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Penny Product

Private Members’ Business – in the Northern Ireland Assembly at 4:15 pm on 12th January 2009.

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Photo of Francie Molloy Francie Molloy Sinn Féin 4:15 pm, 12th January 2009

The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer will have 10 minutes to propose the motion and 10 minutes to wind up. All other Members will have five minutes. One amendment has been selected and published on the Marshalled List. The proposer of the amendment will have 10 minutes to propose and five minutes to wind up.

Photo of Paul Maskey Paul Maskey Sinn Féin

I beg to move

That this Assembly calls on the Minister of Finance and Personnel to address the financial difficulties being experienced by District Councils in the calculation of the Penny Product, by initiating a process of consultation involving Councils and Land and Property Services, for the purpose of producing an accurate register of rateable properties.

Go raibh maith agat, a LeasCheann Comhairle. I declare an interest as a member of Belfast City Council, and I am sure that a number of other Members taking part in the debate will be councillors from other areas throughout the North.

I thank the Business Committee for selecting the motion; it concerns what I believe to be one of the most important issues presently faced by all local councillors and one that we hope can be resolved as a matter of urgency.

The motion calls on the Minister of Finance and Personnel to address the financial difficulties experienced by councils in the calculation of the penny product. We believe that the Minister should initiate a process of consultation, involving councils and Land and Property Services (LPS), for the purpose of producing an accurate register of rateable properties that allows councils to professionally plan for the future on the basis of accurate forecasts from Land and Property Services.

In some areas, the domestic rate accounts for approximately 75% of council income, while the regional rate makes up only a very small proportion of central Government income. In recent years, some councils have made efficiencies and put plans in place to achieve further efficiencies in the years ahead. Leading by example in that way enables local government to move into the future in a more sustainable manner. Although efficiencies have been made, there have been no cuts in front-line services or in the many other services for which councils have the remit.

Some councils have kept their rates down against the backdrop of rising costs, particularly in the areas of salaries and increased pension contributions, which can account for 45% of costs. Councils are facing huge financial pressures. Every citizen and business in every city, town and village is affected by the current economic climate, and that is one of the main reasons why we tabled the motion.

Belfast City Council has experienced a significant fall — £2·6 million — in external revenue as a result of the financial environment in the areas of IT services, building control, business improvement services and investment income. Other revenue areas are likely to suffer due to the current economic climate. That story is replicated throughout all the councils in the North.

Therefore, problems have resulted from the economic downturn and from the estimation of the penny product.

At present, councils face an economic challenge, to say the least. They received the estimated penny product for 2009-2010 on 19 December 2008. For Belfast, that represents growth of 0·8%, which is a disappointing result for the city given the level of investment that has been made in Victoria Square and other major developments in recent times. Although major development has taken place in many council areas, they have not seen the benefit of the rate.

In October 2008, the Public Accounts Committee (PAC), which I chair, produced a report that states clearly that it is extremely concerned that the Department of Finance and Personnel (DFP) had not provided councils with sufficiently accurate information to enable them to undertake their corporate planning. Recommendation 20 of the report states:

“The accuracy of penny product information is essential to the effective financial planning of Council services. While the Committee recognises that forecasting is not an exact science, the Committee is of the view that DFP has not invested sufficient energy into developing systems for calculating the actual penny product and into estimating subsequent year(s) penny product.”

The PAC recommended that DFP places more resources into the system and develops a more robust budgetary model in order to estimate future council revenue. Some of councils’ key concerns are rates bad-debt write-offs, valuation appeals, cost of collection, and vacant properties. Land and Property Services has written off some £10 million of bad debt in 2009-2010.

The estimated penny product shows that there has been a significant increase in some councils. Belfast City Council, which is the largest council in the North, is writing off bad debt that costs some £2·5 million. That is an increase of 224% from 2008’s estimated penny product. Many councils were only made aware of the matter on 19 December 2008 and, therefore, had no opportunity to build it into their financial planning. The Minister must address that matter.

I accept that the level of debt that was written off in previous years was too low. I acknowledge the Department’s responsibilities in respect of bad debt. However, a 224% increase in one year is excessive. It will put even more pressure on Belfast City Council’s ability to keep its rates increase at a reasonable level. All Members want to achieve that for citizens, especially during the current economic downturn. That is why I urge the Minister to reconsider the level of debt write-off in 2009-2010.

Representatives from Land and Property Services must meet council officers in order to discuss debt and to agree on a re-profiled debt write-off programme that will avoid steep increases in one year and will ensure a more balanced approach for the next three years. Working in partnership will help to tackle that and will also inform councillors and officers of key issues that they must deal with at an early stage.

Profiling of bad-debt write-offs should be done in the context of recommendation 23 of the Public Account Committee’s Report on Statement of Rate Levy and Collection 2006-07, which was published on 16 October 2008.

Some councils have suffered exceptional rating-valuation appeals from such organisations as the Ministry of Defence (MOD). Transitional relief arrangements must be extended to cover the impact of the re-evaluations of MOD premises. I am sure that councils that are affected by MOD re-evaluations would welcome those costs being absorbed by central Government as they would have a serious impact.

That would result in reduced rateable values which amount to hundreds of thousands of pounds from 2009-2010 onwards and would also lead to backdated refunds that total millions of pounds, which would be included in the 2008-09 estimated-penny-product finalisation.

As I said earlier, due to the late notification of those items on 19 December 2008, councils have had little or no opportunity to respond to the impact of the district rate, with which they must deal. I urge the Minister to consider giving councils full transitional relief for one year in respect of the impact of reduced rateable values of the estimated penny product for 2009-2010 and backdated refunds. The estimated penny product for 2009-2010 demonstrates that some councils’ share of the cost of collection will rise to over 40% in 2008-09.

The estimated-penny-product notification from Land and Property Services demonstrates that costs have increased because of investment in the revenue and benefits system and additional staff that are needed to implement several new rate reliefs.

We welcome the investment and the modernisation of the system. However, it seems unreasonable to burden councils with the costs of improving the revenue and benefit system in one year, as the improvements arising from the investment will be accrued over a long period of time. I urge the Minister to consider phasing the increased cost over a number of years.

I also seek assurances that the additional costs are being passed on in the context of recommendation 23 of the Public Accounts Committee’s ‘Report on Statement of Rate Levy and Collection 2006-07.’ The Land and Property Services database has identified many vacant properties in many different areas. In Belfast alone, vacant properties have led to a loss of over £20 million in rates income.

In agreement with LPS, building control staff surveyed 12,100 properties and found that 44% of those properties were occupied. The relevant details have been passed on to LPS so that rates bills can be issued. I call on the Minister to ensure that the details of properties that are found to be occupied are put on the LPS database before a revised estimated penny product (EPP) is provided to the council. That would reduce the amount being lost from vacant properties and, therefore, provide a better EPP for all councils. I sincerely urge the Minister to give serious consideration to that situation.

