Corporate report

Foreword, executive summary and summary of recommendations

Published 27 February 2020

Foreword

The Valuation Office Agency (VOA) is the public sector’s property valuation expert, helping people and businesses to pay the right property taxes and receive the right financial support.

The work that it does enables the collection of over £50 billion of revenue in non-domestic rates (also known as business rates) and council tax in England and Wales, which helps to fund essential public services. It is therefore vital that the VOA continues to evolve in order to continue delivery of this essential work.

This review has concluded that the VOA remains an executive agency of HM Revenue and Customs (HMRC).

The review has identified areas where the VOA faces challenges and the review aims to provide further impetus to help solve these. These challenges are well understood in the agency and the review team saw evidence of the positive work already happening to deal with them.

In April 2017 a new way of appealing against business rate valuations was launched. The new process is called Check Challenge Appeal (CCA). It is clear from views expressed during the review that customers were dissatisfied with aspects of the implementation of CCA, in particular there was strong criticism of the online system from rating agents. The VOA has responded to this criticism and has introduced improvements to the online system. A recommendation of this report is to endorse and strengthen the existing plans to learn lessons from the operational implementation of CCA.

The VOA has an operational role which supports other government bodies. The majority of the VOA’s work is for the Ministry of Housing Communities and Local Government (MHCLG), the Welsh Government (WG) and the Department of Work and Pensions (DWP). The review identified that the link between the departments that set the policy and the VOA in its operational role could be stronger, particularly in relation to business rates, and the review recommends an improvement in how the relevant bodies work together.

At a time when the VOA is being asked to do more each year, it is also facing challenges both in terms of having sufficient qualified valuers within the agency and also with modernising its technology.

The review team conclude that there is a clear shared responsibility in the VOA for addressing the challenges it faces and the plans for the future of the agency are positive.

Josina Bowering, lead reviewer, VOA Tailored Review

Executive Summary

The VOA is the public sector’s property valuation expert, helping people and businesses to pay the right property taxes and receive the right financial support.

The VOA is responsible for the valuation of properties and land across England and Wales, and carries out some public sector valuation work in Scotland. Its work valuing domestic and commercial property and land is vital to the non-domestic (business) rates and council tax systems that secure over £50bn of funding for local authorities in England and Wales.

On 1 April 2019 the VOA employed approximately 3,500 people and had offices in 43 locations across England, Wales and Scotland.

This Tailored Review has looked at the role of the VOA, its governance, and its operational efficiency and effectiveness.

This review has concluded that no changes need to be made to either the structure of the agency or its home in government, nor should any of its functions be privatised. Therefore this review concludes that the VOA should remain an executive agency of HMRC.

This review has identified areas where the VOA faces challenges and the review aims to provide further impetus to help solve these. These challenges are well understood in the agency and the review team saw evidence of the positive work already happening to deal with them.

The VOA has recently reviewed and amended its governance in line with Cabinet Office guidance. This has led to a more streamlined senior management meeting structure which has helped with the strategic decision making needed to run the agency. The most senior management committee is the Executive Committee (ExCom), which is chaired by the Chief Executive.

Internally, and externally from the surveying profession, some concerns have been expressed about the amount of valuation experience in the top team with only one post, that of the Chief Valuer, currently being filled by a valuation expert. The review team found no evidence to suggest this is impeding the leadership or delivery of the agency. The agency recognises the wider point about developing opportunities that create a route through to senior leadership roles for people with experience of working in the VOA.

The VOA is an operational organisation with a specific role delivering the policies and processes of other government bodies. Ministry of Housing, Communities and Local Government (MHCLG), HM Treasury (HMT), DWP and the WG are responsible for all of these policies. The review identified that the link between the departments setting policy and the VOA’s operational role could be stronger and the review recommends an improvement in the communication channels between these organisations.

Stakeholders acknowledged the VOA’s professional skills and the high quality of the training and experience gained by the people within the VOA. Some stakeholders, particularly rating agents and local authorities, were critical of the way the VOA has handled the introduction of the operational implementation of Check Challenge and Appeal.

