Select Committee on Treasury Minutes of Evidence

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 and Planning.

  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 manager—that is the line management relationship—and 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 meet her?

  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 model.

  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 fair.

  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?

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