I note that the Alliance Party has tabled an amend­ment. Indeed, they are serial movers of amendments in the Chamber. Today’s amendment adds to our motion. Therefore, we will support the amendment. Go raibh míle maith agat.

Photo of Stephen Farry Stephen Farry Alliance

I beg to move the following amendment: At end insert

‘; and to consider urgently measures to provide transitional relief to those Councils that are carrying forward a significant loss from the 2007-2008 financial year due to differences between the estimated Penny Product used to calculate the level of district rates and subsequent finalisation figures provided by Land and Property Services

I declare an interest as a member of North Down Borough Council, and I thank the proposers of this important motion for tabling it; it is very timely. We move amendments whenever we feel that they are appropriate. Obviously, we can support the motion. However, we want to take the debate a step further and, in particular, to consider transitional relief beyond the £400,000 cap.

Councils are seeking to strike their rates before the middle of February, and it is expected that there will be considerable rises in many districts across Northern Ireland. It is worth stressing that those hikes will not be due to more costly provision of goods, facilities and services. Indeed, most councils are seeking to reduce their costs through efficiency savings, the sale of land assets or the re-phasing of capital investments. Rather, those costs are essentially beyond the control of the councils and ratepayers concerned. In simple terms, a considerable slice has been taken off the rates base of several local councils. That was apparent in the penny-product finalisation figures for the 2007-08 financial year, which were only released after the closure of that year’s accounts.

As in most years, councils will strike their rates based on the estimated penny product provided by Land and Property Services. EPP figures are usually struck at a very conservative level. Indeed, most councils usually expect to receive a significant financial windfall when the finalisation figures become apparent. That windfall is used to boost investment for subsequent years. In my 16 years’ experience in local government, we have always received a positive finalisation figure.

However, many councils are in a clawback situation in which funds have to be found to go back to the centre. For North Down Borough Council, that amounts to about £860,000, which is the equivalent of an 8% rise in rates. That highlights the scale of the problem and puts it into context. I understand that in Belfast the scale of the clawback is over £4 million. The funds to finance the drop in revenue were not factored into the calculations for the 2007-08 financial year or the associated rate. The rates and budgets for 2008-09 were also calculated before the finalisation figures for 2007-08 became apparent.

Councils now have to either run down their cash reserves, pass on the costs, or cut services. That is not a good situation for councils to be in. In many cases, councils have been left to carry those costs through to the rates process for the incoming financial year, which they are considering.

In some cases, the difference between the estimated penny product and the actual penny product is substantial. The extreme cases include Belfast City Council at –4·94%, Carrickfergus Borough Council at –4·48%, Derry City Council at –2·36% and North Down Borough Council — my own area — at a huge –5·9%. The scale of the swing in income for councils is much greater than those figures suggest, given that most councils expect, on finalisation, to receive a net income rather than experience a clawback situation. It is worth stressing that the regional rate is a relatively small element of the income of the Northern Ireland Administration. However, the district rate provides the major element of council income. In fact, I will go further than Paul Maskey and say that, in some councils, it provides over 90% of income. In some cases, income from services provides a balance.

It is important to avoid making a false comparison between the level of the regional rate and the district rate. It is futile for the Executive to point to the freeze on the regional rate when the district rate is under such pressure. Householders will make little distinction between the two elements of the rates bill when it arrives on their doorstep in early April. Given the economic downturn, we must be sensitive to the pressures that householders are under because of rises in utility bills and the financial uncertainty arising from employment concerns and other factors. We must take the issue extremely seriously. Furthermore, the artificially low level of the regional rate has contributed to some hikes in council rates because costs have been inappropriately passed on to councils. Moreover, decisions taken in the Chamber have impacted on the local tax base. Ideally, the regional rate and the district rate should rise in relation to the level of inflation.

Several specific factors that are beyond the control of local officers and Members have led to the financial crisis in local government. Several major revaluations have taken place in the UK, most notably that of Ministry of Defence property. The MOD, like other organisations, is under financial pressure, and I understand that the revaluations are affecting Antrim Borough Council, Armagh City and District Council, Ballymena Borough Council, Coleraine Borough Council, Craigavon Borough Council, Down District Council, Fermanagh District Council, Limavady Borough Council, Newry and Mourne District Council and North Down Borough Council — the problem is Province-wide. The potential impact of those revaluations amounts to £390,000 in Limavady, £230,000 in Newry and Mourne and £460,000 in North Down. A similar problem is emerging with British Telecom.

The debate is not about the pros and cons of the principle of rate capping, rather its impact on local councils. The Assembly will soon consider the rates cap of £400,000, and the Minister of Finance and Personnel seems to be committed to introducing transitional relief to cover its first two years. That measure might help in the short term, but councils will still experience a significant shift in underlying baselines. However, no transitional relief was offered to address the impact of the £500,000 cap, which was introduced at the end of March 2007 before the restoration of devolution. More significantly, it occurred after councils had struck their rates for the 2007-08 financial year. Indeed, the impression was given — rightly or wrongly — that the cost of the cap in the first year would be entirely borne by the centre and that no costs would be passed on to the district rate. That proposal was never formalised, and it was only with the finalisation figures that councils were asked to cover the cost of that cap during the first year via the district rate. The net result of that, in cash terms, is that the cost of the cap for two years has to be borne within one financial year. Again, that is a major diversion that impacts on councils.

Furthermore, the effect of the cap is geographically concentrated. Although the overall distribution of the cap in Northern Ireland may seem benign, it is much more acute in some districts. Given that a major slice has been removed from local rates bases, the costs of local services must be reallocated to citizens who live in that locality.

The effects of the cap, when considered in relation to the regional rate and district rate, are therefore considerably different. In North Down the £500,000 cap adds a cost of around £250,000 to the rates bill — around 2·5%. That amounts to 5% if one considers having to bear the cost twice in the same financial year. Other councils badly affected by that cap include Ards Borough Council and Belfast City Council.

It is clear that some genuine issues in relation to the property market are affecting the level of the estimated penny product. We accept that there are major challenges for Land and Property Services, including the decrease in new buildings, increased vacancies, and the problem of uncollected debt. However, there are issues that are under the control of the Northern Ireland Administration, and there are things that are not being done by Land and Property Services and the Department. The level of vacancies, to an extent, reflects delays in placing occupied or newly-built properties on to the valuation list. Those delays can amount to months, and, in some cases, years. That is clearly unacceptable.

There are also significant costs in relation to collection. It is unacceptable to have a situation in which councils accrue additional costs while providing a worse service. The accuracy of the estimated penny product figures is also an issue.

