Corporate report

Efficiency and effectiveness

Published 27 February 2020

Efficiency and effectiveness

Changes since previous review

Each year the agency produces its annual report and accounts, which are published on GOV.UK and these provide a narrative about the changes made over the years. They show an agency that has undergone a large amount of change. Where appropriate this report references some key changes over time in the sections below.

The organisation

Organisational structure

Over the course of the past 10 years or so the Valuation Office Agency (VOA) has undergone a number of organisational changes. A number of functions, such as some customer contact and case registration, were moved into 4 Network Support Offices to achieve efficiencies and greater consistency in the service provided to customers.

In 2011 to 2012 the organisation was radically re-organised from a structure of 22 regional (Group) offices to national Business Streams for the 2 main operational areas, Non-Domestic Rating and Council Tax. Other areas were already structured on a national basis. The changes aimed to ensure: a better focus on the customer groups; better and more flexible use of people and their skills; and a consistent service to customers from across the whole VOA network.

A new organisational structure was initiated in 2014 to 2015 as a 4-year project to restructure the operational areas of the VOA. Plans were also developed to initially consolidate the remaining customer services work being carried out in 36 locations into the 4 Network Support Office locations (now known as Customer Services Centres), before moving into 2 larger Customer Services Centres.

Although a move to a structure based on functions and a 2-centre Customer Services model is sensible, and should provide the VOA with more flexibility to respond to work pressures and to make best use of the skills of its staff, some of this change to a functional model has been controversial within the organisation.

The new functions cover: customer service; data collection; and property valuation units. The aim of this change is to improve operational efficiency. Additionally the VOA is also considering how they can utilise technology and deliver services to its customers in a more efficient and effective way.

The organisational changes were designed as part of a revised Target Organisational Model. These changes involved in the region of 70% of the organisation, so it is not unexpected that a change on this scale involved some disruption and some details have needed amending.

At the time of the initial roll out of the organisational changes in 2018 there was a temporary drop in productivity. It became clear at an early stage that much of the planning had been on the assumption that the IT platform would have been modernised before the structural changes were made and that technical constraints that impact the organisation’s ability to move work around and reassign tasks could easily be overcome.

Staff suggested that the demarcations between functions could generate multiple hand-offs from one team to another when working cases. The design was seemingly not reassessed at the point that the IT changes were deferred (during 2016 to 2017).

Following the implementation of the planned design for the organisational changes, the agency realised at an early stage that overcoming the IT limitations was proving more difficult than anticipated and the number of hand-offs had an impact on operational performance.

The agency listened to staff concerns and realised that further changes to process needed to be made in order to deliver operational efficiency. On that basis work was commissioned to understand the excessive hand-offs that had been created. A pilot was introduced in the North West that looked at ways to reduce these hand-offs.

The pilot has proved to be successful, the revised process has significantly reduced the hand-offs, is more efficient and staff have found it a more positive way of working, and productivity returned to previous levels.

The pilot was due to run to the end of March 2019, however it was clear before then that it had been successful so the decision was made at the beginning of March 2019 to start rolling out this revised process across the agency.

The implementation of a second phase of the organisational changes, that would have included other areas of the VOA, was halted in July 2018, in light of the number of work priorities the agency had, including the next business rates revaluation being brought forward to 2021 and progressing improvements and further functionality for Check Challenge Appeal (CCA).

While the next phase was halted, the VOA Executive Committee (ExCom) recognised that they may need to make minor changes for business purposes or look at how the corporate functions best support the organisation.

The review team found that the organisational changes had created some operational difficulties and caused some staff disengagement. The review team however concluded that the move to functional organisational structure is a sensible move and the actions being taken to rectify the design flaws are positive.

Estates

The VOA has been rationalising and transforming its office estate over a long period of time, to support new and more efficient ways of working across the organisation. Their approach is to consolidate in a smaller number of higher quality buildings, and have teams co-located, to deliver their business in a more cost-effective and sustainable way and deliver a better service to customers.

The VOA’s estates strategy balances affordability, a range of working styles and geographic coverage. The plans also align with wider government property and people strategies, sharing hubs.

As an executive agency of HMRC, there are obvious business benefits from sharing resources and facilities with HMRC, where it has locations in the same city or town. The VOA work closely with the HMRC Estates team, and have done so for some time, as they have historically shared buildings. The VOA and HMRC are looking to make the best use of opportunities for co-location in HMRC’s new regional centres, and in addition some of the VOA estates team have already moved across to the HMRC team and closer relationships are being developed.

The review team heard that the VOA’s estate was too large and dispersed for its needs. At the time of the last review, in 2009, the VOA had around 82 offices. A number of the offices had just a handful of staff working in them, and most VOA locations receive very few (single figure) customer visitors each year.

In 2017 to 2018 the VOA reduced the number of offices they occupy from 52 to 49, and at the beginning of March 2019 they were operating from 43 offices. The plan is reduce to around 27 locations by 2023, to fit with the future organisational model and more modern ways of working.

