Debate contribution: Rating Policy: Strategic Road Map

Debate contribution by Dr Caoimhe Archibald on 9 December 2024.

MLA

Dr Caoimhe Archibald

Party at the time

Sinn Féin

Date

9 December 2024

Type

Debate contribution (made as a minister)

Business

Ministerial Statements

Heading

Rating Policy: Strategic Road Map

Assembly identifier

Official Report component 4698165

Read the official Assembly record

Text

I wish to provide Members with a statement on my strategic approach to rating policy over the remainder of the mandate. I am determined to build a progressive rates system based on the principles of fairness and equity and to ensure that it aligns with the Executive's policy objectives, stimulates our economy and supports the growth of our tax base by creating the conditions for businesses to thrive. The proposals that I set out today are the first step in that journey. The measures that I will outline are built on analysis of the most recent consultation findings, along with supplementary engagement undertaken by my Department. The first short-term measure that I propose to consult on is elevating the current level of the maximum capital value on domestic properties from £400,000 to £485,000. I do not propose to take forward the policy consulted on by the then Secretary of State to simply remove the cap. That would have seen annually recurring bills to some ratepayers of over £25,000, which could be considered excessive. Altering the current maximum capital value will generate additional revenue at the top end of the tax base, a more progressive step than increasing the poundage element for the whole tax base to realise the same amount of revenue. I believe that that is a proportionate and measured approach. It is important to highlight the fact that means-tested and other forms of support are in place for those on low incomes, regardless of a property's capital value. That measure and others in the rating system, such as lone pensioner allowance, would be adjusted in proportion to any change in liability. The second short-term measure that I wish to consult on is reducing the early payment discount from 4% to 2%. An increasing number of customers now pay their bills by direct debit, which is the most efficient way for my Department to collect rates. The proposed reduction in the early payment discount serves to take account of the shift in customer preference. I will launch a supplementary public consultation process in January seeking views on both measures. The consultation will last 10 weeks and will help determine the final shape of any policy change, with the results of the process coming back to the Executive for final decisions in that area. I turn to my approach to rating policy for the medium and long term. The rating system is the Executive's main lever to generate revenue and is therefore critical for the funding of our public services, raising in the region of £1·5 billion annually. It is therefore important to ensure that supports are targeted towards those who need it most or who are vulnerable and that any rate reliefs meet their policy objective. The more revenue spent on rate support, the less there is for vital public services. We have committed to budget sustainability, and that remains a key deliverable that we cannot lose sight of. As the Minister responsible for rating, I am clear that I must play a leading role in generating income for the purposes of providing much-needed public services. I must be clear, however, that it is not always possible to meet the expectations and demands put on our rating system. With that in mind, the principles of fairness and equity will guide my approach to policy development, operational implementation and decision-making. Three key levers will support my approach to income generation. First, I will broaden the overall distribution of rate collection by extending the tax base. Secondly, I will ensure that rating policy aligns with and underpins Executive priorities. Finally, I will ensure that the administration of the rates system is delivered efficiently and effectively. The focus of today's statement will be on the second lever: work to ensure that rates support aligns with Executive priorities. That will be undertaken through a comprehensive, 10-year strategic review cycle of all rates support provided by the Executive. That work will look at six key questions in the context of every rates support measure, namely who gets support; what support is provided; how the support is distributed through our councils; why the support is provided; how it is provided; and what the support's impact or intended impact is. Every rating support measure will be reviewed over the remainder of a 10-year cycle in clusters of policies selected and grouped for each year by either theme or urgency. Critically, the review cycle schedule will be published well in advance to allow councils and stakeholders time to prepare and gather evidence to inform the process. I stress in that context that "review" does not mean "removal". After each review point, strategic decisions can be taken by the Executive to see whether the support is working well in its current form; whether any changes are necessary to the support; whether support should be redirected within the system; whether support should be adjusted and the savings used to lower or moderate the rate poundage; or whether any resource saving could be deployed elsewhere in the Executive’s spending requirements. My Department has already commenced the strategic review cycle. Year 1 of the process, 2024-25, was focused on the tax base analysis and policy proposals underpinning the supplementary consultation on options for the maximum capital value and early payment discount. That consultation process is aimed at refining the progressivity of the tax, a key element of preparing the groundwork for a future domestic revaluation, which I will cover in more detail later. Year 2 of the process, in 2025-26, will see a comprehensive review of small business rate relief and the scope for enhanced sectoral targeting and application. The second measure to be looked at is the policy of non-domestic vacant rating (NDVR). Both of those policy areas have an urgent strategic importance, and the results of the review will allow decisions to be brought to the Executive in time for the commencement of Reval 2026. I have listened to the business community about the challenges posed by the autumn Budget in recent weeks. In that regard, I plan to commission research into the cost of doing business in the North, with a particular focus on the impacts on our sectors of the announcements such as the planned additional employer National Insurance contributions. The sectors most impacted will be engaged in that work, and the findings will help to inform Executive decision-making. Although the rating system might not be the ideal vehicle for the immediate and emergency intervention being requested by some in the business sector, it is clear that there is a need to prioritise a review of the support provided through the small business rate relief scheme and to see whether that support could be adjusted to react to the challenges of the current economy, post COVID, after the cost of doing business pressures and in light of the challenges facing businesses at present. That work can also look at the plans announced in England at the end of October but will have to take account of two key matters: the fact that our tax base is distinct and our economy is heavily weighted towards small and medium-sized enterprises (SMEs); and the fact that we collect two taxes within one poundage multiplier here. Initial preparation for that work will start now, and I met the business community this morning to outline to it that this will be one of the priority areas of focus in the strategic review cycle for 2025-26. The other area will be to address the second main issue raised by the business sector in my engagement with it to date. Vacant commercial units are a bigger issue than they have ever been, and that trend is unlikely to reverse any time soon. One of my key aims is to align rating policy to help tackle the blight of vacant properties in our towns and cities. Increasing liability for non-domestic vacant rating properties from 50% of the occupied liability to a higher level of liability was consulted on as part of the revenue-raising process. Some consultees expressed concerns about their ability to let older retail and office properties that have had ongoing issues due to general economic factors, including demand for high-grade energy-efficient stock.

1,369 words. Text as published by the Northern Ireland Assembly.

Assessment

Not flagged

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Assessed 21 October 2026 at 11:40 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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