National Ratepayers' Valuation Forum - Meeting Summary

MINUTES OF MEETING HELD ON 10th OCTOBER 2005
VALUATION OFFICE AGENCY, LONDON WC2

Present - representatives of:

Present: Association of Chartered Certified Accountants (James Meyrick), British Property Federation (Anthony Brittain); Federation of Small Businesses (Laura Davies); Forum of Private Business (Tim Kind); IRRV (Tom Dixon), Petrol Retailers Association (Paul Yates) RICS (Jerry Schurder, Terry Walker); RSA (Blake Penfold, Denise Trollops); Office of the Deputy Prime Minister (Nic Suggit); Small Business Service (Richard Thompson); Telereal (David Malone); Welsh Assembly Government (David Fletcher); Valuation Office Agency (Paul Sanderson, Vic East, Tony Capp)

Apologies

Apologies were received from:

Association of Charity Shops (Lekha Klouda); Boots Boots (Andrew Martin); British Hardware Federation (Maisie Slater); British Hospitality Association (Martin Couchman); British Retail Consortium (Paul Browne); Country Land and Business Association (Oliver Harwood); EIA (Colin Mason); Federation of Small Businesses (Roger Culcheth); Fuller Peiser (Mike Flecknoe); Inter Bank Rating Forum (Mike Knight, Roger Littlewood); National Federation of Retail Newsagents (Catherine Tong); RICS (Charles Partridge)

1 Minutes of previous meeting

1.1The minutes of the meeting held on 16 May 2005 were agreed.

2 Action points from meeting on 16 May 2005

2.1 Paul Yates had reported at the last meeting that a member of the PRA had received a letter stating that a 2005 list appeal had been scheduled for discussion in 2010 (para 3.4 of the minutes). Assurances had since been given that the letter had been issued in error but it had not been formally corrected. Vic East agreed to look into the matter again.    ACTION POINT

3 2005 Revaluation - project valuation Project Evaluation update

3.1 Paul Sanderson said that the evaluation report on the 2005 business rates revaluation undertaken over the past few months was now complete. Many of the report’s recommendations related to organisational and administrative issues for the Agency but there were some key findings that may be of interest to NRVF members.

3.2 Vic East said that the VOA’s project board and management board 2005 NDR Revaluation Project Board and Management Board had both endorsed the report in general terms but no decisions had yet been taken on publication, which would be considered at a later date. The report identified the lessons learned, areas of best practice, and made recommendations for future revaluations.

3.3 The main points were :

• All key VOA objectives had been achieved with some important successes in relation to the publication of summary valuations and valuation schemes, which had been well received outside the VOA.

• The redesigned rent return forms were generally commended in making it easier for the ratepayer ion to provide information. Form 6003 had been redesigned to include explanatory notes and the 6004 “boomerang” was a simpler partially completed form used in rent review cases. Nevertheless in response to some comments, the Agency would look again at the number of mandatory fields required in each form.

• The Multiple Electronic Rental Information (MERI) system was the subject of a wide-ranging discussion and it was recommended that the VOA evaluate an alternative to it to improve data matching and the quality of information provided. Potential alternatives included the use of web services (which was being used for web-based appeals and could help in data matching), the PISCES system (which could offer a standardised way of collecting and providing information) and alternative software applications.

• There were a number of recommendations which would be taken forward by the VOA’s Data Strategy Team, including the use of the Valuebill project to try to obtain lists of occupiers and non-occupied property better information from billing authorities.

• Summary valuations (SVs) had been well received. However, there was still some confusion amongst some ratepayers over whether the SV was the bill and the Agency would explore with WAG and ODPM whether a draft or estimated bill can be issued to accompany the SV ahead of the revaluation in order to aid clarity.

• The report recommended that all properties should be recorded on the central database in time for the Agency to issue SVs for all properties in 2010 (although this may not mean that they all would be published on the website given the security and commercial sensitivities that attach to some valuations).

• Reaction to SV helpdesks suggests that some changes in the wording of SVs and explanatory notes would be helpful and these will be reviewed.

• For future revaluations it is possible that SVs could include the rental information held on the property and seeking confirmation that this information is accurate. The Agency would also want to consider publishing rental information on the internet so that Valuation Schemes include details of the rents underpinning each one. All will require further discussion , not least with client departments. Jerry Schurder said that the VOA should aspire to this - this; whilst SVs allowed consideration of the facts held by the Agency on each property, a view on rental levels adopted by the VO clearly could not be taken in the absence of supporting information.