More recently, due to the announcement that there would be a change in the planned timetable for business rates revaluations (see later, Reval 2021), the VOA have considered the location footprint and deferred some office closures to ensure they have capacity to deal with this work. This is a positive; while plans are to continue reducing the estate, it is good to see that the VOA ExCom is willing to make changes to existing plans where it makes sense to do so.

As the VOA reduces office space they have sought, where possible, to retain staff and their skills in the agency. As part of the office rationalisation some staff were historically offered home working arrangements. The number of home workers has built up and these arrangements make keeping in touch and management more difficult.

The VOA reviewed (and continues to review) this practice, to ensure they have the right balance of co-located staff and those working remotely from their colleagues. Homeworking is not now offered, except by exception, recent examples being a small number of people with business critical skills.

As part of its estates programme the VOA are closing some offices in Wales. Some of these locations house Welsh language speakers. The provision of Welsh language service will need to continue and VOA are planning to maintain the service as a priority.

Once there is a better understanding of the number of people who may depart due to the office closures, the VOA will have a better understanding about any specific impacts upon the number of Welsh language speakers they have, and will put any necessary actions in place in order to ensure the VOA is continuing to provide a good Welsh language service to its customers. A shared service with the HMRC Welsh language service is one of the options being considered.

People

The review team’s impression of the staff they met was of a dedicated and committed workforce who have a great pride in working for the organisation, with a genuine feeling of being part of a family. This is something of which the organisation should be rightly proud, and they should look to develop the positive aspects of this even further with the hope that this can enhance staff engagement and retention across the agency.

Senior leadership

Over the last 2 years the VOA has seen changes in its ExCom. This includes a change of Chief Executive from September 2017. Most of the new ExCom have moved to the VOA from other government departments, bringing with them extensive leadership experience and expertise.

The review team interviewed all of ExCom. All of them talked about a shared view of where the organisation was heading and the review team found there was a good understanding of everyone’s role in delivering the agency’s objectives. This view was supported by levels of management below.

The review team found ExCom to be very knowledgeable and enthusiastic and focussed on the challenges facing them and the organisation. The next challenge will be for their passion and vision to be expressed and shared with the rest of the agency.

Union representatives expressed concern that the level of churn at senior levels has made relationships more difficult to develop. This was also highlighted by some external stakeholder groups. It is often to be expected that people in senior roles will move more regularly than others in an organisation.

The level of change in the senior team may be spread more evenly over time in the future, however this is not something that can be predicted. From the review team’s discussions, it was clear that ExCom valued the working relationships they had with trade unions and met with them regularly at appropriate senior levels.

During visits that the review undertook staff acknowledged that ExCom were very visible, with regular office visits taking place. Concerns were raised by some respondents about the lack of chartered surveyor experience within ExCom. While the VOA may have had surveyors in a number of its most senior posts in the past that has not been the case for some time.

The VOA recognise the significance of its Chief Valuer post – this was recently re-graded to Senior Civil Service level 2, in recognition of the complexity of the position and its importance in valuation and revaluations. The post holder is also Head of Surveying Profession in the VOA, leading on professional development programmes, such as the graduate programme and apprenticeships, which are important in helping to maintain the surveying talent pipeline.

It should be recognised that ExCom have a range of specialist professional skills such as leadership, finance, HR, programme management, operational delivery and policy development, which are all essential for running a professional organisation like the VOA. Whilst the review team understood the point about lack of surveying professionals at senior level it concluded this was not detrimental to its operational delivery.

The VOA workforce – including recruitment and retention, and engagement

As mentioned above the review team gained an impression of a dedicated and committed workforce. Many had gone through a lot of change with organisation restructures, a pay and grading review, and more recently applying for roles in the new structure and office closure and subsequent location moves.

The VOA has worked hard with other government bodies to try and find new jobs for people who are unable to stay with the VOA due to office closures or organisational changes. An example of this is the Rhyl office which is closing, where some of those staff have moved to the Department for Work and Pensions (DWP) and many other local public service employers.

The VOA are developing and implementing a combined people and locations strategy for the future – as the VOA continues to consolidate its estate, they will be developing a wider strategy and plan to ensure that the agency is appropriately resourced, in the right locations, to meet its obligations.

This work will bring together its strategic objectives and priorities; from thinking how they do things differently, and how they develop their people, to modernising their technology and use of data. The aim is for their people to be working in modern, professional environments that support them to do their job, working alongside their manager and with more career and progression opportunities.

We also heard that the changes in the VOA have created a much clearer role for managers and a career path for management and leadership that doesn’t require people to acquire valuation qualifications.

There was in the past felt to be a clear ceiling if you weren’t a surveyor, and being a qualified surveyor is not always necessary to be in a management or leadership role in the organisation.

This management career path and the increased focus on leadership skills was seen as a positive step by the people the review team spoke to, and the review team supports this view.

