Memorandum by the Royal Institution of
Chartered Surveyors
INTRODUCTION
These comments from the Royal Institution of
Chartered Surveyors (RICS) are in response to the Treasury Sub-Committee
Inquiry into the Valuation Office Agency (VOA). The Royal Institution
of Chartered Surveyors (RICS) welcomes the opportunity to give
evidence to the Treasury Sub-Committee as our members are very
much involved in the day to day working of the VOA.
Naturally, we would be more than pleased to
attend the Committee to discuss or develop our comments.
OVERVIEW OF
THE RICS
The RICS as a profession deals very closely
with the VOA on two fronts:
(1) Firstly, most senior officers of the
Valuation Office Agency, as well as all Group Valuation and Listing
Officers throughout England and Wales, are Chartered Surveyors.
Furthermore, all Valuation and Listing Officers within Billing
Authorities (whose job is to compile non-domestic rating assessments
and council tax bandings) are members of our Institution. Indeed,
the VOA, although numerically far smaller than it was a few years
ago, remains the largest single employer of Chartered Surveyors.
(2) Secondly, RICS members in the private
sector deal with the VOA on a day to day basis as property advisers
on the rating assessment and consequential liability of their
clients' property. Chartered Surveyors also have dealings with
the VOA on a variety of non-rating issues, including valuations
for tax and compensation purposes.
The short timescale set out in the invitation
to comment has prevented the RICS consulting widely amongst those
members who practise as rating surveyors. We do, however, receive
correspondence from members about the VOA from time to time and
our response seeks to incorporate as wide a cross section of these
views as possible.
GENERAL COMMENTS
1.1 In general terms, the VOA enjoys a high
reputation within the profession for competence and impartiality.
It provides many important valuation services—both to the
public and private sectors—through a core of highly skilled
personnel and a unique and valuable database. It also brings a
consistency of approach to areas such as the negotiation of rating
assessments, inheritance tax and capital gains tax valuations.
1.2 A testament to the professionalism and the
integrity of VOA staff is the fact that none of them have ever,
to the best of our knowledge, been convicted of a criminal offence
arising from their professional work at the VOA.
1.3 The VOA has traditionally been the provider
of professional property advice and services to government departments
and many local authorities. This role has diminished recently
as these bodies have either taken the work in-house or engaged
the services of private practice.
SPECIFIC COMMENTS
We have set out our response to the first question
posed by the Committee in the form of positive and negative comments.
We have sought, where our comments are negative, to provide constructive
criticism. The second question raised by the Committee looks into
the future and here we have restricted ourselves to recommendations.
Q1. Changes introduced since the 1995 Next Steps
Agency Review
(a) Positive factors
2.1 It is widely understood that on its establishment
as a "Next Steps Agency", the VOA was required to adopt
a five year business plan, one element of which was to reduce
operational costs by 6 per cent per annum in real terms, or by
something over 30 per cent in absolute terms. This was a major
constraint on the business of the VOA at a time (the last revaluation
of commercial property in 1995) when the demands of the public
and the professions for a faster and more responsive service had
never been higher. It is to the credit of the VOA that it has
achieved this target by a combination of the greater use of information
technology (IT) and an early retirement and voluntary redundancy
programme, albeit with the loss of a large number of experienced
senior staff.
2.2 We understand that the VOA has met this
undertaking to reduce its costs by 6 per cent per annum in real
terms. This is a major achievement for a department which was
not obviously over-staffed.
2.3 The staff of the VOA have laboured diligently
to make the Next Step changes work well. This is a significant
achievement in light of the upheaval of office closures, staff
regrading and the introduction of advanced IT on a piecemeal basis.
Furthermore, there has been a change in the mindset of VOA staff
who now see rate payers and their agents as customers who deserve
good service.
2.4 There has been an obvious change in working
practices within the VOA. The Agency consults widely both locally
and centrally with ratepayers and their agents, listening to their
views with the desire to achieve more accurate initial valuations.
This co-operation has established a climate where changes in valuation
practice can be incorporated into rating law and procedures via
a consensual rather than confrontational process. This can only
be positive.
2.5 The VOA has created Specialist Rating Units
(SRUs) on a regional basis to deal with more complicated and unusual
valuations. This has been particularly successful as the professional
skills required to value these unusual hereditaments are necessarily
scarce in both the VOA and the private sector. The establishment
of the SRU has meant that experienced specialist surveyors in
the VOA and in private practice are able to meet and negotiate
the assessments of these difficult hereditaments on equal terms
and with considerable savings in time and costs. It has meant
that, where necessary, more senior and experienced valuers are
available to defend these assessments before either the Valuation
or Lands Tribunals.
