Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2022

Executive Committee Business – in the Northern Ireland Assembly at 5:30 pm on 21 March 2022.

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Photo of Conor Murphy Conor Murphy Sinn Féin 5:30, 21 March 2022

I beg to move

That the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2022 be affirmed.

Photo of Roy Beggs Roy Beggs UUP

The Business Committee has agreed that there will be no time limit on the debate. I call the Minister to open the debate on the motion.

Photo of Conor Murphy Conor Murphy Sinn Féin

Before dealing with the order itself, I wish to set out some of the background to the measure. The purpose of the legislation is to reinstate the Back in Business scheme, which lapsed in 2017. When they returned in January 2020, the Executive agreed to the reintroduction of the scheme, but that was then suspended due to the advent of the pandemic and the implementation of the 100% rates holiday for many businesses, which is still in place at the moment.

Today's order re-implements the scheme, which will become operative again on 1 May 2022. That operative date will follow the ending of the first month's rates holiday for 2022-23 and will ensure that the scheme is up and running by the time the three months' rates holiday for 2022-23 ends on 30 June 2022.

The reintroduced scheme will incentivise the occupation of property on the high street that has been vacant for 12 months. The scheme will be subject to ongoing economic evaluation over the next year to monitor its progress. It was first introduced as an amendment to the Rates (Amendment) Act (Northern Ireland) 2012. At that time, it was introduced as part of a package of measures aimed at assisting ailing businesses and improving the appearance of our town and city centres. Now, 10 years on, in what is hopefully an increasingly post-pandemic business environment, we again find that those aims are equally valid for today's high street.

The original Back in Business scheme provided a one-year concession that allowed a 50% empty property relief or vacant rating charge to continue to apply to the new occupier for one year. That was available where a qualifying property had been empty for at least one year previously and had become occupied again. Today's order extends the duration of that tax concession to 24 months with the aim of building a solid platform for new high street occupation in the longer term, following the damage caused by the pandemic. The scheme will help to boost footfall in the high street as people return to shops and workers increasingly return to the office in the months ahead.

I have seen up close the effects of the prolonged period of disruption in my constituency and in other towns and cities that I have visited in my ministerial role since 2020. Today's extension of the scheme will allow Land and Property Services (LPS) to continue to receive new applications to the scheme until 31 March 2023. It will help to moderate the business rates burden for businesses in the difficult first two years by providing certainty in their overheads and helping them to budget for their businesses. It will also help them to adjust to full rates liability in due course and grow the tax base. In the interim period, the Department will generate the same revenue as it would have generated had the property remained vacant. The scheme is therefore a win-win when it comes to growing the economy, economic activity and tax revenue.

Between 2012 and 2017, when the scheme operated before, there were no instances of it being misused nor was there any evidence of displacement. As I mentioned, the reintroduction of the scheme will, however, continue to be monitored through economic evaluation over the next year to ensure that that remains the case.

I turn now to the statutory rule (SR) itself. Members of the Finance Committee have already been advised on its detail, and Members indicated at the SL1 stage that they were content for the scheme to be reintroduced and to run through to 31 March 2023. Article 1 of the order sets out the citation and commencement. Article 2 provides for the amendment of article 31D of the Rates (Northern Ireland) Order 1977, substituting the new end date of 31 March 2023. Article 2 also makes an amendment to ensure that the concessionary rate of liability will be granted for a period of 24 months in each case.

I look forward to Members' comments and commend the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2022 to the House.

Photo of Keith Buchanan Keith Buchanan DUP

I rise to speak briefly on behalf of the Committee for Finance. I thank the Minister for his opening remarks.

The Committee considered the draft rule at its meetings on 2 and 9 March 2022. As has been indicated, it is understood that the rule will allow any business that occupies a long-term vacant property valued as a retail unit to pay rates at the vacant rating level, which is 50%, for a two-year period. The Committee welcomed the introduction of the measure and hopes that further similar steps will be taken to revitalise our city and town centres. The Committee also welcomes the Department's intention to review the effectiveness of the measure during 2022-23.