Recruitment and retention

Whilst the VOA has a very experienced and long serving workforce it is currently facing problems in recruiting chartered surveyors, as detailed below, to meet the increased need for staff to support the business rates revaluations that have been announced.

The VOA’s business plan published in 2017 showed its aims to reduce in size. With a longer revaluation cycle between 2010 and 2017, people could be flexed between workloads to handle for example, peaks in appeals and then revaluation preparations. With shorter revaluation cycles, the work may be less cyclical and more regular ‘business as usual’ so there is a need to recruit, primarily customer service staff but also some additional chartered surveyors.

This recruitment means there could be approximately 560 new entrants to the agency. Although this level of recruitment presents challenges, it also creates an opportunity to bring in staff that may have new ideas which can complement the existing experienced workforce to the benefit of the whole organisation.

In relation to the issue regarding the recruitment and retention of chartered surveyors, the VOA is already a large employer of chartered surveyors, primarily specialising in property valuations. The organisation is always at risk of surveying staff completing their training and then moving to the private sector, this creates a gap in terms of surveyors.

The VOA should be rightly proud of their surveyor training scheme and apprenticeship scheme. The review heard from a number of the graduates on these schemes who were all very positive about the training and the level of support that they receive from all at the organisation. There was however a view expressed by some of the graduates that they may choose not to stay with the organisation after completing their training for the incentives on offer in the private sector.

The organisation is acutely aware of this issue. While many surveyors argued for increased salaries, general government policies and resource pressures mean this may not be possible.

The VOA, like other civil service employers, offers benefits that do not always exist in the private sector. VOA will need to continue to focus on emphasising (as in their current recruitment campaign) the other positive factors about the terms and conditions and overall working environment at the agency, and the wide range of valuation work they undertake.

The organisation have been using an outside agency for recruitment and are exploring new methods and the media for recruitment in today’s market, for both qualified and trainee surveyors and other available customer service posts. It is not yet clear at this stage how successful this approach is being and this will require careful monitoring in the future, but initial results are promising.

The review team visited Plymouth, which is a key strategic location for the VOA and where it hosts one of its customer service centres. Recruitment to non-surveyor grades in Plymouth is going well. The new staff are a mix of external and staff transferring in from other departments such as DWP. These people are being recruited on flexible contracts including different working hours and with weekend working etc. which should greatly assist in delivering its new 2-centre Customer Service Centre model to meet the demands of its customers.

The VOA would like to offer a career path in places such as Plymouth that would allow staff to develop their careers without the need to relocate. The review noted the enthusiasm and positivity that existed at the Plymouth office and how people were excited by the opportunities ahead. The challenge for the organisation will be to sustain and replicate this atmosphere in all offices across the country.

VOA have also recently launched a new scheme for experienced staff in the agency to progress their careers by undertaking an experiential route to qualification as chartered surveyors.

This investment in talent and developing the surveying profession through a Royal Institution of Chartered Surveyors (RICS) Specialist Assessment should benefit VOA’s people and help fill surveyor vacancies in the future.

This scheme is aimed at the Higher Executive Officer grade with either 10+ years’ experience in technical caseworker roles or graduates without a RICS accredited degree and 5+ years’ technical caseworker experience. This is again a very positive step forward in developing talent and retaining it within the organisation.

While the business rates revaluation work could increase the pressure on the chartered surveyor resource (as it has in the past), the VOA has made changes to mitigate this. The VOA has changed its resource profile for undertaking a revaluation by using experience within other grades. In addition, they are recruiting sandwich students who are on a placement year to undertake some revaluation work, supported by more experienced colleagues.

The VOA will be offering flexible contracts to allow sandwich students to return to the agency on completion of their degree course and/or work part time while continuing to study. While this initiative will require the support of experienced staff to mentor the students, it is seen by the review as a progressive and positive step to try and deliver a more efficient service.

While recruitment is ongoing, the VOA is also currently using an agency to provide temporary (non-surveying) capacity, especially within their customer service centres. The review team heard how these staff quickly gain a good understanding of the business and are then keen to apply for permanent jobs.

Staff engagement

As mentioned above, the organisation has undergone a lot of change and will continue to do so for some time. While the review team met enthusiastic people within the VOA, that was at odds with the Engagement Index calculated from the annual Civil Service People Survey. The agency’s engagement score has almost consistently been below 50% since 2010, with the lowest score being 41% in 2013.

The 2018 Civil Service wide staff survey results showed the engagement index had remained stable since 2017, when rounded, at 44%. The completion rate however was up 5% from 2017 survey. At present, this engagement score remains the second lowest across government. There are many positive aspects to the new growth in people for the agency, and the senior leadership team and managers will need to build on current activity, listen and act accordingly.

At the time of the review the agency was developing a narrative and this, along with the people and locations strategy and other engagement and communication actions, are designed to achieve this.

