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Rates (Regional Rates) Order  (Northern Ireland) 2008

Executive Committee Business – in the Northern Ireland Assembly at 12:30 pm on 3rd March 2008.

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Photo of Peter Robinson Peter Robinson DUP 12:30 pm, 3rd March 2008

I beg to move

That this Assembly approves the Rates (Regional Rates) Order (Northern Ireland) 2008.

The Order today is not simply about setting the level of rates for the next financial year; it is about setting a new approach to how we address financial issues in Northern Ireland. The days of asking the people of Northern Ireland to make an ever-increasing financial contribution to efficient public services are over. Now it is time for Government to deliver.

The Rates (Regional Rates) Order (Northern Ireland) is a vital part of the annual financial cycle. The form of devolution that we have in Northern Ireland means that most tax-raising powers remain with the national Parliament at Westminster. Therefore, this Order provides the Assembly with its only mechanism to raise additional resources to fund key areas of central expenditure.

As I indicated previously, devolution is about making a difference to the lives of people in Northern Ireland, and there is no clearer signal of that than our approach to the regional rate. The days of increases in the regional rate compounding to 62% over five years are long gone. Instead, we are steering a new direction for the future, which will benefit every household and business in Northern Ireland. For the first time in many years, instead of the householder being asked to bear the burden, our key focus is to ensure that the public sector delivers.

In my speech to the Institute of Revenues, Rating and Valuation (IRRV) in Belfast in 2007, I stated that one of my priorities was to control the level of the regional rate in Northern Ireland. The Department of Finance and Personnel has delivered on that commitment.

Northern Ireland faces major challenges, none more so than in our public spending plans, which must reflect reality and the fact that we will have to manage our finances within a framework that has, at its foundation, a commitment to delivery, innovation and efficiency.

During the draft Budget debate, I highlighted that, in the last three years of direct rule, Northern Ireland had regional rate increases of 9%, 19% and 6% respectively, with more planned for the years to come. During the Budget debate on 12 February, I emphasised that a 60% increase in the regional rate over five years was unacceptable. In that context, and with the pending introduction of water charges in 2009, I announced that the domestic regional rate should be frozen for the next three years.

The business regional rate increases have been more modest, averaging about 3·3% over the past five years. However, businesses will also be faced with water charges. Therefore, in the draft Budget, I announced an average increase in those rates of 2·7% a year for the next three years. That is in line with the expected rate of inflation and, therefore, in real terms, amounts to a freeze.

That level of regional rate is expected to generate revenue of £530 million. At the same time, we must continue to consider our methods. There is a real challenge to address head-on the efficiencies that we need to make so that more resources can be redirected to the front-line services that need them.

I want to see how we can achieve even greater efficiencies beyond the 3% a year targets that have already been set. Members are aware of how much emphasis I want to be placed on that matter. The new performance and efficiency delivery unit will be in the front line of the battle to strip out waste and identify where we can achieve significant savings of public money.

Some Members have argued that, notwithstanding the 60% increase over the past five years and the introduction of water charges, householders should contribute even more to public expenditure. I disagree, not simply as a matter of political philosophy but because of the relatively modest contribution that such an increase would make to public expenditure.

The regional rate contributes less than 6% of all funding available to the Executive each year. Therefore, if I had sought a 1% increase in the rate, that would have raised about £2·7 million of additional revenue. Similarly, some have suggested that the Department should maintain the domestic rates in real terms. To do that at the current inflation rate of 2·7% would raise only £5·86 million. Therefore, generating significant extra revenues through the regional rate would require increases in rate levels that no one would consider acceptable. The modest sums that could be raised through rate increases can be compared with the resources that will be released through efficiency savings made by Departments. Departments plan to deliver £790 million in efficiency gains by 2010-11.

I now turn to the detail of the Order, and I shall briefly describe each article.

This short statutory rule specifies the regional rate poundages for the financial year 2008-09. Article 1 provides the title of the Order and gives the operational date as the day after it is affirmed by the Assembly.

Article 2 provides for the duration of the Order, and it will apply until 31 March 2009. Article 3 specifies 29·89 pence in the pound as the commercial regional rate poundage and 0·3608 pence in the pound as the domestic regional rate poundage. Today, we are not only setting the rates for Northern Ireland for the next year but, more fundamentally, charting a new direction for the people of Northern Ireland with our approach to Government. The Rates (Regional Rates) Order (Northern Ireland) 2008 not only gives the Northern Ireland householder a well-deserved break from large increases but it lays out a challenge for Departments to deliver a more efficient form of Government. I, therefore, commend the Order to the Assembly.

Photo of Mervyn Storey Mervyn Storey DUP 12:45 pm, 3rd March 2008

I welcome the Minister’s statement, and I thank him for his opening remarks. The purpose of the statutory rule is to fix the amount of the regional rates for the year ending 31 March 2009. Members will be aware that, as part of the draft Budget announcement of 25 October 2007, regional rates for domestic properties were frozen for the next three years, and the rate for non-domestic properties was increased only in line with inflation.