It is accepted practice that, whenever new policies and practices have a differential impact, some form of transitional relief should be introduced. Councils are facing major hikes in their rates, even if they make efficiency savings and cutbacks. Government must intervene to cushion the blow to households. The councils can go only so far without undermining the integrity of local services.

I appreciate that the Minister has spoken to the Northern Ireland Local Government Association (NILGA) on the matter, and is considering what can be done, but we need to go further than the simple measures that are available under existing legislation and consider fresh legislation, even if it is implemented during the next financial year.

Photo of Simon Hamilton Simon Hamilton DUP 4:30 pm, 12th January 2009

I declare an interest as a member of Ards Borough Council. I have been a member of that council for almost four years, during which I have had the dubious privilege of being the chairman of its rates subcommittee. Even if I say so myself, that period in the rates history of Ards Borough Council has been something of a success story. The increase in the percentage rate has been falling year on year — if that does not sound like a contradiction in terms — to the point when, last year, we struck the lowest rates increase in six years. That was at a time when we were striving to continue to improve services and to get away from the yo-yo rates rises of the past and the uncertainty among rate payers as to whether there would be a double-digit increase — as occurred in some years — or a near-zero increase the following year. That allowed people to financially plan more effectively.

However, the challenge of having steadily diminishing rates increases while improving services will be most difficult in the upcoming rates year. I have certainly found that to be the case, as have my colleagues in the council. It can be seen most starkly where the losses to be borne by the council are increasing — not just increasing moderately, but rapidly and by serious amounts.

One may consider the cost of the losses arising from vacant properties — I will continue the tour of the greater Belfast area, beginning with the capital city, on to North Down, and then to Ards, and probably elsewhere. The losses to Ards Borough Council in respect of vacant properties potentially amount to £1·2 million, at a time when we, along with other councils, are endeavouring to clear some vacant properties. Some £600,000 of rates were cleared, but now the council faces a loss of double that amount. The cost of collection in Ards has increased to almost £385,000. The overall increase, including other costs and losses, amounts to around 68% compared with this time last year. That burden is clearly very difficult for the ratepayers of my local council area, and other areas, to bear.

One might ask why we are in that position. The problem was not created by the current Administration or by Land and Property Services (LPS), which inherited problems. The scale of the merger of four agencies into one, new IT systems, and an entirely new rating system obviously placed a lot of strain on that organisation.

Some one-off problems clearly caused difficulties, such as the revaluations of the MOD and British Telecom (BT). There have also been unanticipated problems, such as the unexpected extreme downturn in our economic circumstances, which — going back to the subject of vacancies — clearly created a substantial amount of additional vacant properties at the time when serious efforts were being made to reduce the number of vacant properties.

We have had to address all those problems, but I seek solace in the fact that the issue was recognised and that work is ongoing to try to resolve it. The Minister, LPS and NILGA met before Christmas to discuss the issue and various working groups have been established. I understand that a forum has been created with local government finance offices, representatives of chief executives and LPS to try to modernise the system and evaluate how some of the problems can be overcome.

The reduction of the rates cap is an example of how the Department has been sympathetic by allowing transitional relief to be put in place. Knowing the impact that that would have on our two respective local council areas, that was something about which Mr Weir and I strenuously lobbied the Minister’s predecessor. A debate that is entitled ‘Penny Product’ could appear to be an abstract academic debate, but those problems will have an adverse impact on virtually every household and business in Northern Ireland if they are not addressed. Along with others, I urge the Minister to extend the sympathy that he has already shown regarding this subject matter and to do what he can to relieve the burden that ratepayers in Northern Ireland are likely to face.

Photo of Roy Beggs Roy Beggs UUP

I declare an interest as a Carrickfergus Borough councillor. Accurate penny-product estimation is a vital component as it enables councils to have a more stable estimation of their rates base and to set the appropriate level of rates.

Local councils are currently involved in setting their rates for the next financial year. In order to do that, councils must estimate their expenditure over the forthcoming year and estimate the amount of money — which is collected by Land and Property Services — that they are likely to be able to draw in through the rates process. The councils must have an accurate calculation of their rates-raising capacity from the local domestic and non-domestic properties.

Regrettably, Land and Property Services and the Valuation and Lands Agency — its predecessor — both have a poor track record in that regard. Previous inaccurate calculations were discussed in an Assembly Finance and Personnel Committee in 2001. Predicting a rates base must be a difficult process, but the recent variation was way beyond what one would expect, given the detailed database that the Department of Finance and Personnel uses and the expertise that was available to the Department and its agency. Given their mutual interest in having an accurate rates base, there is clearly a need for closer working among the Department of Finance, Land and Property Services and local councils.

In a recent Assembly question, I asked the Finance Minister for a percentage variation among local councils. I was shocked when I discovered that Magherafelt District Council had a variance of +6·27%, North Down Borough Council had a variance of almost -6%, and Carrickfergus Borough Council and Belfast City Council have variances of approximately -5%. Those are huge variations — how on earth could one have an accurate estimation of one’s rates? After that fails, local councils receive unexpected bills during the course of the subsequent year. I understand that Belfast City Council’s unexpected bills amounted to some £4 million, and my own council’s figure was £300,000 — how are councils supposed to incorporate such unexpected bills?

I was part of the Public Accounts Committee that published the ‘Report on Statement of Rate Levy and Collection 2006-07’ in October 2008. I urge anyone who wishes to investigate that process further to study that report. It highlights that many of the failings were under the control of Land and Property Services.

I shall focus largely on vacant property. Despite the fact that people have been living in properties that were listed as vacant, many of them have not been issued with a rates bill, which means, of course, that the cost burden is falling on their neighbours. Therefore, Land and Property Services must answer for those failings.

In 2006-07, Land and Property Services stopped inspecting vacant properties and — surprise, surprise — that was one of the reasons for the inaccuracies in the penny-product estimates. Many properties were labelled incorrectly as vacant: no rates bills were initiated and no funds were gathered. What private-sector business would virtually stop issuing invoices to new customers? It is unbelievable.

I acknowledge that LPS is working closely with councils to address the problem; however, the legacy of that shambles lives on. Consequently, there is merit in the amendment of Stephen Farry and Sean Neeson, which calls for transitional relief. Councils have been attempting to plan; however, through no fault of theirs, additional bills have been landing on them.

As a direct result of the failure of Land and Property Services, Carrickfergus Borough Council checked some of the properties and discovered that 37% of approximately 1,300 properties listed as vacant were, in fact, occupied. No doubt, that figure is replicated throughout council areas in Northern Ireland — a huge amount of money has not been collected, and everyone else must pay for that. Consequently, rate arrears have risen, and bad debts are predicted to rise from approximately £5 million a year to between £8 million and £10 million a year. Guess what? Ratepayers will have to pay for that shortfall as well, because the benefits of collecting extra rates are not being passed on to local councils.

