Rating Policy

Ministerial Statements – in the Northern Ireland Assembly at 11:15 am on 22nd November 2016.

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Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin 11:15 am, 22nd November 2016

Thank you for giving me the opportunity, a Cheann Comhairle, to make a statement on a rates rethink, spurring economic growth. Inniu, tá pacáiste beart á mholadh agam a bhfuil sé mar aidhm aige nuachóiriú a dhéanamh ar eilimintí intíre agus ar eilimintí tráchtála an chóras rátála, d’fhonn spreagadh a dhéanamh ar an ngeilleagar mar bhunús ar shochaí roinnte agus rathúil. Is iad seo mo mholtaí mar Aire Airgeadais agus tá mé ag súil le dul i gcomhairle fúthu leis an Choiste Airgeadais, le mo chomhghleacaithe san Fheidhmeannas, agus leis an phobal i gcoitinne.

Today, I propose a groundbreaking package of measures aimed at modernising the domestic and commercial elements of the rating system in order to stimulate the economy as the foundation of a shared and prosperous society. These are my proposals as Finance Minister, and I look forward to consulting on them with the Finance Committee, of course, with my colleagues on the Executive and with the wider public. Taken together, the measures constitute the biggest shake-up in rating policy in a generation and signal my commitment to a tax system that is fair and supports prosperity.

Rates are a vital source of public revenue. Money raised through rates funds our schools, our hospitals and other essential services. My aim in setting out these proposals therefore is ultimately to arrive at a refreshed, fit-for-purpose rating system in which citizens and commercial ratepayers contribute according to their ability to funding the building of a modern, inclusive and exemplary society. I also intend to ensure that rates act more as an economic spur. The rates system should encourage regeneration, investment and entrepreneurship and at the same time discourage dereliction and decline.

I will begin with the non-domestic rates proposals. I want to replace the existing small business rate relief scheme with a £22 million investment in small retail and hospitality businesses. That move aligns with the findings of the Ulster University Economic Policy Centre's evaluation, which recommended a more targeted approach. In 2010, the small business rate relief (SBRR) scheme was introduced to provide small businesses with temporary respite from the recession. The Ulster University evaluation found that the scheme had served its limited purpose, helping with cash flow at a particularly difficult time.

It also found that the scheme contributed little to economic growth and the £18m that it cost would not provide value for money in the long term. It therefore recommended replacing the SBRR with a more targeted initiative.

I want to target support under the new scheme at the sectors that are key to the survival of our town and city centres. The statistics show that town centre retail spending is down 10% since the beginning of the century. I would like this new initiative to be easily accessible to small businesses, subject to some simple tests around business investment in the form of, for example, new equipment, skills training or the employment of additional staff. In the time ahead, I would also like to enable companies to access this rates relief by accrediting with the Living Wage Foundation.

I also wish to bring forward a business empowerment zone pilot targeted at small-scale regeneration areas and developed in tandem with other Departments and initiatives. I propose to start in Belfast with two pilots, on the Falls and Newtownards Roads, both areas in need of a greater peace dividend. The west Belfast zone, with special rates relief to encourage business and investment, is likely to stretch from Castle Street through the Gaeltacht Quarter to the bottom of the Whiterock Road. The east Belfast zone is likely to stretch from the bottom of the Newtownards Road through the area now the focus for the EastSide Arts renaissance — CS Lewis Square opens tonight, Mr Speaker — to the Holywood Arches. Those will be confirmed in due course. Having had the pleasure of working extensively in both areas, I know that the will is there to transform those key arterial roads and that a small investment now can reap dividends for years to come.

Another way of revitalising town centres is to make them vibrant living spaces. Therefore, I would also like to take forward a new scheme to incentivise conversion from commercial to residential occupation, by providing a rates incentive for the first occupiers of newly converted premises in our town and city centres. A scheme to encourage people to live in those areas will help to stimulate the night-time economy and assist with issues around footfall that were raised during the consultation.

Another issue concerns the treatment of charity shops. This is a matter where we are striving to get the balance right. Charity shops help to bring people into our high streets or small towns, in particular when times are tough, so we need to make sure that we do not upset the healthy retail mix that exists in many areas. I am all in favour of continuing to single out charity shops on the high street for favourable treatment, but there is a case for limiting their growth. We cannot have our high streets just made up of charity shops. In England, Scotland and Wales, most are charged 20% rates, and local authorities in the South can charge charity shops on the high street. If, for example, we reduced support for charity shops on the high street from 100 per cent to 90 per cent — they pay one tenth of their rates bill — that would represent only a small revenue gain for the Executive. However, it would move us towards the balance principle that everyone on the high street should start to pay something. That was the strong view reflected in the small business rate relief evaluation. I agree with that direction of travel, with the caveat that I would like any future income from charity shops on the high street to go towards supporting entrepreneurship in the social enterprise sector. I look forward to consulting further on the issue.

I would like to address the issue of empty property. Currently, an empty property pays zero rates for three months and 50% thereafter. I want to increase the empty property rate from 50% to 75% of the occupied rate. That remains substantially below what is charged in Scotland, for example, where owners are charged 90% on empty properties, and recognises that our local property market is less buoyant than there. I would also like to remove the initial exemption period of three months. I do not think it necessary, it does not apply to the domestic sector, and it leads to complications in administering it. It is my view that this will encourage the letting of empty properties and increase economic activity. It will, of course, provide additional revenue for the Executive, although, more importantly, it will act as a stimulus for landlords holding empty property to sell up or to offer lower rents and get properties occupied by businesses.

Aligned with that objective, I propose to introduce the rating of empty factories, a class of property that has never been subject to rates. As well as bringing in extra money — up to £2·2 million a year — into the Executive’s finances and the public purse, it will encourage owners to subdivide or let empty factories. It will also remove any doubt about what is a warehouse and what is a factory. Coupled with both changes, I will move forward with proposals for anti-avoidance measures, making landlords liable for rates when they let their premises out to charities on short-term agreements.

