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Official Report (Hansard)

Session: 2008/2009

Date: 22 October 2008

COMMITTEE FOR FINANCE AND PERSONNEL

OFFICIAL REPORT

(Hansard)

 

Land and Property Services

22 October 2008

 

Members present for all or part of the proceedings: 
Mr Mitchel McLaughlin (Chairperson) 
Mr Simon Hamilton (Deputy Chairperson) 
Mr Fra McCann 
Mr David McNarry 
Mr Adrian McQuillan 
Mr Declan O’Loan 
Ms Dawn Purvis 
Mr Peter Weir

Witnesses: 
Mr Alan Brontë ) Land and Property Services 
Mr Arthur Scott ) 
Mr John Wilkinson )

The Chairperson (Mr McLaughlin):

The Committee will be taking evidence from Land and Property Services (LPS). I refer members to the briefing paper, the LPS annual report and accounts for 2007-08, and the executive summary of the Department of Finance and Personnel’s reform delivery unit’s report on Land and Property Services.

The Committee has agreed with the Public Accounts Committee that today’s session will not include scrutiny of rates collection and arrears, as it is being considered by that Committee.

I welcome John Wilkinson, chief executive, Arthur Scott, director of operations, and Alan Brontë, director of valuation and commissioner of valuation. I think that the Committee has had the pleasure of your company at a previous meeting.

Mr John Wilkinson (Land and Property Services):

Good morning. I will begin by giving the Committee a feel for the broader focus of our work. I will also provide some statistics about the scale of our operation.

Land and Property Services was born out of the reform of public administration. The concept was to improve services to the public and make them more joined up. The organisation was formed in two parts: the Valuation and Lands Agency joined with the Rate Collection Agency in April 2007, and in April 2008 we were joined by Ordnance Survey of Northern Ireland and Land Registers of Northern Ireland.

During the last financial year, our senior management team worked on our forward strategy. The vision of the new organisation is to transform land and property services and information for the public good. Our mission, which is aligned with the Programme for Government, is to support the regeneration and economic development of Northern Ireland by providing an integrated set of land and property services. In essence, we deal with land registration, mapping, valuation, revenue collection and the distribution of reliefs. The organisation comprises five directorates: valuation; operations; customers and business improvement; data information and systems; and corporate services.

GeoHub NI, which was launched in the summer of 2008, is a repository of spatial data — a storage and search facility — to which all public servants will have access. It assists in policy formulation and operational delivery. We are also creating a data spine, which will pull together all the information from the various legacy organisations and make it accessible to the new organisation and to the public. That information includes mapping data, which forms the basis of all the registration work that we do.

E-registration is one of our key projects. We are moving from paper-based registration to electronic delivery by solicitors, which will improve our efficiency and the quality of the work that we are doing. By way of our new Pointer data set, we will work with local authorities to put together a common address set for Northern Ireland, which will be held in our data spine and will inform rate collection activities.

On one of our previous visits to the Committee, we talked about the domestic revaluation work that we did in 2007. At the moment, the valuation directorate is dealing with the non-domestic revaluation project, which is to take effect in 2010. That will comprise the valuation of 72,500 properties across Northern Ireland, with a total value of around £1·3 billion.

The client services division of the valuation directorate has been engaged in work with the central asset realisation team, and recently provided advice to Sir George Bain’s review of the relocation of public-sector jobs in Northern Ireland.

Turning back to operations, another aspect of our work is the advice and guidance we provide to local authorities on the penny product. We are seeking to improve on that area of our work. With respect to rating reforms, we spoke about the 2007 domestic revaluation, which moved from rental values to capital values. We have also been involved in further rating reforms in 2008, such as lone-pensioner allowance. We are also involved in the reforms which are under consultation at present.

We entered the Civil Service reform agenda as early participants in the shared-services agenda for HR Connect and Account NI. We were early participants in the reform delivery unit, which made 33 recommendations to our management board. We have also volunteered to take part in phase one of NI Direct.

Our customer services strategy is developing: we are baselining some of the survey information that we have inherited from the legacy organisations, and we are researching to find out how we can improve and how best we can interact with our customers.

As we build our data spine — as we put more information and data into it — the organisation will grow stronger. There is a cycle: it begins with operations. When a piece of land changes hands, we pick up that that has happened through the legal system and we deal with the registration of title. A person who purchases land may decide to develop it; that we pick up through the planning process. Our mappers will incorporate it into the map. Property may be built, and we may need to carry out a valuation for rating. Finally, we may send out a bill, which will take account of any reliefs.

I want to give the Committee a feel for the scale of the work we do. In the first six months of this financial year, we issued 650,000 rates bills. We handle, on average, 20,000 calls and 2,300 valuation contacts each month, for maintenance of the valuation lists and so on. We also have interaction with customers and the public through the Land Registry. Interactions in respect of that are at a rate of 1,600 per month. In the first six months, we have handled 120,000 telephone calls, dealt with almost 20,000 valuation contacts, and had 9,600 customer contacts through the Land Registry. That makes a total of 150,000 contacts. It is a varied and dynamic business, and very much affected by economic trends. The volume of transactions running through the Land Registry has been greatly reduced in the last six months. Some of the work that we do in advising local authorities on penny product calculations and forecasts is affected by the current economic downturn.

Mr Weir:

I declare an interest as a member of North Down Borough Council and as vice-president of the Northern Ireland Local Government Association. I appreciate what the Chairperson has said about the rate arrears, and I will be guided by him in my remarks should I stray towards that territory.

Mr F McCann:

Which means that you are going to.

Mr Hamilton:

If he does, I will whack him.

Mr Weir:

I am sure that the Deputy Chairperson can —

The Chairperson:

I will ask him to keep an eye on you.

Mr Weir:

Can I clarify that, so far this year, 6,600 new houses have been valued, but, because of the intake of 7,493 houses, a backlog of 8,429 new houses remains? Do the 8,429 properties all result from the pre-April 2008 figure, or does that figure include approximately 900 new houses that you have not, as yet, been able to process?

Mr Alan Brontë (Land and Property Services):

At the start of the year we had over 8,000 houses to value. We valued around 6,600, but then we received more to value. We have just over 8,400 properties on our books at the moment. We have valued quite a number of the older houses and, as we were doing that, we were trying to keep up with new houses coming through. We still have 8,000 to do, but they are not the same 8,000 houses.

