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Before I move the order, I join others in expressing my sadness to learn of the death of John Dallat. I worked with him for many years in the House and express my condolences to his family, friends and party colleagues at this very sad time.
I beg to move
That the Rates (Regional Rates) Order (Northern Ireland) 2020 be affirmed.
This order is brought forward annually, and it stems from the Executive's Budget for the 2020-21 year, which was originally brought to the Assembly on 31 March 2020. The order has been overshadowed by the COVID-19 pandemic. In response to the crisis, I introduced a three-month holiday for all businesses. In England, only certain businesses were given rate relief. Had I followed that scheme, which some Members have called for, rates would now be paid on 60% of business properties. My Department will shortly bring to the Executive an extension to the rate relief scheme targeted at the hardest-hit businesses. That, however, is separate from the order in front of us today. This order is about laying the ground for economic recovery in the longer term. It responds to a key concern of businesses for many years: the relatively high level of business rates. In fact, the order delivers an 18% reduction in the non-domestic regional rate.
I turn to the detail of the order and its purpose. The regional rate supplements the Executive's block grant. It helps fund expenditure on health, roads, schools, infrastructure and other essential public services. To underline the significance of the rating system, last year, over £1·3 billion was collected in rates — regional and district, domestic and non-domestic. Taken together, the domestic and non-domestic regional rates set by the order equate to a headline revenue figure in the region of £684 million at the time of the Budget.
The legislation before you today for approval is the outworking of that important Budget decision. The breakdown is that the regional rate represents just over half of a typical rate bill, with the other half made up of the district rate that is set independently by local councils. District rates set for 2020-21 are high in some councils as a result of their financial difficulties.
Today's order fixes two separate regional rate in the pound figures for 2020-21: one for households and one for businesses. The new rate in the pound figure freezes the domestic regional rate for the 2020-21 rating year for households. In other words, there is no increase on last year's domestic regional rate poundage. Our household rates charges are relatively low here, but this freeze is important given the financial pressure on households at this time. On the non-domestic side, the over 6p cut to last year's poundage represents a very significant 18% reduction. These, together, will help household and commercial budgets as we emerge from the initial wave of the COVID-19 pandemic.
I will close these opening remarks by addressing technical matters concerning the order. Its main purpose is to give effect to the poundage decisions already made during the Budget process by specifying the regional rate poundage for 2020-21. 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 2020-21 rating year through to 31 March 2021. Article 3 specifies 27·9p in the pound as the commercial regional poundage, and 0·4574p in the pound as the domestic regional rate poundage.
I look forward to hearing Members' comments, and I commend the order to the Assembly.
May I, as leader of the Ulster Unionist Party, on behalf of the Ulster Unionist Party, pass on our condolences to John's family and to all his friends. He will be a very much-missed Member of the Assembly. We wish his family all the best in these trying and difficult circumstances.
As has been outlined by the Minister, the purpose of the proposed statutory rule is to set the amount of the domestic and non-domestic regional rates for the year ending 31 March 2021. The order stipulates the regional rate for domestic and non-domestic property expressed in pence per pound that will apply for the 2020-21 rating year. The poundage laid out in the proposed rule will reflect the Executive's Budget for domestic and non-domestic purposes.
The policy proposals contained in the statutory rule were considered by the Committee at its meeting on 5 February 2020. The Committee had no issues to raise in respect of those policy proposals at that time. The Committee formally considered the statutory rule at its meeting on 22 April 2020, along with the accompanying report from the Examiner of Statutory Rules, who had no points to raise in the technical scrutiny of this rule.
Much has changed since the Committee's initial consideration of the outlying policy proposals, but it is necessary — and I re-emphasise that it is necessary — to enable the Department to issue rate bills to ratepayers. Naturally, any measures taken by the Executive to provide financial support to ratepayers during the current crisis will draw on the resources received as part of the COVID-19 response.
Whilst I am mindful that the next item of business is on the Budget, it is important to recognise that the collection of rates provides vital funding for the delivery of our public services. However, that being said, I suspect that every Member here has heard the concerns, particularly from the business sector, about the burden that non-domestic rates have on day-to-day cash flow.
