Rates (Regional Rates) Order (Northern Ireland) 2016

Executive Committee Business – in the Northern Ireland Assembly at 11:00 pm on 22nd February 2016.

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Photo of Mervyn Storey Mervyn Storey DUP 11:00 pm, 22nd February 2016

I beg to move

That the Rates (Regional Rates) Order (Northern Ireland) 2016 be affirmed.

As Members will be aware, this order, which is brought forward annually, stems from the Executive’s Budget, which was agreed on 26 January. The regional rate helps to supplement Northern Ireland’s share of national taxation allocated through the Barnett formula for public expenditure. As members will know, it provides a supplement to our share of national taxation through Barnett of between 5% and 6%, helping to fund departmental expenditure on hospitals, roads, schools and other essential public services and investment. The rating system provides significant revenue for Northern Ireland, with well over £1 billion now collected in rates — regional and district, domestic and non-domestic. Taken together, the domestic and commercial regional rate is forecast, as part of the Budget, to raise in the region of £678 million in the forthcoming financial year.

In terms of the specific breakdown of rates bills, the regional rate represents just over half of the typical bill, the other half being made up of the district rates, which were set independently by the new local councils. The district rates this year range from a 0·49% cut to a 2·98% increase. Household bills remain the lowest, by some considerable margin, in the UK. The economic outlook is continuing to improve. However, many challenges lie ahead, as we are all too aware from last week’s disheartening news about Bombardier. Such news only stiffens the resolve of my Executive colleagues to do whatever we can to make sure that the conditions for economic recovery and growth are in place in Northern Ireland.

The real-terms freeze in the regional rate is adjusted at the time of the Executive’s Budget for the effect of inflation, in line with the long-established measure used. This is the Treasury gross domestic product (GDP) deflator, as used more widely within the 2016-17 Budget. The legislation before you this evening for approval is simply the mathematical outworking of that important Budget decision. It will fix two regional rates in the pound for 2016-17, one for households and the other for business ratepayers.

The new rates in the pound represent a small increase of 1·7% in the regional rate for the 2016-17 rating year both for households and businesses. This continues the inflation-capping practice adopted each year by this Assembly since 2007. A few of the Members may remember the whopping 19% increase in the domestic regional rate imposed by direct rule Ministers in their last year in office. We continue to do this in very difficult times for our public finances.

Keeping the lid on rate increases is something else that we can be proud of, but it is not something that is appreciated by everyone. Indeed, inflation capping comes on top of other mitigating measures adopted by this Executive to protect businesses and households. This includes two multi-million-pound shortfalls that we are absorbing. The first of these is the £30 million that the Executive set aside last year to fully fund the district rates convergence scheme to help the many ratepayers who otherwise would have been badly affected by local government reorganisation. The second is the cost of the housing benefit rates, or the rate rebate, which is now funded out of our departmental expenditure limit (DEL), but with a 10% cut. That carries a price tag of £11 million this year, and rising next year.

Finally, it is worth noting that the Executive delivered on their promise last year to make the revaluation a genuinely revenue-neutral exercise for this Assembly by actually reducing the non-domestic regional rate by a couple of pence, which was not reciprocated by local government when the various district rates were struck last year. All of this carries a real cost. Every pound forgone in rates is a pound less for public expenditure, but it is the right approach in my view.

This order — alongside the extension of the small business rate relief (SBRR), industrial derating, the empty shops rates concession, the retention of relief for rural ATMs, all brought forward this year by my Department and the Executive through the Budget, as well as the continuation of the district rates convergence scheme — represents the best that we can do to balance the interests of ratepayers and the demands of public expenditure.

Allow me to move on, then, in more technical terms, to what is covered in the order. Its main purpose is to give effect to the decisions already made during the Budget 2016-17. Article 1 sets out the title of the order and gives the operational date as the day after it is affirmed by the Assembly. Article 2 provides that the order will apply for the 2016-17 rating year through to 31 March 2017. Article 3 specifies 32·40 pence in the pound as the commercial regional poundage, and 0·4111 pence in the pound as the domestic regional rate poundage. That represents a clear and technical outworking of the difficult decisions made by the Executive as part of the Budget agreement.

I look forward to hearing the comments that Members make in relation to the order, and I commend it to the Assembly.

Photo of Daithí McKay Daithí McKay Sinn Féin

Go raibh maith agat, a Cheann Comhairle.

The Committee is aware that the Rates (Regional Rates) Order represents the technical outworking of the Budget process and is a key element of the annual financial planning cycle. The level of the regional rate rise therefore reflects the final uplift that was agreed as part of the Executive's Budget.

The policy proposals contained in the statutory rule (SR) were considered by the Committee, and we had no issues in respect of them. The Committee formally considered the SR before the Assembly this evening at its meeting on 10 February, along with the accompanying report from the Examiner of Statutory Rules, who had no points to raise in his technical scrutiny of it. As the Minister said with regard to rates, they can be very challenging at both council and central level. The Executive have done well to ensure that a cap has remained on the rates in recent years; that is a challenge that has been met.

The Minister is right. People and businesses out there perhaps do not know the detail of it, but I hope that the new Executive can continue to ensure that that burden is not put on our businesses or householders. I suppose there is also a challenge to local government. We all have to be very prudent with the taxpayers' money. We need to continue to follow through in that vein in the Executive and Assembly, but it is always a balancing act. We need to balance that with the delivery of public services. It is a challenge that the Executive have met until now, and I hope that they continue to be up to it.

To summarise, the Committee agreed to recommend that the order be affirmed by the Assembly. I therefore support the motion.

Photo of Mervyn Storey Mervyn Storey DUP

I thank the Chair and Committee again for the work that they have done on this issue and on the items that we have brought to the Floor of the Assembly this evening.

As I have already stated, the Rates (Regional Rates) Order (Northern Ireland) 2016 gives effect to decisions made as part of the 2016-17 Budget. The Executive have aimed to strike a balance between meeting the needs of ratepayers, following the challenging economic times that we have been through, and ensuring that public finances are sufficient to cover the priorities that we have set ourselves. No one likes to have to pay more, but the minimal increase in the regional rates will be welcomed by households and businesses alike. It clearly demonstrates that all ratepayers have benefited from the decisions taken by the Executive.

I therefore commend the order to the Assembly and thank Members for their support.

Photo of Mitchel McLaughlin Mitchel McLaughlin Speaker

Before we proceed to the Question, I remind Members that the motion requires cross-community support.

Question put and agreed to. Resolved (with cross-community support):

That the Rates (Regional Rates) Order (Northern Ireland) 2016 be affirmed.

Adjourned at 11.14 pm.