Select Committee on Treasury Minutes of Evidence



Examination of witnesses (Questions 1 - 19)

THURSDAY 29 APRIL 1999

MR JOHN CHARMAN, MR JIM MCAUSLAN and MR CHARLES PARTRIDGE

Chairman

  1.  Good morning, and thank you very much for coming. I wonder whether we could start with you introducing yourselves for the record?
  (Mr Charman)  Perhaps I can start. My name is John Charman. I am a past President of the Institute of Ratings Revenue and Valuation. I have spent most of my adult life working in the field of valuation and specialising in business rates. I am also Chairman of the Rating and Valuation Panel for the CBI and have been so for many years. I formerly worked as UK Property Manager for ICI.
  (Mr McAuslan)  I am Jim McAuslan. I am the Deputy General Secretary of the Public and Commercial Services Union. My union represents 75 per cent of the 3,000 technical, administrative and managerial grades working in the Valuation Office Agency.
  (Mr Partridge)  I am Charles Partridge. I am Chairman of the Royal Institution of Chartered Surveyors Rating and Local Taxation Panel. I am a surveyor in private practice. I started my career in the Valuation Office. About 800 members of the Royal Institute of Chartered Surveyors work within the Valuation Office on the valuation of property, primarily on rating.

  2.  Thank you very much. Could I make the point that I apologise for the speed with which we are going to have to cover quite a lot of ground. We have two short sessions which we are doing, and we have to do this before 11.15 when we have to break up because of Oral Questions on the Floor of the House this morning. I am afraid this is all because of the new timetable in the House, and it is slightly awkward, but please bear with us. What it means is that we are going to try to ask our questions in a short and sharp way, and if you could possibly make the main points of your answers short as well we would be very grateful. We shall not repeat things. If there are similar answers which each of you has to one which has already been given, we shall try to avoid repetition, but if there is something different which you want to come in on, please do so. We shall try to address our questions to somebody specifically, but if somebody else wants to chip in, please feel free to do so. That is the way we shall do things. We shall have to see how things go on, but we shall have to get through the evidence if we can. Could I begin by asking the question which is at the root of what is on our minds. We are very interested to find out how the Next Steps Review has been progressing, particularly in this case from the employees' point of view, because clearly it has focused on productivity. Mr McAuslan, could you give us an indication as to how you think it is working out from an internal point of view?
  (Mr McAuslan)  I think there is a degree of frustration arising, Sir Michael. We have been inspected by Internal Audit, we have been compared with the private sector, investigated by the Treasury, under the microscope by the professional bodies, considered by three Financial Secretaries and subject to an independent adjudicator. Frankly, our staff know that they have to survive on the charges that they make, the costs for the services that they provide, and alongside this base costs have been reduced by 25 per cent. So I think our members are a bit frustrated, not least because they have been re-engineered, de-layered and have seen their offices close and had their pay and grading systems turned upside down. I think they understand the reasons why change had to take place, but why it has to be so constant, why we have to be put under the microscope so often and why every five years we have to go through the same hoops I think is getting beyond us. We want to see growth. Our members want to see growth. They want to have careers. They want to see investment in training. They want to see investment in training at the levels that we represent which are not necessarily Professional (with a capital p) levels. Our judgement amongst our membership is that we can do a professional job without having to be capital p Professionals. What has been happening with the reduction in base costs is that it has fallen most heavily on the managers, administrators and technicians, and that is now starting to pay a price in the infrastructure part of the Valuation Office Agency. So the message they would want me to give to the Committee is that they want to have some stability and investment at their level, to have jobs that are safe and secure, and to have investment in training and development.

  3.  You talk about "every five years", Mr McAuslan. You are coming to the end of this particular round. Are you therefore envisaging that there is going to be another round ahead of you, or is this something which you are privy to in some way?
  (Mr McAuslan)  Not that we are aware of, no. We have read the latest Government White Paper which suggested that it will be a constant process. It might be something which the Sub-committee might want to comment on, as to whether it is something which should happen in five years' time. We are working on the basis that the existing procedures stay in place, and that it will be another five years. Inbetween those five years there will be all the other changes which are taking place.

  4.  Is there anything that Mr Charman or Mr Partridge want to add to that at this stage? We shall be coming on to the effectiveness in a moment.
  (Mr Charman)  Mention was made of a comparison with the private sector. The only point I would make is that what the Valuation Office Agency have been asked to do by accepting these cuts of 6 per cent year on year is not something which would ever be done by the private sector, it is much too swingeing. Certainly in my old company it would never have happened; we would have a one-off—say, a year's—cut, never a long-term cut like this, because it is cutting into the infrastructure, into the lifeblood of the body.

Chairman:  We shall come now, if we may, to the whole question of the targets and how those have been achieved or set. Mr Kidney is going to start off on this.

