I have received notice from the Minister of Finance and Personnel that he wishes to make a statement regarding the review of domestic rating reform.

I have just been made aware that there is a difficulty in that, apparently, copies of my statement are not outside the Chamber for Members. I do not know if that will make any difference to proceedings. My statement is long, and I do not print, copy and distribute it myself, but I think Members would like to have it in their hands.

On a point of order. It would be very difficult for Members to address themselves to the statement and ask questions without having a copy. I would like a decision on that, Mr Speaker.

It might be useful if the Minister could clarify when the statement will be available to Members.

I have an empty box at the moment for some reason, so I am unable to give you a response.

Will the Minister continue?

I will speak slowly to allow the Department to catch up with me.

I am making an announcement today about the outcome of the Executive’s review of the domestic rating system that was introduced in April under direct rule and fulfils the commitment I made to the Assembly in June when publishing the terms of reference for the review. Today’s announcement, taken together with other recent announcements on the draft Budget, will further demonstrate our commitment to making a real difference for householders in Northern Ireland.

We must remember that what really matters to people is the level of rates that they have to pay, so any changes that we make need to have that proviso. Annual rate increases must be kept to a minimum, otherwise the whole system becomes discredited.

I set about the task even before taking office by ensuring, along with others, that the link with the reinvestment and reform initiative (RRI) was broken in advance of restoration. That link was ill conceived and simply created the conditions in which there was no incentive to save money, and higher rates became an end in itself. Let us not forget that the regional rate went up by 62% over the past five years under the previous Administration.

My recent announcement on the draft Budget to freeze the domestic regional rate over the comprehensive spending review period confirms my intentions in that regard. That regional rates freeze, and this further package of reliefs, are in addition to the commitment that we have given that householders will see the benefit of the contribution they already make to the cost of water through their rates — an average of £160 per rates bill. Against that background I present these proposals to the Assembly today.

It is only 195 days since I commissioned the review. In that short time we have covered a lot of ground, generated much debate and consulted broadly; ultimately, we have had to make difficult choices.

I am confident that the package of proposals that I intend to announce today is a balanced one that will lead to a more acceptable system and a better distribution of the rating burden among householders in Northern Ireland. However, I cannot pretend that it has been an easy task, particularly given the timetable to which we were working — a timetable driven by the desire to make changes in time for next year’s bills. No one expected that it would be straightforward, as will be found with any review that seeks to satisfy competing interests.

In addition, the process has confirmed that we have to be realistic and recognise that if we had been starting from square one, things might have been very different. Radical change now will only lead to a different set of winners and losers. Although I would be the first to recognise the limitations of any property tax system, I believe that, with the right checks and balances, the current system, based on capital values, can be made much fairer. Getting the right checks and balances is, therefore, what I have focused on, and is what I believe we have achieved through the package of proposals that I am presenting to the Assembly today.

Before I outline the proposals, I record my gratitude to the 119 individuals and organisations that responded during the 12-week consultation period that ended on 31 August 2007. Their informative and considered responses have undoubtedly helped to shape the outcomes of the review, and I have made it my business to ensure that the key messages conveyed through the process have been addressed.

The Committee for Finance and Personnel also made a massive contribution to the process. Its thorough and efficient approach was critical to the review timetable remaining on track, and I am particularly grateful to the Chairman and members for giving me advance sight of their report for that purpose. I am even more pleased to report that the Committee’s contribution can be clearly seen in the outcome of the review, with many of our recommendations aligning.

I will turn now to the proposals. Members will recall from my earlier statements that the review was to be taken forward in two strands in line with the terms of reference. Strand one involved a thorough examination of the options for change that could be delivered within the scope of the existing primary legislation in time for next year’s rates bills. Under that strand we also looked at ways in which that legislation could be changed to further improve the system in the medium term.

Strand two concentrated on longer-term options for raising revenue through local taxation, either as alternatives or supplements to the domestic rating system. That approach has led to the preparation of a number of proposals, which are presented to the Assembly as a cohesive package. In my view, they complement one another well, providing the right balance between protecting those most affected by the previous reforms and those most in need, namely our pensioners, and also attending to wider policy objectives.

In summary, the package includes proposals for a 20% single-pensioner discount for ratepayers aged 70 and over and living alone; an increase in savings thresholds from £16,000 to £50,000 for pensioners under the existing lower-income relief scheme; measures to improve the take-up of relief; the introduction of a deferment scheme as a choice for pensioners who own their own homes; a reduction in the maximum capital value; the rating of empty homes; rebates to encourage the provision of energy-efficiency measures for homes in Northern Ireland; and further evaluation and consultation on student rate relief and possible alternatives, with a view to abolishing it. Lastly, there will be further work on the option of introducing a derelict-land tax in Northern Ireland.

The key changes for next year will be the introduction of a single-pensioner discount set at 20% for ratepayers aged 70 and over and living alone, and the proposed increase in the savings limit applied under the low-income rate-relief scheme from £16,000 to £50,000 for pensioners. Those are targeted measures, and I believe that they will have an immediate and positive impact for a relatively modest cost. That cost will be borne by the regional rate, rather than by other ratepayers. Both can also be provided for through subordinate legislation, subject, of course, to the approval of the Assembly.

The increase in the current savings limit is to ensure that pensioners who have saved for their retirement do not find themselves ineligible for rate relief. It is in line with the first-step recommendations of the Lyons Report, and also reflects the considerable support for such a change during the consultation process. The measure is also supported by the Committee for Finance and Personnel.

In addition to that and the extra reliefs for pensioners that were secured during the St Andrews negotiations, I want to address the difficulties facing single pensioners — in particular, those which are a result of the reforms that were introduced under direct rule. The responses that were received during the consultation — many of which were from single pensioners — seem to support that.