Mr Weir:

Roughly speaking, there were 8,600 houses, an additional 7,400 houses have come on to the system, and you have valued 6,600 of those houses?

Mr Brontë:

The figures do not always match arithmetically, because there may be double listings from building control. However, I assure the Committee that in the first six months of the year we have added almost £1 billion of capital value to the list: £929 million has been added, which is important in growth terms and, in a six-month period, is a 1% increase in the actual value of the total valuation list, which is good.

Obviously, we would like to do better, and we would like to be able to bring those new house numbers down. However, at the same time, my valuation team and I have to balance new houses with challenges against existing valuations on both domestic and non-domestic properties. During that period, we have completed over 3,000 non-domestic cases. I have to strike a balance between new houses, altered houses and non-domestic properties. The non-domestic list has greater value that the domestic list.

Mr Weir:

You started off with a backlog of 8,600, and after six months you have the backlog — in net terms — down to 8,400. I am concerned that, at that rate, you will get rid of the backlog in about 21 years.

Mr Brontë:

I have said in our briefing paper that we believe that we will exceed the target in the second half of the year. We had a target of 95% of the cases registered prior to April 2008, and I am confident that we are on course to achieve that target. The Committee should not forget that in the first six months we have cleared all the capital-value reviews that we had received before 1 April. A lot of other activity is going on, and I have to balance my finite resources. I also have to cope with the public, who would like to me to deal with the review of valuation, as well as those people who want new houses valued.

Mr Weir:

That point that I am making is that, in net terms, you are a long way away from meeting your targets — even if you were to clear the 95% target prior to April 2008 and, in addition, you were to clear 90% of the new registrations. It must be taken into account that you have about 7,500 new registrations in the space of 6 months. No one knows precisely how the housing marking will go. However, for the sake of argument, say 7,500 is a half-year estimate and you have 15,000 new registrations in the year, you would aim to have 90% cleared within three months. Around 90% of the 7,500 should be cleared, and about 90% of houses coming in in the next three months should also be cleared, pro rata — which would mean that you would clear 11,000 of those houses plus 8,600. As a result, your backlog would be down to between 3,500 and 4,000.

Mr Brontë:

Yes, but with respect, you are assuming that my resource application for that area will be exactly the same as it was in the first six months, and that is not the case.

Mr Weir:

Your resource application?

Mr Brontë:

My resource application to the work can vary; throughout the year I have to balance what is most important at any one point in time. I am not coming to the Committee to say that we will achieve the 95% completion target for the 2008 houses. We will certainly do our best to achieve that, but we have a lot of resources, for example, which we will use in the first six months to achieve the non-domestic valuation target.

Mr Weir:

With that shift in the emphasis of resources, a much more rapid reduction of the backlog than in the last six months would be expected.

Mr Brontë:

Yes, but the information that we have given the Committee relates to new property, because that is something that the Committee asked about before. It is critical to note that there is greater value in the non-domestic list than in the domestic list. I have to balance my activity across the valuation list.

Mr Weir:

I understand that.

Mr Brontë:

I cannot concentrate entirely on new houses. I would love to be in a position where I had the staff to deal with every house on the valuation list within a couple of months, and indeed, all the alteration and commercial activity cases. There is widespread valuation activity going on, including other valuations for the public sector. The target is very challenging.

Mr Weir:

I am trying to establish whether it is a realistic target. I appreciate what you said about the value in the non-domestic side of things. Clearly, the backlog is creating major problems for local councils, because the more slowly that is done, the more slowly rate revenue comes in, and, without getting into the issue of arrears, that has an impact on the amount of money that is available to councils. Given that 55% to 60% of rate revenue comes from the regional rate, it clearly has implications for the amount of money that is coming in to central Government. This is not an academic debating point; it has real financial implications for central Government, and, perhaps more pertinently given its scale, for local government.

Mr Brontë:

I recognise that. We are striving hard to provide the relevant information and to assist local authorities with their projections. At no time would I wish someone to receive a backdated bill, but when a new house is put on the valuation list, the bill is backdated to the date of occupation or no further back than 1 April 2007. If a house that was built and occupied last year is put on the valuation list today, there is no loss of revenue per se. Backdating is not something that we like to do; we want to give people a valuation and get the bill out as close to the date of occupation as possible.

Mr Weir:

None of us want to see a situation in which a lot of backdating goes on. How confident are you that the date of occupation can be accurately assessed? Anecdotally, I have heard it suggested that bills are being produced that do not charge for the full period of occupation — that Land and Property Services has, for want of a better word, played it safe. How accurate is the data on the date of occupation?

Mr Arthur Scott (Land and Property Services):

Occasionally, when a valuation for a property is carried out, there may well be somebody in occupation. When that happens, the person completing the valuation activity will ask the occupier on what date they occupied the property. The collector will normally act on that information, but there are other checks. We can check against the electoral list, and we are part of the national fraud initiative. Furthermore, we can perform data matching with other data sets. Therefore, if someone has provided us with an incorrect date, we can go back and bill them.

Mr Weir:

When you say “other data sets” do you mean things like electricity bills? If you ask someone how long they have occupied a house — for the purpose of calculating their first rates bill — there is an incentive for them not to tell the truth. I suspect that they will not use the earliest date that they lived in the house. Unless they are politically conscious in that regard — and I know this from experience — they will not tell all.

Mr Scott:

There is an element of management. It depends on the time period and the information that we hold on when the property was built.

Mr Weir:

Do you have access to utility bills, for instance?

Mr Scott:

We do, but we are working our way through data-sharing issues. In the past, we had a regular arrangement with NIE, but we are experiencing difficulties on the interpretation of the purpose for which the information is given.

Mr Weir:

You refer to the out-turn figures for the actual penny product of seven councils being lower than estimated. That will be a major problem for some of those councils. How do you account for this mistake? How does seven compare to previous finalisation figures? My impression from the experience of one of the affected councils was that the estimated penny product tended to be a reasonable amount lower. Therefore, there was always a degree of windfall, and that was, probably, the case in most councils.

It seems that seven councils now have a low out-turn, and, presumably, some of the others that have a high out-turn will have only a minor benefit. What is the cause of that? Is some of that related to the downturn in the property market? Is it in some way related to the backlog that has built up? A lot of councils will have concerns that their overall stock will not be any less — in fact, it will have grown — but that it has not been properly accounted for by Land and Property Services.