• Under arrangements for SV publication in 2004/05 the VOA had only six months to publish and then pick up any changes and make corrections. It was felt that ratepayers should be encouraged to verify the factual details published in their current SV at some stage before the VOA moves into reval activity in for 2010. If this could be coupled with publication of rental evidence , this would provide a good opportunity for ratepayers to take an early view of accuracy. Tom Dixon said that any plans in this area should take account of possible effects of TR on any resultant changes that occur to the 2005 list and ratepayers should be made aware of the potential issues involved.

• The existing valuation model on the VOA’s central database should be reviewed and improved and the Agency should also consider the possible use of an Automated Valuation Model (AVM). If this was developed it might be possible in due course for the AVM to be made available on the web for use by ratepayers and agents.

Local Ratepayer Valuation Forums (LRVFs)

3.4 Tony Capp said that he had conducted a review of the LRVF pilots and this was considered in a separate sub-report. The VOA had introduced f our pilot LRVFs in 2001-02 operating in the North Wales and South West groups but the results were inconclusive, as the pilots had operated outside the key revaluation period. The pi lots were therefore extended in 2003 , to run until the 2005 revaluation was completed with additional LRVFs in the Newcastle group to test the concept in a conurbation.

3.5 The numbers of members at each forum were strong with a minimum of 20 members at each Forum. Most members remained involved throughout and there were few resignations , although attendances at meetings varied considerably.

3.6 Responses to questionnaires showed that the members valued the LRVFs with most suggesting that the LRVF concept should be rolled out across England and Wales. However, importantly, most also believed that the same audiences could be reached through member organisations of the NRVF.

3.7 Good contacts and relationships have been developed through the current LRVFs and awareness of the revaluation and the VOA ’s work has been raised. The Groups and members value these contacts and had agreed that the current LRVFs should continue.

3.7 However, there are few convincing operational reasons to extend LRVFs nationwide. The vast majority of the individual businesses the VOA are reaching through the current LRVFs are provided by a few key organisations , which can be targeted either through the NRVF or proactive contact by the local Group with “key” local organisations such as Chambers of Commerce and Trade and Tourism groups. Of 38,000 businesses whose trade bodies responded to the questionnaire, only around 1% were not members of these “key” groups. In addition, summary valuations had been sent to the vast majority of ratepayers allowing the VOA to engage directly with them.

3.8 In summary, the current local forums would continue, and other VOA groups would seek contact with key local trade organisations ahead of the next revaluation , but there would be no national roll out of the LRVF concept.

Valuation Office Ratepayer Contacts (VORCs)

3.9 A separate review of the Valuation Office Ratepayer Contacts (VORCs) had also been carried out. VORC is a scheme designed to facilitate the provision of rental information from national multi-site occupiers to the VOA by providing the ratepayers concerned with a single point of contact within the VOA. The success of the individual relationships with the participating companies in terms of securing a regular flow of information had been patchy. Of the original 22 multiple occupiers involved in the scheme , about a third had provided regular updates of rental data and have solid relationships with VO staff, with the remainder either providing few updated schedules or none at all. A small number of companies had withdrawn from the scheme and not been replaced.

3.10 Where the scheme had worked well it had provided benefits for both sides. The VOA had secured a regular flow of up to date information, which had helped to produce a more accurate revaluation, and this had also resulted in better targeting of rent returns. For example, HBOS had reported that , before the scheme started , they were receiving an average of 70 rent returns each month, and this had now fallen to six per month. All of these rent returns had been aborted with the required information being provided lmost immediately by e-mail.

3.11 The VORC scheme would therefore continue post 2005 with the aim of recruiting further members and extending the scheme to major landlords. The VOA would also be making improvements to its day-to-day management of the scheme and looking at the problems experienced in matching the data provided by ratepayers with the VOA database.

4 Future role and business of the NRVF

4.1 Tony Capp said that the review of the NRVF had prompted a positive reaction from members both through formal responses to the review and at the last meeting of the NRVF held on 16 May 2005. Members had valued the work of the Forum, and the recommendation was that it should continue. However, there had been suggestions from some members that it should become a more rounded rating policy forum under the aegis of the ODPM and Welsh Assembly Government. Paul Sanderson said that ideally its ratepayer members would run the Forum but there was no national ratepayers body in a position to do so.