Mr Kidney

  5.  I might start with Mr McAuslan, but I also have questions for everybody. In the Next Steps Review there were targets set out for increased efficiency, productivity, valuation quality and timeliness. According to the Agency's evidence to us, most of those targets are on schedule to be met. Mr McAuslan, would you say that the targets are going to be met because of the changes that have occurred since 1995 or in spite of them?
  (Mr McAuslan)  I think that is a very difficult question. It is a bit of both, actually. There were changes that needed to take place, and the drive of the Next Steps Agency has given the business a sharper focus. Unfortunately, it is not a business; some of our members wish it was, because we have to compete with the private sector, but we cannot compete for private-sector services because of a 1920 Chancellor of the Exchequer minute which still lays down how we have to operate. So we are a bit frustrated that we can compete against the private sector, but not for their work. I think that is part of the equation which frustrates our members, that we cannot see where the income comes from to look for growth. To answer your question, change was necessary and it has given us a sharp focus, but I do not think it has been particularly well managed, because I think it has fallen unevenly on cuts. I think that questions will now have to be raised about the network of local offices. We have an agreement with management as to how that should be managed. When you look at the Government White Paper about access by citizens to services, I think that there is a question about how well we are now placed to meet those demands. So the targets have been met because of the changes, but also because of the goodwill, the hard work and the efforts of the civil servants in the Agency.

  6.  Thank you. Turning to quality, Mr Partridge, in the submission from the RICS there is a comment that "We understand that VOA valuers ... feel that the quality of their work ... is starting to slip". You have given your own example of the extra work and responsibility being placed on valuation technicians. Therefore, in terms of the actual quality which you can see, how do you assess the performance against these targets of improving quality?
  (Mr Partridge)  Perhaps I should start by saying that the RICS as a body is not a union. We have members, of course, in both sides of this debate. It is the sheer volume of work that a smaller number of staff have to handle which means that there is an incentive, as it were, to cut corners and not do the job quite as well as you would otherwise like to have done or possibly quite as well as you were trained to do. To some extent it is a consequence of modern living that this pressure is on all professionals, but my view, going round offices in the course of my business and meeting surveyors in the Valuation Office on the other side, is that they feel that they would like to do a more in-depth and better job than they are doing; they are getting results, but sometimes at the expense of quality.

  7.  Mr Charman, I would like to ask you again about quality, but perhaps you would like to comment on that other target about timeliness as well.
  (Mr Charman)  Yes. I think that if you look at it from the point of view of some of our other members—not the valuer members, the revenue and billing authorities who have to collect the money—there are problems, particularly in that the IT which has been put in for the Valuation Office has not really been tailored to the needs of the customers, if you like. The process is computer driven, rather than the other way round. The cart has been put before the horse—quite probably due to lack of resources. Not in the valuation process, but very often in the follow-up to it, because of the poor interface between the billing authorities and the Valuation Office Agency, that has brought about delay. Otherwise I would echo that a good job is being done, but in order to achieve the timeliness very often the quality has to suffer.

  8.  So to both of you, does that mean that quality is being subsumed to quantity in terms of the value of the work people have to churn out?
  (Mr Charman)  I would say that yes, part of the problem has been that there is not the IT support to replace some of the lost staff. We all know that in IT you can reduce staff, particularly in the valuation profession, but I do not think that the IT has been there. They have done one part of the process, but, probably through lack of resources, not the other part.

  9.  Would you agree with that, Mr Partridge?
  (Mr Partridge)  I do indeed. I think that one of the problems is that as a professional, particularly if you are a professional and a government servant, you want to provide a quality service, whether the ratepayer or the taxpayer happens to be a major public company or Mr Smith the local butcher. The problem is that the economics are such that it is difficult to provide that quality and deal with the quantity as well.

  10.  Could I ask you specifically, Mr Partridge, about how they measure the target of quality? It is the percentage of cases which are within 10 per cent of the initial valuation by the end of the case. Do you think that is the right target measure to use anyway for quality?
  (Mr Partridge)  No, I personally do not. I think the quality ought to be in the confidence which the public has in the final assessment that they receive. The Valuation Office of course try to get assessments right and do their best at all levels to achieve that, but the only criterion I would measure it by would be the confidence the public has that one person has been fairly assessed against another.

  11.  Would you rely more on customer satisfaction surveys?
  (Mr Partridge)  I have no idea whether the Valuation Office carry out a customer satisfaction survey, to be honest.

  12.  They tell us that they do.
  (Mr Partridge)  Then in that case I take it they do, but I have no idea what the outcome of that survey is. I did not know it existed.

  13.  We can deal with that by publishing it. Mr Charman, do you agree with Mr Partridge that it is the wrong target to measure?
  (Mr Charman)  Yes, I do. The problem with judging quality in any situation, particularly in something like this, is that it is very much a subjective judgement. To try to do it by figures is a crude measure, but it is too crude. For example, if you find there is a major error in a big assessment—which can happen for all sorts of reasons, and happens more often, again for various reasons which I will not go into now—basically that can result in a major reduction, whereas you could have something which is the result of poor-quality work, if you like, producing a lesser reduction, if you follow what I mean. So it is a very crude measure, but unfortunately it is very difficult to get a subjective measure and it is very difficult to get a reliable measure of quality.

