Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 20-39)

MR ANDREW HUDSON, MR DAVID PARK, MR JOHN WILKINSON AND MS SUE TOWNSEND

24 JANUARY 2007

  Q20  Chairman: Are you happy to do that in writing?

  Mr Park: If I can put in the proviso that—

  Q21  Chairman: We understand you are not directly responsible, but you are being asked here about the implications for you, so could you reply to us in writing on that point?

  Mr Park: We will provide a note, yes.[1]

  Q22 Peter Viggers: What changes did you make to new business rate lists published on 1 April 2005 and why was it necessary to make these alterations?

  Mr Park: Of course this was part of a planned revaluation. The business rating revaluation cycle is on a five-yearly basis and so the process was obviously the updating of the individual assessments for the 1.7 million businesses that are covered. The process was in that sense routine, but obviously the pattern of assessments will change to reflect the changes in the property market over that period of time.

  Q23  Peter Viggers: The number of appeals was significantly lower than on previous occasions, and yet the time taken to clear them was rather longer. Can you comment on that, please?

  Mr Park: On the 2005 lists, it is correct that the number of appeals is significantly down compared with the 2000 lists. There are some reasons for that change which are connected with the appeal regulations, in other words the period of time within which an appeal against the compiled list could be made, so that is a factor. Nevertheless, we would also like to think that the reason for the lower level of appeals is because the process of revaluation is more transparent and we have got the assessments, so far as we reasonably can, right first time, but of course there will be genuine cases where people challenge that. It therefore means the appeals that we have had are probably themselves more substantive. Because we had a period during which queries could be raised before the list became effective, I think we picked up and addressed a number of points where perhaps the facts that we held were not wrong, so I think we have got more substantive cases in that sense. Obviously we are seeking to deal with those as reasonably quickly as we can and the process of clearance has actually been brought forward in terms of the timescale for which people have to wait for their appeal to be dealt with.

  Q24  Peter Viggers: Do you feel that your reputation to be right first time is in good order?

  Mr Park: It is always dangerous to say that and then find the following day that perhaps something crops up that demonstrates otherwise. Yes, we believe that overall, but we do not pretend to be absolutely spot-on in every case, because an assessment for this purpose is ultimately a matter of professional judgment and, of course, there can be genuine differences of opinion around those professional judgments.

  Q25  Jim Cousins: I wonder, Mr Hudson, taking you back briefly for one moment to the reference to the Welsh revaluation, do you keep records on how many times your staff are attacked in the year before the revaluation and the year of the revaluation?

  Mr Hudson: We do keep records of incidents of that sort.

  Q26  Jim Cousins: What does it tell us?

  Mr Hudson: There are very few, so far as I know, in the sense that actual attacks would come to our attention as senior managers, and certainly it has not crossed my desk. I do not know if you are aware of any.

  Jim Cousins: Perhaps you could supply that information to the Committee.[2] It would be another way of looking at the success of the Welsh revaluation?

  Chairman: Whether there has been an increase is what you are looking for?

  Q27  Jim Cousins: Yes. I had not realised, and I had should have done, until the work for this afternoon's meeting, your role in inheritance tax. What sort of financial reward do you get for inheritance tax appraisals for HMRC?

  Mr Hudson: It is not a question of reward. We are paid a certain sum of money each year by HMRC, £11.5 million in 2006-07, in order to carry out work mostly on inheritance tax and capital gains tax where our role is to ensure that the valuations required for those taxes are accurate.

  Q28  Jim Cousins: It is a block cost?

  Mr Hudson: It is a block cost, and we discuss with colleagues in HMRC how to divide that up between the various taxes.

  Q29  Jim Cousins: How much did it go up?

  Mr Hudson: It went down.

  Q30  Jim Cousins: It went down?

  Mr Hudson: The amount that we have been paid for this work has fallen somewhat over the last three or four years, though I am glad to say that the volume of cases that we have dealt with, to take inheritance tax as an example, has gone up from 51,000 in 2003-04 to over 60,000 in 2005-06 and the turn around time has gone down. So, within a budget that has fallen somewhat, we have been able to improve the service that we provide.