Analysis that has been undertaken with the help of experts from the Department for Social Development (DSD) has highlighted as a major shortcoming the low take-up of existing reliefs among that group. That is why I am also proposing the introduction of a lone-pensioner discount from April 2008 for those who are over 70 years of age. However, I am not in favour of extending that discount to all single householders. Such a widespread discount would be difficult to justify on grounds of cost, need and vulnerability to fraud.

Last week there was much talk in the media about a single-person discount, and claims that, by not harmonising with arrangements that apply under the council-tax system in Great Britain, Northern Ireland is being unfairly treated. It is important that people fully understand that a discount given to any group — whether deserving or not — must, in the long run, be paid for through other ratepayers’ paying more. The cost of a discount for single-person households would be of the order of magnitude of £30 million a year. It is difficult to argue that single-person households represent a vulnerable group that requires such a level of support. Indeed, I pose the question of whether it would be right for young families struggling with large mortgages to be required to pay a supplement in order to pay for people who are affluent but living alone.

I have two further points about the proposal for a single-pensioner discount. In its report, the Committee for Finance and Personnel supported the introduction of such a discount for people over 75 years of age. However, on the basis that it would have a much greater impact, particularly in assisting with the major issue of take-up levels, my view is that the age threshold should be 70. I will continue to review whether even lower age thresholds might be justified in the future.

Currently, the evidence shows that people who have recently retired from employment are in a better position to pay their rates bill and to avail of rate rebates or low-income relief. According to the family resources survey, the average weekly income of recently-retired single pensioners is 30% higher than that of single pensioners as a whole. That survey also shows that the average income of single female pensioners — who make up the vast majority of single pensioners — aged 70 to 74 is approximately 28% lower than for those aged 60 to 64, and 15% lower than for those aged 75 to 79.

I propose that the discount level be set at 20%. That, in conjunction with the other proposed support measures such as the increased savings limit, will provide an adequate level of support. The discount will be applied after other reliefs — including transitional relief — have been awarded, in order that the target group will effectively get, and clearly see, the benefit of a 20% reduction in their bills.

Before moving on to the proposals for April 2009 and beyond, I will deal with the important issue of the low take-up levels of reliefs in Northern Ireland. As the report of the Lyons Inquiry into local government in England shows, that issue is not unique to Northern Ireland. However, urgent action is clearly required here, particularly in the owner-occupied sector, where the take-up rate for those who are eligible for the new lower-income rate-relief scheme is estimated to be 42%. As I said, pensioners, in particular, are not taking up that relief. A review of good practice in benefit take-up levels elsewhere has highlighted a number of broad actions that might be taken in order to improve rates-relief take-up levels in Northern Ireland. The Committee has recommended that those actions should be vigorously pursued. In light of that, and as a matter of urgency, I propose to commission a study, led by the voluntary and community sector, to identify actions that might be taken to support Government awareness and take-up strategies next year.

The possibility of new legislation giving increased data-sharing powers to relevant agencies will also be examined as a matter of urgency.

That will be subject to the completion of a privacy impact assessment to protect the interests of our citizens and to ensure that the data is safeguarded.

As well as the proposals for next year, I am pleased to present several further proposals to the Assembly that will take slightly longer to implement but will provide further checks and balances to ensure that the overall system is as fair as possible.

Staying on the theme of pensioners, the first proposal is for the introduction of a voluntary deferment scheme for homeowning pensioners. Essentially, it will involve rolling up rate payments at a concessionary rate of interest until the sale of the house and then securing the debt by creating a charge on the property. Such schemes are not uncommon in other jurisdictions. Although take-up is usually very low because of inheritance considerations, such a scheme can suit better-off pensioners who are beyond the income limits of the lower income relief scheme.

Such a scheme would require subordinate legislation to be passed, which could be achieved by April 2008, subject to the Assembly’s approval. However, complex administrative arrangements must be developed before it could be fully implemented, and further consultation on the detailed mechanisms would be desirable. Therefore, April 2009 has been set as the earliest date for the introduction of a deferment scheme.

Looking more widely, another successful outcome of the St Andrews negotiations last year was the introduction of a maximum cap set on properties with a capital value of £500,000 or more. It is clear that that move has helped to allay some of the public’s fear about the excessive impact of the new system. However, is the cap set at the right level? My view is that it is not, and I am attracted to the idea of setting it at the lower level of £400,000. Although the number of households that would directly benefit from such a move would be fairly low — about 5,000 in total — it would bring the highest bills under the rating system here into line with the average bills in the highest band of the council-tax system. That is a fairer comparator than the absolute highest council-tax bill, which provided the rationale behind the initial cap level.

I shall consult further on the issue, as I am keen to take account of developments on water charging and, in particular, what cap, if any, will be proposed there. Bearing that in mind, I propose to reduce the cap in April 2009, with final confirmation of its level to be made following consultation.

So far, I have dealt with some of the necessary checks that the rating system must have if it is to be fair, but what about the balances?

A popular measure during the consultation exercise, and with the Committee for Finance and Personnel, was the rating of vacant domestic property — not least because of the potential net revenue gain it could yield. Taking account of exemptions, and assuming that the DFP agency responsible for rate collection — Land and Property Services —— is fully equipped and resourced to implement the policy, the revenue gain could be in the region of £15 million to £20 million per annum.

However, the policy is more than a device for raising revenue; it could assist with wider policy objectives, such as housing affordability. That was the subject of the recent Semple Report, which is being taken forward by the Department for Social Development. Given its clear benefits, I propose to introduce the rating of vacant domestic property at a rate of 100% at the earliest possible opportunity, which will most likely be April 2009.