2.6 A point consistently stressed by our members
is their respect for the professional attitude of the qualified
staff within the VOA and their commitment to achieving the correct
valuation, regardless of how much work is involved and frequently
in the face of co-ordinated and weighty arguments (often supported
by greater resources) from private practice. The professional
commitment of the VOA to their job of defending the rating list
is very high and as one of our members commented, " . . .
in this respect, the [VOA] is a credit to the taxpayer."
(b) Negative factors
3.1 The reorganisation of the VOA on a "Group
Office basis" has imposed upon the Group Valuation Officer
many additional responsibilities. Unlike the old District Valuer
and Valuation Officer, the Group Valuation Officer is responsible
normally for more than one local office. Furthermore, this responsibility
extends well beyond the professional tasks relating to Group offices
and includes dealing with issues such as personnel and administration.
However, unlike the previous system, they must resolve these matters
without the support of the regional network which formerly
co-ordinated the activities of local Valuation Offices.
3.2 The VOA conducted detailed aptitude tests
before appointing the Group Valuation Officers and engaged the
services of external consultants to carry out the necessary appraisals.
Only time will tell if those appointed are up to the task or not,
but the RICS remains concerned that the successful administration
of the rating system rests on the shoulders of the Group Valuation
Officers, who would benefit from more central support and enhanced
training in management skills.
3.3 The VOA has tried to incorporate some of
the ideas from private practice into the changes it has introduced
following the Next Steps Review. It needs to attract high quality
surveyors/managers into its ranks as Group Valuation Officers.
To be successful in this, it should consider the introduction
of market driven rewards which are capable of being reviewed against
expected targets.
3.4 The VOA are currently engaged in both preparing
the 2000 revaluation assessments and defending the 1995
Rating Lists. These two tasks are stretching the VOA's resources.
As a result, the speed with which outstanding appeals (and changes
to the 1995 lists) are being resolved is slowing. The RICS believes
that the professional resources of the VOA need to be enhanced
if the public is to receive the service it deserves. Whilst it
is understandable that appeals arising from the changes negotiated
during the life of a rating list will remain outstanding when
that list ceases to apply it is, in our view, unacceptable that
appeals against the original list assessments (as opposed
to the changes negotiated) should remain in dispute after the
list ceases to have effect.
3.5 It would be unfair to the VOA to suggest
that it is solely to blame for delay in settling appeals. The
problem is systemic and needs to be resolved. Realising that the
system needed to be modernised, the RICS established the "National
Committee on Rating" which published the Bayliss Report in
the summer of 1995. This report was the consensual result of 12
months discussion between 16 organisations assisted by eight government
departments. We believe it offers a viable long-term framework
for the future of the rating system and would be happy to supply
members of the Committee with a copy.
3.6 The VOA is no longer seen as an attractive
first choice employer by qualifying and experienced Chartered
Surveyors. The recent limited recruitment drive by the VOA was
instructive. It showed that in London and the South East—where
employment for Chartered Surveyors is plentiful—recruitment
levels and the quality of candidates has been poor. This contrasts
sharply with elsewhere in England and Wales, where the quality
and number of applicants was high.
3.7 This may be a factor of the market, but
it might also emphasise that employment by the VOA is looked upon
as something other than a first choice by many Chartered Surveyors.
The VOA used to have a reputation for providing some of the best
technical training within the profession. Sadly, this is no longer
a generally held view and, together with uncertain career prospects,
discourages high quality entrants.
3.8 The VOA used to train its own young Chartered
Surveyors under its Cadet Valuer Scheme. The quality of training
and work experience provided by that scheme was very high and
appointment as a Cadet Valuer was eagerly sought after by those
wishing to become Chartered Surveyors. This scheme has been discontinued
by the VOA on what we understand to be cost grounds. As a consequence,
the Agency is not replacing valuation skills at the younger end
of its workforce. This is likely to create difficulties in the
future. The RICS believe that the VOA should re-introduce its
Cadet Valuer Scheme and help train—in common with other
responsible employers—the surveyors and valuers the country
will need in the future.
3.9 It is apparent to private practice members
of the RICS who visit local Valuation Offices in the course of
their business, or who meet members of the VOA at professional
meetings, that morale throughout the Agency is very poor. Staff
and Valuers at local office level are disillusioned and unhappy.