The Minister previously outlined his intention to review the wider rating system. The Committee will be keen to consider any policy proposals and will work constructively with the Department early in that process. The Committee agreed to recommend that statutory rule No. 59, The Rates (Regional Rates) Order (Northern Ireland) 2020, be affirmed by the Assembly. Therefore, Mr Deputy Speaker, we support the motion. Thank you.
I welcome the Minister's statement. As the Chair said, we will have further discussion on matters relating to the issue afterwards in the Budget. However, I welcome the order as an important element in the much wider programme that the Executive will need to put in place as we move through the immediate health and economic traumas of COVID-19. Whilst responding to events as they unfold, the Assembly must begin to plan for the long-term economic recovery. The order addresses the issue of high business rates, which, as the previous Member to speak said, have been raised with most of us, particularly by business people, and it delivers an 18% reduction in the non-domestic rate. The order also freezes the domestic regional rate for the next year for struggling households during this difficult period. There will be no increase on last year's domestic regional rate. Therefore, I welcome the order.
First, on behalf of the SDLP, I want to thank other Members for their remarks and condolences on the passing of John Dallat MLA. In some ways, it is ironic that I am the first person from our party to talk about John's legacy and our sadness at his passing, given that my time serving in the Chamber has been fairly brief, but, in that brief time, like everyone in the Chamber, I experienced his extraordinary integrity, courage, passion for the people of East Derry and commitment to inclusive politics in this place. He was one of the few people who served in the original Northern Ireland Assembly, having been elected in 1998, along with you, Mr Deputy Speaker. People who served with him through that time know the size of his character and his heart. It is an immensely sad time for his family and all those who knew and worked with him. I hope that we will have some more time to reflect on his legacy in the Chamber.
I am a member of the Finance Committee, and as the Chair and Sean Lynch, a fellow member, have said, we discussed the rates order in the Committee and approved its passing. I want to make the point — I will make it again in my remarks on the Budget — that, in a sense, the changed times that we are all living in since the beginning of the COVID-19 crisis mean that we have to look, almost from first principles, at how we do fiscal policy in this place. As the Minister and the Chair of the Finance Committee said, regional rates, non-domestic and domestic, are one of the only revenue tools that the devolved institutions here have. However, taking a step back, we can see that the people on whom that burden falls greatest are small businesses in Northern Ireland, particularly small retail and hospitality businesses. Which are the sectors of the economy that have been hardest hit by the necessary steps that we have had to take because of COVID-19? It is hospitality and small retail. That cannot be right. We need to be able to have stable and reliable revenue sources in addition to the block grant, but we also need to be able to recover our economy. The order was processed or, as it were, born, before the COVID-19 crisis and everything that came with it. That has changed things entirely; it has changed the entire assumptions on which the tax is based. We do not know what the commercial property sector will look like in the medium- to long-term. While I support the principle of the order — there was no alternative to supporting the principle of the order to allow the Department and Land and Property Services (LPS) to continue their business this year — I would say —.
I had not indicated that I wished to speak in the debate, but I was one of the Members who entered the Assembly in 1998 with John Dallat. It is appropriate that the Member is speaking now, because I want to pay tribute to John.
John and I sat together on many Committees in the Assembly, including his favourite, the Public Accounts Committee. He was the scourge of government overspending. He made an enormous contribution to the House over 22 years and will be missed greatly as one of the very few Members, including me, who arrived in 1998. Many of us would like to be in Kilrea to pay our respects. We will not have that opportunity, which is very sad. I certainly would have been there had I been allowed to do so.
My intervention is entirely not in order, but I am glad that it has given me the opportunity to pay tribute to someone whom I regarded as a great friend.
I am glad that the Member intervened and that I gave way. I will conclude my remarks at that and defer to what the Member has said. It is an extremely sad time for everyone here who values inclusive politics and making this place work.
