisation of hardcopy records and the implementation of shared workspace with HMRC offices will enable greater efficiencies in the initial appraising of CGT work.
2004/05 2008/9 Days IHT Initial 10 days** Target 8 Appraisal KPI Result 6.5 IHT Formal 78 days** Target 80 [2007/8 onwards- Result 78 elapsed time]
CGT Initial Not measured Target 11 Appraisal KPI Result 9.3 CGT not 25 days** Target 20 negotiated Result 21 CGT 99 days** Target 100 negotiated Result 110
** Approximate figures for 2004/05. The target in 2004/05 was to report 40% in 10 days & 90% in 20 days
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No Ref Recommendation
4 4.48 That the VOA should build on the initiatives it has taken to improve consultation with customers and stakeholders, such as the National Ratepayers' Valuation Forum (NRVF) and the local fora;
Action
Following the 2005 rating Revaluation, a review of the forums established showed that they were highly valued by members and by the Agency itself. The NRVF continues, now renamed the National Ratepayers Forum (NRF) to reflect its wider scope, encompassing other aspects of the rating system in addition to valuation matters. New terms of reference have been agreed and the membership refreshed – the NRF meets at least twice a year, with strong support from its (now) 40 members.
A Ratepayer Forum for Wales has been developed to perform a similar role to the NRF for the 2010 revaluation and beyond. The Forum has attracted support from a number of business groups in addition to the Welsh Assembly Government, LGA in Wales, the Welsh Local Government Association, and the Valuation Tribunal Service in Wales. It met for the first time in January 2009 and succeeds the local forums that operated in North Wales.
The post implementation review of the 2005 rating Revaluation concluded that there should be no further expansion of Local Ratepayer Forums (LRFs), in part because the regional networks of NRF members could best be used to promote awareness of current issues and awareness of rating and valuation matters. However the LRFs continue to operate in England in the North East and South West Groups. In the North East, the two local groups agreed to form a single forum operating from Durham, which meets every six months. In the South West Group, the separate Taunton and Plymouth groups resumed their meetings in June 2008 ahead of the 2010 revaluation. The potential role of LRFs will be kept under review.
All new communications products are now informed by customer insight and, where appropriate, tested with staff and customers before they are formally introduced. Currently, the presentation style of summary valuations is being revised and tested, based upon feedback from staff who manned helpdesks in 2004/05 as well as business ratepayers who received/will receive the document.
No Ref Recommendation
5 4.51 That the VOA should explore ways in which its IT systems might communicate more effectively with those of its main clients, customers and their agents;
Action
The VOA’s IT strategy has been developed to support its wider focus on making information more readily accessible to customers and increasing the transactions that can be undertaken electronically. Improvements include:
● The council tax lists (for domestic properties) and rating lists (for non-domestic properties) are available on line, containing some 25 million entries: in the case of non-domestic properties the lists are accompanied by individual summary valuations for most properties and by details of the underlying valuation “schemes”
● Forms of return for providing rental details of business property are now available for completion on-line - licensed property information can be submitted in bulk.
● Proposals for changes to existing entries in council tax and rating lists can also be submitted on-line (and in bulk via web services by rating agents acting in relation to several properties or clients)
● Billing authorities can submit notifications of changes to both domestic and non-domestic property to the VOA via a web application (spreadsheet/XML or web services description language for bulk submissions or via an
60 electronic form for complex single transactions) – over 40per cent of BA reports are currently being received via one of the electronic means, and that number is steadily increasing
● All billing authorities now download full lists, schedules of alterations & other schedules via the VOA Internet File Transfer Service.
No Ref Recommendation
6 4.52 That barriers to VOA staff having direct access to the HMRC Intranet should be overcome as soon as possible;
Action The VOA Management Board carefully considered this recommendation but concluded at the time that there is no business need for most VOA staff to have access to the HMRC intranet in addition to access to the VOA intranet, and indeed with some risk of confusion over e.g. human resource policies (which differ in fine detail) if they do. The position is however being kept under regular review, and will be further reviewed when a new Chief Executive is appointed.
No Ref Recommendation
7 4.49 That the new initiatives and management styles observed at senior management levels should be communicated to middle management in such a way as to foster the development of an increasingly customer-focused culture throughout the VOA network;
Action
Senior managers have taken a number of steps to foster the desired management styles, including an improved performance management system with enhanced emphasis on outcomes; tailored management training for senior leaders, team leaders and first-line managers; and reinforcement of customer focus in all we do. It is encouraging that customer satisfaction has risen to over 90per cent from 77per cent in 2004-05.
It is an expected requirement for all new managers, on advancement, to undertake the full MDP programme. Other managers have access to the programme and where line managers consider there is a need for management training this can be incorporated in to an objective within the individual’s performance agreement.
No Ref Recommendation
8 4.55 That, as current policy is being evaluated or new policies devised, the whole end-to-end process should be considered and that, wherever possible, the VOA should encourage the relevant lead policy Department to involve customers directly in the course of that evaluation;
Action
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The VOA seeks to work closely with client Departments and devolved administrations as policy is developed, advising on practical implementation and providing feedback as appropriate. Examples include the regular dialogue with business ratepayers through the National Ratepayer Forum (and Local Ratepayer forums in Wales) to design new products and test content of communication with regard to the 2010 Revaluation. The development of a new electronic Form of Return that makes it easier and quicker for business ratepayers to supply information to the VOA (see also 4.5.1 [5] above) is an illustration of how well this can work.
More generally, the VOA draws on feedback from customer surveys across all its business streams to provide input to policy-making.
No Ref Recommendation
9 7.21 That the approach of the Initial Appraisal Unit should be extended to cover at least all English and Welsh cases requiring a VOA referral at the earliest possible opportunity;
Action
The Initial Appraisal Unit (IAU) was expanded in July 2005 to cover the whole of England and Wales, with a separate unit in Glasgow to cover Scotland. The threshold was increased to £500,000 in June 2007. Since July 2008 the IAU’s remit has extended to covering all domestic properties.
Performance results have consistently improved since the unit was established, with turnround times accelerated and cost base reduced. In the preceding year, 54.2% of initial appraisal cases were reported within 10 working days. During 2004-05 this improved to 59.2% nationally - with the IAU clearing 63.2% within two weeks, whilst dealing with approximately 22.3% of all initial appraisal cases. Currently 97.3% of cases are reported within 2 weeks - though timeliness performance is now expressed in terms of elapsed days. The average elapsed time for initial appraisals over the 12-month period to the end of March 2009 was 6.5 days.
No Ref Recommendation
10 7.23 That steps be taken to establish the extent to which any restrictions on the ability of HMRC officials to access or use VOA data limits the effectiveness of attempts to reduce the tax gap and, in the event of there being such restrictions, whether Ministers would wish to legislate to remove or amend them;
Action
The Commissioners of Revenue and Customs Act 2005, which established HM Revenue & Customs, secures that – in broad terms - data obtained by the VOA can be shared within HMRC.
The VOA is currently working with other Departments to identify opportunities to allow sharing of data where that will reduce the burden on both business and citizens to provide key information, and lead to improved value for money
No Ref Recommendation
11 5.24 That further training in the conduct of appeals and advocacy skills should be given to staff representing the VOA at Valuation Tribunals where necessary;
Action
The VOA has undertaken a review of its training provision for staff appearing at the valuation tribunal, informed by feedback from the Valuation Tribunal Service. Training now incorporates simulated valuation tribunal proceedings, with individuals receiving personalised feedback on their performance. Between 2005 and 2008
62 approximately 400 staff in total have received such training. The training module includes distinguishing the different roles of expert witness and advocate during presentation at tribunal. This is supported by a guidance manual accessible to all containing a comprehensive overview of what is required at a valuation tribunal.