It is widely reported that a recent survey by the VOA found a
disturbingly high percentage of staff showing symptoms of depression.
3.10 We understand that VOA valuers, having
to meet ever increasing targets from diminishing resources, understandably
feel that the quality of their work (once the hallmark of the
VOA) is starting to slip. The economies referred to and a shortage
of qualified surveyors has led to unqualified staff (in this case
termed "Valuation Technicians") being asked to deal
with the settlement of more complicated appeals. They have to
do this under the supervision of a qualified surveyor and as a
result normally have no authority to settle these claims. This
leads to delay and adds to the frustration of the supervising
surveyor. There is no doubt that these unqualified technicians
work extremely hard, but their knowledge, training and expertise
cannot match that of a fully qualified valuer.
3.11 The changes introduced following the Next
Steps Review emphasised the importance of settling cases and,
consequently, many qualified valuers feel that the VOA is more
concerned with the number of appeals settled than with the accuracy
of the resulting assessments.
3.12 One of the strange ironies of the VOA restructuring
plan was that it offered financial incentives to surveyors at
different levels to take early retirement or voluntary redundancy.
This encouraged those who saw the greatest opportunities outside
the VOA to leave. These individuals included many with the highest
technical skills or those who thought they had the necessary entrepreneurial
flair to make a success of transferring to private practice. This
contrasts sharply with the private sector where any employer would
have identified the poorest performers and selected them for redundancy,
thus improving the overall quality of staff retained.
3.13 Staff normally rise to a challenge and
part of the responsibility for this demoralised and unhappy state
of affairs must rest with the former leadership of the VOA which
failed to explain and sell the changes to the workforce.
3.14 The investment in IT support within the
VOA has, we believe, been slower and less intensive than that
of equivalent-sized surveying businesses in the private sector.
We understand that this has been partly due to Treasury restrictions
on investment which does not show a positive return in a single
year. Whilst we welcome the current moves to relax these restrictions,
we would point out that rating is currently run on a five year
cycle and the continued investment in IT that will be needed to
deal with the ever greater demands from customers also needs to
be assessed on a five year cycle.
Q2. Changes recommended for the 2000 Revaluation
4.1 The VOA is well advanced with the preparation
of the 2000 Rating List and has undertaken to provide the first
draft to the DETR/Welsh Office by May 1999. We do not feel that
it would be helpful to suggest changes in their procedures at
this time as this would only disrupt this difficult task.
4.2 There are apparently 1.7 million non-domestic
hereditaments in England and Wales. Of this total, some 1.25 million
comprises of shops, offices and industrial properties which are
normally let in the open market and are valued using direct rental
evidence. The RICS understands that the work on preparing these
assessments is more advanced than that in respect of other, more
specialised hereditaments, where different and more complex valuation
techniques are required. We believe that the VOA has made great
strides in developing a customer focus, but it cannot rest easy.
It must constantly strive to improve its working relationship
with ratepayers and their surveyors so as to increase the accuracy
of their initial valuations of these properties. The RICS is,
quite naturally, willing to play its part in improving this relationship.
4.3 As part of this process of improving customer
focus, steps must be taken to raise the morale of staff in local
VOA offices.
4.4 The VOA should act as a responsible employer
and help train its share of young surveyors in the future. It
is still the largest employer of Chartered Surveyors and, as such,
has a moral responsibility to bring on its share of young valuation
surveyors for the future.
4.5 Major savings can be achieved—for
Government, local authorities, valuation tribunals, ratepayers
and the VOA—through the whole-hearted adoption and introduction
of modern compatible IT systems.
CONCLUSIONS
5.1 The VOA is a worthwhile and hard working
agency of Central Government whose staff have been demoralised
by a combination of an extensive and arbitrary five year cost
reduction plan, inadequate past leadership, the unsettling effect
of office closures and the piecemeal introduction of IT.
5.2 Ironically, the very professionalism of
the staff has contributed to their demoralisation as they have
been trained to provide a certain level of service and now feel
they are required to place the rapid settlement of appeals above
their professional responsibility (both to the ratepayer and public
at large) to achieve the correct assessment.
5.3 The changes introduced following the 1995
Next Steps Review are now almost complete and the benefits of
these changes, coupled with the implementation of the latest IT
support, should provide an opportunity for the Agency to re-build
its morale.
5.4 The professional surveyors and staff within
the VOA are resilient and, provided it is explained to them that
they have an interesting and rewarding future, they will respond
to positive leadership.
March 1999
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