Mr Scott:

Predicting the outcome for the penny product for an 18-month period is very complicated. One has to look at a dynamic situation over an 18-month period. There are a range of variables, over which Land and Property Services has little control. The outcome of is estimated as a means to help the council to set its overall financial strategy.

We provide the information on what one penny on the rates will raise. The variables of the valuation lists, both domestic and non-domestic, will impact on that. Over that 18-month period we have to try to forecast how many new properties and demolitions there will be, because additions add to the rateable value at which rates can be raised or the rating burden distributed. That is dependent on the council’s financial plans and what projects it is running. If a council has an increase in its tax base, it could, in theory, reduce what everybody pays, because it has more new ratepayers. That is a theoretical point, because costs tend to increase, and rates go up. If there are a lot of demolitions, rateable values are lost.

The next variable that can affect the calculation is the amount of allowances. Under the reforms that were introduced in April 2007, the allowance to landlords and agents was increased from 10% to 15%. The purpose behind that reform was to encourage more landlords to accept responsibility for the collection of rates from their tenants, without claiming vacancies. That is resource-intensive for the agency, because when a landlord requests a vacancy on a property for which he has responsibility for rates, we have to go out and inspect the property to ensure that all furniture has been removed and that there is no beneficial occupation.

That change in the legislation increased the collection loss for a number of councils. That was more significant in the council areas that have high levels of rented properties and social rented properties, because the Northern Ireland Housing Executive (NIHE) and the housing associations also attracted that extra 5% allowance. In many ways, they were getting that allowance for the benefit of the private-sector landlords. That increased the loss, because it was a loss to the councils.

Because of the challenges of implementing reform, we were not able to carry out the number of inspections of vacant domestic properties that we previously would have in order to check and to provide assurance to each of the 26 councils that they were, in fact, vacant. Councils must face the fact that, if a domestic property is currently vacant, then no rates are due on it. That was reflected in the first half of 2007-08 in the fairly buoyant property market. Many people found it easy to get cheap mortgages and were prepared to leave properties vacant. That changed toward the latter part of the year.

The vacancy amounts that were calculated and estimated for councils were lower than was actually the case. We worked with a number of councils toward the end of 2007-08 to check on the level of vacancies. As a result of that, around £2∙7 million was billed, and we are now engaged with 25 of the 26 councils in carrying out a thorough check of all vacant properties in Northern Ireland in an attempt to get a more accurate assessment and assurance around what the level of vacancy is. If any properties are occupied, they will be billed.

In relation to non-domestic vacant property with a rental value of £2,000 or more in council revenue, we caught up with a number of cases where we had previously been unable to gain access to the property or establish ownership or entitlement to ownership of the property in order to bill them. Because of the way in which the penny product works, over the last four years councils have been receiving revenue because those properties are in the tax base for rates to be raised. There is no loss in collection because there is no exclusion to the liability or write-off of it. We caught up with some of these cases to discover that, despite the fact that we have been paying councils for them for four years, they were either industrial or listed properties and therefore did not have any liability. The number of exemptions in non-domestic vacant property therefore increased, which again affected a number of councils. The other loss of collections comes from write-offs.

At any point in time we are sitting down with councils to tell them where the starting point is, where the tax base is — and we are now doing that for 2009-10. We also show them the valuation lists. In the past, councils would have expected growth, but given the economic situation, many councils are seeing either very little or negative growth.

We are using more up-to-date information on which to base the estimates. Traditionally, we would have used the previous year’s losses. The revised estimated penny product, which has just been circulated to councils for 2008-09, is an in-year revised estimate to help them to identify early variances in order to enable them to assess how they can adjust or adopt their financial strategy to cope. We are carrying out an intensive round of discussions with the councils, laying bare the assumptions and talking about what may or may not happen and what actions we can take in partnership to try and address the areas that we can in the estimates, in order to try and make the position more favourable for councils. It is not an exact science.

Mr Weir:

You have said that the difference between outcome and forecasts for 2007-08 was 1∙25% of finalisation. Is that 1∙25% based on the overall, collective picture of the 26 councils taken as a block, or is it an average of the variation per council? To give an example of the significance of that — if you were to say that, across the board, the estimated value for all 26 councils was £400 million, and it ended up being £405 million, then the variance would be 1∙25%. However, the amount by which the figures are wrong could vary massively. If you were to take two neighbouring councils, one where the penny product ends up being 5% above estimate, and one where it is 5% below, then, on average, you have got it dead on across the board. For those individual councils, the average variation is still 5%. Which of the two is it?

Mr Wilkinson:

That is an average figure, based on the total amount of rates that go to the councils.

Mr Weir:

On average, will the variation for each individual council be more than 1·25%?

Mr Scott:

Yes. It is relative to the size of the council in question. The percentages for some councils are lower — one must consider each individual case. It affects some councils more significantly than others.

The Chairperson:

Can you remember what your question was, Declan?

Mr Hamilton:

Are there any other questions that could possibly be asked?

Mr O’Loan:

The trouble is that I have so many questions.

I am sure that Mr Wilkinson keeps an eye on what is said about Land and Property Services (LPS). It will, therefore, not come as a surprise that I have formed the view — over a period of time — that Land and Property Services has major problems, to the extent that an independent investigation is needed. That investigation should be commissioned by, but entirely independent of, the Department of Finance and Personnel.

Although we and other Assembly Committees can do a great deal towards ferreting out what is happening in LPS, we do not really get to the bottom of it. Someone with major management and accountancy expertise needs to get in the door and find out exactly what the extent of those problems is and whether the mechanisms for addressing them are adequate.

You may or may not challenge that premise from which I start, but are you inadequately resourced to do your job? Or is it the case that the resources are there but — for whatever historic reasons — are not being used as well as they should be?

Mr Wilkinson:

It is difficult to pinpoint one specific reason. The situation that we went through caused some of the difficulties that we faced, and that has all been well rehearsed and is in the public domain. The 2007 capital revaluation’s reforms partially led to the need to replace the former Rate Collection Agency’s IT system. However, there were other reasons that led to that decision. The IT system that was is place was dated and was ready for replacement. Spare parts for it were difficult to come by.

Coupled with the reform, that decision put the organisation — or one of the legacy bodies — through a difficult period. We have been coming through that difficult period, and we talked about our recovery plan during our last appearance before this Committee. As we have ironed out and resolved the difficulties that we had with the IT systems, we have recruited additional staff to tackle some of the backlogs of work that had built up.