When the Minister announced the draft Budget, he mentioned that the past three years have seen regional rate increases of 9%, 19% and 6% respectively, and that the average regional rates bill had increased by 62% since 2002. The Committee for Finance and Personnel’s report on the Executive’s draft Budget welcomed the proposals not to increase the regional domestic rate, especially given the significant increase in that element of the rates during the recent period of direct rule. The Committee also acknowledged the proposal to hold the increase in the non-domestic sector in line with inflation and, therefore, minimise the burden on business. That is in line with the Executive’s wider priority of promoting economic growth.

On 6 February, officials from the Department of Finance and Personnel briefed the Committee on the proposals contained in the statutory rule. The Com­mittee formally considered the rule at its meeting on 20 February, at which a motion to recommend that the rule be affirmed by the Assembly was approved by a majority vote. I, therefore, support today’s motion.

Photo of Roy Beggs Roy Beggs UUP

I wish to put on record that I am content that the rates should continue at the levels indicated.

Photo of Stephen Farry Stephen Farry Alliance

I shall not be as brief as the two Members who spoke before me. The Alliance Party is opposed to this statutory rule.

Photo of Stephen Farry Stephen Farry Alliance

The Alliance Party says yes to proper public services in Northern Ireland and to taking a responsible and realistic approach on issues regarding taxation and expenditure. As the opposition in the Chamber, it would be easy for the party, on the one hand, to point out all the deficiencies about public spending and investment in sustainable public services and rebalancing the economy, and, on the other hand, simply buy in to decisions being taken on households and other taxation. However, that would be opportunistic and irresponsible.

The Alliance Party has not provided a fully costed alternative to the Budget. It does not have access to the resources and the information to conduct such an exercise. If and when the Alliance Party is in Govern­ment, it will be up to the party to make its own choices about how it will balance income and resources. However, party members want to highlight, with a greater sense of realism, the choices that have to be made and the potential consequences of the choices that those in Government are making.

I want to stress two important points. First, the Alliance Party is opposed to the regional rate. It would replace it with an alternative measure that is based on ability to pay, such as local income tax. Property values are not an accurate assessment of ability to pay. We are all aware of those people who are asset rich and income poor.

Secondly, like everyone else, the Alliance Party wants —

Photo of Sammy Wilson Sammy Wilson Shadow Spokesperson (Innovation, Universities and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Education)

Given that the Member has identified an issue here — that some people are asset rich and income poor — surely that is an even more compelling argument to support this Order in that it is designed to help people to avoid huge rate increases?

Photo of Stephen Farry Stephen Farry Alliance

If one is talking about an increase in the rates at the level of inflation, which is probably the most sensible way forward, then that would amount to 25p to 30p in the pound per week for the average household. That is quite a small amount. It is also worth recognising that not every household in Northern Ireland pays rates. Therefore, this benefit from the Executive will assist only some people. The people who do not pay rates tend to be those who are most dependent on public services, and the Alliance Party is concerned about the level at which public services have been funded.

Photo of Peter Weir Peter Weir DUP

The Member has indicated that he is concerned that ratepayers will be paying while others will not: is he advocating the introduction of the poll tax here? [Laughter.]

Photo of Stephen Farry Stephen Farry Alliance

The Member is well aware of the Alliance Party’s proposals in this regard. My point is that some people will not benefit from what is, in effect, a cut in the level of the regional rate. However, there are some who very much depend on public services, in particular the Health Service, and who will suffer as a consequence of the underfunding of the Health Service.

Photo of Stephen Farry Stephen Farry Alliance

Just a moment, Simon. It is important that Members bear what I have said in mind, not least when MLAs from all parties are commenting on the lack of funding in the Health Service.

Photo of Simon Hamilton Simon Hamilton DUP

That was a good lead-in as the Member mentioned lack of funding. Precisely how much additional investment, on top of the many hundreds of millions of pounds of additional money that has already been poured in, does the Alliance Party want to pump into public services?

Photo of Stephen Farry Stephen Farry Alliance

I have already addressed that point in my opening remarks, and the Member can look at previous Hansard Reports. It is interesting to note that Members from all parties are raising concerns about the amount of funding available to the Health Service. In the North Down constituency, a DUP councillor has been extremely vocal in pointing out the difficulties that the local health trust is having in dealing with so-called efficiency savings and is saying that they amount to cuts. He is calling for additional investment in the Health Service. Therefore, it is important to recognise that all parties seem to be concerned with the issue, although some seem to be a bit straighter with the people about the choices that are being advocated for Northern Ireland.

In the past, the Alliance Party has criticised rates increases of between 8% and 19% and has voted against them in this Chamber. They are a huge burden on people, and we join with the Minister in recognising that. However, the Minister of Finance and Personnel, along with all his Executive colleagues and their parties, has now gone to the other extreme, with a freeze on the regional rate for the next three years. In practice, that amounts to a cut.

