A Parliamentary Inquiry into Business Rates is announced

I learn that there is to be a Treasury Sub-Committee to inquire into "business rates". I venture to hope that it will recommend major changes in the system which the Treasury will (for once) accept and Parliament bring into law. An inquiry is, perhaps, slightly different from a consultation - devices which have been used in the past to bypass criticism; but in the past we have not derived much benefit from sub-committee inquiries, it is fair to say.

The last time I remember a Treasury Sub-Committee interesting itself in rating it was in relation to the first quinquennial review of VOA, in 1995. The Agency was, at that time, subject to an annual budget cut of 6%; and when I informed one of the members of this, he gasped "But you can't run a department of state like that!" How right he has been proved to be! That sub-committee recommended increased funding for VOA, but it was turned down, and the decline has proceeded, with revenue being maintained, if not enhanced, by successive measures to discourage objection to assessments.

Now, a shrivelled VOA, that once-independent and proud body of professionally-qualified valuers, which was the only government department outside the security services to have control over its own recruitment and promotions, has been engulfed by HMRC: its Board, formerly composed entirely of valuers, now contains one (if that): it has departed so far from its statutory duty to make and maintain accurate rating lists that it is becoming, however slowly, but steadily, a mere property tax inspectorate, with the kind of attitude which I remember encountering in the tax inspectorate when I worked in the Inland Revenue Solicitor's Office. The number of tribunal and court decisions adverse to its procedural efforts to sustain the tax yield, speaks volumes, as does CCA. 

Tax inspectors work mainly by reference to the arithmetic of the evidence: valuers also look at figures but are supposed to apply their professional judgment to reach an opinion of value - a very different skillset which used to be hotly defended by valuers

The Agency's staff survey results for 2018 have just been published, and it makes depressing reading. There have been repeated news reports, over the years, of stress-induced health problems within the Agency; and the new survey does little to allay the concerns of billing authorities or those of the rate-paying public. While there is some increase in satisfaction in relation to pay and training, this is more than offset by the decline in satisfaction with team managers, with the management of the Agency itself, and with the approach to change. In the case of confidence in the leadership of management and the management of change, the approval rating of the staff is only 24%. It would be worth taking a look at the survey in general, with its comparators to see what its staff feel. If the master mariners are taken off the bridge of the Titanic and replaced by accountants, then a sinking becomes almost inevitable as the ship collides with iceberg after iceberg. The loyal VOA staff, good civil servants that they are will, like Alec Guinness as the Admiral in "Kind Hearts and Coronets", remain steadfastly at the salute as the ship sinks, beneath them. 

The Agency is overburdened with work. I was always taught that one could not value a hereditament properly unless one had first inspected it; and was got into the habit (by the former Valuation Office) of doing so, and seeing comparables, even if only externally, before going into a tribunal. Viewing by Valuation Officers has been discouraged, as the number of their offices and valuers has shrunk - they are apparently told to use Google Maps instead, wherever possible; and, of course, files fly around the country from surviving office to surviving office, miles away from the subject; and case officers in locations remote from subject properties, are at a disadvantage when it comes to making anything other than a desktop valuation, let alone making what I would still call a proper valuation. Out-of-date drawings and applications like Google Maps are simply not enough, compared with the effect of the Mk.1 Eyeball, coupled with independent professional judgment! This approach is perhaps a little ironic, bearing in mind the apparent abandonment of their attempt to edit out the "stand back and look" (fifth) stage of the contractor's test valuation. 

And didn't I hear that the Agency is preparing for another revaluation in 2021? How will they cope with all of this?

There is no right way and wrong way to value real property, but the valuer should employ that method which is most likely to yield the right answer. Short cuts (or what were seen as short cuts) were roundly and soundly (as well as piously) opposed by VOA; but now, in relation to some classes, such as farm attractions, they are apparently trying to edit out the receipts and expenses method, in favour of a shortcut, the outcome of which often seems to favour the Treasury, necessitating appeal action. Is this because they have had a series of lightbulb moments? Or because they have been so downsized and dumbed down that the underfunding which has afflicted the public sector for some years has reached, in the case of VOA, where it has been going on for nearly thirty years, that it has almost attained a stage equivalent to a stage 4 cancer? One Minister has agreed, in public, that the Agency is "...to some extent" underfunded. When is this going to receive the treatment which it needs and so richly merits?

Cancers spread, and we see the effect which the tinkering with the rating system has had on other parts of the system. The Valuation Tribunal for England tells us that it is listing 4,000 cases a month, but these are not all being heard, or settled by consent. Many are just postponed - booted back into the long grass from when they were lifted, in hope. Uncertainty continues. We were told that the English tribunals had received by January this year, a mere 39 CCA appeals against the 2017 lists, of which they had heard 27 and determined 19. They are concentrating on clearing the 2010 backlog, and in particular those cases delayed because of other litigation. They will have to deal with the appeals following the overturning of the Mazars decision. Is this paucity of appeals a tribute to the newly-superlative valuation skills of VOA, or to the new series of obstacles now placed by a helpful Treasury (with the obedient assistance of the legislature) in the path of would-be appellants? 

VTE limps along, also underfunded, and the last of the lay tribunals as ratepayers and billing authorities wait for hearings. Mind you, I understand that at least one Welsh tribunal still has 2005 list cases outstanding. Is it just that ratepayers and billing authorities should have to wait over ten years for the resolution of a valuation dispute? Unquestionably not.

Local authorities can and will speak for themselves, but they have been in a process of slow financial strangulation, by Whitehall, since 1990, when the Local Government Finance Act 1988 took effect, as they became little more than debt collectors for Whitehall, and their financial reserves were rapidly sucked out of them. They were eliminated from rating valuation (except in the case of their own property) and became reliant on VOA (itself in the garrotte) to make list alterations which, increasingly, the Agency has been reluctant to do, frequently finding reasons (or excuses, dependant on one's point of view) to take no action, when they are unable to cover the ground, "walking the dog", as in the bad old days before Agency status. The most favourable interpretation of this is that the Agency no longer has the necessary resources.

Apart from the loss of revenue, now that rate retention by councils (instead of all being sent to Whitehall) has crept back in, local authority revenues staff have little or no idea how appeals are proceeding and what their likely outcome is to be. Being prudent, they make provision for possible repayments in their budgets, but have no idea whether such provisions may be too great or too small. In a number of cases they have concerns that their provisions may not be sufficient, and this causes inevitable concern. Dare they spend, on local services, as demanded by local people and businesses, the revenue which they have collected?  What about the loss of revenue from property which ought to be in assessment and which they have drawn to the attention of the Agency, but upon which the Agency has declined to act?

In order to try to make ends meet, many councils have resorted to all sots of ingenious moves to protect or enhance their revenue. Apart from the entirely legitimate practice of policing claims for empty or other reliefs, some have resorted to the rate avoidance practices which they condemn in others, and have done well by it. Some councils do very well out of parking charges or violations; and some are milking their property portfolios by, for example, quintupling rents for travelling showmen to stand their traditional fairs on council-owned land. Councils are, and have been, strapped for cash while being required to deliver services, so discretionary services are withering and, overall, the voters are unhappy.

All of these things, and more, will need to be looked at again by Ms Morgan and her colleagues. The time for tinkering round the edges is past, and parliamentary time and money must be found for fundamental reform, to provide the level playing field which is all anyone can ask of a revenue-raising system but which has disappeared from the rating system. 

As always, I am seeking to criticise no individual, but the system itself is unquestionably sick and in need of major, substantive intervention.