That recovery plan is ongoing, and the situation is improving by the day. We are dealing with approximately 800,000 properties across Northern Ireland. As I said at the beginning, we are dealing with approximately 150,000 customer cases from the first six months of this year. A very small percentage of those cases have led to complaints.

The organisation has gone through a difficult period. The management board is addressing those issues each month, and we are studying the issues that cause us difficulties, such as some of the backlogs that we are dealing with, and improvements to IT systems. We are also working with organisations like the reform delivery unit, and we are considering some of the suggestions that have come from that process. The situation has greatly improved from the last time that we came before this Committee.

Mr O’Loan:

Have you brought all significant problems within LPS to the attention of the Minister?

Mr Wilkinson:

Yes, I have worked closely with the departmental board and the permanent secretaries. We have spoken to the Minister about the issues facing us.

Mr O’Loan:

Your briefing document refers to non-domestic revaluation. You said that that is to come in on 1 April 2010. From what date will the revaluations apply?

Mr Wilkinson:

The antecedent valuation date will be 1 April 2008.

Mr O’Loan:

We all know that the property market is in a state of chaos and confusion. How can a value be properly and fairly assigned to a property?

Mr Wilkinson:

I would love to talk about that issue, but I had better defer to the commissioner of valuation.

Mr Brontë:

The date of 1 April 2008 is the antecedent valuation date; it is set in statute. All non-domestic rating revaluations in Northern Ireland, and elsewhere in the United Kingdom, will be harmonised on common dates from 1 April 2010. That is just the way in which it has happened; it is not the result of any plan.

We have been collecting information. For instance, 41,000 forms went out to ascertain rental value, and we have received returns from occupiers who are paying rent on a property. We are well-used to analysing rents and to understanding the non-domestic commercial property market. As with all revaluations, this is about redistribution. Increases in value —

Mr O’Loan:

I am clear on that, but the housing market is extremely volatile in an extremely unusual way.

Mr Brontë:

It is, and that is why our organisation has 150 chartered surveyors.

Mr McNarry:

How many?

Mr Brontë:

Our organisation has 150 chartered surveyors — the largest group of chartered surveyors in Northern Ireland. We have just over 300 valuation staff. We do a wide range of work. It is not just the rating system; we have a wide role for Government in relation to property in Northern Ireland, including acquisitions and disposals.

Anyone in the property world will tell you that this is a difficult time, but evidence will be available for us to analyse on properties and rents. Other properties are valued in a specialist way — for example, specialist properties that are on a de-capped rate. There are many other issues besides rental analysis.

I am confident that we will provide and publish an accurate revaluation. We have to keep those figures under review. As we consider the circumstances during 2008 and 2009, we will keep that information constantly under review. The valuations will be published before the end of 2009, and they will come into effect with the bills that are issued in 2010. The market is difficult, but I am confident that we will get the figures right.

Mr O’Loan:

You have not referred to domestic revaluation. When will that become instrumental, and at what date will valuations be cited for domestic capital valuations?

Mr Brontë:

There are no plans to do that. We have not been asked to carry out domestic revaluations.

Mr O’Loan:

I thought that that was planned.

Mr Brontë:

It is normally assumed that, as with other revaluations, domestic revaluations take place on a five-year cycle. Having a cycle of revaluations is important to address the differential growth or decline in areas and in types of property.

Mr O’Loan:

If it were to be a five-year cycle, when would it begin?

Mr Brontё:

It would come into effect in 2012.

Mr O’Loan:

You mentioned your part in the Civil Service reforms, and we have seen the report on that. To what extent are those reforms contributing to solving your problems? Furthermore, as you attempt to manage the amalgamation of various agencies and deal with a backlog of problems, a further reform and restructuring programme is being imposed on you. How big is that burden?

Mr Wilkinson:

I do not consider the report’s findings to be a burden. It makes 33 recommendations, covering matters such as portfolio management, procurement, human resource functions and IT assistance. The report proved useful as an independent appraisal of what is happening in Land and Property Services, and the management board was already addressing many of the points that were highlighted in the recommendations. For example, the report recommended a review of project and portfolio governance. We had already set up a separate directorate to examine that work area, and we had gathered a team to ensure that our project management was robust. Of the 33 recommendations, some are in train and we have already implemented measures to satisfy 11 others. I consider the report to constitute another independent appraisal of the organisation and, given the challenging circumstances and operating environment in which we work, I consider it to be helpful.

Mr O’Loan:

There is considerable anecdotal evidence that there has been a significant delay in implementing the lone-pensioner allowance and that inefficient training has resulted in staff, who do not appear to understand the scheme, asking fundamentally wrong questions.

Mr Scott:

I accept that there has been a delay, but I do not accept that there has been inefficiency. The measures are new, and the details were only delivered in March 2008. We had hoped to make the system live at the end of May; however, system testing revealed some difficulties with the allowance’s interplay with other reliefs, such as housing benefit, rates relief and the disabled person’s allowance, and with the prompt payment discount, for which domestic ratepayers can apply. Unfortunately, it has taken longer than we had hoped to resolve those difficulties.

Nevertheless, the system went partially live at the end of June, and we began to process claims. To date, more than 20,600 claims have been processed — 16,000 by LPS and more than 3,500 by NIHE — and we have paid out £2·2 million, which is in line with our policy colleagues’ estimate of between £2 million and £3 million. However, the number of claims resulting in awards is considerably less than the 50,000 that were forecast.

In addition, we have some unresolved problems concerning private-rented tenants, who must apply to NIHE, which then passes their details to us so that we can adjust their rate accounts. We intend to introduce a manual workaround, and we hope to have all of the 4,000 outstanding claims cleared by the end of November.

Mr O’Loan:

I will not ask the witnesses to repeat the earlier answer about the penny product. However, I do not consider that answer to be persuasive. There is a problem, and that confirms my broader opinion that an independent body is needed to conduct an assessment. That is a comment, rather than a question.

I do not intend to tread on forbidden territory with regard to rate collection. However, with respect to the system of collection, agricultural occupiers get a 20% reduction in rates; however, as I understand, the number claiming that relief does not tally with the total number of agricultural producers in other statistical bases. Can you confirm that that is a problem?