That date will give us time to consider the outcomes of the work being undertaken by the University of Ulster, the Northern Ireland Housing Executive (NIHE) and the Department for Social Development’s working group on housing affordability. It will also allow us to further assess and consult on the issue before taking decisions on items such as exemptions or exempt periods that might need to be applied.

The review of domestic rating reform also looked at the longer term and considered options as alternatives or supplements to the current rating system. One option that should be carefully considered is the taxing of derelict or vacant land. That would be a complementary measure to the taxing of vacant houses. The idea proved popular during the consultation exercise, and the Committee for Finance and Personnel has recommended that it be given serious consideration.

Although the measure could bring in much-needed additional revenue to help fund public services, it could also help to satisfy other wider policy considerations, such as ensuring that there is sufficient supply of development land available. Thus it would assist two policy aims: that of providing affordable housing and that of stimulating economic growth.

In announcing our intention to examine that in greater detail, I emphasise that today is merely a first step. We need to consider carefully the positive and negative effects that such a taxation measure could have. A delicate balance has to be drawn to ensure that it frees up land for development by providing a disincentive to holding it back, but at the same time does not cause such an imposition on developers that it affects the viability of urban development.

Before we can make any decisions about including the measure in legislation, we will have to examine the matter in greater detail and consult with those likely to be affected by such a measure. Therefore, in proceeding with the proposal, I will be working closely with other Departments, particularly the Department for Social Development and, given its role in planning, the Department of the Environment. Depending on the outcome of those considerations, the introduction of a tax on derelict land may simply be an extension of the existing non-domestic rating system, or it may be a new local tax, in which case, it may require changes to the Northern Ireland Act 1998.

Some of the responses to the consultation considered that local taxation should be used in a positive way by serving as an incentive to act in a more environmentally responsible manner. That aligns with my Department’s wider commitment to promote sustainable development. Therefore, I wholeheartedly support that aspiration, provided, of course, that it can be delivered in a cost-effective way.

Having considered the matter in light of the consultation responses and the Committee’s report, I intend to proceed with the option of providing rate rebates that offer the potential to improve the energy efficiency of our housing stock. I am proposing two measures.

First, I want to provide a rate rebate to existing homes that make energy-efficiency improvements, such as cavity-wall and loft insulation. Similar schemes already operate in some local authorities in England, part-funded by schemes set up and supported by the energy generators there. That proposal was submitted during the consultation by the World Wide Fund for Nature, and my officials, along with DETI and other stakeholders, are examining it in some detail.

Secondly, I am proposing an initial rate exemption for the first purchase of new homes that are zero-carbon-rated. However, there are some issues of definition, funding and alignment with other initiatives that have to be worked through regarding those matters. Therefore, I intend to ask my Department, working with the Committee for Finance and Personnel, other Departments such as DETI, and stakeholders such as NIE, to draw up detailed proposals with a view to introducing new primary legislation to be implemented in April 2009.

The review also critically examined some of the new relief schemes that were introduced in April this year. One of those was the rate-relief scheme for people in full-time education and training. That scheme attracted much criticism during the consultation process. Many of the respondents thought that the benefit of the relief was going into the pockets of landlords rather than students. Others questioned the effectiveness of the relief, and a number questioned whether that particular group should be a priority for the provision of rate relief.

The review also considered the number of applications that have been received so far this year for that relief, which is fewer than 500. That, in itself, draws into question the effectiveness of the policy. Therefore, I am minded to revoke the scheme, providing we can reasonably protect those who have already applied. However, before doing so, an evaluation of the policy and consultation with key stakeholders on the outcome of that evaluation are necessary.

So far, I have described what I want to do, provided I get the consent of the Assembly. I will now outline some of the longer-term options that I propose not to pursue, including banding. Although the system of individual capital values has the merit of being easier to understand than banding, I can see advantages to Northern Ireland’s having a system such as the council tax. It is restrained in that those at the top end pay no more than three times as much as those at the bottom end. That makes it more like a charge for services than the rates.

Notwithstanding the increasing sensitivities regarding council tax in GB — which I believe has more to do with overloading the system — we could design our own version. However, I recognise that we are not starting from square one. Another fundamental change in the way that local revenues are distributed among householders in Northern Ireland would not only cause more confusion and upheaval, but create a new set of winners and losers.

Winners tend to stay quiet; losers do the opposite. The political consequences of changing the order of things again should not be underestimated. That in itself is not a reason to show a faint heart — those who know me cannot accuse me of that. However, I cannot ignore the fact that no significant support for banding emerged from the consultation exercise, witnesses to the Committee for Finance and Personnel, or Committee members themselves. I will not, therefore, take that option forward, but I have agreed to provide the Committee with an update of the analysis of banding that was undertaken when direct rule Ministers decided to proceed with individual capital values.

Another major matter that I propose not to take forward is that of a local income tax. That was favoured by many ratepayers who responded to the consultation, although the majority of organisations were against it. It has attractions, in that it offers the prospect of aligning liability more closely with ability to pay. The public perception is understandable, therefore, and it mirrors — and is mirrored — in England, where, during the Lyons Review, the overwhelming majority of those who were surveyed thought that they would be much better off if subject to a local income tax, rather than the existing council tax.

However, the reality is somewhat different. It is estimated that a local income tax would cost income-tax payers in Northern Ireland a further 7p in the pound, if we were to raise the same amount of money as is accrued through domestic rates. That is also a tax on work, and therefore it is not in keeping with the Executive’s priority of economic growth. There are serious concerns about the ability and willingness of HM Revenue and Customs to support the introduction and administration of such a scheme.