4.2 Nic Suggit (ODPM) said that ODPM had benefited from involvement in the NRVF and the opportunity to discuss ideas, and was in favour of a continuation of its work, possibly as a broader National Rating Forum, working alongside WAG. ODPM would want to include the VOA as part of that process. It would be necessary to look at the membership and how it should expand, particularly with a view to securing renewed billing authority representation. In light of the Lyons review it would be especially useful to keep the Forum going ahead of the 2010 revaluation, probably meeting a couple of times a year.

4.3 David Fletcher (WAG) said that he agreed that the Forum should be reconstituted as a broader Ratepayers’ Forum but suggested that it should retain a fairly narrow focus, with only the LGA and Welsh LGA added to the current membership. However, the VOA should retain responsibility for organisational/administrative arrangements, as this would provide a better balance.

4.4 Paul Sanderson invited comments from members:

• Tim Kind (Forum of Private Business) said that he agreed with the views of ODPM and WAG but added that the success of the NRVF lay in its starting point of establishing direct contact with ratepayers and it is important that the Forum’s focus remains on business.

• Paul Yates (Petrol Retailers Association) said that he had welcomed the opportunity to participate in discussions on current issues and on the way forward. The more open approach induced by the NRVF should be applauded.

• Richard Thompson (Small Business Service) said that the VOA should continue to run the Forum.

• Anthony Brittain (British Property Federation) suggested that the Forum should be broadened to encompass the Scottish rating system.

• David Malone (Telereal) said it was important that momentum on valuation issues was not lost , but there was now a need to refocus on billing and liability issues. It would be difficult for the VOA to run a forum involving billing authorities when VOA was not their paymaster. ODPM and WAG would have greater influence and should jointly chair the Forum.

• James Meyrick (Association of Certified Chartered Accountants) said that the principle question is whether the NRVF has produced results for ratepayers, which it clearly had. It had covered policy issues as a result of the involvement of Nic Suggit and David Fletcher well , but the position could change if they moved on. Passing the chair of the Forum to ODPM/WAG should ensure may put at risk continuing momentum. Both WAG and ODPM stressed that any change in personnel would not affect the departments’ engagement with the Forum.

• The FSB had said in its response to the review that the Forum should remain under VOA management.

• Jerry Schurder (RICS) said that the DTLR’s review of revaluation in 2000, and the VOA Framework Review in the same year had focussed on the VOA as a deliverer of change. It was therefore right that the VOA ran the Forum at that stage. However, changes in the future were likely to focus on other parts of the rating system and it was important that WAG and ODPM take ownership of the Forum and steer it forward, although the VOA should retain a close involvement.

• Denise Troloppe Trollope (RSA) said that the VOA/LGA Joint Steering Group on Modernisation should probably merge with the NRVF if the Forum’s main focus in future was to be on strategy and policy development.
• Tom Dixon (IRRV) said that criticisms of billing authorities had always been reported to the IRRV Council. It was important that the LGA should also be represented.

• Tim Kind said that representation by Treasury would enhance the status and effectiveness of the Forum.

• The Petrol Retailers Association (PRA) has a fair spread of occupiers, but not all received summary valuations. Showrooms received them, but some smaller retailers got nothing. The sensitivity of turnover information was recognised, but it was suggested that they should have been sent a statement of the new rateable value. (Paul Yates) Paul Sanderson responded by saying that the VOA’s intention was that all ratepayers should receive a Summary Valuation in future.

• One member of the PRA had received a letter stating that his appeal had been scheduled for discussion in 2010. Paul Sanderson said this was clearly an error and agreed to look into the matter. ACTION POINT – Paul Sanderson

• Tim Kind said that ratepayers’ requirements remained the same - they wanted a fairer, simpler, and clearer system. The publication of Summary Valuations, Valuation Schemes and the introduction of the new Small Business Rate Relief scheme were significant steps in the right direction. However there was still some imbalances in the system overall and inconsistency in billing. Nic Suggit said that the ODPM was undertaking a preliminary research project to see what information is available on reliefs and then look at the effectiveness of them. Small Business Rate Relief would be reviewed on a different timescale. The billing issue was a different one as authorities retained local discretion on content of bills, but he would consider whether the Government needs to dictate more in this area, building on the IRRV’s work.

• Jerry Schurder said that the VOA had made huge strides in its modernisation work which was greatly appreciated, but much more could have been achieved. The legislation introducing the civil penalty came too late; late decisions on transition and the small business rate relief scheme had prevented ratepayers and their agents getting the full benefit of the early publication of the draft rating lists and its impact on their new liability. The late decision on appeals procedures was now holding up the making of appeals. Nic Suggit acknowledged that ODPM were responsible for these problems and noted the concerns expressed.