The review heard about efforts made by ExCom to be more visible and engage better with the staff. More regular office visits have been in the main well received. The increase in number of people joining all colleague dial-ins with the Chief Executive is encouraging, as is the use of blogs. Office managers have a key role to play in helping to encourage this type of interaction.

This will be even more key in the coming months as the senior leadership team roll out a narrative of the future of the organisation and continue to develop communication channels; the agency has engagement working groups and recruited volunteers to Talk With Us discussion groups, this is again encouraging.

The review heard across all sites that it visited and from the unions about the difficulties that the reorganisation presented and the negative impacts that it had. However it should be noted that staff are appreciative of the changes that have been made following their feedback and were pleased a pilot (mentioned earlier) had been undertaken to look at the issues.

This is a good example of staff feedback being listened to and acted on.

The VOA developed and trialled a new performance management and development process for staff in 2017 which focuses on regular performance and development conversations. This seems to have been very positively received and was endorsed by the trade union representatives that the review team spoke to.

Diversity and gender pay gap

The VOA gender breakdown is almost exactly 50/50 split. Its 2018 gender pay gap median figure is 15.1% in 2018, down from 16.3% in 2017. This compares to the overall Civil Service median figure of 12.2% down from 12.7% in 2017.

Whilst the underlying reasons for the gender pay gap haven’t changed – the VOA currently has more men in senior roles than women - the organisation does have a robust set of measures in place that are designed to help reduce this further, including the talent and development programmes and flexible working offers. In addition, VOA already has a range of diversity and inclusion networks that are very active.

Changes to VOA’s work/work cycles

Business rates appeals and Check Challenge Appeal

A large part of the agency’s operational work is delivering business rates assessments, maintaining the lists of rateable properties and handling appeals. The design of the business rates system, including any appeal system, is owned by the Ministry of Housing, Communities and Local Government (MHCLG) and HM Treasury (HMT) in England and by Welsh Government (WG) in Wales.

The government introduced CCA on 1 April 2017 in England as part of their reforms to the business rates appeal system. MHCLG led on the policy aspects of the new business rates appeal process, with the VOA leading on the operational aspects. This is one of the largest changes to the way the VOA operates in recent years.

The Check stage sets out how the valuation has been calculated and allows the ratepayer to agree or update the underlying property facts, and, if appropriate, the VOA can change the rateable value at this stage. If a ratepayer is still unhappy with the rateable value, the Challenge stage allows them to provide the evidence to support their view and the VOA to respond and resolve the issues.

Again, the VOA can change the rateable value, if appropriate, at this point. The independent Valuation Tribunal for England handles Appeals where the ratepayer remains unhappy with the conclusion reached at the Challenge stage. CCA was designed to provide resolution as early as possible, without the need to appeal that existed under the old system.

The operational check and challenge processes are supported by a digital service. The VOA launched this service as a beta service (standard practice across government) recognising that this is a new system that would be evaluated and improved, using customer feedback.

The review team heard from rating agents who were finding the digital service difficult to interact with, particularly when it was first launched and they were disappointed by its limited functionality.

There was strong criticism of the early user journey with the CCA digital service when it was launched in 2017. This included the complexity of the online registration process, where all users of the system needed to submit identity verification details, the inability to easily link multiple properties, therefore making it difficult to interact with the service in bulk and the absence of the functionality which allowed agents, or property owners with a large number of properties to develop software that can communicate directly with the VOA system.

The review team found this criticism was justified, especially during the early period after CCA was introduced.

In response to this criticism from Agents, the VOA had worked with their stakeholders to develop and agree a plan for improvements to the check and challenge digital service and published it in May 2018. All of these planned improvements have been successfully delivered.

These improvements included simplifying the registration process, so that only the main account administrator needed to submit identity validation information, enabling easier management and delegation of user accounts, introducing new functionality for linking multiple properties, and increased functionality allowing for rating agents to take actions on behalf of their clients, including the ability for bulk users of the service to exchange data directly from their own systems.

Customer satisfaction scores have been improving as a result, to over 50% (56% as at 8 April 2019). As with all government digital services, the VOA continues to engage with its customers to gather feedback and improve the digital system.

Whilst the delivery of these improvements has not removed all criticism of the CCA process, policy and service, it is clear that considerable work has gone into recent improvements and that the VOA has learned from this implementation and is now engaging appropriately with its users and stakeholders to continue to identify and resolve issues.

At the time of writing the report the full CCA cycle has not been completed and therefore we can’t be sure of the full impact that it will have on the VOA’s workloads. However, the review heard from agents who said that they were holding a large number of potential checks and challenges while they wait to see the results of the first cases to go through the system.

The VOA are well aware that there could be increased volumes at some point and that operationally they need to be prepared for this. The VOA is monitoring the volumes received and is preparing plans accordingly.

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.