That said, I do not think that we must close the door on it entirely: we can learn lessons from elsewhere, and particularly from Scotland. The Scottish Government have recently decided to abolish council tax and replace it with a local income tax. I understand that that is to be the subject of a public consultation in the coming months. As Scotland proceeds at pace with a local income tax, it is my view, shared by the Committee for Finance and Personnel, that it may be best to maintain a watching brief on developments there for the time being, rather than commission further work of our own on that matter.

Another issue that was examined during the review was that of circuit-breakers, which is the curious title given to relief schemes found in some parts of North America, whereby a limit is placed on the percentage of income that defined groups — pensioners, or ex-service personnel, etc — are required to pay in property tax. At first sight, that seems an attractive option. However, several factors effectively rule it out as a realistic option for consideration in the Northern Ireland context. Research shows that, where circuit-breakers exist, there tends not to be the safety nets of other reliefs for the poorest households, such as those that exist in Northern Ireland through the UK-funded housing benefit system.

Introducing circuit-breakers here would, therefore, cause major complications in working alongside housing benefit and, potentially, could shift the funding of the support of vulnerable groups from annually managed expenditure to the departmental expenditure limit. Introducing a circuit-breaker system would also be administratively complex, given the need to gather detailed information on the income of all ratepaying households. It will also be vulnerable to fraud. I, therefore, propose not to pursue that option further.

I shall now say more about the developments, on which I touched earlier, in respect of water charges. On 15 May 2007, I told the Assembly that I agreed with the Chairperson of the Committee for Finance and Personnel that it is important that rating reform be viewed in the context of how the Executive intend to address the funding of water in Northern Ireland.

Since then, the Independent Water Review Panel has published its first report. The panel recommended that a single bill be issued to households, with rates and water charges separately identified. The Executive have agreed that that proposal should be examined by both the Department for Regional Development and the Department of Finance and Personnel, working together to determine whether and how that might be done. That is now happening. At this stage, there are no conclusions to report to the Assembly.

However, I am anxious that the rating reforms that I have announced today are not jeopardised either by the substantial work on IT systems or possible legislative changes that may be required to provide a single bill for water and rates. Many difficult issues must be addressed, not least the fact that the panel is still working on recommendations for a new affordability tariff scheme, the outcome of which could have a major bearing on the ease with which a single bill can be delivered.

As I said earlier, I have signalled that people will not be asked to pay twice for water and that there will be an off-setting arrangement with the domestic rates; work on that is proceeding. I will provide the Assembly with further information on that proposal as soon as possible, after the Minister for Regional Development and I report to the ministerial subgroup and the Executive in the new year.

Next steps include the publication of a paper later this week that will set out the findings of the rating review in detail, including the options considered and those that were not recommended. Some immediate actions must be progressed over the coming months in order to implement the proposals: first, in order to advance the recommendations on single-pensioner discount, I will need to engage in a targeted consultation exercise that takes on board the views of all interested parties before introducing subordinate legislation for April 2008. At the same time, I will progress subordinate legislation to raise the savings limit for pensioners to £50,000 from April 2008. After that, I will begin work on pre-legislative tasks such as the integrated impact assessments and the consultation that is required to introduce the proposals for the rating of vacant domestic property, the proposed deferment scheme for pensioners, an agreed revision to the maximum capital value, and any legislation that is required on rate relief for those in full-time education and training.

At the same time, I will engage in preparatory work associated with the primary legislation required to intro­duce the new rate rebate for energy efficiency and zero carbon housing. Work will also be required on the legislative implications of the longer-term changes such as derelict land taxation and improved data sharing to facilitate relief take-up. That will require considerable research and discussion with some of my ministerial colleagues.

I have outlined cohesive measures to improve the rating system in Northern Ireland to help those most adversely affected or most in need and also to assist in fulfilling broader policy aims.

I have learnt through the review that reform of the rating system does not operate in isolation. Every new concession has a cost, either to other ratepayers or to the public purse. This is devolved taxation, and shortfalls are not made up from Government subventions. We must, therefore, adopt a measured and proportionate approach to changing the system through targeting support where it is required.

I shall, therefore, keep those measures under review. Raising more money from rating empty homes and derelict land could allow us to enhance some reliefs further; for instance extending the scope of the single-pensioner discount.

No matter what we do, reform cannot possibly satisfy everyone, and we should not try to do that by over-engineering the system — that could have unforeseen consequences.

It should be remembered that the rating system’s influence can be wide in other important policy areas such housing affordability, sustainable development and water reform.

As I said at the outset, what really matters is what people are asked to pay. Today’s proposals will benefit many ratepayers and, taken together with the Budget proposals, will offer many households much needed relief.

Much remains to be done to see the process through to its conclusion, but in making the changes, we are returning the faith that people demonstrated by sending us here. I commend the measures to the Assembly.

Before I call the Chairperson of the Committee for Finance and Personnel, I remind Members of the nature of the statement: Members must question the Minister on the statement, not make further statements.

That sounded very pointed, a Cheann Comhairle.

I welcome the initial tranche of domestic rating reforms that the Minister has announced and the fact that so many of them align closely with many of the Committee’s recommendation. I agree that the reforms improve the domestic rating system. A good beginning is half the work, as the Irish saying goes.

Will the Minister clarify how the single-pensioner discount of 20% for over-70s will work in practice? Will it apply, for example, in a situation where two unmarried members of the same family live in the same household? Will the Minister state whether he is prepared to consider widening the scope of the discount? Will the Minister outline what the revenue outcomes are likely to be as a result of the reforms that have been announced today?