At a cost of £58 million, industrial derating is a very generous support to the manufacturing sector. However, manufacturing is a vital part of our economy, providing well-paid jobs often in locations where employment opportunities are lacking, and is highly export-orientated. Given that and the challenging economic circumstances faced, I intend to maintain industrial derating.

A measure that I would like to remove is the new mines seven-year exemption that has been in place since 1852. I see no good reason for retaining the new mines exemption.

I also wish to remove the university halls of residence exemption that was put in place by direct rule Ministers in 2007. This step has already been consulted on, and it will ensure consistency of treatment between those that are managed privately and those that are managed by universities. Indeed, all other students living away from home pay some rates, so this is only fair. Furthermore, I do not believe that it will inhibit the viability of new purpose-built halls of residence, given that student demand is outstripping supply, as the appearance of so many privately run halls testifies. If evidence emerges that university halls of residence need an additional incentive, I will be happy to return to the issue and look at it again.

We are moving towards a system that widens the tax base and shares the load. However, many businesses find themselves in serious hardship due to matters completely outside their control and beyond normal business risk. Victims of flooding are one example. I do not want to see those who find themselves in hardship in such circumstances being closed down because they simply cannot pay their rates bill. The legislative apparatus already exists for hardship relief, but few businesses benefit from it. I have therefore asked my officials to review the operation of the scheme to ensure that it provides help for more of those who are in need.

My intention to commence a new non-domestic revaluation exercise to take effect in 2019 is a clear response to the calls from the business sector. Coming only four years after the revaluation in 2015, it will make our non-domestic rating system more responsive to changes in the wider world, allow it to flex with economic conditions and help to avoid the shocks that occurred last time round. As before, the process will be revenue-neutral. The objective of the measure and, indeed, the whole package is about balancing the tax base, balancing the rates burden and balancing the books after a hard time for business and government finances. I would also like to reassure businesses by enshrining in law revaluations every four years. That happens in many advanced economies throughout the world.

As for the level of the regional rate that will be set as part of the Budget and in recognition of the new era for local government, I would like to give councils the choice of striking their own non-domestic district rate, thereby breaking the historic link that exists with the domestic district rate. Such a move could help councils to attract new businesses and retain old ones.

Fairness underpins much of what I am presenting today, and that extends to the domestic rating system. When the capital value system was being designed, it was designed on the basis that you paid in direct proportion to the value of your home. However, the application of the £400,000 cap means that those in houses with a higher value pay proportionately less than those in middle- or lower-value homes. To me, that is inherently unfair. Take Bill Gates's house — I know that many people would like to take the house of Bill Gates — he pays $1 million a year in property tax on his $100 million Washington state home. If he lived here, the rates on that home would be less than $5,000 a year.

Significant measures are already in place to safeguard elderly pensioners who are asset-rich but income-poor and remain in a high-value family home. We have a generous low-income rate relief scheme that was put in place before the cap came along. In a phased introduction, I wish to charge a regional rate levy of approximately 55% of the rates due on a property to the full value of a home in order to raise an additional £4 million in revenue.

The first thing that I would like to do with domestic rates is to reduce and then remove the early payment discount. I will reduce the allowance to 2% in the context of the Budget settlement and then consult on the proposal for the removal of the provision altogether. The £6 million that the measure costs the public purse cannot be justified in these difficult financial times.

As with the business rates system, I want the domestic rating system to incentivise good behaviour. I have asked my officials to consider reopening the low-carbon new homes scheme and refashioning it as an energy efficiency incentive by providing an extended domestic rates holiday for the first occupants of new houses that meet the required standard, thus also helping our construction sector. That will need more research into standards and value for money, but that work is under way.

Finally but not insignificantly, I want to advance proposals to significantly reduce the landlord allowance paid to all landlords in the public and private sectors. It was the subject of consultation, and I intend to reduce it to 5%.

Today, I have outlined the immediate challenges. Beyond those, research is well under way into developing a levy on derelict properties. With the help of the councils, we have identified 1,800 problem properties, and I have commissioned the Economic Policy Centre at UU to provide us with independent policy advice. I recognise that there is a range of reasons for derelict properties lying vacant, and we need to be sensitive to those so that we do not hinder orderly development activity. However, if the policy is well designed and discerning, it would help to encourage the regeneration of and investment in our urban areas, areas that have become blighted by properties that are simply lying idle. It could also serve to increase the supply of development land for housing.

All in all, the changes that I have put forward today — the package — are driven by a need to increase the fairness of the system by ensuring that those who can contribute do so and that the tax burden is broadly shouldered. They also involve a better and more strategic targeting of reliefs to support social and economic development. Taken together, the measures will lead to a revenue gain for the Executive and our councils. Current estimates are up to £16 million a year recurring for the Executive, which is money that will help to deliver the Executive’s Programme for Government for all our citizens. Councils stand to gain by up to £10 million a year, which will help them to deliver better outcomes in local services, as well as their new role in place shaping, building communities and economic development.

Last month, I was asked by other parties in the Chamber when I would make hard decisions on rating matters: I trust that you will all agree these are hard issues that I am tackling today. The decisions that I make, however, will not be made alone. I have further consultations to undertake with the general public and the Finance Committee, and I will require the agreement of the Executive and the Assembly when the required legislation needs to be passed.

Leagann an pacáiste misniúil moltaí atá á nochtadh agam inniu bunús láidir síos le forbairt a dhéanamh ar chóras nua-aimseartha rátaí atá cothrom, a dhéanann athbheochan ar lárionaid ár gcathracha agus ár mbailte, a spreagann fás ar ár mórshráideanna agus a chuidíonn le rathúnas. The package of bold proposals that I have set out establishes a solid basis for developing a modern rates system that is fair, revitalises our city and town centres, spurs growth in our high streets and, indeed, supports prosperity.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party 11:30 am, 22nd November 2016

I thank the Minister for his statement. This is our first sight of it, but there are some interesting and very sensible proposals. We will have to look at the numbers because there will be losers as well as winners, but I look forward to exploring that.