Business rates revaluations

A revaluation is undertaken periodically by the VOA to update rateable values to reflect changes in the property market over time. In the Budget in 2016 it was announced that there was an aim to deliver more frequent revaluations of properties in England. In the Spring Statement in 2018, it was announced that VOA would undertake a revaluation one year earlier than planned in 2021 (now referred to as Reval 21), and then revaluations every 3 years after 2021 in England, instead of every 5 years.

The VOA is already preparing for the next revaluation, covering England and Wales and has a formal programme in place with associated governance and oversight. The VOA has successfully delivered every revaluation since 1990.

The compilation of new rating lists typically takes over 3 years from the start of the programme to the introduction of new rating lists which are then maintained until the legislation requires a revaluation. Following a revaluation a general review and lessons learned review are undertaken and improvements are implemented for the next revaluation, improving the efficiency and quality of each revaluation cycle.

The VOA is confident in its ability to deliver revaluations in accordance with the government’s stated intentions. The review team found no reason to doubt this confidence. It heard from both internal and external sources that there is an experienced programme team in place and the people within the VOA are used to the requirements of carrying out a revaluation. The current revaluation due for completion in 2021 is on track, the valuation phase commenced on 1 May 2019 in accordance with the planned timetable.

Legislation

The VOA operates at the centre of an end-to-end process where responsibilities are split across a number of different government organisations. For example, business rates in England involves activity and policy responsibility across MHCLG, HMT, VOA, local authorities and the Valuation Tribunal Service. The legislation is part of the Local Government Finance Act 1988. Equivalent but distinct arrangements apply in Wales.

The nature of tax policy means that questions can arise about the interpretation of tax legislation. Over time, the interpretation of legislation may diverge from the policy intention behind it. In other areas of non-devolved taxation, such as those where HMRC is in the lead, the legislative framework is maintained by way of the annual Finance Bill cycle.

Legislative and policy maintenance for business rates are not part of the Finance Bill cycle and need to be made through Programme Bills in England and through Assembly Bills in Wales. As an example the primary legislation for CCA was introduced via the Enterprise Act 2016 and then further secondary legislation.

Parliamentary and Assembly time is limited for such bills and there is not an established annual cycle for Bills suitable for business rates policy. This can lead to delays in addressing issues where legislation and policy intention diverge.

This potential divergence can lead to litigation to resolve specific areas of uncertainty or differing interpretations of the existing legislation. Litigation is a lengthy and costly process for all concerned and the interpretation reached may not reflect Government’s policy intent. While cases are in litigation the local authorities need to set aside provisions to cover an amount of potential revenue under dispute, leading to uncertainty and reduced availability within their financial position.

The review heard a suggestion that a regular legislative vehicle would be beneficial to enable the legislative framework to be maintained.

The VOA has recently developed a strengthened governance and assurance process in respect of litigation and settlement decisions; this ensures decisions for cases likely to present wider risks are identified and taken in a fully auditable manner. The VOA worked with HMRC to draw on their litigation experience. This is a good example of the VOA learning from and working closely with HMRC.

Data sharing

Information can only be shared or made public where specific legal gateways are in place or the disclosure is necessary for the VOA’s functions. Certain information is currently provided to MHCLG, WG, local authorities, DWP and ONS although there are a number of areas where information that might help inform potential policy decisions is not provided because it does not fall within the functions or gateways that would permit disclosure. The VOA has been developing its analytical function so that it can respond quickly to requests and questions from HMT, MHCLG, WG and DWP policy departments by providing analysis and summary, anonymised information.

Whether the VOA can share data creates a certain amount of tension in the relationships with departments and WG. However it was unclear to the review team how much of this is rooted in misunderstandings about the data the VOA holds rather than the legal gateways in place. The VOA’s data is limited to that needed for its functions, for example, to establish rateable values for business rates or property prices as at 1991 for council tax. It has a comprehensive database of this information in England and Wales but this is not a data set showing current property prices.

This review concludes that it could be helpful for the VOA to continue to clarify to its stakeholders across government what information it does, and doesn’t, hold and establish whether it holds the appropriate data sets and appropriate legal gateways to inform policy considerations.

Technology

The review identified that as part of the VOA’s 2015 Spending Review settlement there was a plan for the VOA to update the current IT systems. This upgrade was to be delivered alongside the implementation of CCA. The CCA roll out became more complex and expensive than had been envisaged. It became clear during 2016 to 2017 that the agency should halt the IT upgrade and resources were diverted to CCA. The review found the current IT systems to be the largest issue within the organisation from both an internal and external perspective at the time of the review.

The VOA’s supporting technology is old. Although it is operationally stable, it has been built up incrementally over several years and is technically complex. This leads to it being inflexible, expensive to change and difficult to provide automation and further efficiency improvements to operational process.

The VOA also carries some risk of components of its technology falling out of support due to its age. This is something that the VOA have recognised and have prioritised short-term investment to ensure system stability whilst the VOA considers further modernisation of its technical infrastructure.

