Examination of witnesses (Questions 163
- 179)
TUESDAY 30 JUNE 1998
MR JOHN
BALLARD, MR
PHILIP WOOD
and MR PAUL
EVANS
Chairman
163. We welcome you back to the Sub-Committee.
For the record, perhaps you would identify yourselves.
(Mr Ballard) I am John Ballard, Principal Finance
Office, Department of the Environment, Transport and the Regions.
On my left is Philip Wood, Director-General of Local and Regional
Government, and on my right is Paul Evans, Director of Regeneration.
Mr Olner
164. How many appeals against non-domestic
rating valuations were outstanding at 1 April 1998?
(Mr Wood) My figure is for the end of May which
I hope is near enough. The answer is 295,000.
165. How many of those relate to the 1990
rating list?
(Mr Wood) I do not have an exact figure for that,
but a small proportion still relates to that earlier revaluation.
166. What is that "small proportion"?
(Mr Wood) I cannot give you that figure now; I
shall give it separately.
167. We need to know how far you have moved
in five years, do we not?
(Mr Wood) Yes.
168. What proportion of the rateable value
on the 1990 list was lost through appeals?
(Mr Wood) Of the 1990 list, 9 per cent.
169. Is that acceptable?
(Mr Wood) No. It seems to me to be much too high.
One of our objectives is to reduce the erosion of receipts from
that source.
170. What percentage has been lost on the
1995 rating list?
(Mr Wood) That loss is forecast to be 7 per cent.
I have to say that originally it was forecast to be down to 5
per cent. Clearly, there is something wrong here. The arrangements
particularly in terms of the original valuations and the appeals
are out of kilter. We are now trying to do something about that.
171. Do you think that it has gone out of
kilter because some of the list was compiled inhouse and some
by external valuers? Is there any method of differentiating the
respective proportions?
(Mr Wood) I see no evidence that the erosion in
receipts is explained by that factor.
172. But have you made any comparisons?
(Mr Wood) I am not aware of any research that
has been directed to that question. The Valuation Office in reporting
to Treasury Ministers has done some research recently which examines
the effectiveness of the use of private sector valuers. That was
reported to Parliament by the Financial Secretary on 23 June.
One of its conclusions was that it was feasible for private sector
valuers to do the work done by Valuation Office valuers. There
was no question that they would be unable to deliver the appropriate
quality.
173. I am seeking to discover what proportion
of the list provided by the inhouse valuers and external valuers
was lost on appeal?
(Mr Wood) I cannot give that answer now, but I
shall provide a supplementary memorandum on it.
Mrs Dunwoody
174. If you are 10 per cent adrift from
the original list, and it looks as if you are going to be wrong
again on the previous one, albeit you have no exact figure, surely
you must ask yourselves why there was such a poor result in the
first place. One reason may be that the people who were used were
not accustomed to making these valuations?
(Mr Wood) The evidence that we have from the closely
controlled and monitored experiment put in hand in an attempt
to answer that question has not established any difference of
that kind.
175. What did it establish?
(Mr Wood) It established that there was no financial
advantage to the Exchequer in using private sector valuers.
176. So, they are all poor?
(Mr Wood) As a consequence, the Government have
decided that they will not use private sector valuers in future,
and not for the 2000 non-domestic rate revaluation in particular.
177. Is that based on the assumption that
if one is to have poor valuations one may as well have them provided
by one's own valuers?
(Mr Wood) We are concerned about what has been
happening and have put in hand an examination in the form of a
financial management policy review of the valuation office[1].
It is clear that there are things that are wrong but which can
be put right. The FMPR report, which I hope will come out in the
summer—certainly in this calendar year - will make various
suggestions. The valuation office agency is consulting on ways
of improving the flow of information in both directions between
the valuers and property owners so we do not get into a stand-off
where each side does not know the basis on which the valuations
and the views and facts relating to particular properties are
arrived at.
178. That is admirable but a little tardy,
is it not?
(Mr Wood) That can be argued, yes. Admittedly,
with any appeal system one must expect some degree of erosion.
It is too high but it has been improving. We went from 9 per cent
to a forecast for the 1995 valuation of 7 per cent. In my view,
that is not good enough. Hence, we are trying to address further
improvement by the means just described.
Mr Olner
179. How can you state categorically that
it is improving when the loss is 9 per cent and 7 per cent and
284,000 appeals are outstanding? That 7 per cent may go up; it
may be worse than the 9 per cent?
(Mr Wood) No. The 7 per cent is not what has been
eroded so far; it is an estimate of the total erosion once we
have been through the great bulk of the appeals. The 7 per cent
is intended to be on all fours as a comparison with the 9 per
cent.
1 Witness Correction: Appeal system. Back
| 