Briefly, I want to ask about lifting the domestic rates cap. As a social democrat, I support the concept of levying those most able to pay, although I would prefer it to be done through income tax. This will disproportionately affect people in my constituency, many of whom are on good but modest incomes and are paying for everything. What consideration has the Minister given to a package of convergence measures such as were put in place to address the position of those affected by a rates bump after local government reform?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for her question and for focusing on the two constituencies most affected by the removal of the rates cap: South Belfast, which I also have an interest in, and North Down. You will note that I talked about a phased introduction. I am very sensitive to the fact that, even if someone lives in a million-pound house, they also have to balance their books and their budget and no one wants to receive next April, for example, a dramatically increased rates bill. We are doing two things. First, we are saying that this is a levy, so it will not include 100% of the rates bill; it is only the 55% that we control as central government. That is the first relief to those in larger houses. Also, it is a phased introduction, and we will take our time to do it. I think it might happen over two rating periods over two years.

It is unfair that those who live in houses that are valued at £150,000 or £200,000 are subject to a regressive taxation system — property tax. I look forward to the day when I — or the Finance Minister who follows me — control income tax, but, until that day, we need to take decisions over the taxes and rates that we control. This decision is timely and will bring extra money into the coffers to deliver services not just in South Belfast and North Down but right across the jurisdiction. I look forward to getting the full support of all the parties in South Belfast, in particular, and North Down for the measure.

Photo of Emma Little Pengelly Emma Little Pengelly DUP

I welcome the statement, although I echo the words of our fellow South Belfast MLA that some of it will create concern in the constituency, particularly around the domestic cap. We look forward to consulting on that and hearing the views.

As the Minister will be aware, the Committee is examining business rates and taking evidence on that. We will be out and about and intend to visit Portadown and Warrenpoint to see the situation on the ground. Will the Minister commit to coming before the Committee, specifically on the issue of rates, during the consultation to outline his thinking in more detail? In addition to that — the Minister referenced this in his statement — will he confirm clearly that this represents his thinking on the direction of rates reform and that he intends to bring all these proposals and any revised proposals following consultation back to the Executive for their agreement and decision?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

Madam Chairwoman, thank you for your question. I know that you were able to come along this morning for a short briefing on the proposals. We need to nail our colours to the mast on the removal of the cap. We are either for it or against it, and we will then get into the discussion of how it will be administered.

I have had the experience in my constituency of politicians from another party rapping the doors of people who may be inclined to vote for me and telling them, "Don't vote for Máirtín Ó Muilleoir because he wants to remove the rates cap". I hope that that does not happen with this issue. I know that the Member has less association with the person involved in doing that than some people might think she has, but that happened. People need to nail their colours to the mast. I hope that the SDLP, in particular, in that light —

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

On a point of order, Mr Speaker. Is it in order to ask the Minister

Photo of Robin Newton Robin Newton Speaker

No. I will take points of order at the end of the Minister's statement.

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I hope that people will nail their colours to the mast, and I look forward to the day when the SDLP is not rapping doors in South Belfast and saying to people, "Oppose Máirtín Ó Muilleoir because he will remove the rates cap". I think that it is fair, and I say that to the Chairwoman of the Committee as well.

I look forward to the opportunity to go to my beloved Finance Committee to discuss business rates. I offered that the last time, but you will remember that my offer was spurned and we spent three hours talking about other matters. The offer stands, however, and I look forward to discussing these matters with the Finance Committee.

Again, we need to nail our colours to the mast. Do we agree with the evaluation carried out, which said that the existing scheme was too broad and diffuse and had not delivered any results? Do we then believe that it should be replaced with a targeted approach that is focused on small retail and hospitality that is linked to tourism? Let us be clear: these are the proposals of the Finance Minister, and they need the support of the Assembly. This is the ultimate authority on all the proposals that I lay out today. There will be a discussion, you can be sure, with the Finance Committee. There will be a discussion with the stakeholders — some of that has started already — and there will be a concerted effort by my team to win people over, and, where there are genuine concerns, we will want to address them.

There will be improvements. I have laid out the broad parameters here, but I have no doubt, from looking at some of the very wise and sage Members around here, there will be improvements on what I am proposing in the time ahead.

Photo of John O'Dowd John O'Dowd Sinn Féin

Before I move beyond South Belfast into another constituency, while, quite understandably, the focus will be on what rates we are raising, it is also worth noting that every £1 million extra that the Executive can raise is 30 extra teachers or 30 extra nurses. Therefore, I welcome the fact that the Minister is looking at proposals that will raise further revenue for the Executive.

I want to move to non-domestic rates. How will the vision that the Minister set out at the start of his statement impact on towns and villages across Upper Bann and other constituencies in making our towns and villages more attractive places for small businesses to do business?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his question. I have had the pleasure, since my appointment, of visiting Lurgan and Banbridge. I have not been to Portadown, another large town in your constituency. In those town centres — and particularly, in fact, before my appointment, in Portadown — I have seen too many empty shops and too much dereliction on the high street. It is my intention that the measures that we introduce today, in concert with the business associations and with other Departments, particularly the Department for Communities, will lead to a turnaround. We did introduce what I refer to as the spray-and-pray approach, where everybody got some rates relief, in 2010, but now we are trying to have a more targeted approach. I think that we need to speak to the councils because this is clearly focused, for the first time ever, on a package of rates measures that focuses on hospitality, which, of course, is linked to tourism. For many years the Executive have been putting the focus on tourism, yet we have not joined up our thinking on rates. We are doing that now.