Photo of Roy Beggs Roy Beggs UUP

Will the Member not acknowledge that although rating levels are being held for this year, that reflects the large increases of previous years? Does he not recognise that huge burdens will be placed on householders in the next two years with the intro­duction of water rates? Does he want higher household rates on top of water charging? Does he not recognise that that would be extremely burdensome and would cause particular hurt to the working poor — those who are just above the threshold for receiving rates relief? People who have to work and have to pay their full rates would accept that continuing to increase rates will adversely affect the working poor.

Photo of Stephen Farry Stephen Farry Alliance

We are all conscious in this House of the ticking time bomb of water charges — an issue which, in many respects, puts this debate into context. However, there are fundamental reasons why we need to take a responsible approach to the level of the regional rates. On the one hand, going for large increases is irrespon­sible; however, at the same time, going for what is, in effect, a cut is also irresponsible in light of the pressing need for investment in public services. There is also the issue of the other financial consequences it will have in our dealings with the Treasury.

Photo of Sammy Wilson Sammy Wilson Shadow Spokesperson (Innovation, Universities and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Education) 1:00 am, 3rd March 2008

The Member has given way a number of times, and I appreciate his doing so again. I am trying to understand his logic. An 8% increase in the rates was such a huge burden that the Alliance Party, and, indeed, the then Member for Lagan Valley Seamus Close opposed it vehemently during a previous mandate. However, Dr Farry is now arguing that a freeze in the rates, which, as he said, would save about 25p a week, should be opposed. The 8% increase represented a weekly increase of 75p — which was a huge burden that the Alliance Party was totally opposed to — but a saving of 25p per week is being dismissed. Will the Member explain the logic of that?

Photo of Stephen Farry Stephen Farry Alliance

We want to avoid a situation in which we are swinging from one extreme to the other. A planned strategic approach should be taken on issues such as the regional rate. The regional rate is one element of public service funding in Northern Ireland, and it is important that it is addressed in a balanced and sustainable manner.

The extremes of having major hikes and unrealistic freezes in the regional rate are unfair and will, potentially, have to be addressed. Planning for an increase in the regional rate of around the rate of inflation is the responsible approach and will fund public services. The people of Northern Ireland are intelligent: they realise what is happening.

Northern Ireland faces a difficult financial starting point. Public expenditure here is already heavily skewed because of the distortions that result from trying to manage a divided society. It is worth putting on record that the Alliance Party will be meeting the Minister of Finance and Personnel next week to discuss how the cost of division in Northern Ireland can be addressed.

Unnecessary duplication of services carries opportunity costs for the possibility of providing quality public services for the whole community. Sadly, the Executive are not yet prepared to face up to the challenge of creating a shared future despite the clear social, economic and financial imperatives for doing so. A shared future is a marginal theme in the Programme for Government and the Budget.

The British Government have produced a tight comprehensive spending review (CSR) settlement for Northern Ireland — the Barnett formula gradually works against the interests of Northern Ireland also. The regional rate is supposed to reflect the differences between the sources of service delivery in Northern Ireland and Great Britain. In Britain much more is delivered by local authorities. The regional rate, therefore, is a vital component in the funding of local services. However, the Minister of Finance and Personnel and the Executive, through their decisions on tax, have made a tight financial settlement even tighter. Rather than investing in public services, or rebalancing the regional economy, they have used available resources as a tax giveaway.

The Alliance Party has criticised the Budget for its shortcomings on investment in a number of service areas. Health is the major area of concern. By 2011, Northern Ireland will be £200 million behind where it needs to be to keep up with service provision levels in the rest of the UK.

The Department of Health, Social Services and Public Safety is now getting the lion’s share of the Budget. Nonetheless, we are flatlining compared to those in the rest of the UK. People here will pick up on that point when they see the quality of the health services that are available to them.

I have pointed out that the South Eastern Health and Social Care Trust is wrestling with the need to deliver the so-called efficiency savings. I am sure that other health trusts are in a similar position. Such efficiency savings appear awfully like cuts to services.

In due course a lot of political parties and Members from different constituencies will be pointing out the problems in local health provision and will be making claims for additional resources or the retention of service levels. When that situation arises, I will say to them that they have made their beds and must lie in them.

The Alliance Party has also highlighted mental-health provision. In Northern Ireland only 8% of the overall health budget is spent on mental-health provision. In the rest of the UK the figure is 12%. Everyone across the political spectrum is conscious of the need for additional investment in mental-health services in Northern Ireland. However, yet again, there is a reluctance to match rhetoric with actions where finance is concerned.

I could highlight others issues including environmental protection; arts funding; public transport; transport infrastructure in general; and investing in the economy. The list of public services that are being underfunded is substantial.

It is worth noting once again that several organisations, including the Economic Research Institute of Northern Ireland (ERINI), the Confederation of British Industry (CBI) and Northern Ireland Council for Voluntary Action (NICVA), have challenged the approach that has been taken in the Budget to household taxation. I appreciate that the Minister has outlined recently his reasons for disagreeing with those organisations’ analysis; he is perfectly entitled to do so, and, no doubt, I will also disagree with their analysis in some respects. However, it is worth recognising that important, credible organisations in our society believe that we have taken a populist, rather than an evidence-based, approach to local taxation.