No Ref Recommendation
12 5.25 That the IT skills of all staff should be further enhanced to enable them to do their jobs more effectively and confidently;
Action
The VOA has a key performance indicator to ensure that all staff have the core skills to do their jobs within 6 months - these skills include, wherever relevant, IT skills. Additionally, strong emphasis has been placed on adequate training as new technology is introduced – examples include enterprise resource planning functionality, the comparable selection tool for council tax, and valuation tribunal presentation packages.
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No Ref Recommendation
13 8.57 That the Management Board should continue to explore and exploit opportunities to increase its visibility to Agency staff;
Action
The programme of office visits by VOA Management Board and other Senior Civil Service staff has been strengthened. Each office receives at least one visit a year, and these are spread over the course of the year, so that Board members remain in close touch with the network. The effectiveness of these visits has been reviewed periodically, and improvements made. In addition, the Chief Executive aims to visit each of the 22 group areas plus Scotland at least once a year. Greater use is also being made of video clips and intranet messages to improve clarity in communications from the senior management team.
No Ref Recommendation
14 5.7 That increased efforts should be made to _ emphasise that business improvement ideas are always welcome and will be adopted where they achieve business efficiencies, and _ ensure feedback on staff suggestions reaches relevant parts of the organisation – even when the suggestion is thought to be impractical;
Action
The Innovations (staff suggestions) scheme is currently being reviewed, but continues to bring forward ideas and suggestions for innovation. The table below shows the number received and adopted over the last 5 years.
2004 2005 2006 2007 2008
Number of Innovations Received (01 Jan to 31 Dec) 471 570 815 554 366
Number of Innovations adopted and awards issued 23 61 70 45 35
More generally, much of the recent process improvement in local taxation list maintenance has been driven by the systematic identification, capture and adoption of best practice – using a replicable methodology - under the oversight of the Business Improvement and Support team within the Local Taxation Directorate. This has been progressively developed into a series of combined process maps and best practice guidance notes under the “how.2” banner accessible to all staff – supported by Control ES software for continuing maintenance and updating of mapping and the (in-house developed) CS1 facility for management information and monitoring.
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No Ref Recommendation
15 5.35 That management should be improved in ways in line with the HMRC Management Framework by incorporating an element of 360 degree reporting at all managerial levels in the organisation to assist managers to identify areas where they have a development need rolling out the planned Management Development Programme with vigour and persistence applying existing arrangements for tackling poor performance more rigorously and uniformly and as a last resort, removing technicians with poor leadership and management skills from management positions;
Action
Staff in senior management roles have access to 360° reporting. In particular, all Senior Civil Servants have undertaken this twice since the last Framework review, with - on the latest round - external coaching on the results.
The majority of Band 1 leaders – 70 in all - have now taken part in the Senior Leaders Development Programme, which provides individually tailored as well as learning set-based development. All participants are offered tutorial support as part of the programme and can bring issues from the 360° element of the programme to Action Learning Sets.
The Management Development Programme – open to managers at Bands 1 to 4 – was launched in April 2005. Since then 236 managers (114 diploma + 122 certificate) have enrolled in the full programme, of whom 22 diploma + 51 certificate candidates have already gained the full qualification. A total of 391 managers (157 diploma + 234 certificate) have accessed selected modules. The Chartered Management Institute has cited the VOA as a centre of excellence in its processes of assignment assessment and student support.
Group and Unit managers have attended workshops aimed at helping them address poor performance and an improved performance management process has introduced action plans to address under performance. Management roles are now focused on a smaller number of people and we have introduced matrix management to Commercial Services and National &Central Services with dedicated resource managers.
No Ref Recommendation
16 5.26 That VOA, HMRC, ODPM and WAG should explore at regular intervals the scope for secondments and other ways to widen the experience of their own staff as well as that of each other;
Action
Between 2005 and 2008, 71 staff were involved in interchanges to and from the VOA. There are currently 8 VOA staff on loan to other Government Departments, and the Agency is keen to continue to explore these and other opportunities to broaden staff experience and encourage their development.
In Wales, WAG staff have shadowed VOA staff in local offices and feedback has suggested that this has been very helpful from the client’s perspective.
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No Ref Recommendation
17 4.40 That the existing plethora of historic targets should be reviewed within 6 months with a view to reducing the number and giving additional emphasis to those remaining. (This is likely to involve identifying a core group of important targets to be regarded as key business/value drivers for at least a three-year period and consistently focusing on their successful delivery ensuring Key Targets are more representative of the whole of the VOA’s business and, perhaps, trying to build a meaningful measure of ‘whole customer experience’ identifying in conjunction with major customers, realistic measures of success in meeting their individual expectations, replacing unrealistic or unnecessary measures where necessary separately identifying information which, although not targeted or published, VOA management requires to monitor the performance of the organisation and put systems in place to ensure the information is available to them)
Action
The key performance targets for the Agency (i.e. those formally announced to Parliament by Ministers) have been progressively developed since 2004/5 to become more outcome-based and to strike an appropriate balance between elements of timeliness, cost and accuracy. They are published in the Agency’s Forward Plan together with a suite of supporting measures covering the delivery of the full range of the Agency’s activities. In particular key targets have been developed in liaison with the VOA’s major clients to capture:
● Overall customer satisfaction (i.e. a broad measure of the whole customer “experience”) right across the Agency’s business and
● Overall value for money across local taxation work (which accounts for some 85per cent of the total in 2008- 09) rather than the previous narrower (2004/5) measure of productivity.
The key performance indicators have been articulated both in terms of overall targets to be reached over a three-year period to 2010, as part of the Agency’s world-class vision, and also as intermediate targets for individual financial years. The supporting measures amplify particular aspects of the Agency’s business, focussing on individual customer requirements, again so far as possible being outcome rather than output based.
Results against each target are included in the Agency’s Annual Report and Accounts.
Aims objectives & strategies
No Ref Recommendation
18 6.10 That the Agency’s aim/purpose as expressed in the 2005 Framework Document should be in substance as stated in its Vision Statement.
Action
The Agency’s current Forward Plan fully reflects this. http://www.voa.gov.uk/publications/forward_plan/Forward_Plan_2008-11.pdf
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No Ref Recommendation
19 7.29 That the VOA explores the scope for moving further work from London and the South East to other parts of the country during the next three years, taking the views and interests of its clients fully into account in the process;
Action
By the nature of its front line operations, which involve physical inspections of properties, the VOA has to maintain a capability in all parts of Great Britain. Nevertheless it is committed to establishing support services away from London and the South East wherever it is cost-effective to do so. It now has established four network support offices in Plymouth, Halifax, Rhyl and Durham and a fifth, in Washington, was recently added on the transfer of The Rent Service (TRS) functions in April 2009. These offices have taken work from London and the South East and will continue to be expanded over time, possibly up to a total of between 300-400 staff. In addition operational units in Gloucester and Huddersfield provide dedicated technical and professional support to London. Finally, the VOA’s Human Resources Directorate has moved its resourcing team from London to Leeds. In all approximately100 posts have been moved from London and the South East, as the VOA’s contribution to HMRC’s Lyons target for relocations, which it reports through HMRC on a quarterly basis.
No Ref Recommendation
20 7.17 That the Agency should focus on delivering the Council Tax revaluation accurately, on time and within budget, and put resources into defending the 2005 rating lists robustly in appropriate cases so that the appeal culture is tackled effectively;
Action
The Council Tax Revaluation in England was postponed on 20 September 2005. The Revaluation for Wales was delivered on time and within budget, taking effect from 1 April 2005, and the level of formal appeals against entries in the lists has been markedly lower (at around 1.5per cent of the total) than following the introduction of council tax in 1993 (when the initia appeal rate was 4.6per cent).