I say to Mr O'Dowd that it is my hope that this will be a spur for economic growth that will set us on a path of more prosperous town centres and more prosperous high streets. You will note, when we go through some of the detail, that it is my intention that, for this new targeted rates relief scheme and support scheme for retail and hospitality, there should be a higher net asset value (NAV) for the properties right up to £25,000. That will bring in many of the pubs, many of the cafes and many of the retail businesses in Portadown, Lurgan and Banbridge. It will probably not include them all — some of the bigger ones — but it widens the net considerably and gives people a real lift in the time ahead. I look forward to my invitation to go back to Banbridge, Lurgan, Portadown and other parts of your constituency, and I look forward to working with the business organisations, the councils and the other Departments to make sure that we all row in behind this idea to get the maximum lift from it.

Photo of Philip Smith Philip Smith UUP

Thank you, Minister, for your statement. I look forward to studying this in more detail at the Finance Committee. I look forward to welcoming the Minister to the Committee again. Hopefully, it might be a little less entertaining and more insightful than his last visit. From his statement, it appears that this has yet to be agreed by the Executive. Did the Minister not consider replicating the Scottish or English model for non-domestic or business rates by removing all SMEs from rates below maybe £10,000 or £6,000 respectively, with tapers down to even higher levels?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his question. I do not know whether my next appearance will be insightful or entertaining, but I am looking forward to getting back in. I know that the Finance Committee has a very busy agenda. The Member, and anyone who has served for longer on the Finance Committee, will know that there have been torturous attempts at some stages to try to really get to grips with this. How do you get the balance right? We need to raise rates to fund our services, but, at the same time, we do not want rates to be punitive and deter business. That is not always easy.

I have looked at the other models. In particular, you will know that in England last year they removed rates for properties below £10,000 NAV. I think that up to half a million businesses may have been involved in that, and they could fund that. We really cannot afford to give people 100% rate relief at that level. We do not have the rates base and the property base compared with the power of the south-east of England, the power of Heathrow Airport and the power of London. We do not have that rates base. What I am proposing here for the retail, hospitality and tourism link businesses that fit the criteria will make a real difference. I envisage those that have a NAV of less than £10,000 getting 50% off their rates, which is an increase on what was there previously and will make a real difference.

The Member and I start out on the same basis that we want to create a system that will really change the landscape for retail and hospitality. In these matters, we do not go to the Executive first and then have the Executive tell the Assembly what to do. I am coming to the Assembly. You are absolutely right that there has to be more detail. I have to go to the Committee. I have no doubt that I will be bidding for, and I am confident that I will receive, the support of Executive colleagues. However, we cannot put the cart before the horse. I think that we are going the right way about this.

Replicating what England did would blow a £60 million hole in our finances, and we just cannot afford to do that, but I am sympathetic to the businesses in smaller towns, some of which you represent. I have been in Comber, Dromore and places like that, where I see too many empty properties. This will make a real difference to retail and hospitality businesses in those areas.

Photo of Stephen Farry Stephen Farry Alliance 11:45 am, 22nd November 2016

I give credit to the Minister for setting out what is a very ambitious agenda. He talks about nailing colours to the mast on the issue of rates capping. If he checks through the Assembly and Executive voting record on this, he may discover that Sinn Féin is actually doing a U-turn. On the specific issue of business empowerment zones, given the current ongoing deadlock around the transfer of regeneration powers to councils, is there not a danger that the Executive are taking a very mixed, contradictory and incoherent approach to how we can best regenerate our towns, villages and cities across Northern Ireland?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his question and for resisting the temptation to oppose removing the cap because, of course, along with mine, his is the other constituency that is really affected by the removal of the rates cap. I thought that it was really important to stop faffing around and to try to focus on actions that will result in better outcomes for our people. For some time now, I have been dismayed by the continuing levels of unemployment and poverty in some of the areas that we look at, especially in Belfast but also in some areas outside Belfast. It is particularly the case in the heart of east Belfast and the heart of west Belfast. At the same time, I have been heartened and buoyed by the renaissance that I see in both those areas. I mentioned that opening tonight is C S Lewis Square beside the EastSide Visitor Centre and the Connswater greenway and not so far from Ballyhackamore, which is doing very well, and Holywood Arches, which may be captured by this. I see great opportunity and great signs of revival.

I know that the Member would not like me to wait until we have all our ducks in a row before striking. In this case, I am striking and trying to send out a strong message that we can make a difference by using property taxes and rates. I believe that we can do that in west Belfast, in the Falls and right up the Newtownards Road, but it needs to be done with the cooperation of other Departments.

I am sure that you have seen it in your constituency. I do not know if Bangor has just adopted a business improvement district (BID) model, but I know that the BIDs are starting to make a difference in Newry, in its cathedral quarter and city centre. This, to a degree, is us taking the BID model and trying to partner west and east Belfast to make a real difference. I look forward to the Member's input in the time ahead, but, like him, I would rather not hang around. I would rather come forward with some bold proposals. Then, let us get them enacted. It is a pilot. If it does not work, we will do something else. However, at least we can hold our heads up and say, "We know that these two areas have not received the peace dividend that we would like them to have received, and, today, we are trying to make a real difference".

Photo of Jim Wells Jim Wells DUP

First of all, I suggest to the Minister that he is going to have trouble with his decision to scrap the cap on domestic rates. He also made a very significant comment in his statement. He said that he is abolishing the industrial derating of vacant factory premises. He will know that there are many factories in Northern Ireland where genuine attempts have been made to rent or sell the property but that for various reasons — sometimes the property is at an interface or the industry is simply not viable — it cannot be done. If the individual owner of that property can show that he or she has made every attempt to sell or rent the property, will they still have a large rate bill landing on their desk?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his question. I do not know whether he was wishing me well, giving me his best wishes or issuing just a word of caution around removing the rate cap.

Photo of Jim Wells Jim Wells DUP

It was a warning.

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

He was giving me a warning, but I travel in hope and with some confidence. In relation to the issue of empty factories, you are absolutely right: it is a conundrum. We have stepped back and presumed that if a factory is empty, there is nothing we can do about it. Then a case was brought forward by the CEO of the Fermanagh and Omagh District Council relating to a derelict factory. It was the opinion in that case and in others that, in fact, the realisation of a landlord that there is no penalty at all in having a factory sitting empty does not encourage movement or action, but it is difficult.