Mr Brontë:

That is correct: our statistics do not necessarily tally with those of others in this respect. The rules provide relief more widely than for a single farmhouse on a farm. A retired farm worker, or a farmer who has part of a farm holding, might qualify. Therefore, our figures will not tally precisely with other databases.

The rules are quite different, and I should be happy to outline them to the Committee at a later date. I do not have the rules in front of me at present. Those numbers have been looked into. As we carry out our revision, as we visit properties that have been renovated, changed or extended, we review agricultural status. We ask occupiers to complete a form in order to ascertain whether they qualify for that. We are confident that we are collecting and refreshing that information. We are aware of the situation, but I cannot say confidently to the Committee that everyone who has agricultural status is qualified to receive it. That is something that we review as we proceed.

Mr O’Loan:

Is that an issue of concern for you? Does more work need to be done?

Mr Brontë:

Were resources infinite, I could tackle many problems in many areas. I am aware that there are houses that enjoy agricultural status that do not have a qualifying farmer in occupation, and I want that data refreshed at the earliest opportunity. However, we are doing that.

Mr Wilkinson:

I can assure members that we are actively striving to improve our operations across the board. One aspect of that is working with local councils and local government finance officers to improve the joint understanding of the penny product calculations.

Belfast City Council is one of the councils that we work with: we were before Belfast City Council on Friday morning. It has had an independent review of the penny product calculations completed by the Institute of Rating and Revenue Valuations (IRRV), which has experience based on all the councils in GB. It works with us to improve what we are doing. We are active on that front and conscious of the implications of the penny product calculations.

However, as Mr Scott said, this is not an exact science. Rather, it is an estimate carried out over an 18-month period in a dynamic property market, which has upturns and downturns. We are seeking to work more closely with councils to get a better understanding of the calculations and help them to manage expenditure and financial planning over the period. Much work is ongoing on that as we speak.

Mr O’Loan:

I could ask other questions, but I will let it rest there.

Mr Scott:

I misquoted the figures earlier — the figures I gave were for applications received. To clarify, 15,300 applications have been processed by LPS and NIHE, and 4,700 are outstanding. I apologise for mixing the figures up.

Mr Hamilton:

I want to ask about the lone-pensioner allowance. You have just answered my first question on the number of outstanding applications. I will try to bunch my questions together.

The Chairperson:

I ask Peter to pay attention to how you do that.

Mr Hamilton:

It is a skill that he can learn.

Mr Weir:

I will maintain a sulky silence for the rest of the meeting.

Mr McNarry:

Is that a promise, Peter?

Mr Hamilton:

It has taken years to achieve this.

Why does it seem that, every time there is a major new IT project, something goes wrong? I understand that those projects are on a large scale, but every time that a new initiative, programme or policy that we all support is introduced, such as the lone-pensioner allowance, there is an IT glitch, which causes problems that affect our constituents.

If there are 4,700 cases outstanding and, on average, people get between £140 and £150 per application, well in excess of £0·5 million is outstanding. When can the people whose applications are outstanding expect to receive what they are entitled to? LPS is moving to a manual system for the NIHE applications because of the problems with the IT system. Am I wrong to think that none of those applications have been processed?

We all appreciate the scale of the challenge that you and your team faced in merging the various agencies. Along with the Minister and the Executive, and as elected representatives, we are keen to make changes to the rating system because of the historic problems that we saw before devolution. Are some of the problems experienced by LPS caused by too much going on at once?

The Chairperson:

Due to the problems with IT systems that Simon described, we are all familiar with the term “manual workaround”. Is that a temporary arrangement until the software is fixed, or is it permanent?

Mr Wilkinson:

Although we have not nailed the complex IT integration, the lone-pensioner scheme has been a success.

Mr Scott:

I mentioned the partial implementation in June, which allowed us to process lone-pensioner allowance applications from applicants who had not availed of any other relief, such as transitional relief, disabled person’s allowance, housing benefit or rate relief. Those cases were straightforward, because they did not have the complexity of the clawback and the recalculation of the discount. Those cases have been being processed by LPS since June.

NIHE had a different system and was able to process awards to people in the social sector much earlier. Therefore, the only people who are affected by the delay from NIHE are those in private-rented accommodation, the rates for which are paid to us. We regret that and have done all that we can to speed up the process. We were reluctant to go down the route of manual workarounds. From previous discussions that we have had with the Public Accounts Committee, you can see that manual workarounds have contributed to our problems in the wider business.

Again, given the need for people to obtain those reliefs, we have taken the necessary steps. That will be done in a controlled way, and only for a short time, until the interface arrangements with NIHE — which are completely new and which we have no experience of — are developed, tested and fully working.

The reason why IT always seems to go wrong is down to the timing factor. It is normal to allow six months for specification, development and testing, and for whatever comes out of the testing to be resolved. We are there or thereabouts with regard to the lone-pensioner allowance. It is sometimes difficult to predict what will come out of testing. If something has been tested and is not working properly, a judgement has to be made about the risks of going forward with something that is not quite right, set against the inefficiency of a manual workaround for something that should be done automatically.

It has been well-documented in the gateway reviews that we are following best practice with regard to the project boards and the assurances that we are looking for. The quirk lies in the interdependent nature of the project. We broke it up into phases, and, in some respects, although that follows best guidance, perhaps we did not carry out that task as well as we should have, or did not realise that fixing one part of the system affects something else.

The collection of rates and the interdependence between information from other organisations and reliefs, and the fact that people’s circumstances can change, just makes the process more complicated. As I explained to the Public Accounts Committee, we did not have the time to defer: we had to move forward.

We replaced the housing benefit system in July, having deferred it on three occasions in order to ensure the issue of the domestic rate bills. That happened very smoothly, and the new system worked well; there was no press or public reaction. In my experience as a senior responsible owner in charge of a major, mission-critical IT project, it is clear that time is needed in order to allow testing to be fully completed. Sometimes there is an eagerness to make announcements that new systems will be implemented, although the IT is not ready. There must be greater cohesion between policy-making and delivery. That lesson has been documented, in our experience, in introducing rating reform, and has been shared with policy colleagues. It is a message that we must continue to reinforce

Mr Hamilton:

What is the estimated time for the payment of the outstanding lone-pensioner allowance?

Mr Scott:

The current backlog of 4,700 cases will all be paid out by the end of November. We have skewed resources in order to ensure that that backlog is cleared.