The most common theme the review team heard about the current IT system from within the organisation is that it is extremely cumbersome with very little of it being automated. Many of the legacy systems have been bolted on rather than fully integrated. This results in processes with multiple manual checks and processes across different parts of the system, which can be unnecessarily resource intensive, and restricts the agency’s ability for process improvement.

The review team heard from staff and observed many frustrations about the IT system, these included long log on times, inability to use some external online services, systems crashing, and having to access multiple different systems in the course of working a case, often manually cutting and pasting data from one system to another.

The review team agrees with the views heard from the VOA that current IT systems also do not provide it with the tools that it needs to run an efficient and modern operation through, for example: workflow; automation; real-time management information on stocks and flows and team-level productivity.

There is also a desire across the agency to see more automation. The VOA has started to use robotic initiatives, such as those seen within their sponsor department, HMRC.

The ability to ingest data, to match data and utilise/analyse data from third parties would also significantly enhance the efficiency of the organisation.

The review team witnessed the amount of manual interventions needed on some casework, which again could be dramatically reduced with electronic data capable of being interrogated and automatically matched.

This view is supported from an external perspective as well. Many stakeholders identified the progress HMRC had made in developing their digital capability and they don’t understand why, at the time of the review, the VOA were lagging behind.

Another common request that the review heard was for much greater pre-population of forms so that the agency can use its skilled resource more effectively on the valuation work, reduce the administrative burden and reduce data entry errors.

The current VOA systems do not provide the VOA with robust or comprehensive management information which could be utilised to target management interventions and improve processes. Whilst some improvements are planned in this area during 2019 it remains an issue.

Improvements to the VOA’s underlying technology are essential to enable the VOA to realise further future efficiency savings, and improve performance.

A more flexible, robust and reliable VOA IT system would therefore help the VOA in the service they provide for the local authorities, who collect over £50 billion in revenue which they rely on for local services.

A new IT system could enable VOA to better access and analyse data to support MHCLG, WG and DWP in their policy considerations. It could in addition potentially allow the VOA to better provide ONS with statistical data, and help contribute to initiatives elsewhere in government.

The review heard about some significant improvements in the agency’s IT that had been made over recent times.

Staff making visits to properties have been provided with updated mobile IT kit, although some staff told the review team that they were finding these not sufficiently robust or adaptable for use in the field. The new technology also helps ensure their safety when out on their own.

A good example of this is the SkyGuard equipment that enables staff to stay in contact and be contacted when out on their own on visits using GPS technology.

The review also noted the development of the agency’s analytical function which is enhancing how they use their data and predictive analysis, demand modelling and designing business rules to reduce work burden and automate aspects of the VOA’s work.

In April 2019 the VOA Digital function integrated with the HMRC Digital and IT team. This should give the VOA access to the greater range of skills and resources available in its sponsor department and so help progress its IT services more efficiently.

The agency is considering the next steps to ensure that any investment in a new IT structure will deliver a flexible system that will support the future ways of working and continued process improvement and efficiencies.

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 VOA’s future transformation plans.

Transformation

The organisation is delivering a major programme of change with the objective of creating a modern and efficient organisation that delivers property valuation services for its customers and at the same time provides a better environment for their staff.

This transformation portfolio has recently been redefined to ensure that it includes all aspects of work that are required to achieve this objective.

The portfolio has defined 2 tiers of change programmes that are reviewed regularly by ExCom. These tiers include portfolios for people, strategy and finance, as well as more-traditionally defined change (delivery) programmes.

To ensure that the portfolio contains the right programmes of work, the VOA has recently set up an Investment Committee. This is similar to the model that its sponsor department HMRC used within its transformational programme and ensures that decisions are made based on robust business cases and it also allows the VOA to take decisions about priorities. In the VOA the Investment Committee will make recommendations to ExCom.

This also enables the VOA’s transformation function to review and plan the capability that the organisation has, and needs, to deliver its wide range of deliverables.

A recent Infrastructure and Projects Authority review and internal audit have both concluded that the VOA has in place appropriate programme management and delivery controls. As noted in this review, there is a significant amount of change activity ongoing and more is required.

The importance of lessons learned from previous change programmes is understood within the VOA. The review team found that currently the lessons learned exercises are not done in a sufficiently systematic way that ensures those lessons are recorded and acted on in new projects.

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.

Future direction

During the period of the review the agency was developing a narrative setting out its planned future direction, referred to as Valuing our Future. This is being shared across the organisation from late May 2019, and sets out how the agency wants to operate now and in the future. The VOA has also recently reviewed its core purpose and strategic objectives:

Core purpose:

• we are the public sector’s property valuation experts and advisers, providing the valuations needed to support local taxation and benefits; our work underpins the funding of vital public services.

Strategic objectives:

• produce reliable property valuations
• provide a clear and consistent experience for our customers, clients and stakeholders
• design and deliver a professional, efficient and engaged organisation

At the start of the review we heard staff concerns about not knowing the future vision of the VOA so it was good to see this work was in hand already during the course of the review.