I thank the Chairman of the Committee for Finance and Personnel for the assistance that his Committee gave to me and my Department during the Budget process. I have said, in my statement, that it is important that — in many ways — the reliefs can pay for themselves. The steps that we have taken, in looking at issues such as the rating of vacant properties and derelict land, will release further funds and will, therefore, allow us to consider further reliefs.

I was attracted to a lower level of assistance for senior citizens. If, and when, we can afford to do so, I will return to that issue. I have spoken to the Committee’s Chairman about that matter. At the present time, we are concerned with those aged 70 years and over who live alone. We will consult on that issue. There are some occasions when, for example, there is a medical requirement that a carer should live with someone. Should a person’s bad health disqualify them from having that benefit? Therefore, we will look at particular cases during the consultation process, and I am happy to work with the Committee in resolving those matters.

Effectively, the reliefs will not be a charge on other ratepayers — it is important that we make that point at this stage. If we can release further resources by increasing the rate income, we will return to the relief levels and age groups.

I welcome several aspects of the Minister’s statement, in particular, his decision to introduce a tax on vacant properties. The Ulster Unionist Party is a prudent party that encourages positive forms of taxation. Although I welcome the single-pensioner discount, I note that it is limited to single pensioners and those aged 70 and over. Will the Minister explain why he has not taken up the suggestion, made by the Committee for Finance and Personnel, to introduce a universal pension for all those who are aged 75 and over?

The Member, who is on the Com­mittee for Finance and Personnel, should take another look at that Committee’s report. The Finance and Personnel Committee proposed a discount for those who are aged 75 and over and who live alone. I have gone a step further by reducing the eligibility age for the single-pensioner discount to 70. I shall look again at the issue to see whether we can do something more in rate relief when we release further resources. My preference, particularly if I take into account the issue of take-up, is to have some form of automaticity about the process so that people are not required to apply for the relief. However, there will be a time lag on that. Therefore, for the first bills, payment will have to be by application.

I, too, thank the Minister for his statement and for the good practice that his Department has engaged in when dealing with the Committee on the review. The Committee looks forward to further work on potential long-term reforms.

The decision to increase the savings limit for pensioners, which applies under the existing lower-income rate-relief scheme, from £16,000 to £50,000 is in line with the Committee’s recommendation. Will the Minister comment on the extent to which that is likely to boost the uptake of reliefs? Moreover, will he comment on the measures that can be taken to ensure that Northern Ireland does not lose out by funding that uplift locally, were the UK Government to follow suit by raising savings levels as part of a wider reform of housing benefit?

I did not bring my crystal ball with me, so my answer cannot be too exact. With regard to the latter point, we might reverse our decisions fairly quickly so that the burden would be on annually managed expenditure, rather than on the departmental expenditure limits.

There would be no need for us to carry that burden if the Treasury was going to carry it. We would re-examine the situation in those circumstances. The expectation is that the cost will be reasonably modest, but it can be calculated only after the system has been in use for a period of time.

I congratulate the Minister on the review and on the timely fashion in which it has been presented. I accept the Minister’s contention that a property tax with checks and balances is probably as good as it gets at present. The broad thrust of the Minister’s proposals improves those checks and balances.

The proposed reduction of the rates cap would be revenue-neutral. Therefore, it would transfer the burden from relatively well-off households to relatively worse-off households. Does the Minister not accept that that would be a regressive policy? How does the Minister square his rejection of the circuit-breaker concept, given the affordability tariff on water? The strand 1 report of the independent water review panel led by Professor Paddy Hillyard has stated that proposals will be made on a water-charge affordability tariff in strand 2 of that review. If it is possible to proceed with that action on one hand, why does the Minister reject it on the other?

The reduction of the rates cap will go out to consultation, and further work will be carried out to determine whether that would simply be regarded as lost revenue or reapplied within the rates burden. The Department will make some assessment for the Committee of the extent of any loss of rate revenue if that change were to be made.

There is a balance to be drawn on whether that is a tax, or a payment for a service. At some point, we must decide whether people have overpaid for that service. Rather than go to the highest band in GB, the Department’s position is that we should take the mid-point of the highest band in GB, which we believe is fair. That is why we are looking at a limit of £400,000. I will provide such statistics as I can to the Member’s Committee.

To some extent, Ministers cannot win. If there are ideas that Members like, they wonder why we do not press ahead with them, but when there is no support for those ideas in the consultation process, we are asked whether we should go ahead with them. Those are the issues that must be taken into account. Overall, I have produced what I believe to be a balanced set of proposals and measures. I hope that they are sufficient to attract the support of the Assembly.

I thank the Minister for his statement. There are many aspects to be welcomed, such as the single-pensioner discount, the rating of vacant property, and the energy-efficiency measures. However, does the Minister not recognise that a local income tax would be simpler than bringing an effectively property-based system with checks and balances more into line with the ability to pay through a complex system of reliefs?

What consideration did the Minister give to replacing only the regional rate with a local income tax, rather than both the regional rate and the district rate? Will the Minister give the House some idea of his wider approach to green taxes such as pay-as-you-throw schemes, reliefs for people who recycle, congestion charges, or road tolls?

Whatever a change from the rating system to an income-tax-based system might be, it certainly would not be simpler. We all know of the upheaval that has been caused over the years by the change in the system. Any change, even if it is for the better, will have considerable consequences for the body politic. Everyone knows that, no matter what system we change to, we will simply create a new group of winners and a new group of losers.