A significant reduction in the number of rating proposals (appeals) has occurred between 2000 and 2005 rating lists as illustrated below. Whilst partly attributable to changes in the Appeal regulations, it also reflects the Agency’s continued focus on “"right first time"”:
ENGLAND * 55% of all appeals are withdrawn R2000 (2004/5) R2005 (2008/09) Rating Appeals Received 1,190,380 614,036
Rating Appeals Cleared 843,667 493,364*
Rating Appeals O/S 346,713 120,672
WALES * 54% of all appeals are withdrawn R2000 (2004/5) R2005 (2008/09) Rating Appeals Received 56,183 29,468
Rating Appeals Cleared 51,585 21,421*
Rating Appeals O/S 4,598 8,047
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ENGLAND AND WALES * 55% of all appeals are withdrawn R2000 (2004/5) R2005 (2008/09) Rating Appeals Received 1,246,563 643,504
Rating Appeals Cleared 895,252 514,785*
Rating Appeals O/S 351,311 128,719
No Ref Recommendation
21 7.12 That the VOA should act in co-operation with ODPM to continue to promote and encourage the adoption of Valuebill by all of the Billing Authorities at an early date;
Action
The Valuebill project was successfully completed and resulted in the VOA developing the Billing Authority Transfer Site (BATRANs). All local (billing) authorities use BATRANs. The VOA also developed an electronic system for the transfer of reports between local (billing) authorities and the VOA. This system is known as e- BARs (electronic billing authority reports) and over 50per cent of billing authorities have trialled or are using this medium. Where it is used, e-BARs has proved very effective in increasing both the speed and accuracy of information exchange, and all billing authorities are encouraged to use it. However, billing authorities vary in terms of their size and computer support, so it will take time to get them all on board. Valuebill was presented as part of a package of measures to improve partnership working between the VOA and billing authorities, and this relationship continues to strengthen.
No Ref Recommendation
22 7.41 That the VOA should continue to look for opportunities to expand Land Services business within the scope provided by the remit in section 10 of the CRCA where there are advantages to the public in doing so and where there is no adverse impact on work for existing customers;
Action
Following the 2005 Framework review, a number of initiatives were implemented by Land Services with a view to increasing turnover. These included the appointment of Client Development Managers, and the use of commercial pre-sales specialists (under contract) to prospect for new customers for existing services. Whilst there was some success from these business improvement projects, growth was not sufficient to offset the reduction in income from other areas. For example, in 2006/7 there were 20% fewer Right to Buy cases than in previous years. As a result, Land Services income (including DWP and RTB) was £19.6m in 2005/6, £18.3m in 2006/7 and £17.6m in 2007/8.
In 2007, in order both to increase efficiency and encourage growth, the VOA Board agreed to restructure Land Services. This was done in 2008. The “DVS” (District Valuer Services) branding has been retained, but two business streams are now responsible for delivering services to customers – National and Central Services (N&CS), and Commercial Services (CS).
In the main, N&CS delivers statutory valuation services through large intra-government contracts where there is limited opportunity for business growth. A recent example is its appointment to perform the function of “statutory officer” for certain categories of appeals against the Community Infrastructure Levy, as set out under the 2008 Planning Act. Valuation services are also provided to DWP including the provision of valuation advice for the Child Support Agency
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The Commercial Services business offers strategic asset consultancy, market and asset valuations, viability studies, energy performance assessments, and advice on acquisitions, disposals and lease reviews. These are tailored to meet customer needs in Health, Transport, Central Government, Local and Devolved Government and Environment sectors. New business in 2008/9 included the provision of advice on Strategic Asset Management - to achieve better use of public buildings and estates – and Energy Certificates, which record the energy efficiency of public buildings. Confirmed sales amounted to £700,000.
For Commercial Services, the total income generated in 2008/9 was £18.8 million.
Accountability and management information flows
No Ref Recommendation
23 8.19 That the VOA remains as a single integrated Next Steps Agency;
Action
The VOA remains a single integrated Next Step Agency and continued as an Agency of HMRC.
No Ref Recommendation
24 8.30 That the VOA should continue as an Agency of HMRC as provided for in the Act establishing that Department;
Action
See 8.19 above.
No Ref Recommendation
25 8.46 That the VOA Advisory Board should be abolished with other arrangements to achieve its intended functions in a more effective fashion being substituted. These would consist of a combination of: regular meetings between HMRC’s Executive Chairman and the VOA’s Chief Executive; regular ‘bilateral’ meetings between VOA management and each of ODPM, WAG (or perhaps both together), HMRC and a group made up of other key customers, to include discussions of strategy, plans, priorities and performance informed by relevant management information produced by the VOA; improved management information flows from the VOA to HMRC, principally to the ‘Fraser Figure’ but including regular reports to HMRC’s Operating Committee (or similar); the role of the ‘Fraser Figure’ to be at HMRC Board level; and an annual discussion (or one every six months) between the Fraser Figure and ODPM/WAG to ensure that these major customers have no significant concerns of which HMRC’s Board or Minister ought to be aware;
Action
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Regular sets of meetings are in place, as briefly described in the main body of the 2008 Review. Reports to HMRC now take place through the Quarterly Strategic Reviews, with supporting management information, supplemented as appropriate by other meetings between top HMRC and VOA managers. Regular quarterly meetings are also held between the VOA and its major clients, who in turn periodically meet with HMRC.
No Ref Recommendation
26 8.61 That the Finance Committee should be abolished, provided the bilateral meetings between the VOA and its major customers deal fully and satisfactorily with financial and funding issues and provided the VOA’s Chief Executive and Director of Finance, Technology and Planning have ready access to HMRC’s Finance Director and/or the ‘Fraser Figure’ in the event of any potential funding problem coming to light.
Action
The Finance Committee has been abolished. There are regular and effective liaison meetings with all clients on financial and funding issues. The Director of Finance and Planning has regular meetings with the Director of Financial Planning and Analysis and the Financial Controller in HMRC, while there has been a vacancy in the Chief Finance Officer post. In addition regular meetings with senior teams below Director level have recently been instituted and are operating well.
No Ref Recommendation
27 We recommend that a new Framework Document should be approved and published in the form we suggest.
Action
The VOA’s Minister (then Dawn Primarolo – The Paymaster General) approved the new Framework Document in April 2005 and it was published in that form. The 2005 Framework Document is available on the VOA’s website at http://www.voa.gov.uk/publications/framework_doc/voa-framework-document-2005.pdf
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Annex E 2009 Framework Review – team members and costs
Review Team:
Mike Shipp, Director, HMRC Sarah Rees, HMRC Karen Walker, HMRC
John Merrall, VOA, (part time)
Frankie Webber, HMRC, (support to the review team)
Approximate costs of the framework review:
Salaries £225,000 Travel & Subsistence £10,000 Printing £6,000
Total £241,000
Note: some costs approximated at date of printing report and rounded cost data extracted from Enterprise Resource Planning system at June 2009
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Annex F Overview of role and structure of the VOA
The Valuation Office Agency (VOA) is an executive agency of HM Revenue and Customs (HMRC). It brings together the previously separate organisations in England and Wales (established in 1910) and in Scotland (established in 1911), and was launched under the Next Steps initiative on 30 September 1991. On 1 April 2009 the Agency merged with The Rent Service (TRS) and continues to provide valuation and estate surveying services, including advice on minerals, to government departments, the wider public sector and other areas in the public interest.