For different reasons, those organisations recognise that additional resources should be reinvested in either first, rebalancing the economy — the belief of the CBI and ERINI — or secondly, in addressing social problems — the belief of NICVA. The Alliance Party does not want to see the tax burden here become any more arduous than it currently is, but serious questions must be asked about an approach to local taxation that is based on populism rather than evidence.

Clearly, the Alliance Party’s proposals would not be able to cover all areas of investment, but they would make more of a start than the Executive have done to date. To clarify the Alliance Party’s position on income issues, it would involve a focus on three areas. First, the cost of segregation would have to be addressed and funds for reinvestment elsewhere should be released, thus potentially reducing taxation in the long run. Secondly, the Alliance Party would also pursue efficiency savings, although in that regard a subtle distinction should be made — for the Alliance Party, efficiency savings do not involve merely doing the same with fewer resources, but rather ensuring that resources are transferred from inefficient old priorities to more efficient new priorities and to meeting new demands. Thirdly, we would follow an evidence-based approach to local taxation. Rather than going from one extreme that comprises rates hikes to the other, effectively cutting rates, we would take a balanced approach, striving to keep rates in and around at the level of inflation.

Another consequence of the policy that has been adopted is that the parity principle may be under threat. For almost 60 years, Northern Ireland has matched the levels of social security provision in Great Britain. However, an assumption that the tax burden should be standardised as far as possible throughout the United Kingdom is behind part of the bargain that the Executive wish to make. How will the Treasury react to the approach that has been taken on local taxation?

Furthermore, how will this — or any future — Executive be able to argue credibly for favourable funding, given that the resources that we receive are used for a populist approach to taxation, rather than for further investment in sustainable public services? That is a strange approach for unionists to take, to say the least. I am also concerned about the message that the Executive are sending out to wider society: they are creating unrealistic expectations regarding local taxation issues. The Executive may be placing themselves in a financial straitjacket. There will be a time when the Executive will need to raise funds from the regional rate to pay for local services, and I fear that they are making things more difficult for themselves in the long run. A rise in rates in or around the rate of inflation would be more sustainable and would be a way to avoid those difficulties. Above all, this argument is academic, given the debacle concerning Northern Ireland Water and the very steep charges that people in Northern Ireland may now be facing.

The Executive have agreed what is effectively a right-wing Budget, and I congratulate the Minister’s success in getting the other three Executive parties to sign up to it. They have all made their choices in that regard. However, I remind the members of all the political parties that are in the Executive that they must be careful about how they argue for things over the months and years to come. They have all made their choices to sign up to the Budget, and, by implication, to the approach that has been taken to the regional rate. In so doing, they have no credibility when they raise issues regarding the underfunding of health, education or transport. People cannot have it both ways when they are in Government. I note that all the Executive parties have made that point in the past: we cannot have it both ways.

The Alliance Party’s approach is the reasonable and realistic one, and I think that the people of Northern Ireland appreciate and understand it. my colleagues and I are hearing on doorsteps and in our constituency offices about people’s concerns for the future of the public services in Northern Ireland, particularly the Health Service. People need to be realistic when they consider the parties in this Assembly and the decisions that they are making. They must ask themselves whether those decisions add up.

Photo of Simon Hamilton Simon Hamilton DUP

Dr Farry’s contribution was longer than the two that preceded it. My contribution may be slightly longer than those of Mr O’Loan and Mr Beggs, but it will not be as lengthy as that of the Member for North Down. That will be another relief for the rate­payers of Northern Ireland.

Photo of Simon Hamilton Simon Hamilton DUP

The Member is absolutely right.

Lest there be any doubt, I welcome the introduction of the Order. It is my rule of thumb that if rates are to be frozen, it is a good idea to vote for and support that. One reason that I became involved in politics was to help, in whatever small way I can, to ease the burden faced by ratepayers, particularly hard-pressed working families, who have endured phenomenal rate rises in recent years.

The rise in the regional rate of over 60% has been mentioned, and in one year there was an increase of almost 20%. In its own small way, and within the limited scope that it has, the Assembly is helping to ease that burden. When the Minister of Finance and Personnel announced the proposal in his Budget statement towards the end of last year, I thought that all parties would support it.

However, much to my surprise and that of many others, the Alliance Party has consistently opposed the proposal. At meetings of the Committee for Finance and Personnel, the Alliance Party was joined by the PUP in voting against the Order and by the SDLP in voting against the cap on industrial rates that will be discussed later. If such a cap were introduced, businesses would not pay any higher rates than they do now.

Many Members view the Alliance Party’s conversion to old-style tax-and-spend socialism as somewhat curious. It is a strange switch, and it has resulted in some DUP Members branding the Alliance Party’s spokesman on finance “Fidel” Farry. However, given the winds of change that are sweeping through Cuba, that is perhaps no longer an appropriate name.