  Q31  Jim Cousins: The land services area of your work, you are heavily dependent upon a small number of government departments for the bulk of the money. You get 25% of your revenue for this from the Department of Health. Is that paid for on a unit cost basis or, again, is it a block?

  Mr Hudson: It varies dependent on the type of work. I will perhaps ask John Wilkinson, the Director of DVS, to explain the detail on the health work, if I may.

  Mr Wilkinson: Basically, we charge on an hourly or a daily rate for the work that we are doing.

  Q32  Jim Cousins: So the principle of your remuneration is completely different in the case of the land services work from the way that HMRC compensates you for your work on inheritance tax?

  Mr Wilkinson: It is in some ways, but we do account for the hours that we do to HMRC for the work we do for inheritance tax and capital gains tax.

  Q33  Jim Cousins: And those hours are going down, are they?

  Mr Wilkinson: The hours have gone down, but because we have improved the way that we do the work, the way we manage the work and manage the various processes, we have been able to drive efficiencies and do an increased volume.

  Q34  Jim Cousins: Have you compared your hourly rates—because we can talk about it in those terms—say for the Department of Health and the Department for Communities and Local Government and the Highways Agency? How do your hourly rates the compare to the hourly rates in the private sector?

  Mr Wilkinson: In terms of the land services work that we do, often we are in competition with the private sector, so the hourly rates are broadly competitive . It varies in terms of the type of contract that we are bidding for. Sometimes we will win a tender, sometimes we will lose one, and that tells me something about the hourly rates, whether they were competitive or not.

  Q35  Chairman: I have a couple of other questions, if I may. Your own Omnibus Survey showed that only 3% of respondents knew about you to complain to if they were unhappy about their valuation. You talk about your overall customer satisfaction going up. That is presumably by the people who already know about you. Only 3% of respondents know you exist, to put it bluntly. What are you doing about it?

  Mr Hudson: The information on who to talk to about banding issues is in the leaflet that goes out with everybody's council tax demand, I think I am right in saying, and we would certainly encourage local authorities to put those questions to us. We try to raise our profile in other ways. It is always possible that some of the media attention we have received over recent months will actually make us better known and give us the opportunity to put ourselves across in what we believe is the right light in terms of customer service, but I think it is an issue, frankly, that the agency is not well enough known for the work that it does.

  Q36  Chairman: What are you going to do about it, apart from dishing out the leaflet?

  Mr Hudson: We have run a number of customer service activities, such as people's panels, in the run up to the council tax revaluation. I think the revaluation in Wales will have brought us into contact with more households, and, as I say, I am glad to say not very many actually appealing. In addition there will be general publicity activities.

  Q37  Chairman: You recently signed a contract, I think, with an organisation called Rightmove to give you access to floor plans and sales prices, and so on. When you were criticised for this I think you defended it on the grounds that this material is available anyway to the public and other organisations. So why did you sign a contract and pay for it?

  Mr Hudson: What the contract enables us to do is assess the historic database. David will add to the story if we need him to, but it is material that has been in the public domain, is not any longer and we are able to access it.

  Mr Park: It includes material which is both currently in the public domain and also that which has been in the public domain, because it covers properties which have been marketed in the past.

  Q38  Chairman: Why are you paying for it if it is public information?

  Mr Park: The principal reason, because the contract was entered into in June 2005, was to enable us to check some of detail that we held on properties as we were preparing for the revaluation, and, of course, as a body wishing collective access, if I can put it that way, to a very large number of records, that was very different from an individual member of the public being able to view the website and, therefore, it was proper, obviously, to have a formal arrangement and agreement with them on that.

  Q39  Chairman: Are you involved in the development of Government policy on the Planning Gain Supplement which will replace section 106 agreements?

  Mr Hudson: Yes, we are. We are working quite closely with the Treasury and HMRC in advising ministers on the Planning Gain Supplement, again, with our particular role being as the experts on valuation.


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