Photo of Francie Molloy Francie Molloy Sinn Féin 4:45 pm, 12th January 2009

Will the Member draw his remarks to a close?

Photo of Roy Beggs Roy Beggs UUP

This area must be addressed, Minister: we must bring about improvements and have a consistent rates base on which we can rely.

Photo of Declan O'Loan Declan O'Loan Social Democratic and Labour Party

I declare my membership of Ballymena Borough Council, and I state my support for the motion and the amendment.

Land and Property Services collects £1 billion per annum, so it plays an important role in the finances of the Executive and of district councils. Indeed, the implications for district councils are more serious than for the Executive. The regional rate contributes approximately 6% to the Executive’s Budget; however, for councils, after income from charges, it contributes almost 100% of the revenue raised. I am not sure whether, as Stephen Farry said, the rates account for as much as 90% of overall council costs but they certainly account for a major proportion of income. Therefore, it is important to district councils that the system works well, and it is clear that a serious situation has arisen concerning the penny product.

We all understand the system, and we know that the penny product is essential information for councils preparing their budgets for the forthcoming year, so it is vital that that information is accurate. Recently, there have been significant errors in the estimated penny product, which, as some Members have mentioned, has resulted in substantial clawbacks and serious distress to several councils.

There is an important side issue concerning the distress that is being caused by the rating system: it is not only councils that are suffering distress; some ratepayers are suffering greatly, particularly the owners of vacant commercial property. Last week, at the Committee for Finance and Personnel, officials demonstrated considerable sensitivity to the problem of imposing rates on vacant domestic properties, and they were considering when and how such rates might be introduced. However, that measure is already in place for vacant commercial properties; it was introduced in good spirit, and it was intended to generate useful movement and activity in the commercial sector. However, when it was introduced, the environment was quite different to what it is now. The measure is creating serious pressure for a particular group of ratepayers, and I ask the Department to pay particular attention to that.

Returning to my main concerns, I am not impressed by the response of the LPS to the penny-product situation. An LPS spokesperson said that it was disappointing that Land and Property Services had been criticised, as many of its estimates were within 1% of the final figure. However, it is the job of LPS to get the estimates right, and too often it gets them wrong.

The 2007-08 figures show that the estimates for 12 councils were within 1% of the actual outcome; the remaining 14 were outside it. For instance, there was a 5% error for Belfast City Council; a 6% error for Magherafelt District Council; and a 6% error for North Down Borough Council. Those errors are not acceptable; they show that the database and the estimation method are not sound.

I was shocked at one piece of evidence in the PAC report, which stated that LPS had to concede that errors were made in important work by one person whose work had not been checked or verified by anyone else.

Several Members mentioned the Public Accounts Committee’s ‘Report on Statement of Rate Levy and Collection 2006-07’, which refers to “a history of errors” and states that councils expressed their concerns regularly. Furthermore, it contains an assurance from 2001 to the Committee for Finance and Personnel that future calculations would be accurate. That promise has not been realised.

The PAC report concludes that DFP has not invested sufficient energy into developing systems for the estimation of the penny product and recommends that the Department put more resources into the system and develop a more robust budgetary model. I support that recommendation.

I note that it is only now that LPS is developing protocols with councils towards using their substantial local knowledge and databases to improve the information base of LPS. That development is long overdue. The problem with LPS is symptomatic of a wider problem — the most evident being the large rate arrears to which Members have often referred.

The Committee for Finance and Personnel has taken a great deal of interest in LPS and its underperformance, and it has shown interest in my proposal that DFP commission a wide-ranging independent investigation into LPS. That matter was put on hold during the PAC inquiry, but we should return to it now.

I support the motion and the amendment, and I hope that their success will lead to some amelioration in an unacceptable situation.

Photo of Peter Weir Peter Weir DUP

Like other Members, I begin my contribution by declaring an interest: I am a member of North Down Borough Council and vice-president of NILGA.

As several Members said, penny product is pertinent to the 26 councils in Northern Ireland; it has a different effect on each of them, but it is not restricted to one area. Consequently, the meeting that was held before Christmas between NILGA and the Minister was useful and productive. Representatives from the four major parties and various councils attended the meeting.

The DUP supports the motion; there was little in Paul Maskey’s speech with which to disagree. It resonated so much with the position of the parties in Belfast City Council that it could have been given, verbatim, by almost any of its members.

The DUP has no problem in supporting the Alliance Party’s amendment, despite the serial nature of its proposer.

At the time of the Executive’s welcome announcement on the freezing of the regional rate some years ago, a message was sent to local councils that they should not see the freezing of the regional rate as an opportunity to increase local rates.

Each council is different, and each has areas in which it can make cuts, but most have acted responsibly since that announcement was made and, for many years, have striven to provide the best possible value for the ratepayer. Considering the pressures faced by councils, I take issue with Dr Farry’s hope that there would be some level of regional rates increase alongside the local increase. Given the pressures on local councils, the wisdom of holding back the regional rate and restricting the increases to ratepayers becomes more evident by the day.

I agree with Dr Farry that ratepayers do not differentiate between what they pay as a regional rate and what they pay as local rates. Consequently, the freezing of the regional rate at least eases the burden of ratepayers to some extent. However, whatever local councils have done, they are, undoubtedly, being hit by a range of issues, the common factor in which is that they are outside their control.

Mention was made, for example, that the amount received through rates, particularly in the non-domestic sector, is due to reduce over the next year because of the recession. Unfortunately, we will have to deal with that. What was not mentioned is the continuing pressure caused by the large increases in landfill tax over the past few years. Whatever its merits, and with the best will in the world, that tax is beyond the councils’ control.

Furthermore, the mistakes that were made a couple of years ago placed a massive additional burden on Land and Property Services. As Mr Beggs said, there was a ridiculous situation at that time because someone took their eye off the ball on the control of vacant properties. Some of the changes to LPS, such as the computerisation of its system and changes to the rates, will benefit everyone in the long term. Practical efforts have been made to try to rectify the mistakes of a few years ago. A new closer working relationship has evolved between council officers and LPS not only in Carrickfergus Borough Council but in the bulk of councils. Perhaps it was driven by necessity, but it has proven to be a good system of close co-operation. However, the Assembly must put more meat on the bones.

It is clear from the problems in LPS, the trouble with estimating the penny product and the specific issues that were mentioned in connection with the revaluation of MOD and BT sites that councils face a major short-term problem. If the Assembly is to deliver the best for all its ratepayers, continued efforts are required. The Department must consider sympathetically some sort of assistance or transitional relief to ensure that councils are able to do their jobs properly.