The narrative for the future brings together strands of planning and design work. It is encouraging to see that ExCom are all engaged in understanding, checking and challenging assumptions about how the VOA could work differently to deliver the full range of its functions.

There is work already underway to look at the end to end processes across the VOA, designing the most efficient and effective ways of working and how best to deliver the service their customers and stakeholders require. This includes clarifying the skills and resources the VOA needs and reviewing the estates and locations strategy, along with their people strategy, to ensure the move to fewer offices is achieved in a way that best suits the VOA’s specialist role.

This end to end design work will inform the design of the new IT system the VOA needs. The review found that any investment funding should not be used to update and replace the current IT system with simply a more integrated version of what they currently have, instead they need to consider how modernised data and systems could enable the VOA to operate much more flexibly and efficiently, whilst also enhancing the customer experience. ExCom are also of this view and it is good that they have started work on this to inform their future planning and submission for funding as part of the next Spending Round.

Delivery of a future IT system and the related people and estates aspects of the VOA’s future design will take time. Although the current systems limit the process improvements the VOA would like to make, they are still looking to make improvements where they can. The VOA has recently restructured and refocused its continuous improvement team, to help identify process improvements that will deliver efficiencies and improve customer service, within the existing design.

Stakeholder relationships

The VOA has formal stakeholder relationships and engagement forums, including ones with local authorities, a number of professional bodies and the agent and business communities.

The review heard from the VOA’s Chief Strategy Officer about the steps that had been taken over the last 2 years to improve the relationship with external stakeholders through regular dialogue via a number of stakeholder groups.

These meetings are usually quarterly, and the review received positive feedback from stakeholder groups about them and more generally about the open nature of the relationship with the VOA and a willingness to collaborate, talk and try to resolve issues.

Stakeholder groups also reiterated the professional and friendly nature of the VOA and their ability to carry out their duties as well as recent improvements in relationships.

Perhaps the most important strategic relationships are with MHCLG and HMT as the policy departments responsible for both business rates and council tax in England and with the WG for matters in Wales. There was a concern mentioned to the review team that sometimes it appears matters are raised and discussed at a strategic level, but the resultant actions don’t always progress through to operational levels.

The VOA include Operational Directors in the stakeholder meetings and – following this feedback – are looking to strengthen the links between strategy and operational staff. It is hoped that this will further improve the service the VOA offers and the relationship is has with key stakeholder partners.

The review heard about the Business Rates Oversight Panel (BROP) which had been set up and chaired by MHCLG, to bring together all the parties in the end to end business rates system in England, including the central government departments, the Local Government Association and Valuation Tribunal Service.

Discussions with MHCLG, HMT, HMRC and the VOA during this review established the need to develop their collective relationship further. It was agreed that these 4 central government departments should have regular meetings to discuss their specific roles and the strategic options within the overall business rates system.

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.

The review heard from Local Authority (LA) representatives about a range of issues. This report focusses on the discussions we had about their relationship with VOA. In the past each local authority had direct contact with local VOA staff. Over time the agency has tried to ensure the contact and service is more efficient and consistent – this has involved more centralisation and a change in the way local authorities contact VOA, so the VOA can better understand local authorities’ needs, and ensure the local authorities are providing what the VOA needs to carry out its functions.

Although the local authorities acknowledge that the new ways of working are intended to help the agency be more efficient and provide a more consistent service, they feel it is currently harder for them to contact someone who understands their local issues or who can progress cases for them.

Over a number of years the focus for local authorities has also changed; since the introduction of new funding initiatives such as business rates retention and the new homes bonus in England, local authorities are much more focused on bringing new and changed properties into the rating and council tax lists, and understanding any impact from appeals. As a result of the new focus for local authorities, the VOA has seen an increase in the work it receives from them.

In response to rates retention, the VOA introduced Local Authority Relationship Managers and has been clearer about the standard of information it requires to progress property assessments; request from local authorities could often lack information and resulted in work being carried out but then no action to the rating or council tax lists.

The relationship with local authorities is not a straightforward partner relationship. The VOA interacts with 348 different billing authorities which operate within the local authorities. Each has its own processes, IT systems and ways of working which the VOA needs to accommodate, whilst providing a national service.

Any change in the VOA’s operational performance can be felt in the local authorities as under the rates retention arrangements and new homes bonus schemes (mentioned above) there is a direct link between the business rates and council tax assessments and their funding.

The review team heard concerns from the local authorities about the resourcing of the VOA and the impact that this can have on the level of service they receive. The VOA are aware its work can have a direct financial impact on local government – for example through the clearance of appeals and the processing of additions or changes to the ratings list that may capture growth in the local tax base.

