Corporate report

Non-Domestic Rating (NDR) Reforms Programme: Accounting Officer Assessment Summary

Published 30 April 2024

Background and context

In the Business Rates Review: Final Report published at Autumn Budget 2021 the Government announced several important changes and improvements to business rates, representing fundamental reform to the system in England.  These included a range of measures to reduce the burden of business rates and a move to more frequent revaluations – a priority customer ask.

The Welsh Government has similarly set out its commitment to move to more frequent revaluations in its 2022 Reforming Non-Domestic Rates in Wales Consultation and response in February 2023. 

The Non-Domestic Rating (NDR) Reforms Programme has been established to deliver a range of commitments from the Business Rates Review and Welsh NDR consultation response, including:

• a new rating exemption for eligible renewable plant and machinery to support green investment and the decarbonisation of non-domestic buildings
• a new relief to support investment in property improvements
• increased transparency for ratepayers, with greater disclosure of evidence used to arrive at their valuation
• making the system fairer by moving to three-yearly revaluations from 2023, from the previous five-year cycle, with a range of supporting changes to make this sustainable.  These include a new duty for ratepayers to provide the VOA with certain property information, a compliance regime, and changes to the system for appealing valuations.

The Programme has made good progress to date and has delivered a range of commitments, including on reliefs and exemptions, and has begun the first revaluation on the new three-yearly cycle.  It is now in its Beta phase.

Regularity

The programme falls within the VOA’s statutory functions and remit.

The UK Non-Domestic Rating Act 2023 legislated for three yearly revaluations from 2023 and supporting reforms. The Act received Royal Assent on 26 October 2023. The Local Government Finance (Wales) Bill was introduced to the Senedd in November 2023 and will legislate for reforms not included in the UK Act for Wales. The information duty, penalty regime and ratepayer disclosure measures within the Act will require commencement regulations before they come into effect.

The programme consulted DLUHC lawyers and HMRC Sols, who provide legal advice to the VOA, extensively ahead of and in the course of primary legislation, and continues to work closely with HMRC Sols throughout the design phase.

Therefore, the programme is legally compliant and the regularity requirement is satisfied.

Propriety

The Non-Domestic Rating (NDR) Reforms Programme adheres to HMT’s Managing Public Money guidance. It undertakes the appropriate assessments and reporting.

Clear governance processes have been established for effective Programme management. A Programme Board chaired by the SRO is established as the main decision-making authority and key internal and external stakeholders are represented.  The programme complies with the VOA’s end-to-end change lifecycle process.

The Programme joined the Government Major Projects Portfolio (GMPP) in July 2022. As part of GMPP, the Programme reports quarterly to the IPA on progress. An assessment of the Programme’s progress has been published within the IPA’s Annual Report and a Gate 0/1 Review was completed by the Programme in March 2023.

The Programme’s Outline Business Case (OBC) has been approved by VOA’s Investment Portfolio Committee and Executive Committee (ExCom).  All costs (actual and estimated) were determined with input from senior officials across the VOA and HMRC, including commercial, digital and finance stakeholders.  Treasury approval was secured in March 2023 and a further approval process is currently underway, focusing on the latest iteration of the Programme’s OBC.

An SRO letter for the Non-Domestic Rating (NDR) Reforms Programme has also been published in accordance with IPA requirements.

In view of the above, I am satisfied that the propriety test is met.

Value for Money

The Non-Domestic Rating (NDR) Reforms Programme follows HMT’s Green Book methodology. In developing its OBC, a longlist of delivery options was developed, and the Programme conducted an appraisal against a set of critical success factors to identify a shortlist of options which proceeded to a full economic appraisal.

A preferred option has been determined through an holistic assessment of the risk, qualitative benefits and economic appraisal of each shortlisted option.  The preferred option has been agreed by Ministers.

Specifically, the collection of a more complete set of property and related data from ratepayers is intended to provide the VOA with a stronger evidence base for its valuations, which should in turn become more accurate. This, along with the increased transparency of how valuations are calculated, will bring greater confidence in the system as well as increasing its fairness. The introduction of the challenge window will also enable the VOA to operate this work more efficiently, programming similar cases to be worked together, which reduces the risk of missing statutory deadlines of this work and creates a more flexible system for accommodating any future changes.

The anticipated benefit to cost ratio for the programme is 2:1 before the application of optimism bias.  There are additionally a range of qualitative benefits associated with more accurate, timely and transparent valuations.

I am therefore satisfied that the programme represents good value for money to the Exchequer and this element of the assessment is met.

Feasibility

There are sound programme management and governance practices in place to assure and monitor plans and progress, maintain robust controls, and identify and mitigate risks.

To date, the Programme has met the following milestones:

• implementing legislative changes to green plant and machinery valuations (in April 2022)
• completing the first tranche of work to improve transparency for ratepayers, through revisions to its Rating Manual and online information, and a range of communications activities and campaigns (in April 2023)
• commencing its first business rates revaluation on the new three-yearly cycle (from April 2023)
• implementing legislative changes in respect of Material Change of Circumstances (in April 2023)
• bringing delivery of changes for the Welsh Government into the scope of the programme (from summer 2023)
• launching a new Improvement Relief (from 1 April 2024)
• completing the Alpha phase of development of a new service for ratepayers to provide data under the new information duty (in March 2024)

The Programme has recently completed a GDS Assessment of its Alpha Phase and received an Amber rating with approval to proceed.  Actions in response to all recommendations are complete or underway.  The Programme was rated Amber by the IPA in March 2023.  Actions in response to all recommendations are complete.   The Programme has an Integrated Audit and Assurance Plan in place to ensure further assurance in line with GMPP and GDS requirements.

The Programme continues to make good progress against its milestones, and is well placed to deliver its outstanding scope assuming ongoing funding beyond the current Spending Review period in line with its business case.

I consider that the feasibility test is therefore met. 

Conclusion

In conclusion, as the Accounting Officer for the Valuation Office Agency, I am satisfied that the Non-Domestic Rating (NDR) Reform Programme is proper, regular, feasible and offers value for money.  I have therefore approved it as of 25 April 2024.  I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this programme, I undertake to prepare a revised summary, setting out my assessment of them.  This summary will be published on the government website (gov.uk). Copies of this summary will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Accounting Officer’s name: Jonathan Russell, Chief Executive Valuation Office Agency.

Signature:

Date of signing: 26/04/2024