The Member will have heard, at the end of my statement, reference to a tax on derelict land. That has the same difficulties. Sometimes, people say to me, "I am sitting on derelict land; it is not that I do not want to sell it, I just cannot get a buyer for it". The issue is not without complexity or challenges, but I urge the Member to move forward with an open mind. If we could prove to him that introducing a tax or rates on empty factories would help to convert them into productive assets, I hope that we would then get his support. We have a fair bit of evidence gathering to do before he comes to that decision, but I hope that he will proceed with an open mind as we negotiate these issues.

Photo of Declan McAleer Declan McAleer Sinn Féin

I thank the Minister for his statement. Will he outline how these proposals will benefit councils?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

Go raibh maith agat as an cheist. I thank the Member for his question. The House knows that I am an advocate for local councils and for increased powers for them, a fact that has been in the news recently. I believe that they are great partners. There are now 11 ambitious councils with very strong growth plans for the future. When the measures are implemented, they will immediately create a nice little windfall for councils. They will benefit by an extra £10 million, which perhaps they will use to borrow additional money, improve services or invest in their council areas. Think of the money that Belfast City Council spends on the Visit Belfast Welcome Centre. I know that, similarly, there are plans for the relocation of the Visitor Information Centre in Derry. Belfast City Council puts money into its convention centre, the Waterfront Hall and other facilities. Those are really focused on tourism and trying to grow the economy by bringing in visitors. Now we say to them, with the new rate relief measures, that we are also focused on hospitality.

I will mention one other measure announced today, and that is about trying to convert some retail premises into accommodation. It still pains me to walk through Belfast city centre, in particular, and to see premises above shops that are not used, are just empty, and in which people could live. Also, in some of our towns and villages, there are retail spaces that are not coming back, and they, too, could be converted into accommodation to help people live in town or village centres and, in the case of Belfast, the city centre. I think that those are big benefits to the councils, but we can magnify and multiply them if councils work closely with us as we implement those measures.

Photo of William Humphrey William Humphrey DUP

I thank the Minister for the statement he has made. I very much welcome the review of non-domestic rates for businesses. A boost to local businesses, particularly small businesses, is vital. Has the Minister been in touch with and liaised with Belfast City Council, the chamber of commerce in Belfast and traders' associations, particularly around the two pilot schemes that he mentioned on small-business empowerment zones. I must say to the House that I am concerned that there is a zone in east Belfast, which runs from the foot of the Newtownards Road to the Holywood Arches, and one in west Belfast, which runs from Castle Street in the city centre the whole length of the Falls Road to the bottom of the Whiterock Road. That is hardly fair or equitable, and the outcomes cannot be compared.

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his question, and I take on board the point he makes. It is a pilot scheme, so let us see whether it has a dramatic impact on both those areas. I know that neither scheme is in your constituency. If they work, I wish to try a rural pilot. How can we get out into the villages and towns, particularly the villages? I was speaking to Kilkeel Harbour Works on Thursday night. How can we do more work in the small coastal towns and villages?

I urge the Member, as difficult as this may be, to approach it with an open mind and a good heart. Let us see where the advantages are. If there are advantages for west and east Belfast, and we learn lessons, let us roll out those advantages in north Belfast, and, Heaven forbid, we might even roll them out in south Belfast as well.

Photo of Danny Kennedy Danny Kennedy Deputy Speaker

Will the Minister return to the issue of the proposed rating of empty factories and provide clarification on the size of factory and whether his proposals will include industrial units? The Minister will know that many business and factory owners also own vacant units that they hope to develop at some point, subject to opportunities being provided for them. Could the imposition of rating charges on such units serve as a negative to owners and reduce their ability to provide employment opportunities?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for his question. I go back to a word that he uses: opportunities. I see this as an opportunity. We have to proceed with care. As I said in the introduction to my statement, we want to encourage and spur economic growth, and we want to discourage dereliction, but that needs to be handled carefully. Of course, empty business units are already liable for empty property rates — 50% of rates. Thus far, we have not got it right. I have visited too many places where I see empty factories that have effectively been abandoned because there is no onus on anyone to try to sort out the problem. With the Member's support and help, we will tease our way through this. Together, we can seize opportunities, and one of those opportunities is to bring back into productive use the empty factories that I see across the landscape.

Photo of Catherine Seeley Catherine Seeley Sinn Féin

The Minister has touched on this a little, but will he detail how he hopes today's measures will encourage tourism?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for her question. It is a fact that the Minister for the Economy has been working assiduously over recent months on a new tourism strategy. It is a matter of fact that the Executive have invested very strongly in our tourism infrastructure. All parties, I think, have agreed to that. Think of the Gobbins, the Peace Bridge — also a piece of tourism infrastructure — or Titanic Belfast. We have made tourism the jewel in the crown of our proposition as a region, yet, at the same time, we have not joined that up with rates policy.

When I was in Ballycastle recently, I saw at least two closed-up pubs. I travel to other areas. There has been a big decline in the number of pubs in recent years, for a number of reasons, which include the changing habits of people. I would like to see the tourists who come here to follow the 'Game of Thrones' tour, for example, and who end up in Ardglass or north Antrim be served by the people who want to open cafes, restaurants, pubs or other premises, and whom we have encouraged to do so. I saw that when I visited Portrush at the invitation of Minister Givan. Down on the harbour, we had the pleasure of seeing a small cafe called Babushka, where we met 10 Chinese bloggers who were in having fish for their breakfast. They were enjoying breakfast and blogging about the wonders of that part of the world. We are trying to join up our thinking. We know that tourism is important, but now we are giving an added incentive and lift to those who have taken a risk and set up businesses in the hospitality sector.