Mr Wilkinson:

The task is very challenging, but also exciting, as regards the broader picture that I have tried to paint this morning. A great deal of good work is going on. We have a fully-formed management board; we have developed balanced scorecards for each business area in pursuit of our key targets; and we will soon appoint an independent board member.

We are working actively with other stakeholders; I mentioned the IRRV review earlier. There is a lot of good work going on behind the scenes, and we are making progress. The management board regularly carries out a complete check of progress of the revenues and benefits side of the rate collection function, in order to pick up some of the issues that we have discussed with the Committee on previous occasions. That is on track, but, like all things, it is challenging.

We have sorted out our IT system and got it up and running. The systems that I talked about issued 650,000 bills over a couple of weeks in April. Nevertheless, having resolved that issue, we have brought 70 or 80 new staff into the organisation over the first six months. Those people have to be introduced in phases and trained. Efficiency improves as the weeks and months pass.

Much is happening in the organisation. We held a conference in Lisburn recently with all the managers from various parts of the organisation. We spent the morning session examining how the managers could join up in order to harness the full synergy of the merger. For example, one presentation outlined how mapping using aerial photography has helped with valuation and, as Mr Brontë mentioned to Mr Weir earlier, the processing of backlogs.

The organisation is working hard, and we are not complacent. We are focused on improving our performance and securing continuity behind the scenes. It is an exciting opportunity for Northern Ireland to combine those services for the benefit of its citizens.

Mr McNarry:

I thank Adrian McQuillan for allowing me to jump the queue.

I am sympathetic to your efforts, and I am loath to proffer some of the criticism that we have heard. I hope that you achieve your targets, because I recognise their importance. Given the slump in the building of new houses, you will not be so busy. That may give you some breathing space. Have you estimated the reduction in the number of new houses over the next 12 to 24 months? Moreover, have you estimated the hole that those reductions will make in the returns on your values?

Constituents are concerned that a house that was bought for £200,000 is now, because of reductions, valued at £150,000. What adjustments are you making on the effect of falling prices from those valuations? That information would help the public, because they do not think that there is a flow consistent with their valuations.

Mr Wilkinson:

The flow of information into our organisation — for example, with new houses — sometimes has a time lag. There is a possible break on the horizon. At the moment, we are still dealing with many new houses. However, that might slow and allow us the opportunity to catch up.

Mr Brontë:

We rely heavily on information from local-authority building controls, who notify us at the commencement of building operations. We value the property once it is complete. We have previously advised the Committee of our work with Belfast City Council, which spans a variety of areas. Moreover, we are working closely with building control, which is providing us with survey information from its trawls. Other local authorities recognise the advantages of that model.

As Mr Wilkinson said, there is a lag in the flow of information, and, as I said to Mr Weir, I suspect — as we all do — that the number of new properties ready for valuation will decrease in the second half of 2008. That will give us the capacity to, perhaps, deal with some of the outstanding work.

Mr McNarry mentioned value. If he means the fall in property values —

Mr McNarry:

I had asked specifically about the estimation of the reduction. When will you be able to tell the Committee that you have a forecast, as it were, of a reduction in the number of new properties?

Mr Brontë:

The number has varied between 12,000 and 14,000 over the past couple of years. I do not have the exact figure, but because of the way in which we register the work coming through from local authorities, I can look at the system in order to see what work is coming down the track. As building control departments give us the commencement of properties, our management information will allow me to look down the track in order to see how that will flow over the next 12 to 18 months.

The Chairperson:

Do you get notification from building control departments about the completion of work? What happens, for instance, if a contractor abandons a project having started it? You are notified that it has started, but the relevant information is when the building is completed.

Mr Brontë:

Absolutely, and that sounds logical. In reality, however, a person can be in a property before a formal completion notice is issued, because if a fireplace, perhaps, or a front step is missing, building control departments will not sign off completion. Many properties in Northern Ireland do not have completion notices, and, in our experience, the safest way is to incubate, as it were, the commencement notice for nine to 12 months.

Mr McNarry:

I am not criticising your system; I just find it strange that you cannot give me the information. I assume that you can provide it.

Mr Brontë:

Yes.

Mr McNarry:

I would, therefore, be grateful to receive it.

The Chairperson:

You are saying that your system can track the information.

Mr McNarry:

Without getting into the technicalities, I would be grateful if you would provide the information.

Mr Brontë:

Absolutely. We have improved our system in the past six months to take that information on and to trap it electronically.

Mr McNarry:

That is crucial information, and now that I know that you have access to it, will you provide an estimation of the hole that that will put in the return of values? It is bound to have a shocking effect, certainly over the next two years.

Mr Brontë:

We flagged up almost 6,500 new domestic properties in the first six months of 2008, bearing in mind that some houses are demolished. Quite often, one is demolished to make room for two. That equates to about £929 million of value. Those are quite good figures, because the total value was raised by £1·5 billion in the whole of 2007.

Values in the domestic rating system are fixed at 1 January 2005. Therefore, every property in the valuation list is valued as at 1 January 2005. A new house going into the list today, therefore, goes in at its 2005 value.

Mr McNarry:

Are there swings and roundabouts in that approach? Are you guesstimating that a house that was valued in 2005 is worth more or less in 2008? That is, are you extracting too much money with regard to values, or not enough?

Mr Brontë:

All capital value or, indeed, rental value rating systems are based on an antecedent valuation date, because if one person’s house was valued in 2005, 2006 or 2007, and the next person’s house came in at 2008, they would have different values for the same property, and that would be unfair. Therefore, there is a common valuation date, as is the case in the non-domestic sector. Those values are fixed, and, when putting a new house into the valuation list today, we value in tone. In other words, we look at similar houses in similar localities, and using our information to enter the new house on the same basis, because that is fair.

Mr McNarry:

Do you do that from a helicopter in the sky, or do you travel up a lough in a boat? Are your 150 chartered surveyors physically carrying out that work?

Mr Brontë:

As one would imagine, not many of the chartered surveyors are involved in the basic domestic rating system; most of them are involved in much more complex work. There are already 700,000 properties on the valuation list. We have all heard a great deal about computer systems, but we in Northern Ireland have a very advanced system for holding data and carrying out computer-assisted mass appraisal. When a house is put on the list, we include survey information and details that have been obtained by a person who has measured that property or from building control in Belfast. We pull together information on the various physical attributes of the property and compare those properties to other similar properties. Our system will provide us with comparable properties and give us an indicative valuation, and a valuer will then sign off on that. That is a fairly well accepted mode of practice.

