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District Rate Increases

Finance and Personnel – in the Northern Ireland Assembly at 3:45 pm on 26th January 2009.

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Photo of Stephen Farry Stephen Farry Alliance 3:45 pm, 26th January 2009

6. asked the Minister of Finance and Personnel to report on what assistance is being given to district councils to deal with the anticipated significant increases in the district rate in some areas due to factors beyond their control.            (AQO 1905/09)

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 pleased to say that I have already announced a package of assistance for councils, as the Member well knows from his very positive reaction to it last week. That package is worth up to £8 million in the next financial year. It comprises three key elements, including allowing councils that are in a general repayment situation to offset the amount through staging the British Telecom and Ministry of Defence reductions over five years. That will result in a benefit of £3·3 million next year.

(Mr Deputy Speaker [Mr McClarty] in the Chair)

I will also change the way in which councils’ net revenues are calculated, providing a benefit of up to £4 million next year. Finally, there will be a one-off reduction in the cost of collection to ensure that some of the additional costs that are associated with the development of new IT systems are not passed on to councils. That will provide a one-off benefit of £600,000 to councils. I believe that that is a proportionate and affordable response that will allow assistance to be provided quickly in order to cushion the impact of a combination of factors that affect councils at this difficult time.

Photo of Stephen Farry Stephen Farry Alliance

The question has, obviously, been somewhat overtaken by events, but I thank the Minister for his answer. Before asking a supplementary question, I declare an interest as a member of North Down Borough Council. Does the Minister recognise that the introduction of the £500,000 cap is still a live financial issue for councils such as my own? Given that councils were asked to fund the lost revenue through finalisation figures that were presented to them only in June 2008, they have to fund the cap twice in the same financial year, and that pressure needs to be ironed out.

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

I hear what the Member has said, and he has raised that issue on a number of occasions because, I know, it particularly affects his own council, as he indicated. However, it should be remembered, as I, too, have indicated, that the £500,000 cap was introduced under direct rule — not under devolution. We reduced that cap from £500,000 to £400,000 to ensure that no ratepayers in Northern Ireland were paying above the average highest council tax band-payer in the rest of the United Kingdom.

From April, a reduction in transitional relief of about £1·5 million will be provided to councils over two years. That relief will have a beneficial impact in helping councils such as the Member’s own. The £500,000 cap was introduced under direct rule two years ago. Given the steps that we have taken, and the transitional relief that we have brought in as a result of our measures, it is not appropriate to go back any further.

Photo of Roy Beggs Roy Beggs UUP

I declare an interest as a member of Carrickfergus Borough Council. Rates collection is one of the issues that is beyond the control of councils. For a time, the Rates Collection Agency — and Land and Property Services that took over from it — failed to monitor vacant property properly in order to determine who should be paying rates. Will the Minister assure the House that the penny products of councils that studiously monitored vacant property and reported that information to the Department will be updated accordingly, so that a fair rates burden will be shared by all? Furthermore, what changes is the Minister making to the system to ensure that a similar fiasco is not repeated?

Photo of Nigel Dodds Nigel Dodds Shadow Spokesperson (Business, Enterprise and Regulatory Reform), Without portfolio, Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Without Portfolio) 4:00 pm, 26th January 2009

I am grateful to the Member for raising that subject, which has been discussed in the Assembly and in the Committee. The Member will be aware that I have prioritised the collection of rates and the monitoring of vacant properties, and he will understand from previous discussions some of the reasons for delays, which relate to the legacy that we inherited and to the introduction of a large number of reforms at one time. The matter is being addressed, and I have allocated extra funds to Land and Property Services (LPS) to ensure that more attention is paid to collecting arrears. Furthermore, a considerable amount of good-partnership work on inspecting vacant properties is under way between councils and LPS, and I want that work to continue.

My Department will do everything in its power to ensure that any benefits arising from those measures appear as quickly as possible on bills, which will be issued without undue delay so that councils — and, given that the rates are regional, LPS — have the maximum income.