Photo of Joanne Bunting Joanne Bunting DUP

How does the Minister plan to address the legitimate concerns that some of us have that, far from being a fair system that supports prosperity, it is a system in which he is penalising some small businesses to the benefit of others? They all contribute to the economy and all employ people. How does he propose to define "retail"?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin 12:00 pm, 22nd November 2016

I thank the Member for her question. I suppose it goes back to the basis of our new thinking. In 2010, we introduced a small business rate relief scheme. That was helpful to many small businesses, and I am sure that many of us know the owners of small businesses. We will be six, seven or perhaps eight years on when — I hope — we introduce our new measures, and it is time for a more targeted approach.

In other places where they have had to designate businesses as "retail" or "other", they have found a way to do it, and I am confident that we will be the same. Offices will lose out, and they are important. Therefore, having supported for seven years an average payment of £700, we are moving on to a system where we will target our resources elsewhere. I am going to spend more money: the last small business rate relief scheme cost around £18 million, and I intend to spend £22 million on this.

There is a lot of work for Land and Property Services (LPS) to make calls on. I have not made them, but I am sure that, in consultation with the Committee, we will make calls on dog-grooming services, hairdressers and so on. How do they differentiate from a payday lender? Is that someone whom we wish to allow into the scheme? I would not wish to see that.

There is a lot of work to be done. It will not lead to any decrease in activity on the high street; it will lead to an increase. I am very happy to look with all stakeholders, including Members, at how we define retail and hospitality businesses and differentiate them from other businesses that have benefited over the past six years and got a nice little lift from us to make sure that they survive these times.

Photo of Gerry Mullan Gerry Mullan Social Democratic and Labour Party

I thank the Minister for his statement. I was glad to note that in your statement, Minister, you recognise the valuable contribution that charity shops make to our society by attracting shoppers onto our high streets and through the very valuable work that they do to support the most marginalised and most vulnerable in society. You intend to carry out further consultations on the matter. Can you give me an idea of what kind of consultations you have carried out and what length of consultations you intend to carry out? This is a very big issue for charity shops in my area.

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member. The Member has brought this issue up before. We will move into consultation on all these measures rapidly. On many of the issues, I hope to move into consultation before Christmas.

We will not take anything forward before we thrash it out among ourselves. Do I believe that charity shops could pay 10%? I do, but I am happy to be informed by Members. As you know, the rate is 20% in Wales, Scotland and England, and it should not be any more than that. However, I believe that we have to stop the proliferation of such shops. We have just over 350 of them; I think that we are OK where we are, and I certainly do not want to see more. Could they make a small contribution of £15 a week? Yes, they could. However, I am happy to discuss that with yourself and see where it goes.

Another little idea that the Member will be interested in is whether we could use that money with the third sector, the charity sector, to encourage social or third-sector entrepreneurship. People are trying to find other ways of raising money for voluntary groups and charities. That is my preference, although only a small amount of money would be raised through it.

When we went out to consultation on the small business rate relief scheme, businesspeople had a principle that everybody should pay something, which I agree with. So, if you are on the high street, you should pay something. That is my opinion; it does not have to be an awful lot, but, in principle, everybody should pay something.

The last thing that I say to the Member, although it does not affect his constituency, is that an issue that we could tackle is that of higher-value units being let to charities — say a unit with an annual rent of £100,000 — thereby allowing landlords to dodge responsibility for paying empty property rates. There is much more sympathy for the towns and villages where charity shops are a key part of the mix.

I look forward to working with you. There will be plenty of opportunity through the Committee, the Assembly and the consultation to make views heard. It was a vigorous debate the last time, and I am sure that it will be again.

Photo of Pam Cameron Pam Cameron DUP

I thank the Minister for his statement and his answers so far. Following on from the previous question, the Minister has highlighted a direction of travel in respect of charity shops that would see a reduction in the exemption to 90%. I fully understand the need to have a balance, in our town centres in particular. I am thinking of the likes of Antrim in south Antrim. Just for clarity, will the Minister be consulting with the charity sector to include their views in any consultation?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I could go further than that: not only will we be consulting with them but I can assure you that we cannot do this without the support of Members. That is where I am minded to go. I will be informed by the consultation but it will be the Members of the House who will decide whether we should introduce any rates for high street charities.

Photo of Trevor Lunn Trevor Lunn Alliance

I thank the Minister for his statement. It is encouraging to hear a Minister saying he is going to stop faffing around and take some hard decisions, so I welcome that.

I am still on charity shops, Minister. Is the Minister minded, as part of the consultation, to examine what constitutes a charity shop? I have no wish to put the boot into them but some of the current charity shops are acting in direct competition with fully fledged shops that are paying fully fledged rates. The Minister talks about balance and a constructive approach but I question, in terms of procurement of stock and the way they operate, whether some of them are actually what was meant to be a charity shop at the beginning of all this.

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

Thank you. Yes, we do need to look at that. It needs to be a fair system.

I have just noticed that we have a large group in — from Cullybackey, I think — the guests of Robin Swann. I hope that this is going to help villages as well.

I know that in Lisburn charity shops are part of the mix. I also know that it is the opinion of the charity sector leaders and businesses I meet that they should not be competing directly by selling new retail items from their shops. We need to get the balance right. If someone is paying full rates next door to a charity shop then it is our understanding that the charity shop should be selling goods that are not in direct competition. I think that it breaches the spirit of what we are trying to do with charity shops.

Let us look at it as we move forward. We should not exaggerate it either, Trevor. I am not sure that 10% is a stern or tough action but it is a positive one in that we are saying, "Look, you're occupying a productive asset and we think you should make a contribution".

I have one last point: there are unscrupulous landlords who dodge the empty property rate by putting a charity into the shop, but they do not reduce the rent by one penny. I am amazed at charities across this town that are paying full price for the properties they occupy. I always thought that the landlords made people a deal. In fact, what they do is that he or she dodges the 50% empty property rate and then makes sure that charities, which are sometimes maybe not as ruthless in negotiating as some others might be, pay the absolute full rent. For me, that also breaches the spirit of what we are trying to do.

