Examination of Witnesses (Questions 1-19)|
24 JANUARY 2007
Q1 Chairman: Mr Hudson, welcome to the
Committee. Could you introduce your team, please?
Mr Hudson: Thank you, Chairman.
On my left is David Park, who is the Deputy Chief Executive of
the Agency and also Director of Local Taxation, on his left is
John Wilkinson, who is the Director of District Valuer Services,
and on my right, Sue Townsend, who is the Director of Finance
Q2 Chairman: One of the big events in
your life presumably was the postponement of the council tax revaluation,
and I see from your Annual Report (I assume as a result of that)
the amount you spent on early departure costs jumped from £3
million to £16.5 million. When did the Treasury first ask
you to estimate those costs?
Mr Hudson: We were brought in
in time to discuss and consider the implications of postponement
with ministers ahead of the announcement.
Q3 Chairman: How far ahead?
Mr Hudson: In good time.
Q4 Chairman: What does that mean:
a month ahead, a week ahead, an hour ahead?
Mr Hudson: The main decision was
in terms of local government funding and policy more generally.
We were able to advise on the implications for the administration,
the delivery of the revaluation, including, obviously, the financial
implications of postponement ahead of time.
Q5 Chairman: Yes, but what I am trying
to get a handle on is how much notice you were given of the notice
to postpone. Was it weeks, months?
Mr Hudson: Certainly not months,
and once the decision had been taken it was important to announce
it quickly in order to prevent further nugatory expenditure.
Q6 Chairman: What are the implications
of a 20-year gap between revaluations?
Mr Hudson: It is part of our job
to keep the lists up-to-date, and we are able to do that as professionals
working on 1991 values. That is part of our job.
Q7 Chairman: Can you explain to the
Sub-Committee exactly how your relationship works with HMRC? Do
you, for example, work solely with senior management of HMRC or
do you meet Treasury ministers at the same time?
Mr Hudson: I report to the Chairman,
Paul Gray, as my line managerthat is the line management
relationshipand the minister responsible for the agency
is the Paymaster General. Because so much of our work is on local
taxation in England and Wales, inevitably we have close contacts
as well with the Department for Communities and Local Government
and the Welsh Assembly Government, so we have a lot of contact
with them. In terms of contacts with HMRC, as well as meeting
the Chairman, because we are part of the SPIRE contract for IT,
we have a lot of contact with their IT team, both at senior management
level and at working level, and we are trying to extend that contact
on other things in order to, for instance, provide a more joined
up service to businesses who are both, obviously, rate-payers
and payers of other taxes.
Q8 Chairman: You said that your minister
was the Paymaster General. As chief executive, how often do you
Mr Hudson: It depends on the business
in hand, but certainly every few months.
Q9 Chairman: Every few months?
Mr Hudson: Yes.
Q10 Peter Viggers: You recruited
significantly to prepare for the council tax revaluation then
had to reduce your headcount again, of course. How many surplus
staff have you carried during this period and can you give us
a report on the process which will result in them being removed?
Mr Hudson: We reckon that at the
time of the postponement there were about 1,250 staff working
on revaluation. Between 400 and 500 of those were on fixed-term
appointments, and they left the agency, some almost instantly,
who were on very short-term arrangements, others within weeks.
We then ran the early departure scheme which the Chairman was
referring to, and that led, from memory, to getting on for 400
staff leaving. Since then, there has been a process of natural
wastage and staff who under other circumstances we would have
replaced were not replaced. As of now we are within about 150
staff of getting down to the number that we would have, according
to normal calculations, to do the work in hand.
Q11 Peter Viggers: That programme
is scheduled to be completed by 30 June this year, I think?
Mr Hudson: The 30 June 2006 was
the point at which we completed the work on the automated valuation
Q12 Peter Viggers: How long will
it take you to prepare for the revaluation of council tax in England?
Mr Hudson: I might ask David Park
if he wants to fill in any detail on this, but my immediate answer
is that that would depend on the exact details of the revaluation,
for instance, the number of bands and how much notice we had of
that. I do not know if David wants to add anything to that.
Mr Park: Yes, to endorse that,
in the sense that clearly it would depend on the detailed specification
of the task, but we are essentially in a position now where we
have an automated valuation model capability, which means that
we could undertake a revaluation of all 22 million properties
relatively quickly in terms of the process of valuation itself.
In order to prepare for that we would obviously have to ensure
that we looked at the sales information around the new valuation
date, whatever that proved to be, and make sure that we calibrated
it accordingly to undertake the valuations and then we would also
have to ensure that we had systems in place to deal with the inquiries
and the appeals. Of course the last component of the valuation
process is, having undertaken the valuations of properties, to
place them in the bands or whatever structure is decided by ministers.
Q13 Peter Viggers: Can you put a
timeframe on the amount of time you would need from the time when
you are notified to the time you undertake the valuation?