Even though this is a serious subject, the Alliance Party’s contributions have resulted in it taking on a comic quality, to the extent that a more appropriate title would be “Bruce Forsyth” Farry. Dr Farry takes every opportunity in the Assembly, at meetings of the Committee for Finance and Personnel or when addressing the general public to say “Higher, higher.” He wants people’s rates bills to be even higher than they are now. However, perhaps “Bruce Forsyth” Farry is not an appropriate name either, because not too many people will say “Good game, good game” or “Didn’t he do well?” to him when he talks to them on their doorsteps during the run-up to the next election.

The Alliance Party states that it merely seeks a rise in the regional rate that is based on the rate of inflation, which, it argues would be a more measured option. However, when Members of the Alliance Party are pressed on how much the rise should be, they do not come up with an answer. Dr Farry repeatedly referred to health, and the Alliance Party subscribes to the claptrap that there is an annual £200 million shortfall in funding for health over the period of the Budget, totalling £600 million over the three years. To raise that money through a rise in the regional rate would require an increase of over 200%.

Photo of Stephen Farry Stephen Farry Alliance

The figure of a £200 million shortfall in funding came from the Economic Research Institute of Northern Ireland: was it talking claptrap?

Photo of Simon Hamilton Simon Hamilton DUP

The amount of money that has consistently been allocated to the health budget over the years has resulted in the current situation in which, compared with the start of the decade, its budget has doubled. The money involved is not a small amount: it has doubled from £2 billion to over £4 billion. There are massive inefficiencies in the Health Service.

Photo of Sammy Wilson Sammy Wilson Shadow Spokesperson (Innovation, Universities and Skills), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Education)

Does the Member accept that the Member for North Down said that the Alliance Party was perfectly justified and right in opposing an 8% increase in the regional rate during the Assembly’s previous mandate because it meant a 75p increase a week per household? Now, however, Dr Farry advocates that a further £200 million be raised through an increase in the regional rate. That would mean an increase well in excess of 8% in rate bills, but during the current mandate he can justify that.

Photo of Simon Hamilton Simon Hamilton DUP

Mr Wilson is correct. An increase based on inflation would raise a paltry figure relative to the massive increase in spending that the Alliance Party seeks. It would not even scratch the surface of the amount that their spending plans require. Even to raise the £200 million to meet the shortfall over the three-year period would require an increase of over 200% in the regional rate. The average bill would increase by £920 from the current figure of just over £400. The Alliance Party wants to inflict that burden on people.

Photo of Stephen Farry Stephen Farry Alliance 1:15 am, 3rd March 2008

I understand that the Member studied accountancy at Queen’s at the same time that I read political philosophy, so I will perhaps challenge his point about socialism and communism later. He said that the Northern Ireland regional rate raises some £590 million per annum, and yet he referred to an increase of £200 million as a doubling of the regional rate. Surely £200 million is merely a fraction of £590 million, rather than a multiple? That is not to say, of course, that the Alliance Party advocates the funding of that gap from the regional rate. However, given that he has an accountancy degree, can the Member explain how he does his sums?

Photo of Simon Hamilton Simon Hamilton DUP

I thank the Member for his intervention. It is not, of course, a blanket total of £200 million that has been asked for; rather, the figure is £200 million per year, totalling £600 million over the period. When I heard of that demand coming from the Alliance Party, and from other Benches, I asked the Department of Finance and Personnel by how much that would increase the regional rate. The answer was that the regional rate would have to increase by 228% to £920. That is how much it would cost; that would be the burden on the taxpayer. Indeed, that is only a fraction of the burden that would be incurred if Alliance Members’ wishes were granted. They want a litany of things, from environmental protection to the arts, and everything in between. They want more and more —

Photo of Simon Hamilton Simon Hamilton DUP

Tractor farms and the euro. [Laughter.]

Photo of Simon Hamilton Simon Hamilton DUP

Yes, maybe they could break down the cost of division with an integrated gulag.

That £600 million, and the doubling or even trebling of the regional rate, would only be the start of the Alliance Party’s plans. Those of us who listened for years to the Alliance Party crying out for devolution under any circumstances, so that a difference could be made from the direct rule state of affairs, are bewildered by the latest nonsense coming from their Benches.

This is a difference from direct rule. If direct rule had been in place today, the people of Northern Ireland would have faced a massive increase in their regional rate, on top of what they have already paid over the years. Businesses too would, undoubtedly, already be facing the prospect of 50% industrial rates, rising to 100% in a few years. That is the difference that this Assembly is making; that is the difference that devolution is making. I warmly welcome the introduction of this Order, and give it my wholehearted support.

Photo of David McClarty David McClarty UUP

Mr Hamilton, thank you for the insight into your level of television viewing.

Photo of Jim Shannon Jim Shannon DUP

I am glad of the opportunity to question the Minister on this subject. I welcome his report and the opportunity for local involvement, at Assembly level, on the issue of regional rates. Some time ago, I brought the matter of regional rates for properties with agricultural occupancy clauses to the Minister’s attention, and there was discussion between us and with other bodies about it. Estate agents have opined that the value of properties with such clauses is 40% to 50% less than it would otherwise be.