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party

There are many good things in this statement: the use of pilots; the proposal in respect of energy efficient new homes; the tourism and hospitality interventions; and other things.

Does the Minister not have two concerns? The first is that if a decision is made in the near future that regeneration powers are not to be transferred to councils, then the rug would be pulled from under his feet with regard to his high street interventions, of which there are a number.

Secondly, does he have a concern that the DUP flagged up clearly this morning that when it comes to some, at least, of what he is proposing, he does not have political cover from them?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I am not going to speak for the SDLP. I am certainly not going to speak for the DUP either this morning. I am going to take and bank the positive comments at the start of that statement about the elements of this that you like.

I am with you in terms of regeneration powers for councils. At the same time, and I know you will see this as well, I am buoyed by the attitude of councils, which, as you know, do feel hamstrung. You heard Gerry Millar, of Belfast City Council, saying in a radio piece last week that additional regeneration powers would help them to do more.

I do not see their hands being completely tied. I see them still trying to do things. I admire the leadership of John Kelpie of Derry City and Strabane District Council, Suzanne Wylie at Belfast City Council and their colleagues in Lisburn and Castlereagh City Council or from other areas who have been in touch with me.

I hope that this will empower them while we wait, as Trevor Lunn said, for Government — while we wait for Godot. At the same time, it will empower the councils to partner us in the time ahead, and it will empower businesses. The Member will know that, despite the challenges, the BIDS went ahead: the Cathedral Quarter voted for a BID, as did Belfast One. As you know, they have much more ambitious plans and hopes for the devolution of power to cities, but they did not sit on their hands. I hope that he will support us in moving positively ahead while we await further improvements.

Photo of Steven Agnew Steven Agnew Green

As a Member from the other constituency that is greatly affected by the proposal, I unequivocally welcome the removal of the rates cap. I have long argued that it is not fair that my constituents in the Kilcooley Estate subsidise the rates of those who own estates in Cultra. The Minister said that he is confident in going forward with his proposals. Given the position of other parties on this issue in the past, what evidence does he have for his confidence that he will get political support from the DUP for this positive move?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

You are the second person who wants me to join and speak for the DUP. I am very confident that we will get this entire package through, and it is a package; it should not be seen as doing something around low-carbon or zero-carbon homes. That should never have been stopped, Mr Agnew, and we are trying to bring it back. It is not only about the conundrum of empty factories or increased help for hospitality. It is a package, and the cap is part of it. I am confident that all of the measures outlined today will go through and be passed by the Assembly. Will they be tweaked? Will there be, maybe from you, better ideas of how we can do them? I am open to and would welcome that. I am confident that this package of measures will, as a package, be endorsed by the Assembly in the time ahead.

Photo of Jim Allister Jim Allister Traditional Unionist Voice

I bring the Minister back to the small business empowerment zones and express my disappointment that his approach to pilots is so Belfast-centric. There is not a single rural town included, and, although the issues may be slightly different, the pilot may be beneficial there, too. I think of a town like Ballymoney, which has been ravaged by dereliction. What does a small business empowerment zone actually mean? There is no substance here about it. Is it rates exemption? Will he clarify that? On rural issues, will he confirm that he is not minded to disturb agricultural rates? Can that be taken as a given?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I will take the third question first. Yes, there will be no change to the agricultural rate reliefs.

Mr Allister, if you would like to bring suggestions about rural areas to Mr Brian McClure at my Department, I would welcome that. Responsibility for rural areas lies with another Minister, with whom I have discussed this. It would be nice to have another pilot for rural areas outside Belfast. We may do so in the time ahead. This was the bite of the issue that we could take at this time. I mentioned the need to do something for smaller towns and villages, although I was not thinking of places as big as Ballymoney; I was thinking of some of the small coastal villages and towns, for example. If you have any suggestions on that, please bring them forward. You should not think that because we have one pilot, we cannot have another.

I envisage a rates empowerment zone as being somewhere where, for example, the pioneers and champions of the EastSide Partnership, EastSide Arts, will tonight open C S Lewis Square. They could go to a potential investor and say, "We now have special status under the rates system, so, if you have a new business here, you would get 50% rate relief. Instead of paying 100%, you would pay 50%".

This is for at least three years, perhaps five, so there is a bit of certainty and a reason to attract someone to the area. However, it is also for existing businesses: we need them to expand and invest more. We want to transform the area in which they are based. It does not work by passing legislation alone; it does work by having, for example, a full-time worker who, like the chair or chief executive of a BID, goes out and sells the advantages of an area and works out the best strategy to build on this. It is another tool in the toolbox, for example, for the EastSide Partnership, the West Belfast Partnership, Féile an Phobail in west Belfast, EastSide Arts and other groups. I hope that, in that context, we will move swiftly into discussions with some of the other Departments and the council about how they can come in behind this idea.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker 12:15 pm, 22nd November 2016

Cuirim fáilte roimh an ráiteas. I welcome the statement and, if the Minister is looking for a rural town for the scheme, Warrenpoint will be very open to having it. Will he outline in more detail his interesting proposal to enable companies to access rate relief by accrediting with the Living Wage Foundation? In all this, workers' rights are very important.

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

Go raibh maith agat as an cheist. Thug mé cuairt ar Rinn Mhic Giolla Rua ar na mallaibh. Tá súil agam go mbeidh mé arais, le dea-scéala más féidir, ach tá súil agam go gcuideoidh seo leis an cheantar. I have been to Warrenpoint at the invitation of the Member, and I believe that, like all the other towns, villages and cities, this would benefit Warrenpoint, especially now that it is trying to focus more on tourism in the time ahead.