The real difficulty with introducing a local income tax system is the fact that economic growth is the priority for Northern Ireland. A tax on work or, more accurately, a tax on workers is not the best way in which to encourage that growth. We have an opportunity to stand back, observe the Scottish model and learn lessons from it. If there are mistakes to be made, let the Scottish Government make them, and we will learn from their experience. We are not ruling out completely the idea of introducing a local income tax, but we can look and learn from the Scottish model over the next few years.

We have taken the right decision. It is better to remove the sharp edges from the existing system, make it fairer and address the issue of people’s ability to pay, rather than change the system and go into the unknown, as the Member for North Down would like us to do.

I thank the Minister for his thorough statement and for his measures to set the qualifying age for lone pensioner discount to 70, in particular. That will enable more pensioners to qualify than if the age had been set at 75.

First, does the Minister agree with the expert opinion given to the Committee that there are no examples in the world of circuit-breakers having been introduced effectively in a domestic rating situation? Secondly, will there be an initial exemption period for the introduction of rates for vacant domestic properties?

There was a second element to the question from the Member for North Down Dr Farry. He raised issues about green taxes and whether there was scope for further reform. I am happy to discuss the matter with him and his colleagues to consider whether there is such scope. A consultation process will be carried out on the exercise, and we will attempt to make some progress on those issues.

My honourable friend Mr Weir asked whether I accepted the expert opinion on circuit-breakers. I am loath to go against expert opinion on anything, and I have reached a similar conclusion to the experts. Therefore, I am happy to accept their views.

There will be a consultation process, and that will allow us to consider the introduction of rates for vacant properties. There may be cases where some properties shall be exempt entirely, and I am sure that some people will want to put forward such proposals. There may be cases for exemption periods, such as the time between a property being vacated — the interregnum — and being sold or re-let. There are issues relating to blighted properties or ones that have been purchased for demolition that we must consider. Therefore, it is difficult to establish the exemptions that we will finally agree to. The Committee and the House will want to examine those issues during the consultation process.

Go raibh maith agat, a Cheann Comhairle. I welcome the Minister’s statement, particularly with regard to pensioners. The Committee recommended that the availability of automatic rate relief to people of pensionable age should be given further consideration. What is the Minister’s thinking on that?

It is an important issue. I agree entirely with the Member and with the Committee. However, it is difficult to consider the matter at this stage. I would like to involve Age Concern, Help the Aged and other organisations so that we can have evidence as to why there has not been a higher take-up in rate relief. During Question Time yesterday, I mentioned that the uptake had been approximately 40% for those in owner-occupied properties, between 60% and 70% for those in privately rented properties and over 90% for those in public-sector rented properties.

That shows that there is a need for considerable movement, particularly on the owner-occupied sector. If an automatic system can be established whereby people do not have to apply for rate relief, we will be able to improve the situation.

If we consider the sectors that are most affected by this matter, it is clear that, to some extent, there is a stigma attached to claiming rate relief. People do not want to apply for what they consider to be handouts; we must change the culture and make it clear that rate relief is an entitlement rather than a handout. I suspect that if those people went into a clothes shop in Belfast, they would be among the first to look for a 10% or 15% discount, and that they would have no difficulty with doing that. Indeed, they would feel that they were entitled to ask for such a discount, and, if it was offered, to take it. Rate relief should be no different; it is an entitlement not a handout, and people should apply for it.

I thank the Minister for his very detailed statement.

The Committee for Finance and Personnel examined the issue of enhanced discount for farmers, and it decided that the option would be considered in the context of decisions on other reforms. If a farmer has a property with an agricultural occupancy clause, it will be worth much less than similar properties, yet it seems unfair that the householder should have to pay rates to that effect. I understand from my discussions with estate agents that the value of such a property is probably 40% — perhaps even 50% — less than it should be.

In his statement, the Minister outlines proposals for vacant properties and the moneys that such proposals could raise. I think that it was suggested that £10 million could be raised by 2009. Will the Minister also consider reviewing the enhancement discount for farmers?

I admire my colleague’s ability to put forward the case for the farming community at all times, and he is right to do so.

As I understand it, a benefit has been built in for the farming community, in that farms are reduced in valuation because they are farms, and in recognition of the fact that they can be sold only in a limited market. I am happy to consider whether there should be any distinction between farms per se and those agriculturally tied properties that, in many cases, were given planning permission only because of their farming connection and which cannot be used for any purpose other than for farming. I am always willing to consider and review matters, but, on this occasion, it was felt that the discount that has already been built in to the system for farmers was suitable and appropriate.

I too thank the Minister for his timely statement.

Can the Minister provide an assurance that derelict land taxation will not be used to encourage “garden-grabbing” or to impose further taxation on the beleaguered farming community? Can he further assure the House that the proposed taxation will apply to developers who hold land banks and brownfield sites for future development so that such development can be encouraged?

I assure the Member that I do not propose to tax his garden. The idea behind derelict land taxation is that it would particularly apply to sites that have been zoned for housing but which are being held back for commercial reasons and for profit. It would ensure that there is a flow of land into the property market, rather than encourage land-banking. It would therefore help the housing Minister to work towards her goal of ensuring that more affordable housing is made available.

Obviously, I am not talking about agricultural land. Let me kill off that idea just in case anyone should think that that is the route that is being taken — I do not want to be lynched by the farmers. The proposal will involve derelict land that has been identified for housing but which is not being used for that purpose.

I thank the Minister for his statement. I appreciate that his focus has been on ensuring that change is deliverable next year and the year after, and I recognise too that some of the more radical options that have been suggested probably could not have been delivered in that time frame.

Will the Minister clarify whether circuit-breakers will be applied specifically to pensioner households — not just to single-pensioner households, but to couples as well? It has been argued that if circuit-breakers were applied more widely, they would be open to abuse. However, if one were focused on pensioner households, as was the intention under direct rule when there was a circuit-breaking affordability tariff in respect of water charges as recommended by the Consumer Council, would that not work?

