Rates (Amendment) (Northern Ireland) Order 2006

Part of the debate – in the House of Lords at 7:06 pm on 7 November 2006.

Alert me about debates like this

Photo of Lord Rooker Lord Rooker Minister of State (Sustainable Farming and Food), Department for Environment, Food and Rural Affairs, Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Farming and Food), The Minister of State, Northern Ireland Office, Deputy Leader of the House of Lords 7:06, 7 November 2006

My Lords, before I start, perhaps I may make a housekeeping announcement. Peers with an interest in Northern Ireland may wish to know that tomorrow's meeting with the Secretary of State for Northern Ireland has been postponed until Monday 20 November—probably Monday afternoon. Letters will be sent out with new details. I regret that, but it is one of those things.

I do not intend to belabour the point about the order. The review and reform of the rates was commenced by the Northern Ireland Executive in 2000. A decision was arrived at in December 2002, just after the Executive was suspended, to go for a capital value system. The order is therefore the culmination of four years of research and reform to see whether we can get a better system that is fit for purpose in Northern Ireland. It applies purely in the Northern Ireland context. That is all we are discussing tonight.

The provision has been arrived at after an enormous range of consultation on the order and the draft order, amounting to more than 32 weeks in all, and substantial debate in Northern Ireland itself. The present rating system in Northern Ireland, for noble Lords who are unaware of it, does not benefit from the experience in England of having had the poll tax—otherwise known as the community charge—forced on it or, indeed, the council tax. In other words, the local rating system in Northern Ireland is based on the rates system that we used to have in England prior to the poll tax. Indeed, the values currently used in Northern Ireland on which the rates are fixed are in many cases the rateable values from 1968.

In 1968, the majority of properties were probably rented; now, the majority of properties are owner-occupied. I think that the proportion is about 70 per cent plus. If all 720,000 properties in Northern Ireland had risen in value by the same percentage from 1968 to today, there would be no problem. Everyone's rates on the new system would be exactly the same as they are today. The purpose of the system is not to raise new revenue. I make that absolutely clear. It is not the function of the new system to raise new revenue. But the plain fact is that not all properties have risen in value by the same percentage. Some have gone up enormously; others have gone up by a very small amount. That means that, in today's Northern Ireland, many people are paying an unfair rate, based as it is on an old rateable value of the property. Others are clearly not paying a fair share.

I am not going to go through the minutiae of the system to be brought in. It is a system used elsewhere in the world; it has not been invented purely for Northern Ireland. It is not a brand new system. It is based on the capital values of properties—capital values can vary from market values—as of January 2005. Everyone was sent their assessment in the summer. There were about 14,000 complaints—about 2 per cent.

On behalf of the Government, I regret that this is not being done in the Assembly by the Executive, but we need to move the order because the new rating system—the new capital values—will be used to bring in the water charges. Without the water charges, Northern Ireland could lose an enormous amount of revenue that will flow from a different system. A fairer system means that most people in Northern Ireland will gain rather than lose. Sixty-eight per cent of the population will gain, pay the same or pay less than£1 a week extra. A pensioner couple living in a house worth £500,000 on the basic state pension will pay no rates, so it is not the case that this is unfair and penalises most people. We have made several concessions for young people in education and others.