Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Supplementary Memorandum from The Department of the Environment, Transport and the Regions (EST 98D)

During the course of the Select Committee's hearing on the 30 June 1998, Department of the Environment, Transport and the Regions officials undertook to provide the Committee with further information on a number of points raised by Members.


The Committee asked for the exact figure for outstanding appeals against non-domestic rating valuations (Question 166)?

  1. Of the 295,000 appeals which were outstanding at the end of May 1997, 13,900 were in respect of the 1990 rating list.

The Committee asked what proportion of those valuations lost on appeal was provided by the in-house valuers and external valuers (Question 173)?

  2. All of the 1990 and 1995 valuations were done in house.

  3. The experiments mentioned in oral evidence were developed to test the feasibility of using private sector valuers in support of the VOA's on-going valuation work, for supporting referencing activity (i.e., the measuring and recording of information about land and buildings).

  4. The evaluation of the experiments concluded that whilst it was feasible for private sector firms to support the valuation work of the VOA, there was no clear financial advantage to the public sector in their doing so. Accordingly, the Financial Secretary to the Treasury announced on 23 June that the Government had decided not to contract out this work.

The official asked for further information to be brought to the Committee's attention about the financial policy management review (paragraph 177)

  5. In response to questions from the Committee, officials said that the Department was concerned about the loss of yield due to appeals against rating valuations. That remains the case. We do monitor this closely, but it is also fair to say, to give a fully rounded picture, that valuation is not a precise science: there is generally a significant margin of judgement involved in determining a rateable value and therefore genuine grounds for argument. Against this background—as we indicated in oral evidence—some loss of yield due to appeals is inevitable, but difficult to predict accurately in advance. It is also relevant that the 1990 revaluation of non-domestic property was the first for 17 years. Given the scale of changes in rateable values after such a long gap and, in some cases, the absence of accurate up-to-date-information, a relatively high level of appeals and of loss of yield on the 1990 list was to be expected. The scale of changes in RVs, the number of appeals and the anticipated loss of yield in relation to the 1995 list all show a significant reduction compared to the 1990 list, though not as great as originally forecast, as pointed out in oral evidence; and a further reduction is anticipated in the 2000 list. On the other hand, within the percentage reductions in the lists there will be cases where the reduction arises for changes in the environment after the publications of the lists. Conversely some changes, new construction and improvements to properties, increase the value of the lists. Overall, at the latest date for which figures were available, the total rateable value of the 1995 lists for England and Wales is about one per cent higher than it was at 1 April 1995.

  6. A financial management and policy review of the valuation tribunal service has looked at the procedures governing the handling of ratepayer's appeals against valuations entered in the rating list. A consultation paper was issued in September 1997, "Valuation Tribunals: Financial Management and Policy Review", and since then further informal consultation has taken place with representatives of ratepayers, rating professionals, the Valuation Office Agency and Valuation Tribunals. Amongst the procedural proposals being considered are suggestions for requiring both the Valuation Office and, where appropriate, ratepayers to provide factual information earlier in the process to reduce the matters in contention so far as practicable. The Valuation Office Agency has already begun discussions with representatives of major ratepayers in relation to the 2000 revaluation, with a view to encouraging earlier exchange of information. Improved information flows and the better understanding coming out of these discussions should help the VOA to achieve a greater degree of accuracy in valuations and should help reduce the number of appeals against the 2000 rating list and the consequent loss of rates yield.


The Committee asked whether there were original estimates for the costs of local government re-organisation (Either in total or in individual cases) and if so, what the figurers are. If figures should be presented on a case-by-case basis, it would be useful to the Committee also to receive actual or indicative figures for the final outcome in those same cases (Q226-227)

Estimates of costs

  7. The Local Government Commission for England's published reports of their recommendations for local government contain broad estimates of the transitional costs of re-organisation.

  8. For the majority of areas, the estimates produced by the Commission were based on a standard theoretical model and made use of figures provided by the local authorities. This enabled comparisons between the relative costs of the various possible structural arrangements within a county area. The Commission's estimates were based on current prices, at the time of the relevant reports. They also exclude any element of betterment, for example improvement in IT systems, which will occur when new authorities invest in new facilities. However, for six areas the Commission's source for estimates of cost was the Audit Commission (and these Audit Commission estimates excluded the costs of redundancy, early retirement and other staff compensation costs).

  9. Taken together, the Commission's estimates of the transitional cost of local government reorganisation produce a total cost range of £125.6 million to £199.1 million. The table below summarises the transitional cost estimates given in the relevant reports by the Local Government Commission for England.

Local Government Commission for England estimates of transitional costs

Estimate of transitional costs
£ million

Isle of Wight4-5
Avon 13-18
North Yorkshire (no separate estimate given for Humberside) 3-4
East Sussex3-5
Hereford and Worcester6-9
Essex: Southend4-8


Total excludes Dorset—the structural change implemented was not one of the Local Government Commission for England's final recommendations and they had not, therefore, made an estimate of the cost.
1 Source: Audit Commission. Excludes costs of redundancy, early retirement and other staff compensation costs.

Actual Transitional Costs

  10. As stated in oral evidence, the Department has not collected comprehensive information about the total costs, or their breakdown, incurred by local authorities as a consequence of local government re-organisation. It believes that the SCAs which have been issued to local authorities are the best guide to overall transitional costs. They will reflect both capital expenditure incurred and revenue expenditure which has been capitalised. Authorities are likely to have sought to capitalise expenditure wherever possible since this allows them to meet costs, or accrue offsetting savings, over a number of years; the attractiveness of capitalisation was even greater because under the terms of the transitional costs scheme authorities are not required to meet borrowing or interest costs for a period of three years. These considerations underpinned the point made in oral evidence that the SCA figures must cover the great bulk of authorities' costs.

  11. When submitting their bids for SCAs, authorities also made estimates of the savings accruing, together with the receipts realisable, in the year of the application. These amounts were taken into account before the SCAs were issued. Information on the total of SCAs issued (to date), presented on a county area basis is given below.

Transitional costs of re-organisation SCAs issued

Total (to date)
County AreaSCA Allocation

Isle of Wight3,723
North Yorkshire10,047
East Sussex13,657
Hereford & Worcester16,050


1 The £428 million figure given in oral evidence includes total public expenditure provision of £120 million for 1998-99 SCAs, some of which has still to be allocated to authorities.

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