Photo of Francie Molloy Francie Molloy Sinn Féin

Will the Member bring his remarks to a close?

Photo of Peter Weir Peter Weir DUP

I support the motion and the amendment.

Photo of Mitchel McLaughlin Mitchel McLaughlin Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. I declare that I do not have an interest because, in 1998, on my election to the Chamber for the first time, I resigned from Derry City Council.

I have considerable sympathy for the councils. I was a councillor in Derry for almost 20 years, and I am aware of the complex issues that can affect the annual process of striking the district rate. Councils can drive efficiencies only so far before coming up against the difficult choice of raising rates or cutting essential services. Many councils find themselves on the cusp of that dilemma now.

It is only fair that I say that I also have some sympathy with Land and Property Services, which inherited, rather than invented, the problem. It may have been tasked with driving an agenda of change that was too complex in too short a period, as was the considered view of the Public Accounts Committee. The issue, for instance, of retreating from developing the accuracy of the register to include vacant properties, or to establish whether properties are genuinely vacant, has a direct impact on the lack of accurate information on which the calculations are based.

From listening to the contributions from the parties in the Assembly, it is clear that Members have a good understanding of all the issues because they have had to deal with them annually. However, it seems slightly contradictory that the calculation of the estimated penny product is based on information that is out of date as soon as that process begins.

By the time is has been applied in the particular financial year, it is 18 months out of date, which compounds the existing problems.

When Land and Property Services was established and took over from the Rate Collection Agency, we should, perhaps, have taken the opportunity to abandon the practice of estimating the penny product, and to reduce it to an annual process whereby, at a given point in any year, an agreement could be signed off between the district councils and Land and Property Services as to the valuation list, which would produce a single figure. The variations and the various impacts of the changes that inevitably occur in the built stock right across the North can be factored into the following year. It compacts the process.

There may be an initial cost implication that would add a dimension to the amendment offered by the Alliance Party, because there may be a need to provide some transitional support to councils in the first year. However, if we were to deal with factual information — at least, information that was agreed to be factual at a given point — and we worked towards the upcoming 12 months before we revisited it, councils and the Department would know exactly the basis on which they were proceeding, and know the expenditure programmes on which council rates would be based. The compensation can be built into the process by regularly amending the valuation list.

An initiative for which I would argue strongly is that we make the necessary investment — again, a collaboration between Land and Property Services and the councils. The work could be carried out by the councils, and it would be a cost-effective operation in reviewing the vacancy list. We all know that therein lies the problem of delinquency, the consequence of lost revenues and the annual conundrum between Land and Property Services and the councils.

In supporting the motion and the amendment, I ask the Minister to give some consideration to reviewing the entire system and questioning the value of having an estimated penny product that so often turns out to be inaccurate and may not be needed at all.

Photo of Adrian McQuillan Adrian McQuillan DUP 5:00 pm, 12th January 2009

I declare an interest as a member of Coleraine Borough Council.

I believe that the Minister had a meeting with NILGA recently to discuss the difficulties councils may have in setting an appropriate rate for 2009-2010, so I congratulate him on taking a proactive approach to the current problem.

I am well aware of the steps that Land and Property Services has taken in engaging with local councils to update and inform them of the current state of play, so that councils can make a fully-informed and well-judged decision when striking their local rate. The bilateral meetings between Land and Property Services and each council has, using the key assumptions, been of value to the councils when trying to estimate their potential needs for 2008-09 and 2009-2010. A useful step will be the inclusion by Land and Property Services in 2009-2010 of quarterly outturns and discussions with councils, so that councils will be able to identify in advance any need to alter spending plans. It will also help to keep the rates bill for every property owner as low as possible.

However, we must not overlook the real financial difficulties that some councils will face as a result of the closure of Ministry of Defence sites. Although I appreciate fully that the Minister has to live within his own budgets, and that his scope to assist councils is severely limited, I ask him to do whatever he can for those councils affected by MOD site closures and the BT situation.

I support the Minister in his efforts to deal with the issue in this most difficult financial climate. I am sure, too, that he will do all that he can on a practical and cost-effective basis to aid councils. I support the motion as amended.

Photo of Jim Shannon Jim Shannon DUP

I support the motion and the amendment. I declare an interest as a member of Ards Borough Council.

The issue is complex and one of which I am well aware, having been a member of Ards Borough Council for almost 24 years. The issue affects every member of each council area in the Province. The calculation of the penny product is difficult and is undertaken by Land and Property Services — I do not envy it its task.

There is much to be taken on board and considered, and the nature of estimation is such that there must always be some form of guesswork — although it is educated guesswork. I am also aware that the Minister and his Department are examining the process and are attempting to find a way forward that is helpful to all council areas in this difficult financial time.

Although, of late, the estimation in Ards has not been as far out as estimations have been in other council areas, such as the Belfast City Council area, we in Ards are not without a certain amount of fear for the future. Indeed, when I contacted the director of contract services for my council, he expressed several concerns, which I would like to reiterate. The main issue causing a negative impact as regards the penny product and advice to councils on striking the rate for 2009-2010 is the huge increase in the losses figure, which, in turn, dictates the percentage of rateable income. The losses for Ards Borough Council have increased greatly from £1·137 million to £1·342 million in 2008-09, to £2·259 million in this present year. As those figures clearly indicate, the projected losses are being increased by some 68% over the 2008-09 figures. If other Members have made those points already, I apologise for repeating them.

Deferring some of the costs from council to central Government would go some way to addressing the huge loss of funds resulting from a reduced estimated penny product. A forum has been sent up, which represents the Society of Local Authority Chief Executives (SOLACE) and the finance offices, and it is working very closely with LPS to address some of the issues. I understand that the Minister, in his response, will give some indication of where we are headed on this matter, and I hope that the news will be good.

In the interim, we all face the huge problem of the extra losses that we will have in the short term. As aware of those issues as I am, I have every confidence that our Finance Minister and his Department are equally aware of the issues, and I understand from discussions with the Minister that that is the case. They are working towards a solution that will mean as little added burden on the ratepayer as is possible in this time of financial strain and hardship. For some of my constituents, even paying £100 more this year will be a strain, particularly given the job losses and the reduction in working hours that they have experienced.

The Finance Minister has shown a keen mind for improvement in his previous ministerial position as Minister of Enterprise, Trade and Investment. We again look to him to improve on the system that he has inherited and to produce something that will work better for the councils and, subsequently, for the people of this Province. It is my belief that there will be the possibility for more accuracy once the Minister takes the situation in hand. He has already met NILGA and other bodies to show his commitment to getting it right within his Department. While he is in the process of doing that, it is my desire that councils be given a little help to offset the rise in costs. Take Ards Borough Council as an example; a 68% rise is a tremendous loss to offset. Indeed, it is quite crippling. The council will clearly need all the help that it can get from the Minister and his Department, and the constituents whom I represent wish to see assistance given.