More specifically the work of the Agency today encompasses:
• compiling and maintaining lists of rateable values of the 1.7 million non-domestic properties in England and the 100,000 in Wales to support the collection of around £20 billion in business rates. These lists are maintained and updated as changes to properties occur and are revised completely every 5 years. For each non-domestic property that is rateable (i.e.each hereditament) the Agency provides an entry in the list based on its open market rental value at a specific date 2 years prior to the introduction of each list, known as the antecedent valuation date. While the Agency provides rateable values for current lists based on levels of value as at 1 April 2003, it is the local Billing Authorities that issue bills each year to ratepayers based on nationally-set rate poundages and collect the revenue on behalf of central government. They also administer any reliefs and exemptions. This separation of responsibilities ensures that issues connected purely with the valuation of properties lies with the Agency and ratepayers may query their rateable value either informally or through a statutorily determined process involving the independent Valuation Tribunal Service (VTS) where eligible. The next set of new lists come into effect 1 April 2010 with an antecedent valuation date of 1 April 2008;
• compiling and maintaining the list of Council Tax bandings of some 22 million domestic properties in England and 1.3 million in Wales to support the collection of around £25 billion in council tax. Local Billing Authorities levy bills on householders dependent on one of eight property bandings (A to H) in England although since the 2005 revaluation Wales has nine bands (A to I). These are determined by the Agency. The local Billing Authorities also administer reliefs and exemptions. First introduced in 1993, bandings in England continue to remain related to levels of capital values as at April 1991 (the antecedent valuation date), unlike the quinquennial revaluations for non-domestic properties. There are some differences in the process, but Council Tax payers like ratepayers can query their banding informally or where eligible appeal direct to the VTS;
• determining local housing allowances across 153 Broad Market Rental Areas in England, providing 450,000 rental assessments for housing benefit purposes and registering some 80,000 Rent Act 1977 fair rents in England;
• advising government ministers on property valuation matters;
• providing valuation services and policy advice to the Scottish Parliament and Welsh Assembly Government;
• providing valuation advice to HMRC in connection with inheritance tax (IHT) capital gains tax (CGT), and other compliance work; and
• delivering a range of non-statutory valuation and estate surveying services to government departments and the wider public sector.
The local taxation work is carried out on behalf of Communities and Local Government and the Welsh Assembly Government. National taxation and other statutory work covers work for HMRC and for the Department for Work and Pensions. Non-statutory work includes services for clients such as the Highways Agency and Health Authorities.
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The Agency operates with a network of 83 offices across England and Wales, providing statutory local taxation services for business rates and Council Tax, plus five offices in Scotland (although note in Scotland council tax and business rates are dealt with by the Scottish Assessors). This network is managed regionally by 21 Group Valuation Officers.
Senior management and certain central functions are carried out in the Chief Executive’s Office, relocated in March this year from New Court to Wingate House also in London.
The Agency employs the equivalent of 4260 full-time staff (as at 1 April 2009) of which approaching 30 per cent hold property-related professional qualifications. In addition to a network of 21 Groups, each headed by a Group Valuation Officer (a statutory role in connection with local taxation), there is a parallel structure relating to the provision of property advice to HMRC and the wider public sector comprising teams attached to National & Central Services and Commercial Services.
The Agency’s Forward Plan 2009-2012 apportions the costs between its main clients as follows
Local taxation work 77 per cent National taxation and other statutory work 15 per cent Non-statutory/commercial work 8 per cent
The Agency operates 3 business streams;
• The above figures demonstrate that Local Taxation & Housing Allowances Directorate is the largest stream by some margin and is responsible for policy and operational delivery of statutory work in relation to Council Tax, Non-Domestic Rating and includes work previously undertaken by The Rent Service (housing allowances).
• National & Central Services (N&CS) undertakes valuation work for HMRC in connection with national taxation (predominantly inheritance tax but also capital gains tax)
• Commercial Services (CS) provide valuations and property advice to government departments and other public sector organisations including health and local authorities, often having secured instructions through successful tendering in competition with other professionals.
The 3 business streams are supported by the Agency’s corporate services functions – customer services, human resources (including training), communications & customer insight, finance and IT based functions.
Additionally there are a number of national units responsible for specialist operational matters to support the work of the 21 Groups and also N&CS and CS teams involving the valuation of unusual or specialist properties (mineral occupations, pipelines, chemical plants, race courses etc.) each being managed by a unit head either regionally or centrally.
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Annex G Key Performance Indicators, targets and outturn – 2004/05- 2008/09
Year 2004 / 2005 KPI Met / Missed Contain reductions in the 2000 local rating lists to less than 7.5 per cent in respect of 9.7 per cent compiled list appeals settled in 2004/05 Missed Contain reductions to a maximum of 4.7 per cent of the total compiled list rateable value 4.6 per cent over the entire life of the 2000 rating list Met Prepare for the forthcoming NDR revaluation by producing draft rating lists by 30 Met September 2004 Produce compiled list by 31 March 2005 Met Prepare for CT reval in Wales by producing draft valuation lists by 1 September 2004 Met Produce CT compiled lists for Wales by 31 March 2005 Met Prepare for CT reval in England by digitising data for 97.5 per cent of properties by 31 100 per cent March 2005 Met Evaluate by 31 July 2004 whether AVM can be utilised for banding of minimum 60 per Met cent of properties Achieve an increased fee income of £19.2m from Land Services (commercial arm) £19.4m Ensure that Land Services’ share of VOA costs is covered Met Maintain customer satisfaction at 86 per cent 77 per cent Missed Improve productivity by 2.5 per cent 2.4 per cent Missed Improve staff satisfaction by 1 per cent 58 per cent Met Recover full resource costs within Parliamentary Approved Estimates Met Other Targets: Rating Met / Missed Draft programmes for clearance of appeals available by 31 July Met Publish final programmes by 1 October 2004 Met Adhere to start date for appeals in 95 per cent of cases 99 per cent Met Number of appeals settled in England (up to 280,000) 283,174 Met Number of appeals settled in Wales (up to 5,900) 6,164 Met Clear 95 per cent of reports within three months of receipt 96 per cent Met Clear all reports received by end of year 100 per cent Met Other Targets: Met / Missed Council Tax Clear appeals in England (within max of 27,800) 28,828 Met Clear appeals in Wales (within max of 2,000) 2,012 Met Provide a considered view to taxpayers within two months of receipt 60 per cent Missed Ensure that all appeals are ready for hearing within six months 95 per cent Missed
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Clear 95 per cent of all reports within three months of receipt 98 per cent Met Clear 95 per cent of reports in respect of new properties within two months of receipt 95 per cent Met Ensure 95 per cent of all bandings are “right first time” 95 per cent Met Other Targets: Inheritance Tax Met / Missed Clear all initial appraisal cases within 20 working days 94 per cent Missed Report agreed values for 75 per cent of cases within three months 80 per cent Met Report agreed values for 90 per cent of cases within six months 93 per cent Met Report agreed values for 95 per cent of cases within nine months 97 per cent Met Other Targets: Capital Gains Tax Met / Missed Clear 90 per cent of initial appraisal/informal valuation cases within 30 working days 80 per cent Missed Clear the remainder within three months 93 per cent Missed Clear 90 per cent of negotiation cases within six months 68 per cent Missed Clear the remainder within 12 months 91 per cent Missed Other Targets: Customer Service Met / Missed Answer telephone calls within an average of ten seconds 100 per cent Met Acknowledge correspondence within five working days 98 per cent Missed Reply to 90 per cent of correspondence within 15 working days 91 per cent Met See all callers within five minutes 100 per cent Met Achieve specified valuation targets (90 per cent) 91 per cent Met Meet timeliness targets (90 per cent) 92 per cent Met
