Copyright: David Lawson – appeared Property Week Oct 1998
Home pageImagine hammering on the barred doors of the John Prescott's office, writ in hand, demanding he pay up or go to jail. It is a cash-strapped local government officer's dream. And, in theory, the pugnacious deputy prime minister has approved such a possibility.
After the next general revaluation, government ministries will be legally responsible for paying their own rates to local councils. If the Department of the Environment Transport and Regions messes up, Prescott, as its chief minister, would be liable to prosecution.
This strange situation of a government paying itself business rates is has a hidden logic. 'Crown bodies have always contributed through a special arrangement in lieu of rates,' says a spokesman for PACE, which is responsible for a large part of the government estate. 'This will now be formalised so they are treated like everyone else.'
That means they can also be prosecuted for non-payment. There is little chance of matters reaching a point where council officers can get their own back for spending cuts. But it does open up horizons for rating surveyors.
Property with a rateable value of around one billion pounds could be opened up for private firms, according to Denise Trollope, a partner with GVA Grimley. The firm is about to get a taste of this new market after being appointed with Gerald Eve to advise PACE in the run-up to the year 2000 revaluation.
In the past, government buildings have been assessed by the Valuation Office for CILOR (charge in lieu of rates). The 1997 Local Government Act changed the rules so they would be treated like any other property in future.
That has two significant repercussions. First, it fills a black hole in the rating lists, as the VO figures have not been available to the public. Extra evidence will be available for thousands of premises - particularly useful in areas heavily stocked with government offices. Secondly, it opens the door to private sector advisers.
Government departments will now have the right to appeal against valuations, says Stanley Bootton, lead partner with Gerald Eve. That means they may need the help of outside advisers.
'It might seem that the government is robbing Peter to pay Paul by changing the system but PACE has a duty to ensure its property is run efficiently and that can only be done with full transparency on occupation costs,' he said.
This is a step further along a road which has seen government departments handling their own budgets and paying their own rents, added the PACE spokesman. 'We have taken on these advisers for our own estate and made them available where individual ministries need them,' he said.
'They don't have to come to us,' says David Room, national rating partner with GVA Grimley. 'They don't even have to go to PACE.' But enthusiasm for advice is already understood to be surfacing. This is why a similar keenness to get this business showed in a long list of bidders for the contracts won by Grimley and Eve. They run for three years with options for two-year extensions.
One problem is that no-one really knows what will be involved. Bidders were flying blind into this area because there are no schedules showing how much property is involved, how closely the CILOR valuations compare with the rest of the rating list and how keen ministries will be to appeal.
Both advisers have some inside knowledge. Gerald Eve is already well advanced on a direct commission from the DETR, while GVA Grimley has a track record with Crown occupiers and clients like Trillium on the PRIME/DSS estate. But this could provide little overlap with other work that may flood in.
It is understood the Treasury is 'counselling moderation' to government departments so they do not go wild with appeals against valuations. It is also unlikely that CILOR charges will have been calculated on a different basis to private sector buildings.
'The Crown Property Unit has never refused to discuss assessments in the past. It is just that the appeal mechanism has now been formalised,' says Booton. That should eliminate fears that the VO will be overwhelmed with work on top of the general valuation, leading to delays which affect other parts of the market.
There will be scope for debate, however, particularly over unusual buildings. Booton points out that this could throw up all sorts of strange animals such as transport weigh stations and research laboratories with indeterminate values. One of PACE's main motivations was advice on the large amount of residual vacant property it was created to handle after the government estate was devolved to ministries two years ago.
And if the odd castle or nuclear bunker emerges, it is unlikely to blow any fuses. 'We have already done that,' says Trollope, pointing to GVA Grimley's work on Hampton Court for the Royal Palaces Trust.
So those dreaming council officers will have to make do with images of besieged ministers rather than tabloid pictures of the Queen pulling up the drawbridge against bailiffs as the Millennium dawns.