  14.  Do you have a suggestion? It is difficult, but ....
  (Mr Charman)  I think the only way it could be done—and I have not thought it through—would be some sort of a panel of peers, if you like. I mean "peers" with a small p.

Jacqui Smith

  15.  A few of them could do with a job!
  (Mr Charman)  It could be done through a panel of people who actually understand, because the problem is that rating valuation and rating in general is a sort of arcane mystery to a lot of people. Some say that that is how we like to keep it, but we would deny that strongly. I think you need to have someone who understands, someone who knows and has done the job. If you like, it could be a place for retired members of the Valuation Office or, indeed, the outside profession.
  (Mr Partridge)  If I may break in, there is one point I would make, which is that it does seem to me strange that the Valuation Office is forever being assessed on these sorts of performance criteria. The obvious reason for that is that this is a predicated tax going to one government department—the Department of the Environment—and yet the Inland Revenue make assessments on people every day of the week, some of which may well be adjusted by much more than 10 per cent, and I wonder whether the same level of spotlight is being placed upon them.

  16.  We have been doing that job as well. Mr McAuslan, I want to ask you about future targets in a moment. Before I do that, could I follow up the Chairman's question. The Next Steps Review led to a five-year plan which comes to an end next year, so as far as you are aware there is no next-five-year plan in the process of being formed at the moment, is that right?
  (Mr McAuslan)  No, I think my interpretation of the Government's White Paper is that it is going to be a constant process.

  17.  You mentioned in your paper a "current joint review of pay, performance management and grading". Is that review and are those discussions the nearest thing there is to a future plan at the moment?
  (Mr McAuslan)  That is very much in terms of the human resources issues within the Agency, not in terms of the Agency's work and the Agency's performance.

  18.  Precisely. I noticed that you wanted to say something about quality. My question is, where is the discussion about things like quality and timeliness for the next three years, five years or whatever the number of years is? What is happening?
  (Mr McAuslan)  We have a pretty good relationship with the Valuation Office Agency management currently. We have a working partnership agreement with them. That does not mean to say that we are in bed with them, because there are a number of things on which we disagree, and I would like to comment on one of the points you made about IT churning out assessments. I think you have got to watch your language. I think there is an issue about how the Agency can improve its standards and its quality. There are also ways in which it can rely more upon other processes to come to rateable values, not simply relying on professional judgement, because that is never going to be equally applied throughout the country, and the country as a whole has to make a judgement as to whether it wants 100 per cent accuracy throughout the whole country, at a huge cost, or a 90 per cent accuracy at a reduced cost. That is what we have been working towards with the IT support system and the systems whereby people can appeal through panels and so on. In terms of HR, we have had major problems, firstly in the fact that we think there is an uneven spread throughout the Agency; that we are living hand to mouth and have relied over a number of years on fixed term appointments and casuals at the clerical level, because the overall funding has meant we have been carrying a surplus of professional grades, so the seedcorn has not been put down to develop and recruit new staff, training programmes have been stopped which were developing lower graded staff to do a professional job of technician. The training has not been put in to develop people to deliver the service. My worry and the worry of our members is that we shall hit the five-year target but we shall not have invested in what the Agency will look like five years thereafter. This is why we are trying to look at, and press the Agency management to have a partnership agreement which will look at the human side of the Agency rather than just the output side of it.

Mr Kidney:  Thank you very much.

Chairman:  I wonder if we could turn next to the restructuring of the VOA. Mrs Blackman is going to take up the questioning.

Mrs Blackman

  19.  There now exist within the structure groups which, as my understanding goes, have replaced the regional tier. Would you like to comment on how effective these groups are?
  (Mr Charman)  It is very early to judge, but I think we can say that the place of the regional tier has disappeared, and so has the district tier to a large extent. The problem is that there is now a much bigger remoteness from the customer, if you like, whether the customer is looked at as the ratepayer or the rating authority. For example, if you take the new group office which covers the City of London, there has always been an office for the City of London, bearing in mind that an enormous percentage of business rates—I forget the exact percentage—is paid in the City of London. There is now one group office covering three rating authorities, including the City of London. That must, in my view and, I think, in most people's view, cut down on efficiency in the interface between them. There is a very important relationship between rating authorities and the Valuation Office Agency. It is also much more difficult for the individual staff within the office if they are having to spread over a much wider area. Obviously forget London now, but if you go to a much more rural area, in previous times where there was a relatively small district, the people knew their district, knew what was going on, knew their values and knew their community. Now it is much bigger, you lose a lot of that local knowledge.


 
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