I know that Ards Borough Council is not alone in carrying a large financial burden when it comes to the calculation and the variation of the penny product. I support the motion and the amendment, and I call for a review, which I know that the Minister is considering anyway. I have every faith in his ability to work through the problem and find a solution that we in the Assembly and in Ards are looking for. Like most other councils, Ards Borough Council is desperately seeking help. I look to the Minister — without the Santa Claus uniform — to give us some help on this occasion.

Photo of George Robinson George Robinson DUP

I declare an interest as a member of Limavady Borough Council, one of the councils about which the press saw fit to speculate recently. I could not help but notice that the proposers of the motion are members of the same party as some councillors in Limavady who could not wait to see the British Army vacate Shackleton barracks. They are now crying false tears as they recognise the real cost to the ratepayers of Limavady borough and some other council areas. This is the real world, and actions have consequences. Indeed, some members of that same party would like to see the closure of Magilligan Prison, which is, as I understand it, another significant ratepayer to Limavady Borough Council.

I know that the Minister is aware of the situation in Limavady in particular, and our very real need to have some assistance to see us through to the RPA changes in 2011, when things will change on a large scale.

I appreciate the Minister’s efforts in regard to empty properties and the collection of rates arrears, and I acknowledge both the hard work of the LPS and all its achievements to date. I recognise that Limavady is not the only council area that has been affected by MOD closures and BT rebates — the economic downturn means that all council areas will take a blow.

I appreciate that the Minister is limited in the ways in which he can assist the affected councils and that like every other Minister, he has a budget within which to operate. I am not asking him to throw money away without considering carefully the value-for-money criteria that is expected of every Minister. If the Minister could find a cost-effective way to assist councils in these unusual financial times, it would be much appreciated by the councils, but it would be appreciated especially by each ratepayer, who will benefit from any help that he can give. I support the motion.

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 Members who tabled the motion, which has provided an opportunity to debate the importance of rates revenue to district councils’ provision of services. For many years, the rating system has provided the funds and relative stability that allow councils to plan and deliver services to their ratepayers.

The current economic outlook and the abnormal combination of several factors, some of which were highlighted in the debate, have had an impact on the revenue levels that councils can expect to receive from district rates. As Members know, councils are not alone in facing a difficult and challenging future: financial pressures, which have been compounded by the downturn in the economy, affect the Executive’s and the Assembly’s plans, as well as those of households and people in business. Difficult choices must be made in order to ensure that the resources that are available are used to deliver and improve the key services that most benefit the community.

The debate has been useful, and I welcome Members’ suggestions as to how to assist councils and ensure that the rating burden continues to be equitable. The motion urges me to take several actions to help councils through these difficult times. Every Member who spoke declared an interest as a member of a district council, apart from one Member, who declared 24 years of experience in local government. I, too, declare my membership of Belfast City Council.

Aside from what I can do to help councils, I do not doubt that councillors will be doing what they can to help their councils and their ratepayers through these difficult times. That is an important point. Reference has been made to the positive impact that freezing the domestic regional rate for three years has had. Together with other changes, that has led to a situation where, over the three-year Budget period, households in Northern Ireland are £1,000 better off than they would have been under direct rule. Allied to that, we are freezing the business rate next year in real terms and introducing a small-business rates relief scheme. Those are positive developments and proposals to help people in difficult times.

Therefore, I reject Dr Farry’s suggestion that the regional rate has been kept artificially low and should be increased. People will remember that under direct rule, when district councils were keeping their rates increases at a sensible level, there were sometimes regional rates increases of between 15% and 20%. Therefore, the action now is a sensible and proportionate response to the difficult times that we are in. Householders and businesses are grateful for the increased assistance to help them cope in difficult economic circumstances.

As we have demonstrated, actions, rather than words, matter. Indeed, action, not words, will improve the position of councils. As was mentioned, I had a very useful meeting with the Northern Ireland Local Government Association just before Christmas, and we discussed many of the issues that Members raised during the debate.

During the meeting, we talked about the unrecoverable debt issue, the increase in cost of collection, vacancy control issues, the possibility of more co-operation and partnership between local government and Land and Property Services, the increase in the landlords allowance from 10% to 15% for the Northern Ireland Housing Executive, the contribution of 3% towards housing benefit costs — which is a cost and collection for councils — transitional relief and the cap on valuations. All those issues and others were discussed, and it was a very useful meeting. As a result of that meeting, I promised not only to reflect carefully on what was said, but to make an announcement as soon as possible in the new year about what we can do to help, and I hope to make a statement shortly on that issue.

I also listened carefully to the concerns expressed by the association — and as been stated by Members today — about the performance of Land and Property Services. Some Members highlighted some of the issues, and many made the quite proper point that many of the issues have been inherited and are historical. They reflect the fact that the new, combined Land and Property Services was asked to take on an enormous amount of change to the rating system all at once. As a result, matters that should have been given attention did not get it. However, that issue is being addressed, and I am determined that issues such as rates arrears and the inspection of vacant properties should be given high priority, so that from here on in those issues do not become a matter of criticism, and they should not be neglected.

Land and Property Services is tasked with ensuring that the valuation lists upon which rates are levied are maintained to reflect new developments and alterations to, or the demolition of, existing properties. District councils have a statutory duty to assist LPS to support the maintenance of the valuation lists by providing any relevant information that they obtain. To determine the appropriate liability for rates, LPS must also establish who occupies or owns property. That is an important point to make about vacancies.

Out of 60,000 vacant properties, 47,000 have been inspected. In many of those cases where it can be established who is responsible for paying the rates and who owns the properties, the bills can be sent out immediately. However, there are many occasions when that is not possible. The property can be identified as being occupied, but it is not as easy to identify who is responsible for paying the rates. Sometimes that leads to the delay in getting vacant properties that are currently occupied onto the valuation list. However, progress is being made, and I commend the close working partnership that has developed between virtually every council in Northern Ireland and LPS.

I take the point that councils have been to the fore in the matter, but LPS has also played its part in developing arrangements that will lead to more efficient and effective processing of inspections of vacant properties and getting properties onto the valuation list, where they should be. That work needs to continue, and I am determined that the co-operation and partnership between LPS and local government should continue, and that the greatest possible co-operation, and working together, transparency and openness between local government on the one hand and LPS on the other should be maintained.