In April 2017 a new way of appealing against business rate valuations was launched. The new process is called Check Challenge and Appeal (CCA). It is clear from views expressed during the review that customers were dissatisfied with aspects of the implementation of CCA. In particular there was strong criticism of the online system from rating agents. The CCA online system had limited functionality when it was first launched and fell short of expectations. The VOA has responded to this criticism and has introduced improvements to the online system.

The review team found that the external concerns were justified about the early stages of the implementation of CCA. Lessons need to be learned about how customer facing functionality in future IT systems is delivered and, if phased delivery is used, how that is communicated to external users. A recommendation of this report is to endorse and strengthen the existing plans to learn lessons from the introduction of CCA.

The VOA continues to go through significant change, which includes frequent revaluations for business rates in England, the new Check Challenge Appeal process, and internal changes such as a reorganisation, office closures and people changing roles, as well as adapting to the increasingly devolved nature of the local taxation system in Wales.

In particular some of these changes involve a high level of uncertainty. The workloads for CCA remain unknown as it is not yet possible to know when, or in what numbers, business rate payers or their agents will submit Checks and Challenges online. There is a risk that a spike of work within the CCA process could occur at same time as the business rates revaluation peak. The VOA’s delivery of the full range of its objectives will be challenging if these peaks coincide.

The recruitment and retention of chartered surveyors is a critical area to enable the VOA to deliver business rate revaluations alongside its other work over future years. Recruitment and retention of this skilled resource is difficult for the VOA due to the competitive market conditions for surveyors.

A recurring theme throughout the review was concerns about the VOA’s IT systems. The core database that VOA uses was built over 25 years ago, and over time different applications have been added to develop how the VOA works and makes use of different information sources. The resulting IT infrastructure requires staff to access multiple different systems in the course of working a case fully. The current IT works for the current processes but is inflexible, inefficient and hard to change. Investment funding is needed for new business processes and a supporting new IT system if further efficiencies are to be made.

The VOA has been reducing the number of office locations for a long time. It has also been changing its organisational structure and introducing new working methods. These changes have adversely affected staff morale and the most recent organisational changes temporarily had an impact on performance.

Using the skills of staff more flexibly across different sorts of valuations is a positive move, however the review team heard that the detailed design of this new model initially involved cases being passed excessively between different teams.

The review team found that the VOA ExCom was quick to respond to this problem and promptly trialled a revised design. This proved to be a more efficient way of working cases and also a more positive way of working for the staff involved. Whilst the initial roll out was frustrating for staff it is good that ExCom acted quickly, and the new, improved process is now being used across the agency.

The review team saw evidence of ExCom working well together to ensure they fully understand the financial and performance position of the agency and that there is a willingness to learn lessons from changes that have not gone as well as expected in the past. The level of performance achieved in the VOA has an impact on ratepayers and local authorities. At a time when the VOA is being asked to do more each year it is facing a challenging period. The VOA are working with MHCLG, WG, DWP and HMRC to agree the priority areas of work that can be delivered within the available funding.

The review team conclude that there is a clear shared responsibility in the VOA for addressing the challenges it faces and the plans for the future of the agency are positive.

Summary of recommendations

Recommendation 1

This review recommends that the VOA conduct its proposed comprehensive customer evaluation of the operation of the CCA system and publish this in autumn 2020.

Recommendation 2

This review recommends that the current work on an IT upgrade and the business performance benefits it might bring are included in any forthcoming VOA funding considerations to support the VOA’s future transformation plans.

Recommendation 3

This review recommends there is a structured process in place for learning lessons from previous change activity to embed a systematic approach to ensuring these are acted on for future change activity.

Recommendation 4

This review recommends that a new structure of regular engagement at operational and senior level is put in place, in particular to support the important relationship between MHCLG, VOA, HMT and HMRC.

Read the report’s next section, Introduction and overview.