I know that I am trying your patience, Mr Speaker, because I have been on my feet too long, but a really major change in the new rate relief proposals is that people have to apply. Previously, under the spray-and-pray approach, we just said that every business under a certain NAV would get relief. We are now saying that it is targeted at small retail and hospitality, but, as well as that, you have to apply. It is a very simple application process, but you have to prove that you have made an investment in your business. If your rate relief is £1,000, you need to show us that you spent £1,000 on new equipment and skills training, and you employed more staff. We want to make it online-only and really simple, but, for the first time, you will have to ask for the rate relief. In my mind, that is a sea change because people will now understand that they are earning something and are entitled to it, but they have to ask for it.

In my view, another way for a business to be entitled to the new business rate relief system is for it to be accredited with the Living Wage Foundation, which accredits businesses. The new living wage is £8·45, but businesses that pay that can have the proud boast that they are Living Wage Foundation companies. If any small business in retail or hospitality can say to us, "I won this accreditation", that, for me, would be enough to entitle it to ask for and receive rate relief. I hope that that encourages more companies to look seriously at how they can increase the money that they pay their staff. Of course, when you have added investment in staff, you will demand more productivity, but all that moves people up the business and job value chain. My officials will be speaking to the Living Wage Foundation people today, and this relationship can only benefit businesses and employees in the time ahead.

Photo of Jonathan Bell Jonathan Bell DUP

There are a number of very positive things in the statement, and the manufacturing industry will be hugely pleased — rightly so — with the nature of the maintenance of industrial derating. There will be interest in the use of the rates system to encourage regeneration, investment and entrepreneurship. What measures and time frame can we use to check whether this statement matches up to the outcomes? What targets can we use in an outcomes-based approach, and when can we look back to see how well we are doing at using the rates system for regeneration, investment and entrepreneurship?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

That is a fair question. As you know, we really did not do that with the last scheme, but that was in the mouth and the maw of a terrible economic crisis. With this scheme, it maybe needs to evaluated every two years, but certainly no longer than that. I think that you will agree, as a former Minister for the Economy, that Neil Gibson's Economic Policy Centre does good work. We are happy with the work that it does. As I said, we are commissioning in other areas, and I would be very happy if it is the body that is commissioned.

We cannot rely on anecdotal evidence and need to assess whether this is working. If it is not working, we need to do something else. I am confident that it will work. As you know, some stakeholders are very supportive and some are not so supportive, but we need to get it right, and, if we do not have the evidence, we will not really know what we are doing. I am happy to work through with the Member how we gather evidence; how we decide whether it is having the desired effect; how we can ensure that it does not have effects that we do not want; and how we can augment and enhance what is working well for us and abandon things that are not working.

Photo of Kellie Armstrong Kellie Armstrong Alliance

I thank the Minister for his statement. I take him back to page 4, on halls of residence. There is only one very small hall of residence in my constituency, at Queen's University marine biology station. What impact will the change have on the hard work being done to attract external students to Belfast? The change may make Belfast a bit more expensive. It will also make it more expensive for rural dwellers who want to send their children to halls of residence or are themselves students. Will it have a negative impact on places like the Holylands?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

I thank the Member for her question. No, I do not think that it will have a detrimental effect on the valiant efforts of our universities to attract people from outside this jurisdiction to study here; it will make the system fairer. Other students who live away from home pay rates in other types of accommodation that are almost like halls of residence — we see those springing up across the city. It is a small change to the system. We consulted on it. I think it is time. I have not yet spoken to my dear friends in the University of Ulster or Queen's University, but they have strong cases to make on overall funding, and I am listening to that very carefully. I do not think that this will make any difference to their efforts to attract students. All we are doing is making the system more equitable.

Photo of Lord Maurice Morrow Lord Maurice Morrow DUP

In the early part of his statement, the Minister said:

"Today, I propose a groundbreaking package of measures aimed at modernising the domestic and commercial elements of the rating system".

He then proceeded to outline a list of fairly punitive measures against those who pay their rates: has he anything new to say about those who do not?

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

Lord Morrow, you have to read past the first few pages. Much of the statement is about people who do not pay their rates, including landlords who pay 50% empty property rates, which will go up to 75% — still way off where Scotland is. That will make a difference. It involves those who do not pay rates on empty factories; we are trying to get that right as well. They will add to the tax base. Through many of the things that we are doing we are trying to bring in more money, not just for Fermanagh and Omagh District Council but for all councils and for government coffers. Of course, we have just spent the best part of 30 minutes discussing the big one: the people who are not paying at the minute are those who enjoy the domestic property cap, and that is going as well. There is no doubt that some people who heretofore did not make as much of a contribution as they should will have to shoulder more of the burden, because we are making the system fairer in the time ahead.

I am always up for listening to other proposals on how to raise more rates. As you know, there was a bit of a love-in when we removed rates entirely from community amateur sports clubs and extended that to pigeon clubs. Everybody is in favour of removing rates, but, if Lord Morrow has other proposals around how we might bring forward other measures to raise rates, I am certainly all ears. Make no mistake: when we finish the exercise, with the support of the House, there will be £16 million recurring each year more in government coffers and £10 million more in council coffers.

Photo of Robin Newton Robin Newton Speaker

That concludes questions on the Minister's statement.

Photo of Claire Hanna Claire Hanna Social Democratic and Labour Party

On a point of order, Mr Speaker. Is it in order for the Minister, when the DUP publicly responds to say that he does not have its support — ironically, when my party was acknowledging its broad sympathy — to deflect his anger by making allegations against other parties and presenting tittle-tattle as fact? If he insists on taking his frustrations with the DUP out on others, would it not be better that, rather than making allegations, he named names and presented evidence?

Photo of Robin Newton Robin Newton Speaker

I do not think that is a point of order. The Speaker has no role in adjudicating on Members' —

Photo of Máirtín Ó Muilleoir Máirtín Ó Muilleoir Sinn Féin

On a point of order, I am happy to name Dr McDonnell and Declan Boyle as going around doors —


I can bring the evidence as well.

Photo of Robin Newton Robin Newton Speaker

Minister, the Speaker has no role in adjudicating on Members' or Ministers' remarks, but the Member has placed her concerns on the record.