I join with others and express my condolences on behalf of the Alliance Party to the family and friends of John Dallat. I have only been here a short time, but we managed to have a conversation outside a number of months ago. It was around his dogged determination to ensure justice for Inga Maria Hauser, who was murdered in 1988. He fought that case very hard. All of us would agree that the best legacy to John would be ensuring that the perpetrators of that murder are brought to justice. Our thoughts are, obviously, with John's family at this time.
In relation to the order, as a new boy, I looked at the last time the Assembly debated a rates order and what the protocol was for contributions. The debate was on 22 February 2016. It lasted less than 15 minutes, but it was at 11.00 pm. The situation that we are facing today, in 2020, is very different and, perhaps, it merits a bit more debate due to the circumstances that we find ourselves in, with the affirmation of the order occurring in May, as opposed to February, and the future so uncertain.
At the outset, I declare that I was previously a member of Ards and North Down Borough Council. I welcome the decision to cut the regional non-domestic rate by 4p, delivering an overall reduction of 18% and alleviating somewhat the impact of Reval2020, which hit some sectors very hard, especially hospitality and hotels.
Historically, in Northern Ireland, business rates, as the Minister outlined, have been much higher than in Great Britain. Papers that led to the 'New Decade, New Approach' document detailed that as a significant issue of concern for businesses. Options for action were set out but, at that time, were not felt to be feasible. I am, therefore, pleased to see action on the issue in the making of the order, and I hope that it can be sustained in the future to ensure that the rates burden is fairly shared.
As Members are aware, rates in Northern Ireland are made up of the regional and the district rate, which provide the main source of income for our 11 local councils. In the current economic circumstances, a serious and almost certain risk exists that the revenue forecast for district councils, when striking the rates in February, will be much lower than anticipated, whether derived by the district rate or by provision of services, such as leisure, planning, tourism and more.
We are, therefore, making the order in the knowledge that the levels set do not secure the financial future of our councils. The arrears that are likely to arise for domestic and non-domestic rates, or the downturn in the estimated penny product for the non-domestic property base, are storing up a crisis for local government and making double-digit rises across Northern Ireland in the next financial year almost certain, if assistance is not provided centrally. The delay in the dispatch of bills will help somewhat to reduce the level of arrears, but bills will still end up being higher than before.
It is, therefore, of paramount importance that the Department of Finance, working in conjunction with the Department for Communities, provides the financial assistance necessary to ensure that our councils can continue, do not become insolvent and are not forced to implement swingeing cuts and massive rate hikes next year to recoup the unanticipated costs arising from COVID-19. To witness the collapse of one form of local government in Northern Ireland that has continued through thick and thin would be a tragic mistake, overlooking the valuable role played in delivering key services, such as waste collection, burial, planning, leisure and economic development, alongside local civic representation.
History will judge whether the decision to offer full rate relief for all businesses for the first three months of this financial year was the right one in the use of public funds. However, the Executive found themselves in unique circumstances and needed to take an urgent decision to provide immediate support, so it was the right decision at the time. The decision on whether to extend the rate relief beyond the end of June now needs to be taken. In the context of the ability to review the effectiveness of the blanket relief, and the understanding of sectors most in need of further assistance, I urge the Minister to consider targeted relief extension, taking into account those businesses that will remain under lockdown restrictions and struggle to come back as soon as others, such as, for example, the retail, aviation, hospitality, leisure and tourism industries.
LPS conducted a non-domestic rating review in 2019, and the consultation closed on 11 November. In the challenging circumstances in which we now find ourselves, it is even more important that the recommendations arising from that review are brought forward, evaluated by an independent panel and published for consideration. The new economic circumstances require, more than ever, a fit-for-purpose business rating system, which is not focused purely on bricks and mortar, but ensures that businesses not only survive but thrive.
Alliance will vote for this order but requests that clarity is given by the Minister on the issues raised, whether they are in relation to securing a sustainable financial future for local government, the extension of the non-domestic rates relief or the status of the non-domestic rating review.
