Council use external consultants to make large business rates savings at museum

Wrexham Council have paid external consultants to help gain business rates refunds for the museum.

The detail eventually emerged following several queries on the topic after a £289k business rates saving was referenced as part of budget documents around the ongoing council hunt for savings.

Questions have been raised why such external work was needed when the reason for a saving was widely known in the the museum sector following a landmark England and Wales ruling.

The debate around use of external providers to help the council make savings is not a new one in Wrexham.

Back in 2016-2017 there were large public concerns about consultants PWC making savings for public bodies and the fee model they charged. The so called ‘risk reward timeframe’ was of specific concern around what would be billable time, so for example work done say this year could result in an invoice. There were some commercial agreements possible that could mean that the savings made this year could create bills several years into the future based on the current savings made.

Back in 2015 we asked Council Leader Mark Pritchard about those PWC’s ‘reshaping cuts’ and billing, and if cuts made were linked to the fees generated for the external consultants – and was firmly told ‘no, no.’. In 2017 it emerged from Cllr Pritchard ‘…for every pound they saved they get 10 pence‘.

After the PWC contract finished there was a large local bun fight between the Council Leader and the Labour Group Leader over who procured, and supported them, to carry out the work.

Due in part to the pricey dalliance with PWC there was a local inference such arrangements were now politically off limits and out of favour.

With the recent budget process looking for millions of pounds of cuts in a short period of time lots of information has been made public, including per-department lists of efficiencies, savings, revenue increases and cuts.

One such sheet is below from a recent meeting pack, with light explanatory notices for some of the figures. As readers will have seen Wrexham.com has queried several such items to give more insight to how the UK Government and Welsh Government budgets are affecting local budgets ‘on the ground’, and also examine areas of local council policy.

Item 5 above details how £289,000 is attributed to a ‘NDR’ , or Non-Domestic Rates (more commonly known as business rates) refund for Wrexham’s Museum. This, the report states, is due due a ‘rating list appeal’.

At the start of the month we verbally queried the budget line, and specifically asked if the saving and work had been conducted in-house, noting fees charged by business rates firms on savings identified.

Often such fees from business rates companies can be large double digit sums (as high as 40-50%), and some companies even bill for savings years into the future (again, as high as 40-50%) – a practice some rating firms have been highly criticised for.

The response then was ‘no stone has been left unturned’ in the quest for budget savings, and a further note would be provided to give some context.

We clarified the query, asking if the appeal / rates work has been taken internally and that there were no external consultants getting a percentage, or future invoices to pay.

The response then provided read, “Wrexham Council works closely with a firm of specialist Rating Agents to deal with appeals on all of the Council’s commercial portfolio, and significant savings have been achieved over the years as a direct result. The latest success relates to the Wrexham Museum where, following a landmark ruling by The Upper Tribunal (Lands Chamber), the appointed Agents were able to negotiate with the Valuation Office Agency and secure a reduction in the rateable value of the museum for the period 1 April 2017 – 31 March 2022, to a nominal value of £1.00.

“The Council expect formal confirmation of this change from the Valuation Office Agency within the coming weeks and once processed, this will result in a budget saving of approximately £289,000 which is in addition to £239,000 achieved following a successful appeal against the 2010 rating list entry.”

Last week we re-asked the question, pointing to local history with PWC around external entities charging on savings made – with the Council Leader reassuring “…we haven’t used any external providers to give us the information. We’ve done everything in house.”

At that point the Chief Executive noted, “Our approach on the budget is generally we try and utilise the skills and expertise we have, and then we add on external support where it’s needed, not to drive this process”.

We were give assurance that a further explanatory note would be provided.

After the briefing the Council Leader got to the bottom of the issue, and confirmed that Wrexham Council was infact paying a fee to external consultants for the savings made.

Cllr Mark Pritchard shared an update he had been given from the finance department , “The Council uses rating agent specialists to engage with the Valuation Office. A small fee is paid for the service provided and this has been included in the projections in the report. It represents very good value for money, given the level of rate reduction achieved.”

There has been no indication of which consultants were used, what the fee was, or what other properties owned by Wrexham Council have been subject to similar arrangements.

The huge news in the world of museums was the landmark case in 2020 that saw Exeter City Council get £1.5m back after successfully reducing the rateable value of their museum to a nominal pound – something it appears Wrexham has now done with outside assistance.

Due to this the, again, huge news in the world of museums was new business rates changes – announced by the Valuation Office – and in museum related trade media.

One business rates expert who looked at the matter (above data for Wrexham’s museum) has told Wrexham.com , “The council could have done it themselves, and did not need a rating agent to do it.”

The expert also noted, “A budget saving of approximately £289,000 is listed, but £289,000 is also exactly one of the the refund amounts, if the council is paying a fee on this amount then the budget saving might not be the full refund amount stated. They also will have received an additional refund of around £235,000 for another business rates reduction for the museum and a fee will most likely have been payable on this figure as well.

“If the firm employed to carry out the appeals are carrying out work across similar commercial council sites, this implies other savings have been made on sites owned by the council. With more fees payable to the company, and potentially on future years savings as well as any refunds issued, a ‘small fee’ payable across multiple sites could soon become large amounts owed to the rating agent. If the fee is 10%, which would be low in the trade, on these two savings alone the council could be paying a significant five figure sum in fees.

“With the change to Museums being such big news and having such a landmark case in your favour, where is the need for an agent to deal with this?”