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Year 2005 / 2006 KPI Met / Missed Contain reductions in the 2000 rating lists to max of 4.7 per cent over life of lists 4.6 per cent Met Contain reductions in 2005 rating lists to max of 4.2 per cent of the compiled list RV over 0.09 per cent life of lists Met Council Tax England Target Removed Clear by 30 September 2005 all appeals received on CT Wales up to max of 30,000 by 31 9,440 March 2006 (target set at 11,350) Missed Improve productivity by 5 per cent 5 per cent Met Clear 96 per cent of initial assessments referred from HMRC within 30 working days 100 per cent Met Cover costs and achieve income of £21.1m from Land Services £19.7m Missed Achieve customer satisfaction of 86 per cent 83 per cent Missed Improve staff satisfaction by one per cent (up to 59 per cent) 57 per cent Missed Other Targets: Rating Met / Missed Publish final appeals programmes by 1 October 2005 Met Adhere to start date in 95 per cent of cases 96 per cent Met Clear 90 per cent of reports within two months 91 per cent Met Settle all appeals against 2000 list in England 91 per cent Missed Number of appeals against 2005 list settled in England (375,000) 311,473 Missed Settle all appeals against 2000 list in Wales 94 per cent Missed Number of appeals against 2005 list settled in Wales (15,555) 15,941 Met Other Targets: Council Tax Met / Missed Clear 95 per cent of reports within two months 95 per cent Met Ensure 96 per cent of new bandings are “right first time” 96 per cent Met Ensure 99 per cent of appeals in England are ready for tribunal hearing within three 94 per cent months of date of receipt Missed Number of appeals cleared in England (up to 28,000) 28,022 Met Number of reports settled in England (419,000) 504,264 Met Clear 90 per cent of informal enquiries within four months of receipt 96 per cent Met HMRC Met / Missed Clear 50 per cent of initial appraisal IHT cases within ten working days 74 per cent Met Clear 50 per cent of all IHT cases within one month 61 per cent Met Clear 75 per cent of all IHT cases within three months 82 per cent Met Clear 95 per cent of all IHT cases within nine months 97 per cent Met Clear 90 per cent of non-negotiated CGT cases within six weeks 93 per cent Met
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Clear 95 per cent of non-negotiated CGT cases within three months 98 per cent Met Clear 80 per cent of negotiated CGT cases within six months 87 per cent Met Clear 90 per cent of negotiated CGT cases within nine months 96 per cent Met Clear 96 per cent of negotiated CGT cases within 12 months 98 per cent Met Customer Service Standards Met / Missed Answer telephone calls within average of 10 seconds 100 per cent Met Reply to at least 90 per cent of correspondence within 15 working days 93 per cent Met Recover full resource costs within Parliamentary Approved Estimates Met
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Year 2006 / 2007 KPI Met / Missed Achieve customer satisfaction of 88 per cent 88 per cent Met Clear 90 per cent of rating reports within two months 97 per cent Met Clear 95 per cent of CT reports within two months 98 per cent Met Clear all IHT initial appraisal cases within 12 days 7.6 days Met Contain reductions in 2005 rating lists to max of 4.2 per cent of the compiled list RV over 1.1 per cent life of lists Met Ensure 96 per cent of new CT bandings are “right first time” 96 per cent Met Improve productivity by five per cent -2.2 per cent Missed Improve value for money on IHT work by five per cent 21 per cent Met Ensure all staff have core skill within six months of taking up post 100 per cent Met Other Targets Met / Missed Achieve staff satisfaction rating of 60 per cent 68 per cent Met Initiate measure of staff commitment with a view to benchmarking Met Average of all sick leave under seven days 8.2 days Missed Average short-term sick leave under four days 4.6 days Missed Conclude performance inefficiency cases within six months 100 per cent Met Recover full resource costs within Parliamentary Approved Estimates Met Achieve at least 86 per cent customer satisfaction for Local Taxation work 86 per cent Met Have recorded up-to-date tenure details for 85 per cent of non-domestic properties 88 per cent Met Achieve 90 per cent compliance with valuation integrity standards 91 per cent Met Clear 90 per cent of enquires on Wales 2005 CT list within three months 94 per cent Met Provide a considered decision on 90 per cent of CT appeals in Wales within six months 92 per cent Met Clear by 31 March 2007 95 per cent of 2005 list rating appeals received by 31 January 95 per cent 2006 Met Achieve 90 per cent compliance with quality assurance standards within DVS 92 per cent Met Achieve 88 per cent customer satisfaction for work done by DVS 95 per cent Met Report all CGT and other non-negotiated valuations within an average of 25 working days 17 days Met Report all IHT formal cases within an average of 100 working days 70 days Met Report all CGT and other negotiated valuations within an average of 120 working days 96 days Met Provide HMRC with list of all outstanding cases at year end (including explanation) Met Achieve a valuation accuracy rating from customers of 88 per cent across Land Services 84 per cent work Missed
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Year 2007/ 2008 KPI Met / Missed Achieve 88 per cent customer satisfaction overall 91 per cent Met Clear rating reports within an average of 18 working days 11 days Met Clear CT reports in England within an average of 14 days 14 days Met Clear CT reports in Wales within an average of 16 days 12 days Met Contain reductions in the 2005 list to 4.2 per cent over entire life of list 2.3 per cent Met Ensure that 96 per cent of new CT bandings are right first time 97 per cent Met Clear IHT initial appraisal cases on average within 8 days 9.6 days Missed Clear CGT initial appraisal cases within 12 days 9.5 days Met Improve productivity by 3 per cent 8 per cent Met Improve value for money on IHT work for HMRC by 5 per cent 15 per cent Met Ensure all staff have core skill within six months of taking up post 99 per cent Missed Other Targets Met / Missed Conclude performance inefficiency cases within six months 100 per cent Met Recover full resource costs within Parliamentary Approved Estimates Met Achieve staff satisfaction within top 15 per cent of public sector comparators Missed Improve staff commitment to VOA by 2 per cent Missed Average of all sick leave under seven days 7.9 days Missed Average short-term sick leave under four days 4.5 days Missed Achieve at least 88 per cent customer satisfaction for Local Taxation work 90 per cent Met Have recorded up-to-date tenure details for 87 per cent of non-domestic properties 91 per cent Met Achieve 90 per cent compliance with valuation integrity standards 93 per cent Met Clear 95 per cent of enquiries on 2005 Wales CT list within two months 97 per cent Met Provide considered decision on 90 per cent of Wales CT proposals within two months of 87 per cent receipt in 95 per cent of cases Missed Provide considered decision on England CT enquiries and proposals within two months of 82 per cent receipt in 98 per cent of cases. Missed Provide considered decision on all rating proposals received on or after 1 April 2007 93 per cent within two months of receipt Missed Achieve 92 per cent compliance with quality assurance standards within DVS 93 per cent Met Achieve 90 per cent customer satisfaction for work done by DVS 97 per cent Met Improve value for money on CGT work by five per cent 34 per cent Met Report all CGT and other non-negotiated valuations within an average of 20 working days 20 days Met Report all IHT formal cases within an average of 80 working days 74 days Met Report all CGT and other negotiated valuations within an average of 100 working days 105 days Missed
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Year 2008/ 2009 KPI Met / Missed Achieve 90 per cent customer satisfaction overall 93 per cent Met Clear rating reports within an average of 12 working days 10 days Met Clear CT reports in England within an average of 14 days 11 days Met Clear CT reports in Wales within an average of 12 days 11 days Met Contain reductions in the 2005 list to 4.2 per cent over entire life of list 2.7 per cent Met Ensure that 96 per cent of new CT bandings are right first time 97 per cent Met Clear IHT initial appraisal cases on average within 8 days 6.5 days Met Clear CGT initial appraisal cases within 11 days 9.3 days Met Improve value for money on local taxation work by 3 per cent 11 per cent Met Improve value for money on IHT work for HMRC by 5 per cent -35 per cent Missed Ensure all staff have core skill within six months of taking up post 100 per cent Met Other Targets Met / Missed Achieve at least 90 per cent customer satisfaction for Local Taxation work 92 per cent Met Achieve 93 per cent compliance with valuation integrity standards for Local Taxation work 94 per cent Met Provide a considered decision on CT proposals within two months of receipt 93 per cent Missed Provide considered decision on rating proposals within two months of receipt 95 per cent Missed Achieve 90 per cent customer satisfaction for work done for HMRC and other statutory 93 per cent clients Met Report all CGT and other non-negotiated valuations within an average of 20 working days 21 days Missed Report all IHT formal cases within an average of 80 working days 78 days Met Report all CGT and other negotiated valuations within an average of 100 working days 110 days Missed Achieve 94 per cent customer satisfaction for work done by National and Central Services 95 per cent Met Improve value for money on CGT work for HMRC by 5 per cent -21 per cent Missed Achieve 90 per cent customer satisfaction for work done by Commercial Services 95 per cent Met Achieve 94 per cent compliance with valuation integrity standards for Commercial 93 per cent Services work Missed Recover full resource costs within Parliamentary Approved Estimates Met Achieve staff satisfaction rating within top 15 per cent of public sector comparators Missed Achieve staff commitment rating of 72 per cent 70 per cent Missed Average of all sick leave under seven days 7.7 days Missed Average short-term sick leave under four days 4.5 days Missed Conclude performance inefficiency cases within six months 100 per cent Met
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Annex H New Framework Document
Foreword by the Financial Secretary to the Treasury
The Valuation Office Agency has made good progress over the last four years. It has successfully delivered both the 2005 Council Tax revaluation in Wales and the 2005 Non-Domestic Rating revaluation in England and Wales, and is well on-track to deliver the 2010 NDR revaluation. Customer service has improved significantly with quicker turnaround times for customer enquiries and customer satisfaction levels rising every year. During this period, the Agency has also made significant efficiency savings and so has demonstrated its ability to deliver more for less. The Agency has also needed to deal with the difficult and complicated ports revaluation exercise, during which the Chief Executive has acknowledged that the Agency’s communications with port occupiers and operators could have been improved.