Is the Minister now in a position to tell the Assembly whether he has addressed that anomaly in the rating system? It has already had, and will continue to have, a great effect on a number of people in my constituency of Strangford, and, indeed, on people throughout the Province. I am not sure exactly how many people are affected, but it impacts on anyone who has a property with an agricultural occupancy clause.

Photo of Naomi Long Naomi Long Alliance

I welcome a couple of things in what the Finance Minister said. He said that this was about setting out a new approach to the regional rate so as to avoid the massive increases that we have had in the last number of years, and to ensure that the public sector delivers. I do not believe that there is an elected representative in this Chamber who would wish that we did otherwise.

However, he also talked about controlling the level of the regional rate.

Although the sentiment is admirable, my party’s concern is not about the current level of the regional rate but about the creation of a boom-and-bust cycle in which huge hikes for several years will be followed by a complete freeze that will then force another couple of huge hikes. The Alliance Party does not believe that that way forward is sustainable. My party’s concern is that, for the public’s sake, rates bills are properly managed.

My party also welcomes efficiency savings. No one who sits in the Chamber believes that there is no room for efficiency savings in the public sector — no one is arguing otherwise. However, the Assembly must carefully consider areas in the public sector where the problem is underfunding, not lack of efficiency, and must confront that wherever it exists. No one argues against efficiency savings, because everyone wants to have efficient public services. However, to achieve efficiency, the Assembly must control spending and must not get into a negative cycle in which it freezes rates while knowing that doing so will put it under pressure later. It is a matter of long-term planning.

Several Members asked valid questions during the debate. However, I disagree with them in interpretation. For example, everyone agrees that some of the rates hikes that occurred during direct rule were excessive. There is no question about that, and a particular political point was being made. Dr Farry made a significant point when he highlighted the fact that the Government, which still retains control of the Treasury and the allocations that the Assembly receives from that quarter, are the same Government who believe that the contribution level from local householders in Northern Ireland must be increased.

The Assembly is now in control and cannot be forced to raise those funds through rates in the sort of measure that the Government have during the past three years. However, it will not go unnoticed if the Assembly freezes rates and then goes to the Treasury to ask for additional resources. The Assembly must be careful to ensure that when it approaches the Treasury, it does so with a rational and reasonable argument and can defend its position.

Roy Beggs Jnr mentioned poverty and the working poor. It is right that those matters be raised. Part of my concern is that people who fall into the category of the working poor will be those most damaged by the unpredictability of their future finances; the boom-and-bust cycle in which rates are fine for two years and then become outrageously expensive at the next top-up.

When those issues were debated in Belfast City Hall, colleagues who sit to my left in the Chamber made the point repeatedly that the problem was the lack of a measured approach towards rates — 19% increases and so forth — which damages people because they cannot plan for their future effectively. Therefore, for the sake of the working poor, there must be some predictability about what rates increases are likely to be — not only during the next year or three years, but in the long term.

Simon Hamilton quite rightly identified the fact that it would be easy to support the argument for no rates increase. Of course, it would be easier to tell the public that the Assembly will not be asking them for any more money. If the Assembly stopped at that point, it would be incredibly easy. However, the Alliance Party believes that the Assembly must be responsible and must tell the public that rates must be managed in a regular and measured way in order that it can deliver public services. Dr Farry clearly explained the consequences of not raising the required amount of money.

It would be easy and popular for the Assembly to simply back the notion of having no rates increase. It would be easy to put one’s hand up in favour of such a move. However, what is difficult to do is to articulate a constructive argument as to why rates must be managed differently. The Alliance Party has been accused of saying no again — in fact, that is not true. My party does not want to be destructive and negative: it wants to put forward constructive, alternative arguments, which is the opposition’s role in this place.

My party has also been accused of wanting to spend a huge amount of money. Frankly, that makes me want to laugh. If one examines the manifestoes of every party in the Chamber, it is clear that all of them made considerable commitments to the public. The difference is that the Alliance Party thought through the consequences of the commitments that it made and was aware of what must be done differently in order to meet those commitments.

Realistically, all parties must be serious when they write their manifestos and make their promises, because — since devolution — private Members’ motions have consistently called for more money for this, more money for that and more investment in the other. Those motions have come from all the parties, and the majority of them have not come from the Alliance Party — that is a false statement. Members constantly call for extra money, and I look forward to future private Members’ motions that explain from where the money will be taken.

That is the challenge that has been put to those of us in opposition, and I put it back to those in Government.

Photo of Peter Robinson Peter Robinson DUP

Believe it or not, I am grateful to all the Members who contributed to the debate.

As I said earlier, the Order provides the Administration with a vital tool to raise much-needed additional revenue to fund public expenditure on key services and provisions. Therefore, it is imperative that we use it wisely and get the correct balance between what is reasonable to levy on households and commercial premises, while raising sufficient funds to meet our spending requirements. We have that balance right this year and in the years of the CSR period; the public will see an Administration that makes a difference to their lives by delivering on its promises and being in touch with what is required to improve our services.

As custodians of the money raised through the regional rate, it is our job to ensure that that money is used to its maximum potential. That way, we will be able to realise a more vibrant economy and better quality services for all our people.