Some Members raised specific issues, which I want to try to address in the short time remaining to me. Some Members mentioned BT, and Ministry of Defence rates liability, and I listened carefully to the concerns that were expressed about those issues, in my meeting with NILGA and here today. Those bodies are entitled, as is any other ratepayer, to challenge their valuations. What happened is that they challenged, on appeal, what they pay in rates, which they are entitled to do just as is an individual ratepayer.

Of course, it must be remembered that a reduction in district-council income also means a reduction in income on the regional rate. Therefore, the Executive and the Assembly will also suffer as a result of those revaluations. Just as there is less income for district councils, as well as a payback to BT and the MOD — going back 10 years in the case of BT and five years in the case of the MOD — so there is a reduction in income for the Executive, as well as the money that we must pay back to BT and the MOD. This is not only a hit on district councils but a hit on the Executive. However, I accept that the effect on local councils is greater, because a far greater proportion of their income is dependent on rates compared with that of the Executive. It is important to put that on the record. I await advice from my officials on what can be done quickly, and within existing powers, to cushion the impact on councils. I will consider that issue further and make an announcement shortly.

Some Members raised the issue of collection costs. In proposing the motion, Paul Maskey mentioned that issue, as well as the increases in those costs. Other Members mentioned the need for the changes that have been introduced to do away with the obsolete IT system. Not all the increases were passed on as quickly as they should have been in previous years, but we are now passing on those increases. However, I have listened carefully to what Members have said today. I have also listened to representations that were made, particularly about issues that were raised in the Public Accounts Committee’s report, and I will consider all those issues further.

Several Members raised the issue of write-offs. The forecasted write-off for rating debt in 2008-09 is £5 million, but the forecast for 2009-2010 has risen to £10 million. The economic outlook means that it is assumed that, because people will find it harder to pay bills, as well as an increasing number of liquidations and bankruptcies, the amount of debt that will be written off will increase. That is a fact of life that we must take into account.

It might be easier to say that we will not increase the level of write-off, but what would be the consequence of that? The increased write-off forecast has been made in order to provide a prudent estimate of the income that councils might expect to recover, therefore avoiding a clawback situation. We must be as transparent as early as possible about the likely effect, rather than wait until later to tell councils that the debt write-off will be £10 million instead of £5 million and that we will claw it back from them. No one would be praised for taking that approach either. We must be realistic — if it becomes more difficult to recover debt, we must recognise that fact. That issue has been raised with me, and, again, I will consider it further.

I am also considering the issue of increased collection costs. Mr Farry and others mentioned the issue of the reduced cap and transitional relief. In reducing the cap from £500,000 to £400,000, I indicated that transitional relief would be made available to councils. That measure was widely welcomed, and it will have a major impact on Belfast City Council, North Down Borough Council and other affected councils. Mr Farry tempts me to go further, but the £500,000 cap was introduced under direct rule. Again, that shows the benefits of devolution over direct rule. If we had had devolution when the cap was introduced, transitional relief might have been available.

I have already dealt with the issue of vacant properties. The amount billed so far for inspections that have taken place is some £5·6 million overall, for both regional and district rates. Members talked about vacancies, but it should be remembered that, although £1 billion is brought in by way of regional and district rates, we are talking about a figure in the region of £5 million, or perhaps a bit more. It is important that vacant properties be inspected and, where rates are liable, that that money be collected.

It must be borne in mind that, as an overall proportion of the total rates income, that amount of money is relatively small. Nevertheless, that money must be brought in. I believe that we have made significant progress on vacant properties. However, from now on, more must be done to address the issue. It is also important that councils examine not only domestic vacant properties, but non-domestic vacant properties, because, at present, rate income for non-domestic vacant properties is not being brought in.

In previous years, we have examined the reasons why vacancies were not inspected as they should have been. Inspections were never stopped, and we understand the reasons why they were historically not carried out in the way in which they should have been. However, I am determined that such accusations will never again be levelled. We must ensure that all vacant properties are inspected and that everybody who should be paying rates is paying rates.

Let me be clear: rates arrears do not impact on councils’ revenue streams until such times as they are written off. Some spurious comments have appeared in the press about that matter.

On the issue of non-domestic empty property rates —

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

I will finish on this point. Mr O’Loan made a point about non-domestic empty properties. He will be aware that the Northern Ireland Executive decided to rate such properties at only 50%, and, even then, vacant factories were not included, whereas, in England, all non-domestic empty properties are rated at 100%. Therefore, we are significantly better off than our counterparts elsewhere in the United Kingdom. Again, I will monitor the impact of that policy.

Photo of Naomi Long Naomi Long Alliance

First, I also declare an interest as a member of Belfast City Council, because I do not want to break the cycle of council members declaring an interest when speaking in this debate. I thank Paul Maskey and his colleagues for tabling the motion and for accepting the Alliance Party’s amendment. Despite the discomfort that our amendment obviously cost Paul Maskey, he conceded that it had added something to the debate, so I thank him for that. I also thank the Minister for his comprehensive response. Given the time constraints, I do not intend to summarise the issues that every Member raised. However, I wish to explore certain themes that arose during the debate.

All ratepayers — whether business or residential — live in a difficult financial climate. However, that climate also affects the councils themselves. At a time when most of us wish to cushion the public from the effects of increased bills, local councils face huge problems, such as the pressures of rising costs and overheads or issues around waste management.

Although those matters are predictable to an extent and can be budgeted for, unpredictability has increased in recent years over the estimated penny product for rates. Not least of all, that unpredictability has affected the issue of vacant properties, a point that several Members stressed.

The clawback from previous years — particularly last year where the outturn was much lower than predicted — together with its compounding effect and the expectation that money would be forthcoming, as opposed to clawed back, has made the situation worse. There are issues with the additional costs of collection, and the way in which that is being managed, particularly the changes in write off. I think that everyone accepts that it is necessary to change in way in which debt is written off. However, the timing of that and the way in which it is profiled is critical in the current context.

Photo of Roy Beggs Roy Beggs UUP

The Member for Strangford Simon Hamilton stated earlier in the debate that the failures were not the responsibility of the Department or Land and Property Services. Therefore, whose responsibility are they? Does the Member agree that some body must be responsible for those failures, whether it is the Department, the agency or its predecessor?

Photo of Naomi Long Naomi Long Alliance

I thank the Member for his intervention. It is true to say that the problems with LPS were largely inherited. However, it is also fair to say that, since devolution, there has been no real improvement in the way in which that body has functioned. In fact, many people would contend that the situation has actually worsened. The Minister conceded that the main improvement was council driven, and that is not necessarily the way that one would expect improvement to be driven.

