Small Business Rates Relief Scheme

Finance And Personnel – in the Northern Ireland Assembly at 3:30 pm on 1 December 2008.

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Photo of Simon Hamilton Simon Hamilton DUP 3:30, 1 December 2008

1. asked the Minister of Finance and Personnel what consideration he is giving to a small business rates relief scheme.  (AQO 1368/09)

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

I am considering a number of options, including more targeted schemes, which address wider social needs, such as sustaining services for local communities. I am attracted to elements of the Welsh scheme, but before I decide on anything and bring it to the Assembly, I need to be satisfied that it is necessary, effective and affordable. New legislation will be required, and that will take over a year to work through. I hope to make an announcement shortly.

Photo of Simon Hamilton Simon Hamilton DUP

I thank the Minister for his response on the important issue of a possible small business rates-relief scheme. The Minister will know that a large section of all rates bills goes to local councils. Can the Minister comment on recent reports that rates arrears of up to £124 million, which are being managed by Land and Property Services, have created financial difficulty for district councils across Northern Ireland.

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

I am grateful to the Member for his question, because it allows me to clarify the position. It is important that rates arrears are followed up by Land and Property Services, because it is only fair to all ratepayers that everyone pays their rates on time.

It is important to highlight that the figure of central rate debt managed by Land and Property Services does not impact directly on district councils. The income due to each council is paid over each month, regardless of the amount of debt outstanding. I assure the House that Land and Property Services pursue all debts until all prospect of recovering the money has gone, and only then will debt be written off. When that happens, the amount written off is charged in appropriate shares to the regional rate and the district rate.

Some of the press speculation and statements that have been made about the £124 million debt and its impact on councils is nonsense.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. I thank the Minister for his answer. In the context of addressing the challenges facing the small- and medium-sized enterprises, will the Minister consider reviewing the public procurement policy so as to enable local SMEs to tender for the procurement of elements of the major capital projects?

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

That question is far removed from the subject of the original question about small business rates-relief, but I accept the Member’s comments. There are already a number of processes in the procurement system, which are designed to ensure that local companies get a fair crack of the whip. I am always prepared to look at other ways in which that can be done, and I will bear in mind his comments when I discuss the issue with officials in due course.

Photo of David McNarry David McNarry UUP

I appreciate the Minister’s mood of caution in answering the original question. Nevertheless, his response on rates relief is disappointing. May I provoke the Minister and ask him whether he has any suggestions as to how the cash flow of small business might be strengthened. Has he considered asking for a reduced differential rate of corporation tax for small- and medium-sized businesses, for instance, that will reflect their immediate needs during the recession, or will he consider doing so?

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio)

The Member will be aware that the study into the small business rates-relief scheme that was undertaken by the Economic Research Institute of Northern Ireland (ERINI) concluded that there was not a strong economic case for such a scheme and that it would prove ineffective.

However, I have decided to have another look at the issue. The report stated that a more targeted scheme might be justified on wider social grounds, and the Committee for Finance and Personnel also recommended that the matter should be looked at further. I want to lift the Member’s mood of pessimism by saying that the Department will look at ways in which it can have a more targeted scheme. However, we must ensure that it is necessary, affordable and effective.

As regards what we can do to help small businesses; corporation tax, which is within the gift of the national Government, is important, and we have pressed them on that and on other issues. However, ultimately, it is a matter for them, and there will always be difficulties when it comes to having different tax rates within the UK. Nevertheless, we have taken measures to help businesses, and I will give the Member four examples. First, the decision was made to freeze the level of industrial rating at 30%. Under direct rule, rating liability this year would have been 50% and 75% next year. Secondly, we have ensured that empty property rate relief of 50% will be retained here, unlike the rest of the UK where it is 100%. Thirdly, freight transport relief has also been retained, and that is important for our ports and harbours, as they will be able to pass on those savings to Northern Ireland businesses. Fourthly, last year’s Budget stated that the non-domestic regional rate would not increase in real terms.

Those four specific, substantive measures that we have introduced under devolution mean real help and assistance to small and medium-sized enterprises in Northern Ireland, and they would not have happened under direct rule. We must remind ourselves and the community that as well as doing more — and we need to do more and look at ways of doing more — a considerable amount of work has already been done.

Nevertheless, we face challenging times. The pre-Budget report announced by the Chancellor on Monday also contained measures to help small companies: deferment of the 1% corporation tax rise; giving them longer periods of time to pay, and enabling them to offset corporation tax liability by offsetting the three years’ prior losses. All of those measures provide substantial help for our small and medium-sized enterprises.