The revised framework document sets out how the Agency will work in the future, setting out its aim, objectives and priorities and its responsibilities and relationship with HMRC, its sponsor department. This is underpinned by the annual plans and the forward strategy which set the milestones for business activity.
The challenges will continue to be stretching. The Agency’s remit broadened on 1 April 2009 when it took on the functions of The Rent Service. Ministers and client Departments will be looking to the Agency to demonstrate continuous improvement to provide the best customer service and the most soundly-based valuations while, in keeping with the Operational Efficiency Programme across the whole of the public sector, increasing its efforts to bear down on costs and improve efficiency. The Agency knows that it needs to transform its ways of working, and it approaches these challenges from a strong base of professionalism, a focus on getting it right for the customer and a good track record for improving efficiency.
RT HON STEPHEN TIMMS MP FINANCIAL SECRETARY TO THE TREASURY June 2009
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FRAMEWORK DOCUMENT FOR THE VALUATION OFFICE AGENCY
1. STATUS AND FUNCTIONS OF THE AGENCY
1.1 The Valuation Office Agency (VOA – “the Agency”) is an Executive Agency of Her Majesty’s Revenue and Customs (HMRC). Its main functions are to: • undertake rating valuation work in England and Wales on behalf of Communities & Local Government (CLG), and the Welsh Assembly Government (WAG); • undertake Council Tax valuation work in England and Wales on behalf of CLG and WAG; • provide valuation services to HMRC in England, Wales and Scotland in connection with national taxes; • provide valuation and property management services in England, Wales and Scotland to central government, the devolved administrations, public bodies and to others where it is in the public interest; • provide valuation services to the Department for Work & Pensions (DWP) in connection with housing benefit and local housing allowances, and to CLG in connection with Fair Rents; and • support policy “owning” departments in advising ministers on policy matters relating to property.
1.2 The Agency does not have a separate legal status. It is part of HMRC.
1.3 The Commissioners of HMRC are charged by statute with the care and management of the taxes that they administer and with responsibility for appointing: • valuation officers for rating purposes; • listing officers for council tax purposes; • district valuers for Housing Act and other purposes; and • rent officers for housing benefit, Local Housing Allowance and Fair Rent purposes.
1.4 The main statutory and other authorities under which the Agency operates are set out in Annex A. It may also provide valuation services under further statutory or non-statutory authorities.
1.5 The Head Office of the Valuation Office Agency is at Wingate House Shaftesbury Avenue London W1D 5BY
2. AIMS, OBJECTIVES AND PRIORITIES OF THE AGENCY
Aims and objectives
2.1 The Agency aims to provide a fair and robust basis for taxes which help to pay for public services and for housing benefits, and to help drive better use of property in the public sector. Its objectives to enable this to be achieved are to: • compile and maintain accurate and comprehensive valuation and rating lists for local taxation; • make Fair Rent registrations and maintain the register of Fair Rents; • determine reasonable market rents for housing benefit purposes; • calculate and publish Local Housing Allowances; • provide accurate valuations for national taxes; • deliver expert advice on valuations and strategic property management; • develop and maintain a comprehensive and up-to-date property database; and • advise policy makers on valuation and property issues.
Priorities and Key Targets
2.2 The Chief Executive of the Valuation Office Agency agrees the Agency’s priorities with its major clients including the Commissioners of HMRC and Treasury Ministers when planning and allocating resources for undertaking the Agency’s functions. These priorities, together with specific shorter-term targets, are set out in the Agency’s annual Forward Plan. Although some Agency targets vary from year to year, as priorities change, its Key Performance Indicators (KPIs) detailed in its Forward Plans run for a number of consecutive years to assist HMRC and other major clients with the achievement of their Departmental Strategic Objectives (or equivalent).
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3. ORGANISATION, RESOURCES AND FINANCES
Management structure
3.1 The Chief Executive and Permanent Secretary of HMRC is responsible for the Valuation Office Agency and is the line manager of the Chief Executive of the Valuation Office Agency.
3.2 The Agency is headed by a Chief Executive, who is responsible and accountable for the conduct of the Agency’s operations.
3.3 The Chief Executive of the Valuation Office Agency is supported by a Management Board consisting of senior managers of the Agency, plus one or more non-executive members appointed by the Agency Chief Executive in consultation with the Chief Executive of HMRC.
Organisation
3.4 The Agency conducts its operations through a network of local offices and specialist teams located in various parts of England, Wales and Scotland. On 1 April 2009, the Agency had around 4260 staff (full time equivalents).
Changes to the organisation
3.5 The Chief Executive of the Valuation Office Agency may, within the delegated authorities under this document, make such changes to the organisation of the Agency as are necessary to maintain and improve the performance of the Agency.
Resources and funding
3.6 The principal resources of the Agency are its people, its systems and technology and its information bases.
3.7 The Agency operates on a net control arrangement, recovering the full resource cost of its funding from the clients for whom it provides valuation services.
Financial objectives
3.8 The financial objective of the Agency is to recover the full cost of its operation within each business segment, through charges for the services it provides.
Financial provision
3.9 The resource required by the Agency and its charges for each of its projected work programmes is agreed with its clients. In each case, a Service Level Agreement (SLA) sets out the arrangements under which the Agency provides its services to clients and the repayment arrangements. The resources of the Agency are identified separately within the overall HMRC departmental total. Where ministers or Treasury officials raise significant issues relating to the Agency’s financial situation, the Chief Executive of the Agency or the Agency’s Director of Finance are consulted and, where appropriate, involved in the discussions.