Mr McNarry:

I am quite satisfied with that explanation. I am glad that it will be recorded in the Hansard report, because I will have to read it again to allow it to sink in. However, the public are experiencing a problem, particularly now that home budgets are stretched and people are feeling vulnerable. I do not have answers to their questions, but I am looking for some. The implication is that Land and Property Services might have made a mess of the valuations in the first place because of the guesstimates that were issued. I will not argue whether that is right or wrong. People have come to my constituency office to ask for advice because the value of their property has been underestimated or overestimated and they are not sure what to do about it.

The Chairperson:

What did you tell them to do, David?

Mr McNarry:

I told them to be honest — I did not do what Peter Weir did. I did not tell people not to declare that they have moved into a new house. I find those comments to be highly immoral and also impractical, coming from somebody who has studied the law.

The Chairperson:

I think that Peter was talking about human nature in general, rather than any specific advice that he offered.

Mr McNarry:

He was perhaps being personal about his thoughts on human nature, but he was not speaking for me.

Mr Hamilton:

The facts show that people are not declaring that they have moved into new houses.

Mr McNarry:

I do not want to get into that; Peter is not here.

Mr Hamilton:

You should not have started it.

Mr O’Loan:

He is not here to speak for himself.

Mr McNarry:

I can say only that I recently moved into a new house and that I had to phone on several occasions to ask somebody to value the house. I had to insist on that happening. That is how I dealt with the situation.

Returning to my constituents, who are more important than I am: many homeowners are working through their personal budgets. Are you likely to carry out a review of valuations? Can you perform some kind of juggling act so as to get as close as possible to the current valuation of the home, or is it the case that some people have paid too much or too little? I cannot get my head round it: are we losing or are we winning?

Mr Brontë:

It is a difficult subject, and I am happy to write to the Committee to provide a further understanding of it, if you wish. However, for now, I will paint a picture for the Committee. Let us say that the price of every property in Northern Ireland fell by 40% in the past year. I carried out some checks the other night. An article in the ‘Belfast Telegraph’ showed the original asking price of some properties followed by the reduced asking price, and, after tracking each of the reduced asking prices, it found that that those prices were still considerably higher than the 2005 value.

The Chairperson:

In a way, the slump in property prices is making the 2005 valuation more accurate.

Mr McNarry:

So you were robbing us blind from 2005, and it has only caught up with us now.

Mr Brontё:

Even the reduced valuation exceeded the 2005 value. There are currently very few properties whose value has dropped as low as our 2005 valuation of them. However, even if every property in Northern Ireland fell 10% below its 2005 value, there would still not be any requirement for a revaluation. A revaluation is only required when there has been differential change since the valuation date, regarding the location and the type of property.

However, I suggest that when the market settles, it will not settle in the same pattern as 2005. That requires a revaluation on a regular basis, so that the relativity between properties is kept the same. That is why we undertake non-domestic revaluation — because certain sectors and towns move ahead. If we do not revalue, people will be paying an unfair share of the rate burden.

Mr McNarry:

That information is very useful. It is a very complex matter, so perhaps it could be further elaborated. During 2007-08, you have operated an extensive advertising campaign entitled Who Gets Help and How. I am told that 58,000 of your customers claim housing benefit, 6,000 claim rate relief, and 11,800 claim disabled person’s allowance. Have those figures increased or decreased from previous years? How much has the advertising campaign cost?

Mr Wilkinson:

Due to the way in which we work, Mr Brontë is responsible for the valuations and Mr Scott is responsible for the collection and distribution of benefits.

Mr McNarry:

You are working very well.

Mr Scott:

Approximately 1,300 more ratepayers were awarded housing benefit during this year, and we paid out £2 million more than we did last year. Some reconciliation work needs to be done on the new system that was installed in July, so I am not able to give a figure on rate relief today. However, I could provide those figures to the Committee in writing. The figures for disabled person’s allowance are about the same; we have around 11,800 cases and pay out approximately £2·4 million. Those figures are fairly static — people continue to be awarded that allowance until such time that it is no longer appropriate. However, I anticipate that that figure will increase before the end of the year.

The lone-pensioner allowance is a new relief that was established in April. To date, we have dealt with approximately 15,000 cases and have paid out £2·2 million. The figures for education, training and leaving care are slightly down on last year, when we had over 1,000 applicants and paid out £523,000. This year, we have dealt with just under 700 applications and have paid out £265,000, but the term has just started and some applications from landlords might not have been processed yet, so that figure could increase.

I do not know how much the advertising campaign cost, but the leaflet was included with rate bills, so printing the information leaflet was the only cost. We used posters and worked with various third parties — such as the Citizen’s Advice Bureau and credit unions — to try and get the message out to the wider community. I will write to the Committee about the details of that cost. In overall terms, I am sure that it is relatively modest.

Mr McNarry:

Much obliged; thank you.

The Chairperson:

Thank you for your patience, Adrian.

Mr McQuillan:

I am a very patient man.

The first phase of e-registrations is currently being rolled out. What have the customer reaction and uptake been like? What do you expect to achieve when that is fully up and running?

You said that you worked with 25 of the 26 local councils on the penny product. Why did you not work with all 26?

Mr Wilkinson:

With respect to e-registration, we are seeking to get away from the paper-based system. When property or land changes hands a large number of papers, maps and copies of all the conveyancing instruments have to be processed through Land Registry. We are working with the Law Society, a key stakeholder, to move towards an electronic registering process. The basis of that is mapping. One of our concerns is to drive efficiencies: the more we can do electronically, the more efficiencies we will make. Another aspect is quality. With the paper-based system that we have at present, much of the material is rejected because the detail is incorrect.

Mr Scott:

There are about 400 professional conveyancing firms in Northern Ireland. The pilot scheme that we are running involves 20 firms. They are enthusiastic and they see the benefits.

The system prevents submission of incorrect applications. Some 20% of registrations submitted are incorrect — they are incomplete, documents are missing, or something has not been signed. The system forces the professional firm to complete all that. The cost of reworking incorrect applications is significant. We have a staff of about 20 working on that, so there is a staff cost of about £300,000 per year in dealing with the poor-quality applications that come in from legal firms. Rolling out e-registration across all the professional firms will allow us to declare that cost as an efficiency. In other words, we will no longer need those staff and we can manage them out of the process or divert them to other priority areas within the agency. Improving the quality of the work coming in will speed up the turnaround time of the registration process, to the customer’s benefit.