Other areas of Government are, rightly, encouraging pensioners to take up pension credit, which is based on a minimum-income guarantee and is their entitlement. In such circumstances, could there not be a cross-reference in the rating system guaranteeing that pensioners will not have rating liabilities that will, in effect, bring them below the minimum-income guarantee for pension credit? That cross-linking could serve to encourage the take-up of pension credit as well as the take-up of rate relief measures.

On the latter point, there is an awful lot that could be done if there were greater crossover of data in Government. However, that has other implications about which we must be satisfied. Some of the data relating to the rating system is held in places other than in my Department. Therefore, data sharing would be required. Those matters could not have been resolved in the short term. However, all changes can be considered: they can come at any time if they have merit.

As far as circuit-breakers are concerned, during the consultation process there was not the kind of support for pensioner households that the Member believes there was. However, that is not the only reason why it was discarded. The view held by officials is that it did not sit easily and could be disruptive to some of the benefit systems. The Department will do further work to determine whether there are ways around those difficulties and whether there are benefits in introducing some kind of circuit-breaking system.

Like other Members, I welcome much of what the Minister has delivered to the House. However, will he expand his explanation of the benefits that the measures on vacant properties will have on the hard-pressed housing sector?

A number of advantages will flow from those measures. Clearly, there will be the advantage of providing further rating income. As far as benefits to affordable housing are concerned, if people know that they cannot leave their houses empty in the hope that rent levels or sale values will increase, they will know that there is a cost attached. If they are leaving property vacant for financial reasons, there will be an encouragement, or incentive, for them to put their houses back on the market either for sale or to let. Essentially, the measures are a disincentive for people to leave property empty for profit and will allow a lot of property to come back on the market.

It is estimated that there is a large number of vacant properties in Northern Ireland: clearly, that must be dealt with. As property values have risen so extensively in recent years, there was a view that if people held off selling their houses, their properties would become more valuable. Therefore, they did not put those properties back on the market, and that has denied other people houses and has made properties less affordable.

The measures fit in with the policy objectives of the Department for Social Development and should assist, as a policy lever, to make more properties available on the market.

I thank the Minister for his statement and welcome how much it mirrors the Committee for Finance and Personnel’s report on the review of domestic rating. In fact, in many instances, it enhances the report’s proposals.

I particularly welcome the increase in the savings limit. Does the Minister have any plans to abolish the savings threshold as proposed in the Lyons Report with regard to council tax?

On the Member’s first point, I can only say that great minds think alike. We have reached the same destination and taken the same journey. [Laughter.]

I can hear what other Members think about that. The savings threshold has been increased from £16,000 to £50,000, which, in all circumstances, is reasonable. In respect of the removal of the threshold, the Lyons Report asked us to sit back and watch, and that is exactly what we shall do. We will look at how the £50,000 impacts on the householders and whether there is a cause for further revision and removal. I had considered increasing the savings threshold even further, and one of the big issues that will impact on that is increases in the property market, so we will regularly examine our threshold levels to ensure that they are kept in line with the property market.

Go raibh maith agat, a Cheann Comhairle. I thank the Minister for his statement. Considering that such a small percentage of people avail of rates relief, I am grateful that the Minister has commissioned a study, led by the voluntary and community sector, to promote awareness of the take-up strategies. Does the Minister have any plans to go further and finance and resource the voluntary and community sector so that the campaign is bedded in the community, thus making it more effective in its delivery?

I want to hear what the voluntary and community sector has to say and what it believes will make a difference in take-up levels. If repre­sentatives of that sector have specific proposals that need to be funded, I will examine them. I am considering the pursuance of one possible reason for the low take-up — the amount of form filling that is involved. The form filling may appear complicated to some people, particularly senior citizens, and assistance may be required to complete the forms. Therefore, there may well be value in representatives from Help the Aged or Age Concern travelling around areas and offering advice and assistance on form filling. That is the type of area that I am prepared to examine if the voluntary and community sector confirms that the complication of form filling is one of the reasons for the poor take-up of reliefs. The introduction of some automaticity into the process so that people will not have to apply for some of those reliefs will also help.

I thank the Minister for his statement on what can only be good news for the people of Northern Ireland. Will the Minister state why he is proposing to reduce the level of the cap?

I have already said that I chose the reduced level because it brings us into the average of the highest band in Great Britain, which is fair and, therefore, a fairly good comparator. That takes some of the pain out of the rate-paying process if a substantial part of the regional rate is regarded as being payment for services, but there must be some linkage with the services that people are receiving, and there must be an upper limit to that. If the GB level is on the top banding — set as it is — our circumstances are such that the midpoint of that top banding is the appropriate place to pitch, and that is why I pitched the cap at £400,000.

However, a consultation process is under way, and it would be advantageous to link our cap level to whatever limit is proposed for water charging — if possible. I hope that the Minister for Regional Development will consider the introduction of an upper limit for water charging and that we will be able to co-ordinate the two payments.

I welcome the Minister’s intentions to reward households that make energy-efficiency improvements. Will that reward apply equally to homes that have been modernised? What percentage of the initial rate will be rebated to owners of new homes that are zero-carbon rated?

I have not set the percentage, or level, of the rate rebate, because my Department is first required to carry out a consultation process. I am happy to hear suggestions from Mr Armstrong — or any other Members — on where that level should be pitched. If I have understood him correctly, the Member asked whether the rebate would be retrospective for homes that already have such efficiency measures installed. That too is an issue for the consultation process. My view is that any homes with those efficiency measures should receive the full advantage of the rebate, irrespective of when they were installed.