Financial delegations
3.10 The Chief Executive of the Valuation Office Agency has full financial authority within the resources voted for which he or she is accountable, including authority to: • commit and certify expenditure, both cash and non cash; • authorise payment and accept receipts; and • enter into contracts for the supply or receipt of goods and services.
3.11 Such authorities are subject, in all cases, to the same delegated limits as may, from time to time, be in force from the Treasury to HMRC.
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3.12 The Chief Executive of the Valuation Office Agency may delegate financial authority in writing to appropriate post-holders within the Agency.
4. ACCOUNTABILITY
Ministerial responsibilities
4.1 The Chancellor of the Exchequer is accountable to Parliament for the Agency as part of his or her responsibility for HMRC. On behalf of the Chancellor, a designated Treasury Minister sets the Agency’s overall objectives and approves its business plans, including its financial and other performance targets. At present the Financial Secretary to the Treasury is the designated Minister. Where, however, the Agency carries out statutory functions relating to matters other than taxes administered by HMRC, the ministers in charge of the departments or devolved administrations with policy responsibility for those matters are accountable for the policy and legislative framework within which the Agency carries out those functions (see Annex A).
4.2 Ministers are not involved in the day-to-day management of the Agency.
The Chief Executive of HMRC
4.3 The Chief Executive of HMRC, as Principal Accounting Officer for the Department, is responsible for ensuring that there is a high standard of financial management in HMRC as a whole, including the Agency.
4.4 The Chief Executive of HMRC, in consultation with the Chief Executive of the Agency, is responsible for strategic oversight of the Agency and advises Treasury Ministers on: • overall objectives and financial and other targets for the Agency and its performance against them; • any changes needed to the Agency’s operating framework; and • policy and other issues where HMRC has an interest.
The Chief Executive of the Agency
4.5 The Chief Executive of the Agency is appointed by the Chief Executive of HMRC. The Chief Executive of the Valuation Office Agency is a Treasury appointed Additional Accounting Officer.
4.6 The Chief Executive of the Agency is responsible to the Chief Executive of HMRC for the exercise of HMRC’s statutory and other responsibilities that are devolved to the Agency. He or she is accountable to the HMRC Chief Executive, and through the Chief Executive to Treasury Ministers, for the management of the Agency and for the delivery of the Agency’s objectives and targets.
4.7 As Additional Accounting Officer for the Agency’s Request for Resources (both RfR2 and RfR4) the Chief Executive of the Agency is personally responsible for ensuring propriety and regularity of the public finances for which he or she is answerable and for the efficient and effective use of all resources. As part of these responsibilities, an annual statement on internal control will be included with the Agency’s accounts.
4.8 The Chief Executive of the Agency is, in addition, responsible for: • ensuring that the requirements of Managing Public Money and the Resource Accounting Manual are met; • ensuring that the Agency observes any general guidance issued by the Treasury or the Cabinet Office; and • putting into effect any recommendations of the Public Accounts Committee, other Parliamentary Select Committees or other Parliamentary authorities that are accepted by the Government.
4.9 The Chief Executive of the Agency may be summoned before the Public Accounts Committee or other Parliamentary Select Committees to give evidence when the affairs of the Agency are examined.
4.10 The Chief Executive of the Agency has direct access to Treasury Ministers on any issues affecting his or her operational responsibilities. He or she must consult with the Chief Executive of HMRC where the issue affects the latter’s responsibilities as Principal Accounting Officer or has wider implications for HMRC.
Liaison and consultation between the Agency and HMRC
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4.11 The HMRC Chief Executive and the Chief Executive of the Agency are jointly responsible for ensuring that there are effective arrangements for liaison and cooperation between HMRC and the Agency on all matters of mutual interest.
4.12 The HMRC Chief Executive may designate a senior member of HMRC to act as a central point of contact between HMRC and the Agency, with responsibility for: • providing advice and assistance to the Chief Executive of HMRC on issues relating to the Agency; • monitoring the financial and other interests of HMRC in relation to the Agency; • providing advice and assistance to the Chief Executive of the Agency as necessary; • representing the Agency’s interests within HMRC; and • liaising with major clients of the Agency on a regular basis.
Internal audit and management inspection
4.13 As Additional Accounting Officer, the Chief Executive for the Agency commissions the internal audit and management inspection services required to ensure the proper and efficient conduct of the Agency. These services comply with the objectives, standards and practices laid down by HMRC, and by the Treasury or Cabinet Office (the "central departments").
4.14 Individual audit reports are made to the Chief Executive of the Agency, who is responsible for acting on the recommendations. An annual statement on internal control is given by the Chief Executive of the Agency. This will be informed by the work of the internal auditors and executive managers within the Agency. The HMRC Chief Executive, as Principal Accounting Officer, reserves the right to ask the Director of Internal Audit to review aspects of the Agency’s operations or systems, after consultation with the Chief Executive of the Agency.
External audit
4.15 The Agency is subject to external audit by the Comptroller and Auditor General.
5. BUSINESS REPORTING AND PLANNING
Business Plans
5.1 Each year, following consultation with major clients, the Chief Executive of the Agency submits for consideration and approval by the Chief Executive of HMRC and Treasury Ministers, a business plan (the Forward Plan) setting out the Agency’s aims, objectives, business strategies, work programmes and forecasts for a period of years with the first year being covered in detail.
5.2 The principal performance measures for the Agency, covering financial efficiency, effectiveness and quality of service elements, are formally agreed between Treasury Ministers, the Chief Executive of HMRC and the Chief Executive of the Agency. Since much of the Agency's work is carried out for other departments and the devolved administrations, they are closely involved in setting the measures and targets for that work. Key Performance Indicators (KPIs) in relation to those measures are set and announced by Treasury Ministers annually, normally before the end of April.
5.3 The Chief Executive of the Agency submits regular reports on the Agency’s performance to HMRC’s Executive Committee. He or she may l also provide reports to the individual fulfilling the function referred to at paragraph 4.12 above, who will liaise with the Chief Executive of HMRC.
Annual Report and Accounts
5.4 Each year the Chief Executive of the Agency prepares and signs an Annual Report and Accounts for presentation to major clients, the Commissioners of HMRC and Treasury Ministers, with the aim of laying the Report and Accounts before Parliament by the summer recess. The Annual Report and Accounts shows the Agency’s performance against its financial and operational targets. In addition, the resource accounts of the Agency will be consolidated into the overall HMRC resource accounts.
5.5 The Accounts are prepared in accordance with the Accounts Direction issued by the Treasury under Section 7 of the Government Resources and Accounts Act 2000.
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5.6 HMRC’s annual report, currently published in the autumn, also gives an account of the Agency’s performance.
6. MANAGING HUMAN RESOURCES
Status of Valuation Office Agency employees
6.1 The Agency’s employees are civil servants and subject to the Civil Service Management Code. The employees’ terms of employment are with the Crown as the Valuation Office Agency is not a separate legal entity.
Responsibilities of the Chief Executive of the Agency
6.2 The Chief Executive of the Agency has delegated responsibility for the management of the Agency’s human resources and its industrial relations, subject only to the matters noted below at paragraphs 6.6, 6.7 and 6.9.
6.3 The Chief Executive of the Agency exercises these responsibilities with regard to provisions and guidance issued by the central departments (and the Civil Service Commissioners). He or she may bring forward proposals for alternative human resources or industrial relations policies designed specifically to meet the business objectives and operational needs of the Agency. These may be implemented with the agreement, where appropriate, of the Commissioners of HMRC and the central departments, and after consultation – including negotiation, where appropriate – with staff and their trade union representatives where changes in terms and conditions are envisaged.
Consultation between the Agency and HMRC
6.4 Where new human resources policies of mutual interest to the Department and the Agency are being planned, there is consultation between the parties.