We offered to work with every council on the penny product. I have not spoken with the council concerned and can only guess that it had a positive finalisation last time around. That is unfortunate. However, I hope that, through our contacts with individual councils and with the Association of Local Government Finance Officers, we can persuade it to join us. We have a panel of five local government finance officers who represent the councils, with which we are in regular dialogue about the improvements we are making.

The Chairperson:

Dawn, it is your turn. Thank you for your patience.

Ms Purvis:

I have several questions. The first relates to your annual report, which provides a summary of performance set against ministerial targets. Several targets were not achieved; have new ones been agreed? Have new measures been set, or do you still use the measurements shown? What is your performance to date against those targets?

Mr Wilkinson:

Last year was difficult for a variety of reasons. Some targets we did not achieve, and the achievement of others was delayed.

As I said at the outset, we revisited the forward strategy of the organisation. We worked through what we wanted to achieve, by way of our vision and our mission. We established key competencies. We strive to be customer-focused; to manage data and information efficiently; and to be wedded to business improvements. We decided to review the key targets. The management board and senior management team looked at the key targets that would drive the organisation forward and deliver the forward strategy.

One of the key targets for this year involving the rate collection side of the business is similar to that of last year, but many of the other key targets are new. Work has been carried out on producing balanced scorecards, not just for the organisation, but for each of the directorates of the organisation. I have an excerpt from one of those scorecards, and members can see that most of the key targets are shaded green; the rate-collection target is shaded red, and a couple of others are shaded amber, which represents work in progress. At this juncture, that is the position of performance against a revised set of key targets. Those revised targets are more strategic than some of last year’s targets, which were very operational.

Ms Purvis:

As there is a new set of targets from April 2008, does that mean that there is no way of measuring progress against that of previous years? I take it that most of those previous targets have been completely changed, given what you said about your mission and your vision.

Mr Wilkinson:

I think only one of the former targets is included on the corporate scorecard.

Ms Purvis:

The rate-collection target.

Mr Wilkinson:

Yes. Some of those previous targets were very operational targets. They were not corporate and strategic targets that were going to develop the organisation and take it forward; rather, they measured some of the productivity and outputs in-year. Those targets have been included on the scorecards for the appropriate directorate. For example, some of the valuation targets that were in the business plan last year have dropped out of the corporate scorecard, but they are in the scorecard of the valuation directorate. When the management board meets, on a monthly basis, it reviews progress against the corporate scorecards as well as the directorate scorecards, so we do monitor the performance against those targets, and that is information that I could still provide to the Committee.

Ms Purvis:

Will you provide the Committee with a list of the new key targets that have been set in place, including the target percentages, and some information about how you are meeting those targets, or measuring against those targets to date? I notice that there was a target relating to customer satisfaction with regard to rating, but that that has been changed in the briefing that you have provided, so that it now refers to overall customer service satisfaction. One cannot be measured against the other, so it would be interesting to see what new target was put in place in April, and how you are measuring up against it.

Mr Wilkinson:

That is an interesting point. The previous year’s targets related to phase 1 of Land and Property Services, which involved rate collection and valuation. When phase 2 began on 1 April this year, and the merger was complete so that Ordnance Survey and Land Registry were included in the remit, obviously we had to revisit the key targets. Rather than compiling a list of 20 key targets, we had to pick some of the ones that we felt were important and strategic, and some of the other targets for the legacy organisations were transferred onto the scorecards for the various new directorates.

Ms Purvis:

Obviously, with a massive change-management programme there is an effect on staff, and I am glad to see that you are trying to address issues involving staff. Your briefing states that the departmental staff survey, which was carried out in December 2007, highlighted a number of areas where improvements were needed. What were those areas? I see that you have carried out workshops and drawn up an action plan, and are discussing that at monthly meetings and team briefings. How is the action plan progressing? Obviously you are measuring it on a monthly basis; have any differences been highlighted between permanent and temporary staff?

Mr Wilkinson:

No differences would be highlighted, because the survey is done anonymously so that individuals cannot be identified.

The results of a staff attitude survey last year were poor. That was for reasons which varied across the organisation. In revenues and benefits, for example, some of the dissatisfaction centred on the new IT systems. Some other areas of dissatisfaction — if I can call it that — in the perception survey involved issues such as some staff not fully understanding the changes being made. There were issues around access, and discussions with the various directors and managers across the organisation. Issues such as communication were identified.

I have a lot of experience in dealing with staff attitude surveys through my previous work. This survey was representative of the 50% of the organisation who had filled it in. One of the important things in a perception survey is to try to fully understand what it is all about. One of the first things that we did was to get our communications team to run some focus groups of staff, and talk to them about the various aspects of the staff survey. It was broken down into some generic areas. On the back of that, along with some work with trade unions, we put together an action plan. That action plan has been shared among senior managers — not just the management board, but senior managers in the organisation — because of ownership of some of the issues.

We have been working on the various improvements, for example: communications; the team brief; communicating performance, and scorecards. We have been actively working on that now for a number of months. The progress and performance against the staff attitude survey forms part of the management board information pack that we, as a senior management team, look at each month.

In gauging how well we are doing, the proof of the pudding will be in the eating. The Department is about to run another staff attitude survey, and we will see the progress that we have made in forming the new organisation and settling some of the actions that we have taken on board in response to the previous survey. We will continue working on it. It is still early days — we are six months into the newly formed organisation, so I do not want to make any rash promises or commitments. We are very focused on it, we are working on it, and my hope is that it will improve.

Ms Purvis:

When you have repeated the exercise, will you give us a short briefing on the comparison with the previous results?

Mr Wilkinson:

Yes, I will do that.

The Chairperson:

Thank you. It has been a very long session, but it has been very interesting. I know how time flies when you are enjoying yourself. [Laughter.]

Mr Wilkinson:

It has been a pleasure. It is good to have the opportunity to sit down and talk and explain what we are doing and the progress that we are making. We are happy to continue doing that with the Committee. I thank the Committee for its time.

The Chairperson:

There may be issues arising from this discussion that we will follow up with correspondence, and there are some points on which you will come back to the Committee.

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