Recognising this, and the need to focus on this part of their customer base, the VOA have been proactive. As well as the Local Authority Relationship Managers and Engagement teams, they have put in place new forums at strategic and working level to enable them to engage with local authorities and their representatives, and ensure that issues can be aired and dealt with collaboratively. They engage with the local authority Treasurer societies, Chartered Institute of Public Finance and Accountancy (CIPFA), Institute of Revenues Rating & Valuation (IRRV) and the LGA on a strategic level, through the Local Authority Advisory Forum.

There is also a Local Authority Working Group, for local authority representatives (alongside LGA, IRRV and CIPFA) at working level. Their Local Authority Relationship Managers are tasked with improving communication with local authorities more generally, providing a more consistent service, messaging and feedback loop. The review team found this to be a positive step and welcome this level of engagement.

The review met with several rating agents and associated bodies. Again, the professional capability of the VOA was highlighted, although they were concerned by the amount of experienced staff that had left the VOA in recent years. There were also some quite strong views expressed by external stakeholder groups and rating agents about decisions being made and whether the VOA are sufficiently focussed on their customers when making operational decisions.

Again, the review team saw a tension between the changes the VOA needs to be making - and is making to become a more effective and efficient organisation - and the view of rating agents who would not necessarily want any major changes made to the VOA.

The VOA has extensive formal relationships with a number of professional and industry bodies and the agent community. The Business Rates Advisory Forum is there to enable the VOA to engage stakeholders across the property profession and industry sectors on strategic matters.

This forum usually meets 3 times a year. At an operational and technical level the VOA has the Professional Bodies Liaison Group, to ensure direct engagement with the main professional bodies on its operational process, polices and on products and services.

The VOA also has regular meetings with the Local Government Association and with LAs through their Local Authority Engagement Team, as well as many regular bilateral meetings with key stakeholders across industry, business, local government and professional bodies.

The review also spoke with the valuation services from both Northern Ireland and Scotland. Although both countries provide their own independent services, there is a close harmonisation in the work that they do and there is regular dialogue between themselves and the VOA. There is good evidence of sharing best practice. Both Northern Ireland and Scotland use the VOA’s Property Services to assist with some of the larger national projects that impact all countries.

All countries in the UK have different legislation, revaluation cycles and list compilation dates - Northern Ireland currently operate on a 5-year basis; and Scotland’s next revaluation is on a 5-year cycle (2022), however there is a Bill currently proposing 3-yearly revaluations.

The cycles aren’t aligned to those for England and Wales, and whilst there are differences in the timing and processes used, there can be valuable lessons learnt from each other so it is good that the different organisations are in regular contact and working together.

Funding position

The funding settlement through to 2019 to 2020 for the VOA was agreed as part of the 2015 Spending Review. In April 2017 the agency’s main funding was incorporated into the HMRC Vote.

The VOA’s 2015 Spending Review settlement required a cost reduction of 29% over the period. The agency set out ambitious plans to reduce total funding from around £210 million in 2015 to 2016 to around £160 million in 2019 to 2020. This included an in-year reduction of around £30m in 2019 to 2020. In the early years of the spending review the IT modernisation was deferred to deliver the new CCA policy and underpinning system.

Making significant financial savings in 2019 to 2020 was predicated on the IT modernisation, so as a result of the reprioritisation securing these savings became unachievable. Over the course of 2017 to 2018 and 2018 to 2019 the VOA considered how the funding gap in 2019 to 2020 could be bridged, at the same time the revaluation was brought forward a year, to 2021.

Further funding support was provided for this. At the time of the review’s evidence gathering progress in closing the gap had been made and the VOA continues to consider how to address the residual pressure, alongside the operational challenge of delivering the revaluation a year earlier.

The VOA’s ExCom are aware of the challenge and, supported by their finance teams, have worked hard to ensure the potential impact that different options could have on performance levels is understood. Following the completion of the review’s evidence gathering a plan for managing the VOA’s financial position for 2019 to 2020 was agreed with HMT.

This provides certainty for the VOA for the year although there is still work to do to live within the settlement. ExCom still anticipate a difficult year, particularly as volumes under CCA are uncertain.

MHCLG explained how even a small gap in the finances of the VOA and any necessary reduction in the service that this leads to can be magnified when looking at the effect on the finances of local authorities. This is an example of the complex dependencies and interactions that exist.

The HMRC Corporate Finance team expressed satisfaction with the interaction that both departments have and the proactive approach that the VOA took to address the issue. MHCLG noted that they are involved in discussions about performance levels, although they no longer have a direct input to the VOA’s funding settlement. The review finds that this collaborative approach will stand the VOA in good stead to manage the current situation and as the next spending round process starts.

The next spending period presents a challenging delivery and funding period for the agency.

Conclusion

The review team found no reason to disturb the role, purpose or sponsorship of the VOA. The VOA Framework Document has been updated, with no material changes required.

The review team concludes that the direction of travel for the VOA is positive. The VOA Executive Committee is aware of the main challenges facing the agency and have a clear shared responsibility for addressing them.

Read the report’s appendices.