Transitional relief, to which the Alliance amendment referred, will significantly improve the situation. Paul Maskey, Stephen Farry, Declan O’Loan and Simon Hamilton spoke about council income. However, at a time such as this, that income is likely to decrease. Discretionary expenditure by householders is also likely to decrease, which will affect council income. The downturn in construction will also affect, for example, income from building control. All of those factors compound the difficulties faced by local councils.

Roy Beggs, rightly, raised the issue of the potential for increased bad debt in the current financial situation, as people find themselves unable to pay their rates.

Although the Minister has rightly said that that will not immediately affect the councils, it will have an impact down the line.

Simon Hamilton, Stephen Farry, Declan O’Loan, and Peter Weir mentioned the importance of having good and robust modelling of the estimated penny product. Mitchel McLaughlin went further by questioning whether one was needed at all. Robust financial planning is good for local councils, many of whom have been taking it to the extreme when trying to manage their own finances more efficiently, but, every year, they have been confounded by that problem. The timeliness of the information is critical. Even if there is variation in the information, it is important to have it in good time so that plans can be made.

In different ways, Simon Hamilton and Stephen Farry stressed the need for the avoidance of a boom-and-bust cycle in rates, fluctuating between almost no increase and huge double-figure increases. Members are looking for, and stressing to the Minister, the need for predictability over what people can expect from an increase in their rates so that households, businesses and individuals can budget much better.

The Minister correctly said that it was important that councils take action to bring their expenditure under control. I fully concur with that. The Minister will know that an efficiency saving programme has been in place at Belfast City Council, where he and I sit. He will be aware of the efficiency saving programmes of many other councils. However, those do not alleviate the current difficulties, and that is why our amendment asks the Minister to intervene. I look forward to the statements that he said that he will make in the future.

The Minister said that he will consider what he could do within his current powers. I ask him to consider Stephen Farry’s suggestion that additional powers may be needed to deal with transitional relief. If the Minister is willing to tell councils that he will do that, they can factor that in, even if legislative change is needed.

Photo of Jennifer McCann Jennifer McCann Sinn Féin 5:30 pm, 12th January 2009

Go raibh maith agat. I am not a councillor, although I was one for a short time. I ask Members to bear that in mind.

Most Members who spoke highlighted a number of financial pressures across all councils and how those affect everyone, including households. The inaccuracies with the estimation of the penny product and the lateness of that estimation have compounded those pressures. Although the debate was on a specific issue, most Members will agree that they do not want council services to be affected by those pressures.

I thank my colleagues Paul Maskey and Mitchel McLaughlin for tabling the motion. In his opening remarks, Mr Maskey outlined the importance of the motion and explained why councils are facing huge financial problems. Along with other Members, he mentioned some of the problems of Belfast City Council, of which he is a member, but I will not dwell on individual councils.

He said that the Department of Finance and Personnel does not provide the necessary information to councils, and he quoted the report of the Public Accounts Committee on the matter. The report stated that the Committee was extremely concerned that the Department of Finance and Personnel was not providing the councils with accurate information and that, therefore, it was difficult for councils to undertake any forward planning of their spend. Recommendation 20 of the report said that that information is essential. He also urged the Minister to meet council officials, and I know that the Minister said that he had already initiated consultations with several organisations.

Moving the amendment, Stephen Farry pointed out that the regional rate provides only a small income for councils and that, when households get the bills through their door, people do not make a real distinction between the different rates bills. Given the economic climate, we all must be aware of how those higher rates will affect people.

He also outlined some of the difficulties that his own council is facing: that no account is being taken of the reduction in the cap, and that the cost of that reduction is to be borne by councils over a one-year period yet it will affect their budget over two years. He called for transitional relief for councils, as did most Members.

Simon Hamilton said that Land and Property Services had inherited the problems it currently faces and that work to sort out the problems is ongoing.

Roy Beggs said that there was no reason for the inaccuracies given the detailed database and expertise possessed by the Department and by Land and Property Services. He, and other Members, pointed out that the failure to inspect vacant properties has added to the problem. Land and Property Services had calculated the penny product without inspecting properties, and that has compounded the problem.

Declan O’Loan said that Land and Property Services collects £1 billion per annum and that estimation of the penny product is crucial to future planning.

Peter Weir talked about the freezing of the regional rate. He said that the vast majority of councils have acted responsibly, in ratepayers’ interests, to try to keep down the size of rates bills.

My colleague Mitchel McLaughlin asked whether we need the estimated penny product. He called on the Minister to review the whole process and stressed that the accuracy of the register directly affects the accuracy of the estimate. He is the only Member who called on the Minister to review the process and try to find a better way of doing it. That will take co-operation between council officials and Land and Property Services.

Adrian McQuillan and George Robinson both spoke about the closure of MOD sites and how that affected rates. Jim Shannon said that a forum had been set up and that, given the economic climate, an added burden on ratepayers should be avoided at all costs. People are losing their jobs and ratepayers cannot afford to pay more than they are paying now.

The Minister said that councils are not alone in facing difficulties. The Executive, as well as the ordinary household, are facing financial difficulties. He stressed the positive impact that freezing the regional rate, and freezing the business rate next year, will have. He spoke about small business rates relief and how that will have a positive effect on business. He said that he has already consulted with a number of organisations about that. He referred to transitional relief and said he would be making a statement shortly on how the Department can help in all those issues.

With respect to vacant properties, the Minister admitted that there was a delay in identifying who was responsible for them. He referred not only to vacant domestic properties but to all vacant properties.

That was the gist of what was said by most Members. However, there has been a big change over the last year in some rates bills, and many people are now in arrears. I am sure that other Members are also finding that that is the case. Rates are now being assessed on the value of property and, for many people, that means a high rates bill. Land and Property Services is currently sending out letters to people who are already in debt. It must be sensitive about how that is done: the letter states that if the bill is not paid by a certain date, court action will follow.

I know that many of my constituents are finding it quite difficult to get by in the current economic climate. Therefore, it can be quite shocking for some people, particularly some elderly people, to receive such letters.

We must be sensitive both with the collection of rates arrears and about the economic climate. People are losing their jobs, and although we know that rates need to be collected and that they are in place for services provided, their collection must be carried out in a way that is fair and sensitive to people’s current economic situation. Go raibh maith agat.

Question, That the amendment be made, put and agreed to.

Main Question, as amended, put and agreed to.


That this Assembly calls on the Minister of Finance and Personnel to address the financial difficulties being experienced by District Councils in the calculation of the Penny Product, by initiating a process of consultation involving Councils and Land and Property Services, for the purpose of producing an accurate register of rateable properties; and to consider urgently measures to provide transitional relief to those Councils that are carrying forward a significant loss from the 2007-2008 financial year due to differences between the estimated Penny Product used to calculate the level of district rates and subsequent finalisation figures provided by Land and Property Services.

Adjourned at 5.41 pm.