The Minister referred to rising house prices. Given the soaring prices across Northern Ireland in the past 18 months, with which everyone is familiar, will the Minister advise the House on what impact that will have on rate bills at the next revaluation?

I could go on and on about that, because there is a misconception, if not a deliberate attempt by some members of the press to mislead the public, on that subject. If the price of everyone’s house were to rise by the same percentage, there would be no change in the quantum of their rate bills. A change only takes place when the value of someone’s property increases at a higher rate from that of others, in which case they will pay a higher amount of the overall total. The overall amount of revenue collected does not change; only the distribution within it. If someone’s property decreases in value relative to the overall average in Northern Ireland, their rate bill will decrease; if the value of their property goes up vis-à-vis the overall value of properties in Northern Ireland, their rate bill will go up. It is not the case that everyone’s rate bills will increase simply because of an increase in the overall value of property in Northern Ireland.

Although some pensioners in my South Belfast constituency will benefit from the proposal, many others will continue to pay high rates because of the value of their property. Many pensioners argue that a rate bill still based on property value is unfair, whereas a local income tax would not penalise working people. They have worked all their lives and, on retirement, want to look forward to life without having to worry about high rate bills. What is the Minister’s view on that?

Every pensioner who lives alone in South Belfast, and elsewhere in the Province, will benefit from the package that I have announced today. Indeed, the rise in the savings limit for pensioners from £16,000 to £50,000 will probably be of particular benefit to those living in South Belfast. Except where I expressly indicated otherwise in my statement, all existing reliefs remain in place. The reliefs that I have announced today are additional reliefs and, therefore, the package as a whole improves the position for everyone.

I cannot agree with the Member’s point about income tax. The Assembly’s priority is to achieve economic growth in Northern Ireland, and it would be a retrograde step to tax working people. It would be a considerable setback in our drive to stimulate the economy. However, the Scottish Executive intend to move in that direction, and I have indicated that my Department will watch their experience to see whether any lessons can be learned.

Although the Minister touched on the answer to my question in his response to a previous one, the answer must be clarified for some Members of the House. The Minister will be aware that, in the past few weeks, a member of the SDLP who is also a member of the Finance and Personnel Committee has been scaremongering, saying that the Department was con­sidering the introduction of rating for agricultural land.

That led to real concerns in the rural communities that I represent. I am not sure whether that Member was misinformed or misled. For the benefit of Mr O’Loan, I ask the Minister to once more clarify the Department’s position. Is the rating of agricultural land under consideration?

There is no question of the Department rating agricultural land.

Some Members:

Hear, hear.

The Department has been clear about that matter and has released a public statement so that there is no doubt about the issue. The only reference to land in my statement is in respect of derelict areas. In response to Mr Cree’s question, I outlined the type of circumstances that will apply to derelict land, and I do not believe that any farmers would define agricultural land as derelict.

Most people would accept that the Minister has achieved a fine balance and a level of consensus on this matter. That will be broadly welcomed by the whole House. We particularly strongly support the incentives for energy-conservation measures, and the capital valuation limit of £400,000.

I particularly welcome the decision to rate vacant properties, but why is that measure not proposed to be introduced until April 2009?

I set out some of those reasons in my statement. I am disappointed — I thought that the DUP’s green Member would have concentrated his question on green issues and on the incentives that I announced in my statement. However, he has decided to address another matter.

The timescale is simply a matter of administrative details that must be resolved so that the Department is capable of dealing with those matters. That also allows further time for consultation. It is an administrative matter, and it is proper that we get that right so that the Department is able to deal with these matters, rather than going ahead unprepared and having real difficulties in administering the system thereafter.

I too thank the Minister for his statement. I particularly welcome the rebates for zero-carbon housing and energy efficiency. I welcome the fact that there will be further consultation on other green taxes — that is important.

However, I was disappointed to hear that the main source of local taxation will remain property values, which are regressive and not based on ability to pay. In a motion that the House debated, I suggested that we consider a land-value tax, which would tax developers who are retaining land banks and would release more land for housing. Did the Minister consider a land-value tax, and what were his conclusions?

I welcome the Member’s encouragement in respect of the matters on which I had expected him to ask questions. He did not let me down.

Unlike me. [Laughter.]

I am a little confused about Mr Wilson’s latter remarks. If he does not consider that I have addressed the issue of land taxation in dealing with derelict land, he can only be suggesting that I should have included agricultural land. He had better have a conversation with the Member for North Antrim Mr O’Loan about that. My statement deals with the vacant land that needs to be dealt with, and we will do further work on that.

I would be happy to speak to the Member about green issues, if he wishes, over the period of the consultation.

A Cheann Comhairle. The Minister has stated how he intends to engage with the community sector in respect of rate relief. Will he also clarify how he intends to engage with those who, for their own — or for family — purposes, have had to make disability adaptations to their homes? Many people do not claim the rate relief that is available for that. Will the Minister outline how he intends to engage with that sector?

By and large, when adaptations are carried out, there should be good records in the Depart­ment of Health, Social Services and Public Safety; the Housing Executive; or some other body. I will certainly look at that matter. There is recognition under the existing system that many adaptations increase the value of a property, and that people should not be punished on account of their disability. I am happy to consider finding a way to test the level of uptake from people in those circumstances and whether a special initiative is required to address that issue.

The Business Committee has arranged to meet today as soon as the House suspends for lunch. I propose, therefore, by leave of the Assembly, to suspend the sitting until 2.00 pm.

The sitting was suspended at 12.25 pm.

On resuming (Mr Deputy Speaker [Mr Dallat] in the Chair) —