The main arguments on the amount set in the Order have been covered in previous debates on the Budget. Dr Farry used the same speech that he used on two or three occasions — it does not improve the more that one hears it. He stated, correctly, that parties cannot have it both ways. However, while he was saying that he was attempting to have it both ways. We must have an open, transparent and honest debate on the issue.

Dr Farry deliberately does not say how much additional revenue is required to meet his aspirations for health, transport and education. Every now and again, he makes inaccurate quips about the amount of underfund. People in Northern Ireland have 7% more money a head spent on them in health than people in Great Britain — not less. If Dr Farry is going to enter the debate, he should at least do so with accurate figures.

Photo of Peter Robinson Peter Robinson DUP

I will give way in a moment. However, the Member might want to wait for a while because, as I continue there will be a few more questions for him to answer.

I agreed with one thing that Dr Farry said. The public are intelligent and able to see what politicians are up to. We have seen what the Alliance Party is up to — they try to show that they can meet their requirements for health, education and transport with an inflation-based increase in the regional rate for householders in Northern Ireland. In my statement, I said that — taking inflation at 2·7% — an inflation-based increase would realise £5·86 million. Will Dr Farry tell me how the £5·86 million, which — as he says he wants — would be raised by an inflation-based increase in the regional rate, will pay for the £200 million that he wants to spend in health, not to mention the millions he wants to spend in education or transport? His shopping list may be even longer than that. The Member must be straight with the people of Northern Ireland — if he asks for large sums of money for those worthy causes, the cost of which he would add onto the rates, he must tell people that he will treble their rates, rather than double them.

The answer to the question that he put to my colleague is that the £590 million is not the amount of money from the regional rate from households but from households and non-domestic properties. Therefore, my friend is right to say that the £200 million would have doubled the regional rate. That is what the Alliance Party wants. Not content with a 62% increase over the past five years, it wants to more than double the regional rate for the next few years.

Photo of Stephen Farry Stephen Farry Alliance 1:30 am, 3rd March 2008

I have two points to make. First, I freely recognise that more money is spent per capita on health provision in Northern Ireland than is spent elsewhere in the United Kingdom. The reason for that is, sadly, that we have greater health need per capita in Northern Ireland, and, therefore, the Budget allocations reflect that need. The Alliance Party’s point is that, as a result of the current Budget, our inability to keep up with healthcare standards in the rest of the UK has led to our falling behind. We are flatlining.

Secondly, I made it clear that the Alliance Party does not have the resources or access to the detailed information that is needed to provide a fully costed Budget. However, I have sought to highlight three areas to do with income: first, the costs of a having a divided society must be dealt with, and no doubt we shall return to that point in our meeting with the Minister next week; secondly, possible efficiency savings must be highlighted; and, thirdly, a more responsible approach to the regional rate must be sought.

The Alliance Party has not sought, at this stage, to address how it would fund the underfunding of our public services. However, the several different income strands that we have set out for Northern Ireland can be dealt with.

Photo of Peter Robinson Peter Robinson DUP

The Member has no shame whatsoever. He tells us that he does not possess the resources to garner together an argument, yet he states his approach as if it were fact. He has admitted that he does not have the resources at his disposal to realise what the real financial position is. Perhaps he should use Assembly facilities —Committee and Library resources — to obtain the facts so that he might return with answers. However, I suspect that to do so would scuttle his argument.

The Member accuses me of adopting a popular rather than an evidence-based approach. Let me give him that evidence. The increases under direct rule have been significantly higher than anybody in Northern Ireland should have been asked to bear. A 62% increase over the past five years is unacceptable, but the Member evidently does not think so. If we are to redress the balance, we are right to do what we have done — freeze rates. I would have thought that, after his recent radio broadcast, the Member would have recognised that people do not support his stance. I do not know what doors he has been knocking on, but people to whom I have spoken welcome the fact that they are to experience some relief from the massive rates hikes of previous years.

I listened to the contribution from the deputy leader of the Alliance Party. She should have listened to the old saying that one never refers to rope in the house of a hanged man. It was unwise for her to start to refer to manifestos. She has obviously forgotten that the Alliance Party’s manifesto for the local government and Assembly elections stated that there should be rates reductions. Her party advised people to watch out for the parties that would be in Government, because they would attempt to hike the rates in Northern Ireland. The exact opposite has now happened; the parties in Govern­ment want to freeze the rates in Northern Ireland. The Alliance Party has torn the page out of its election manifesto and now wants to hike the rates in Northern Ireland.

I will take no lectures from her about the need to show consistency on the issue. She argues that to have a hike one day and a freeze the next day leads to a hike in the future.

She should know — if she does not, she should speak to her husband, who will tell her — that Castlereagh Borough Council has dealt with precisely those issues. That is why Castlereagh Borough Council has the lowest rates in Northern Ireland and the lowest increases. The council consistently gives the best value to its ratepayers through precisely the same programme that the Assembly is adopting. We cannot simply pull more money out of the pockets of the people of Northern Ireland.