• Charles Partridge said that the VOA’s initiatives in publishing summary valuation data had gone some way to achieving the Prime Minister’s objective in improving the transparency of the property market. The new rating list is effectively the first open property database in the UK.

• Paul Sanderson said that he hoped to see a number of further developments in future years, e.g. valuations tied in to mapping such as OS Mastermap which would provide map-based search facilities; the use of Unique Property Reference Numbers or a similar system; and for all relevant transaction data to be published in support of rateable values shown in the rating lists.

5 Lyons review update

5.1 Nic Suggit said reported on the announcement on 25 September that Sir Michael Lyons’ report on Inquiry into local government finance which had been focussed on the balance of funding and the reform of council tax and business rates and due to report at the end of year, would now be delayed. Ministers announced on 25 September that the LyonsReview’s remit had been extended to consider include the future role and functions of local government before making function of local government. As a result any recommendations on the reform to council tax and non-domestic rates was how it should be funded. only likely to be published in December 2006. The council tax revaluation, scheduled for 1 April 2007, had therefore been postponed.

5.2 It is expected that the inquiry team will publish at various stages a number of discussion papers, probably focussing initially on the future role of local government. A Bill enacting any changes is now unlikely before 2008. government and funding issues.

Possible administrative changes to business rates

5.3 Nic Suggit said although no formal review of the administration of the rating system was taking place post revaluation, he had invited ideas for reform from members and a number had responded. The original idea intention had been that to pass any proposals for administrative change could be passed to the Lyons Inquiry team for their consideration. However, in view of the expanded remit given to Lyons on 25 September, it was likely that ODPM would itself have to consider system changes.

5.4 A few ideas had emerged from recent suggestions had been made in discussions and these included:

• The consolidation of Acts and regulations
• A removal of the RPI cap on annual increases
• Reduce multiplier in some way the UBR multiplier
• More regular revaluations
• A review of the Plant and Machinery regulations
• Draft or estimated bills to accompany summary valuations
• A suggestion that the current wide range of complex rate reliefs should be reviewed and simplified.
• The introduction of valuation bands for smaller properties
• End the agricultural exemption
• Introduce new rate reliefs for good causes, renewable energy plant, and climate change initiatives
• Remove transitional relief (TR); introduce tighter TR schemes; have one permanent scheme; review the funding of transition
• Localise/partially localise the business rate
• Switch form from an occupier based to an d ownership based tax
• A number of ideas were submitted about billing collection and enforcement.
• Changes to appeals regulations.

5.5 The issue for ODPM now was what to do with these ideas in particular in view of the ongoing Lyons review. The aim would be to talk to smaller groups of people so that ODPM develops greater understanding of value and implications of individual proposals although there was no commitment to follow up on these or any other proposals at this stage. ODPM is happy to receive more suggestions and to hold discussions so that they can build an understanding of the issues prior to any consideration of the merit of any of the suggestions. At this stage there is no commitment to take forward any of these ideas.

5.6 David Fletcher said that Lyons will make recommendations on change in due course. Wales will not be bound by Lyons but will be watching its progress closely.

6 Unscrupulous rating agents

6.1 Terry Walker (RICS) gave a presentation on the joint RICS/IRRV/RSA Rating Consultancy Code of Conduct and the procedures employed by the RICS when complaints are made against its members. The Code of Conduct was mandatory on members of RICS , RSA and IRRV but it is also intended as a benchmark for the industry. It was therefore legitimate for non –members non-members to cite the agreement when seeking engagement as an advisor, although the RICS could not take any action on any complaint concerning allegations of non-compliance with the Code of Practice by a non- non-member. In these circumstances a ratepayer would be advised to take advice from the local Trading Standards Office or to seek redress through the courts.

6.2 Where complaints are received about RICS members, two alternatives were available to ratepayers. RICS members had a “complaints handling procedure” which could be used for complaints on all matters including standard of service, contract disputes and fee disputes. Unsettled cases could go forward to arbitration (which could involve costs to the ratepayer of about £200). It was possible for compensation to be awarded under the complaints procedure.

6.3 A complaint can also be made direct to the RICS in cases where there had been an alleged breach of the RICS rules of conduct or of Practice Statements (including the Rating Consultancy Code of Conduct.) The procedure has two stages – stages: investigation by RICS staff members and then, if appropriate, the complaint can be referred to an RICS disciplinary body.