Mr Park: It is obviously quite
difficult because it does depend on the detailed specification,
but, I suppose, if one looked back at the experience of, firstly,
bringing council tax into being and then the work we were doing
on the previous revaluation, it could be between one and two years
in total from the start of the process, to through the publication
of the draft lists and up to the assessments becoming effective.
Mr Hudson: If I might add, the
process will be a good deal quicker and easier for us thanks to
completing the work on the automated valuation model following
the postponement of revaluation.
Q14 Peter Viggers: The council tax
revaluation in Wales was completed in 2005. Was that a success?
Mr Hudson: Given that only about
1.4% of households appealed against their bandings and that, so
far as I know, the collection rate of council tax in Wales is
proceeding well, that suggests to me that we have delivered a
revaluation in a way that households in Wales find reasonably
Q15 Peter Viggers: The increases
were quite high in certain parts of Wales, nearly 64% in Cardiff,
52% in Brixham, for instance. Should we expect similar increases
in England? If not, why not?
Mr Hudson: The level of increases
depends not on the revaluation as such but partly on where bandings
are set, partly on the decisions taken by local authorities. Certainly
for the revaluation that was planned for 2007, ministers have
made clear that revaluation itself was not designed to lead to
an increase in the tax burden.
Q16 Ms Keeble: I wanted to ask a
bit about revaluations and appeals. Did you regard the operation
in Wales as a success?
Mr Park: Obviously it depends
which criteria you use to judge success. From our own point of
view, it was certainly delivered on time and within budget. I
think the level of enquiries and appeals that we actually received
was less than we had originally forecast, although that is obviously
a somewhat uncertain business, and I think we were able to handle
those enquiries and appeals as quickly as we could. In total,
the outcome, I think, was quite positive in that sense.
Q17 Ms Keeble: There was an issue
about the appeals. You did not achieve them all on target. Is
that right? Would you like to say something about that, in particular
about the position in relation to the dependency on tribunals?
Mr Park: Yes. There are two aspects
to that. The first is that we did try to encourage people, if
they were not happy with their assessment, in fact to contact
us informally, as it were, so they could make their inquiry by
phone or by whatever means they chose, and we undertook to look
at that and give it priority if there was something we could do,
either because the list was not correct or some matter we should
be taking into account. So, we gave the priority to that and encouraged
people to use that route. However, if there was a more substantial
issue, if I can put it that way, then to move down the formal
appeal route was the next choice. We did not want to deny people
the opportunity to appeal formally, but we tried to deal with
the inquiries quickly first.
Q18 Ms Keeble: You have got a problem,
have you not, with the Valuation Tribunals, with the membership
and the Chairs of them? Have you got enough and have you got enough
trained and capable people there?
Mr Park: I think one needs to
be careful about describing it as "a problem". Firstly,
the Valuation Tribunals are, of course, independent and we do
not have the responsibility for their administration. We do, however,
have very good liaison with them in terms of the work which comes
in their direction and the appeals that have to be listed and
heard and, again, in terms of the formal planning of the Welsh
revaluation, an understanding of the possible workload that might
be involved was obviously one of the areas that we did discuss
with them. The pace at which they were able to hear and determine
appeals obviously was very much a matter for them. It is probably
worth just emphasising that, of course, there were two revaluations
taking place simultaneously in Wales, both the council tax and
the non-domestic rating, so they had a larger workload overall.
Q19 Ms Keeble: I understand that,
but we all know about the Valuation Appeal Tribunals because we
encountered the process. It is something that anyone who comes
into contact with local government sees. There is an issue, is
there not, about the number of members and Chairs, or the number
of people coming forward, and also the training and the capability
of those people. I wonder if you could comment on that and the
impact that then has on the entire service that is provided. I
know it is not your responsibility, but you have to live with
the consequences of it. It used to be the Lord Chancellor's Department,
did it not? Presumably it is now DCA, but you have the direct
consequences of failures in that service and it would be helpful
if we knew, therefore, exactly what the scale of the problem was?
Mr Park: I think I should just
say, they are a non-departmental public body now and come under
the DCLG (Department for Communities and Local Government). Clearly,
for those appeals that are not resolved, they have to pass through
the hands of the Valuation Tribunals, and listing and hearing
is an important part of that process. I think it is fair to say
that in relation to the cases that are now moving towards the
Valuation Tribunals, I am not aware of a capability issue outstanding
as such, but, of course, once an appeal is within the jurisdiction
of the Valuation Tribunals, there may, for example, be postponements
or adjournments and they these may be on a number of different
grounds, but I am not aware that it is a capability issue as such.
Ms Keeble: I do not want to delay
the Committee, but it is actually quite an important issue in
terms of the performance of this function and it would be very
helpful if we could have some information about adjournments and
the need to reschedule hearings. It would also be very helpful
to know, out of the total board of tribunal members that there
are, what percentage are used and, therefore, what impact this
has on the performance of your own service. Could we have that
in writing, because that will not delay the Committee any further?