Photo of Peter Robinson Peter Robinson DUP

I will be happy to give way to the Member in one second.

We will get the additional required resources by making efficiencies in the system. We will save £790 million through efficiencies. That is the way to do it, rather than asking for more money from people before we remove the waste from the system. People will welcome that policy.

Photo of Naomi Long Naomi Long Alliance

The Minister has drawn a parallel between his budgetary approaches for Castlereagh Borough Council and Northern Ireland. Will he concede that the difference is that, unlike in Castlereagh, where people can hop on a bus and go to Belfast to use the services that are provided there, people in Northern Ireland will not have the option to go elsewhere when times become difficult and service provision is low, as it has been in Castlereagh?

Photo of Peter Robinson Peter Robinson DUP

If the Member knew a bit more about the subject, she would know that more people hop on buses to go to facilities in Castlereagh than the other way around. Recreation facilities in Castlereagh make money for the council, whereas facilities in Belfast lose money. The Member might wish to take some lessons from Castlereagh in that respect. The Member for East Antrim Mr Wilson found it so difficult to pay the rates in Belfast that he decided to move to Larne, so Mrs Long should not try to egg him on to intervene in the debate.

Mrs Long raised the issue of unpredictability. How can she talk about the unpredictability of future rating when — for the first time ever — a Minister has given predictability to the business sector and to householders in Northern Ireland? We have told people what the regional rate will be for the next three years. That is total predictability until the end of the mandate of this Assembly. No previous Minister has offered householders or the business sector that degree of predictability so that they can plan their finances in the longer term. I would have thought that, instead of criticising that, the Member would have thanked the Executive for providing people with a longer run-in time in which to assess their finances for the next three years.

The Member for Strangford Mr Shannon mentioned what I will describe as a “horticulture allowance”, which would be an extension of the existing farmhouse allowance. The Member came to see me with one of his constituents, and he made a strong case. He pointed out the similarities between the horticulture and farming sectors. My officials have been tasked with assessing how widespread that issue is and examining ways in which we might best address it. Addressing the matter in the way in which the Member has suggested will probably require primary legislation. Therefore, my Department is gathering evidence, and officials have written to the Department of the Environment’s Planning Service about the number of houses that have user restrictions imposed by the planning system for horticultural reasons.

I have covered the issues that were raised during the debate, and I hope that I have at least covered Members’ substantive points. If, on reading Hansard, I discover some issue that I have not covered, I will write to the Member concerned.

Photo of David McClarty David McClarty UUP

I remind Members that the motion requires cross-community support.

Question put,

The Assembly divided: Ayes 79; Noes 8.

AYES

NATIONALIST

Mr Attwood, Mr Boylan, Mr D Bradley, Mrs M Bradley, Mr P J Bradley, Mr Brady, Mr Brolly, Mr Burns, Mr Butler, Mr W Clarke, Mr Dallat, Mr Doherty, Mr Gallagher, Ms Gildernew, Mrs D Kelly, Mr G Kelly, Mr A Maginness, Mr P Maskey, Mr F McCann, Mr McCartney, Dr McDonnell, Mr McElduff, Mrs McGill, Mr McGlone, Mr Molloy, Ms Ní Chuilín, Mr O’Dowd, Mr O’Loan, Mrs O’Neill, Ms Ritchie, Ms Ruane.

UNIONIST

Mr Armstrong, Mr Beggs, Mr Bresland, Lord Browne, Mr Buchanan, Mr Burnside, Mr Campbell, Mr T Clarke, Mr Cobain, Mr Craig, Mr Cree, Mr Dodds, Mr Donaldson, Mr Easton, Mr Elliott, Sir Reg Empey, Mrs Foster, Mr Gardiner, Mr Hamilton, Mr Irwin, Mr Kennedy, Mr McCallister, Mr McCausland, Mr B McCrea, Mr I McCrea, Mr McFarland, Mr McGimpsey, Miss McIlveen, Mr McNarry, Lord Morrow, Mr Moutray, Mr Newton, Mr Paisley Jnr, Rev Dr Ian Paisley, Mr Poots, Mr G Robinson, Mrs I Robinson, Mr K Robinson, Mr P Robinson, Mr Ross, Mr Savage, Mr Shannon, Mr Simpson, Mr Spratt, Mr Storey, Mr Weir, Mr Wells, Mr S Wilson.

Tellers for the Ayes: Mr Bresland and Mr Storey.

NOES

UNIONIST

Ms Purvis.

OTHER

Dr Farry, Ms Lo, Mrs Long, Mr Lunn, Mr McCarthy, Mr Neeson, Mr B Wilson.

Tellers for the Noes: Dr Farry and Mr McCarthy

Total Votes       87  Total Ayes        79         [90.8%]

Nationalist Votes 31 Nationalist Ayes 31        [100.0%]

Unionist Votes   49  Unionist Ayes   48         [98.0%]

Other Votes        7  Other Ayes         0         [0.0%]

Question accordingly agreed to.

Resolved (with cross-community support):

That this Assembly approves the Rates (Regional Rates) Order (Northern Ireland) 2008.