6.4 Tom Dixon stressed that the RICS rules of conduct mirrored those of the RSA and IRRV.

6.5 Tim Kind asked about the process employed by the RICS in selecting a surveyor when called for advice by a ratepayer - how does RICS select member with rating expertise rather than a qualified surveyor with more general experience? Terry Walker said that the ratepayer should be referred to the RICS rating help line – line: about 300 practices, which specialise in rating services, are available to provide up to 30 minutes free telephone advice.

6.6 The RICS had concerns that some members without recent experience in the field continue to offer services in rating. The RICS did not use practice certificates at present so it was impossible to take pre-emptive action but the Institution would prevent members from practising further in the rating field if legitimate complaints were raised and upheld. Jerry Schurder said that, as with all professional advice and services, people would be well advised to seek recommendations or referrals before entering into any contract.

6.7 Tom Dixon said that the IRRV gave recommendations on rating specialists but it should be understood that within the IRRV all surveyors are rating specialists by definition.

6.8 Terry Walker said that the RICS did not have firms in membership so had no overall control or influence. However, the RICS can control members for their personal actions and for actions taken by non-members that they are responsible for. for whom they are responsible. For example, salesmen are not normally RICS members but where a complaint is made, and an RICS member is held responsible for the actions of that person, the member will be held to account.

6.9 The RICS database is interrogated by geographical area and the professional qualities and experience of the member concerned. It is these two criteria that are considered when a ratepayer approaches the RICS to suggest an advisor. A ratepayer will be offered details of up to three members but the RICS is not permitted to recommend one member over another. Tom Dixon said that he understood that the RSA would be writing to the RICS suggesting that some non-qualified surveyors are being approached to undertake rating work. Terry Walker agreed to report back on the matter ACTION POINT

7 Any other business

Small Business Rate Relief (SBRR)

7.1 Nic Suggit said that the deadline for applications for SBRR for the 2005/06 financial year was 30 September 2006 and data on take up of the scheme would not be available until some time after the end of that financial year. As a result the differential between the main multiplier and that used for ratepayers eligible for the SBRR would be unchanged in 2006/07.

7.2 David Fletcher said that if Wales did introduce a SBRR scheme it would be funded centrally rather than by a differential in the multiplier. Research into the possibility of a Welsh SBRR scheme and current rural reliefs will be published as part of consultation paper within the following month and he encouraged NRVF members to participate in that discussion. The consultation paper would look at the continuing need for the extended rural relief scheme introduced at the time of the foot and mouth outbreak. It would also consider whether there should be rural relief rather than targeting relief on deprived areas. Or is areas and whether a wide-ranging SBRR scheme is the right way forward and right vehicle to address issues in Wales. The Minister wants the WAG to engage with ratepayers as innovatively as possible on the issue and members were encouraged to respond to the consultation paper in due course. ACTION POINT

Wales – assumptions on appeals losses

7.3 Jerry Schurder asked why the Welsh Assembly had made a lesser an assumption on appeals losses when setting the multiplier for 2005/06 which was lower than their counterparts in England. David Fletcher said that WAG had taken the view that appeals arising from the 2005 council tax revaluation should have priority and as a result any “losses” arising from rating appeals would take longer to work through. WAG had therefore decided to assume a lower level of “losses” initially and use the powers in the Local Government Act 2003 to increase the multiplier at a later stage if necessary. There would be no increase applied for appeal “losses” in 2006/07.

Electronic transfer of rental information

7.4 Blake Penfold said that improvements on the electronic transfer of rental information were crucial to a successful revaluation in 2010. Work in this area should be prioritised as the VOA would be seeking information around the AVD of 1 April 2008. Tom Dixon added that there was a disincentive in providing basic rental information under the MERI/VORC systems as ratepayers and agents were required to provide it again if they subsequently decided to appeal. The issue needed addressing.

Close of meeting

Paul Sanderson said that the VOA would return to NRVF members with a more considered view on the nature of the continuing role of the Forum in the near future and with dates for future meetings. He added, on a personal basis, that this would be his last attendance at an NRVF meeting as he had now moved on to “modernise” the VOA’s data systems. He thanked all the NRVF members for their support and contribution throughout the 2005 revaluation programme and wished them all well for the future.

Tony Capp
Valuation Office Agency
17 October 2005