I thank the Minister for coming here today, and I thank everyone for their kind words about John Dallat. I saw John just last week; I went out to see him and was talking with him. I had to go out to see him simply because I was put on a Committee that he was on. When I went out to visit John he was not well, but he still had that fire in him. He and I were trying to plan a trip to Munich; I have a daughter who lives in Dachau and we were going to try to go over to follow-up on the terrible tragedy, which Mr Muir mentioned, of young Inga Hauser's murder. John was still up for the trip. The day that I was there was the 75th anniversary of the liberation of Dachau, which was the first concentration camp. It was in Germany, but it was the very first one and was the model for the rest of them. I was able to talk to John and, as I say, he lit up.
I will miss John. I know there will be a time for the House to pay tribute to him, but I genuinely miss him. He was a good man. I knew him long before I ever went into politics; I knew him from the bar but that is neither here nor there now.
As so many Members have said, I have no option but to support the order. I see the small reductions that are being made, but there are a lot of small businesses like my sister's, who rang me last night. She and her family have a very busy house and one pub in the centre of Belfast. They have no money and have used up whatever savings they had on the rates. The three-month rates holiday was welcome for them, but they are trying to come out of the current situation and they can find no way of sustaining their business if the lockdown continues much longer. There is no way that they will find the resources that they need if they have to try to operate a business through distancing in a public house, because that will not be possible.
The review has been carried out, and it will be much fairer to get away from bricks and mortar and look at turnover. That is for the days ahead, and we will be able to debate such issues in the Budget debate. I have reservations and will reluctantly support the order.
I thank all the Members who contributed to the debate. As I have stated, today's 2020 regional rates order gives effect to decisions that were made as part of the Executive's 2020-21 Budget. The Executive's aim is to strike a balance between meeting the needs of ratepayers during what will be a challenging long-term economic environment and ensuring that public finances are sufficient to cover the priorities that we have set ourselves.
Turning to some of the points that were raised, I appreciate the support expressed for the order. Matthew O'Toole mentioned revenue raising, which is an issue that we have discussed on many of the occasions that I have spoken in the Chamber. He will be aware that I am committed to looking at the fiscal levers that are available to us. That work is even more important in the time ahead, given the circumstances that we face.
In relation to council finances, which Andrew Muir mentioned, of course we will continue to engage with councils and try to ensure that they have the necessary resources. There is no question of local government going under or going out of business. Councils, like all other public departments, will find that a certain amount of the money that they had budgeted spending in this quarter will not now be spent. From my experience of talking to some councils, they are already looking to see where they can find savings as well as recognising that they have a reduced income from the normal services that they provide. However, there will be savings from contributions that would have made to various events, particularly over the summer months, that will probably not go ahead. We will continue to look at that and look at the finances that are available to councils through the rates discussions with them.
I of course get the points that Mr Catney raised in relation to the ongoing struggle of small businesses, although that is not part of this. This does contribute to businesses through the reduction of the non-domestic rate over the year and further into the future, but obviously the Executive want to look at other interventions that we can make. There has been, I think, over £0·5 billion-worth of interventions to try to support businesses to date. We understand that the economy will struggle in the time ahead and we will continue to do what we can.
I trust that Members will show the necessary support for the order. I believe that a strategic approach to the domestic regional rate and, in particular, the non-domestic regional rate will be welcomed by households and businesses alike.
In closing, I thank the Committee Chair, members and staff, for their work in reviewing the concept of the order at its meeting on 5 February and the substance of it on 22 April. The timing of the Executive's return, the late Westminster Budget and the issues facing us all as a result of COVID-19 have been real challenges, and I welcome, therefore, the Committee's work to assist the Department in its scrutiny, and I look forward to working with it, hopefully in a more typical environment in the months ahead as normality begins to return. I commend the order to the Assembly and ask Members to affirm it.
Before I put the Question, I remind Members that this motion requires cross-community support.
Question accordingly agreed to. Resolved (with cross-community support):
That the Rates (Regional Rates) Order (Northern Ireland) 2020 be affirmed.