Statutory appointments
6.5 The Chief Executive and Commissioners of HMRC have devolved their responsibility for the appointment of valuation officers, listing officers, district valuers and rent officers to the Chief Executive of the Valuation Office Agency.
Recruitment, promotion and early releases
6.6 Recruitment and promotions are conducted in accordance with provisions and guidance issued by the central departments concerning fair and open competition. HMRC retains responsibility for substantive advancements into the Senior Civil Service.
6.7 The Agency consults HMRC on its policies regarding early releases. HMRC retains responsibility for early releases and dismissals for inefficiency for all Senior Civil Servants.
Performance management, pay and grading
6.8 The Chief Executive of the Agency is responsible for performance management, pay and grading systems for all Agency staff outside the Senior Civil Service. He or she ensures that the Agency’s pay and grading systems continue to meet the Agency’s needs within the amounts that it can afford, consulting with HMRC about any significant changes to these systems and on plans for annual pay awards.
6.9 The pay and grading of the Senior Civil Service will accord with the general rules applying in HMRC, subject to any variations agreed by the Agency Chief Executive and HMRC.
Interchange
6.10 The Agency encourages the interchange of staff within the public sector and between the public and the private sectors where this is of benefit for career development or operational reasons.
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Diversity
6.11 The Chief Executive of the Agency and managers will ensure that there are equal opportunities and treatment for all staff and applicants for employment in accordance with HMRC and wider government policy.
Staff training and development
6.12 The Agency recognises training and development to be essential elements of human resources management for staff at all levels. It develops its training strategy to ensure that staff throughout the organisation have a clear understanding of the Agency’s aims and objectives, a commitment to high standards of service in delivering the main functions to customers, and proper training for their roles.
Trade union representation
6.13 The Agency welcomes staff joining a Trade Union and playing an active part within it to make sure their views are represented, although it will remain a personal decision whether to join or not. The Agency works in partnership with the Trade Unions to ensure that the views of staff are represented at all levels in the Agency.
Health and safety matters
6.14 The Chief Executive of the Agency is bound by HMRC’s health and safety policies and by all relevant health and safety legislation. The Agency has its own health and safety officer whose duty it is to ensure that policy and legal requirements are met.
7. SERVICES TO MINISTERS, CENTRAL GOVERNMENT, DEVOLVED ADMINISTRATIONS, PUBLIC BODIES AND COMMERCIAL POLICY
Handling MPs’, MSPs’ and AMs’ questions, enquiries and complaints
7.1 The Chief Executive of the Agency provides Treasury (and where appropriate other) ministers with any information needed to answer Parliamentary Questions or deal with any other Parliamentary business, including debates concerning matters for which the Agency is responsible. Treasury Ministers decide how best to respond to Parliamentary Questions about the Agency. Where an MP asks a question about any matter delegated to the Agency under this Framework Document, Treasury Ministers normally ask the Chief Executive of the Agency to reply directly to the MP. Such letters from the Chief Executive of the Agency are published in Hansard.
7.2 Normally the Chief Executive of the Agency or his senior managers in Scotland and in Wales will reply direct to the questions of members of the Scottish Parliament or Welsh Assembly in relation to matters delegated to the Agency under this Framework Document.
7.3 MPs, MSPs, AMs and members of the public who have a complaint about the Agency are encouraged to write in the first place to the relevant Group Valuation Officer, District Valuer or other operational manager and, if necessary, then to the Chief Executive of the Agency. If they remain dissatisfied, they can refer their complaint to the independent adjudicator.
7.4 MPs can also refer complaints about the Agency to the Parliamentary Commissioner for Administration (the Parliamentary Ombudsman). The Chief Executive of HMRC, as the Principal Officer of the Department, is responsible for dealing with inquiries by the Parliamentary Ombudsman, but in the majority of cases he or she will delegate this responsibility to the Chief Executive of the Agency.
Provision of reserved services
7.5 The Agency normally enters into SLAs with central government, the devolved administrations and other public bodies for which it undertakes work which is reserved to it. Such agreements specify: • the nature of the services to be provided; • the basis on which work will be charged; • the statistical information to be supplied; and
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• the processes for monitoring and reviewing the agreements, including where appropriate revisions following the outcome of Spending Reviews
7.6 Each service level agreement includes agreed performance measures and targets. The Agency also provides its clients with any information that they may reasonably require to enable them to evaluate performance and to satisfy themselves that best value is being obtained. Regular meetings to discuss the Agency’s performance are held with its major clients.
Provision of other services and commercial policy
7.7 The Agency may provide valuation services to any public authority and also to any other body where this is necessary or expedient in connection with the exercise of functions of a public nature or the management of money or assets received from a person exercising functions of a public nature.
7.8 In undertaking this work the Chief Executive of the Agency must be satisfied that: • it will not conflict with the Agency’s core functions; and • the price agreed for the work is consistent with the relevant guidance from HMT on Managing Public Money.
8. PROVISION OF SUPPORT SERVICES
General arrangements
8.1 The Chief Executive of the Agency is responsible for ensuring that the Agency has access to the support services it requires to function effectively, and that, wherever appropriate, service level agreements are in place.
8.2 The Chief Executive of the Agency keeps under review the level, timeliness, quality and value for money of any support services, whether provided in-house, by HMRC, or contracted out. He or she may, with the agreement of Commissioners for HMRC, untie from HMRC in respect of any service the latter currently provides. Any proposal to do so must have regard to the financial and value for money implications for HMRC and the Agency, including the impact on any existing contractual commitments.
8.3 The Chief Executive of the Agency may deal directly with the media on operational matters. The Chief Executive will refer enquiries concerning policy or wider issues to the relevant department or devolved administration.
9. REVIEW OF THE FRAMEWORK
Review
9.1 This Framework Document will be reviewed in three years' time, unless Ministers direct otherwise.
Amendment
9.2 The Chief Executive of HMRC or the Chief Executive of the Agency may propose amendments to the Framework Document. Such amendments may be made with the agreement of the Commissioners, subject to consultation with major clients of the Agency and the approval of Ministers.
Publication
9.3 Copies of this Framework Document, and of any revised editions, will be placed in the Libraries of the Houses of Parliament.
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ANNEX A
STATUTORY AND OTHER AUTHORITIES COVERING THE AGENCY’S ACTIVITIES 1. The Agency continues to operate under a number of different authorities in relation to its work. These include those devolved authorities to the Chief Executive of the Agency by the Commissioners for HMRC in connection with HMRC’s responsibility for the care and management of the taxes they administer.
2. The principal authorities which relate to statutory officers within the Agency are: (a) in relation to a district valuer • authorities arising under the Housing Acts (with analogous provision in Scotland) (b) in relation to a listing officer • authorities arising under the Local Government Finance Act 1992, and regulations made under it, concerning the compilation and maintenance of valuation lists in England and Wales. (c) in relation to a valuation officer • authorities arising under the Local Government Finance Act 1988, and regulations made under it, concerning the compilation and maintenance of rating lists in England and Wales (d) in relation to a rent officer • The Welfare Reform Act 2007 • The Housing Act 1996 • The Housing Act 1988 • The Rent Act 1977 • The Rent (Agriculture) Act 1976 (e) various references in other primary and secondary legislation concerning the certification and apportionment of rateable values by valuation officers for different purposes in England and Wales and the authority to determine Community Infrastructure Levy appeals in accordance with the Planning Act 2008
3. Section 10 of the Commissioners for Revenue and Customs Act 2005 applies to the Valuation Office Agency
4. The Agency is also authorised by the Treasury to: (a) market information it holds which can be traded, subject to certain legal constraints, if this is information of which it has special knowledge; (b) provide advice or assistance, including training, to overseas Governments in connection with the development of land or property-based taxation systems.
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