Department for Transport,
Local Government and the Regions

Annex G to Modernising Local Government Finance:
A Green Paper
Review of Revaluation of National Non-Domestic Rates
Section 2: Revaluation 2000 - Lessons to be Learned

G8. The review considered what lessons could be learned from the Revaluation 2000 process in England and what could be done differently and better for the next revaluation to reflect the Modern Local Government:In Touch with the people White Paper, but within the existing legislative framework. The main areas for potential change are to bring forward announcements of the outcome of a revaluation, and to give ratepayers, through representative panels, the opportunity to be closely involved in the process. Both would meet the objective of providing greater certainty for ratepayers.

Discussion

G9. In general, Revaluation 2000 was well received:

G10. The number of enquiries from ratepayers to local authority, VOA and DTLR offices is significantly less than at the 1995 revaluation, suggesting that most ratepayers are getting the information they want, either from the leaflets or the VOA website. It may also be that, at the third revaluation in ten years, ratepayers are getting more used to the process.

G11. The identified areas for improvement are in the main about making the process more business friendly and recognising the importance to businesses of being able to anticipate changes in rates liability in their budgets. The principal concerns were:-

  • Could the production of draft rating lists be advanced.

  • Was the timetable for consulting and announcing decisions on transitional relief and the multiplier reasonable? Could it be advanced?

G12. Consultation responses were understandably critical of the delays in the system and the difficulties this caused for planning in both businesses and local authorities. First, there was widespread concern that the details of the transitional relief scheme and the 2000/01 multiplier were not announced until November 1999. There were in some quarters criticisms of the lateness of some of the regulations required to give effect to Revaluation 2000 and the changes that accompanied it. Local authorities have also suggested that they should not be required to issue bills on the basis of draft rating lists.

G13. All of these areas might be addressed through improvements to the timetable. Of course, the key to this is the production by the VOA of the draft rating lists. The VOA believes that given sufficient resources for the next revaluation, it will be in a position to produce draft lists 6 months ahead of the revaluation date, compared with 3 months in previous revaluations. There is a statutory requirement to send the draft rating lists to billing authorities by the 31 December before a revaluation and the VOA has worked to this deadline in the 2000 and previous revaluations. But there is nothing in the current legislation to prevent earlier publication. Whilst this would be welcome, businesses and local authorities would only benefit if decisions on TR and the multiplier were available around the same time, or earlier.

G14. Assuming that the next revaluation goes ahead as at present provided in statute, in April 2005, based on an antecedent valuation date of April 2003, the VOA could aim to complete valuation work by the end of May 2004. This would facilitate the announcement of a provisional multiplier and transitional relief scheme (if any) shortly thereafter and publication of the draft rating lists in September 2004, six months before they came into effect. This would in turn facilitate earlier publication of the compiled rating lists and the issuing of bills to ratepayers.

G15. There is an awareness emerging among ratepayers that there are advantages in contributing positively to the revaluation process to help ensure valuations that they can accept from day one. The VOA would like to build on the work begun during the 2000 revaluation by establishing ratepayer panels at both national and local levels. These would enable a greater degree of consultation during the revaluation process, which should lead to greater acceptance of the new values and less need for appeals. Building up consultation mechanisms with ratepayers and ratepayer groups will require care and involve education of ratepayers of all sizes. It will be important that ratepayers both see the value of the exercise and trust the process.

G16. Better electronic communication should also allow the VOA to provide much fuller information to individual ratepayers about their valuations. Ideally, in addition to the summary of the valuation, this should include information about the new multiplier and any TR scheme, to avoid any confusion between rateable value and the amount payable. The earlier in the process that the package of information can be made available, the greater the certainty that would be introduced.

G17. However, early announcements about TR and the multiplier would need to be provisional. Individual values may change as a result of further (and better) information becoming available which will in turn affect the level of the multiplier and possibly the detailed terms of any TR scheme. In any case, the level of the multiplier depends also on RPI the previous September, which is not announced until October. So the provisional multiplier and TR scheme announced in the summer would remain uncertain until the autumn. This may be preferable to saying nothing until a firm announcement is possible in the autumn.

G18. Many rating professionals and ratepayers continue to argue for an antecedent valuation date (AVD) closer to the revaluation date. This is seen as fairer to ratepayers, so that the valuation better reflects the true market level by the time it takes effect. The RICS’s Bayliss report in 1996[1] suggested an AVD 18 months in advance of revaluation, compared with 2 years at present.

G19. However, this is unlikely to be possible in addition to delivering an earlier announcement of the revaluation outcome. While it should be possible to reduce the length of the revaluation process, the extra time gained is unlikely to be sufficient to allow shortening both ends of the process. A very short valuation period would also not allow sufficient opportunity for the work of the proposed ratepayer panels. There must be a choice between a later AVD, or an earlier announcement of the outcome. It is the earlier announcement that provides the greater practical benefits to ratepayers, in terms of certainty about future rate bills.

G20. Ratepayers and rating professionals have also said it would be helpful to have a broad indication of the likely outcome of the revaluation in the course of the process. This would be on the basis that any figures were provisional and subject to change and could not be applied to any individual valuation. Ratepayers have said that such provisional information at an early stage is preferable to getting no information at all until firm announcements have been made. They suggest this would reduce the scope for unscrupulous rating advisers (commonly known as ‘cowboys’) to act on the basis of widespread uncertainty. However, there are also risks attached to releasing provisional data, which can be misleading if it later turns out to be different from the final position.

Conclusions

G21. Early discussions with the proposed ratepayer panels will help the VOA to tailor its requests for information in a way that ratepayers will find easier to answer and also to explore the opportunities for facilitating the provision of information by electronic means.

G22. Assuming no other changes are made to the revaluation system, it should be possible to produce the draft lists much earlier in the process for the next revaluation. Below is an indication of an advanced timetable that could be achievable. However, the question of whether the timetable should be or needs to be accelerated to this extent must take account of the benefits that might be realised against the additional costs that are likely to be involved. Final decisions on the details of timing will need to be taken closer to the time of the next revaluation. Main recommendations on the basis of no other changes to the current system are:

  • Establishing national and local ratepayer panels as part of the revaluation procedure, for discussions with the VOA on information exchange, leading to more acceptable valuations.

  • Subject to available resources, VOA should complete the valuation process 10 months before the next revaluation, by 31 May 2004, to inform decisions on the multiplier and TR; this should allow the draft lists to be published by 30 September 2004.

  • Aim to publish provisional decisions on TR and multiplier by 30 June 2004. This will provide business with a nine-month lead in to plan resource needs from 1 April 2005; however, as the multiplier is based on September RPI, it would not be possible to confirm these calculations any earlier than mid-October 2004.

  • Produce information leaflet in summer 2004 for distribution by local authorities. This should be fully financed through additions to the Cost of Collection allowance.

G23. Further consideration should also be given to:

  • Announcing or discussing with ratepayers some high-level, broad provisional indications of the likely outcome of the revaluation during the process, so they can better prepare for the outcome, in advance of any subsequent announcement.

  • Publishing a compiled list on 1 January 2005, on which basis authorities can issue bills during February and March, coming into force on 1 April 2005.

  • The VOA providing individual valuations to ratepayers (both the RV and the basis of the assessment) by 31 December 2004, in the context of wider information about the effect on rate bills.

  • Encourage negotiations between the VOA and individual ratepayers to agree assessments as far as possible before the new lists come into force.

1 RICS Bayliss Report - Improving the Rating System, Royal Institution of Cartered Surveyors, 1996.

[ Annex G Section1 ] [ Contents ] [ Annex G Section3 ]
Published on 19 September 2000
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