The Committee sought clarity as to whether the measure will apply to any business that relocates to vacant premises. The Department has kindly responded on that, and perhaps the Minister might also refer to it in his response.

Photo of Maolíosa McHugh Maolíosa McHugh Sinn Féin

Ar dtús, ba mhaith liom buíochas a thabhairt don Aire as a ráiteas. As the Minister has outlined, the statutory rule will reinstate the Back in Business scheme, which was designed to encourage new businesses to open up in previously unoccupied premises. The scheme provides for a 50% reduction in business rates for two years for any new business that moves into premises that have been unoccupied for 12 months or more.

Starting a new business can be expensive and beyond the reach of many. Prospective business owners have to contend with huge start-up costs that they must invest without a guarantee that their investment will see a positive return. One such start-up cost is, of course, the rates bill, if the business operates from rateable premises. A 50% reduction to the rates bill will go some way to giving breathing space to any new business and will enable it to establish itself and to start turning a profit.

The other aspect of the legislation is the boost that it will provide to our high streets. Our high streets have suffered badly, particularly during the pandemic. We have seen a rise in the number of derelict properties on our high streets. The rise of online retailers has also had a knock-on effect on bricks-and-mortar businesses in our town centres. We all want to see our town centres and shopping areas thriving. The rates support scheme aims to bring vibrancy, footfall and investment back to our high streets. The difference that a bustling business can make to a once empty property on a main thoroughfare is striking, and I welcome the reinstatement of this positive rates relief scheme. I support the motion.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party 5:45, 21 March 2022

I will speak briefly today. In short, we will support the extension of the Rates (Temporary Rebate) (Amendment) Order for all the reasons that have been outlined by others, specifically in order to support the high street and other non-domestic commercial properties as we move out of the COVID crisis.

I want to say a couple of things. While we support the extension in principle, it is important to draw attention to the order's wider context, because it will have wider policy implications, as it were, than the rural ATMs order that we debated earlier. This is a much more substantial intervention. The cost of the rural ATMs exemption is about £100,000 a year, whereas this relief costs tens of millions a year, I think. The Fiscal Commission report suggests that it costs around £35 million per annum.

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

I was very pleased that the Minister commissioned the Fiscal Commission report, but the problem with commissioning good reports is that other politicians sometimes quote them back to you. The report is very useful and examines those things in detail. While we are supportive of the principle, given the cost — this is one of the larger areas of sub-parity in which the Executive have made a decision, with which they are continuing, to have a relief in a particular area; in some cases, it is a more generous area of service provision, but, in this case, it is a more specific tax relief — we should have a thoroughgoing look at how well targeted the relief is and whether it is achieving what we want it to achieve. I welcome the fact that the Minister said that that will be reviewed over the next year or two.

It is really important to state a couple of things. The income from the regional or local rate, whether domestic or non-domestic, is, largely, the only revenue source that the Finance Minister has. We need to be better at understanding the effectiveness of the resilience of the rates base. We passed legislation earlier this year to ensure that we can defend some of that rates base. We had to interrogate that, and it was not easy in some ways to prevent appeals against changed valuations on the basis of coronavirus. It was about taking a responsible decision, because we had to defend the revenue base of our only revenue source.

As we, as an institution, hopefully "mature", we need to move towards being able to raise more revenue and to take responsibility for more revenue in this place. Certainly, more than one party in this place wants that to happen. For that to be the case, however, we need to understand fully the effectiveness of the reliefs that exist at present. If someone asked me how well targeted and effective this relief has been in the years that it has existed at getting new businesses into vacant premises on the high street, I would not be able to point them to a piece of evidence on or an evaluation of that. That is not say that that does not exist. I am sure that it has been a factor.

We support the extension, but, in order to justify the relief, we need to understand, in broader terms, how well it is working, because it is costing us £35 million a year. There are other rating reliefs. Obviously, there is industrial derating, which has been instrumental in helping to support the growth of our manufacturing sector in particular parts of the region. This is not about saying that those reliefs should not exist; it is simply about saying that we need a better evidence base, which has been called for in the Fiscal Commission report. I understand that we will not get the Fiscal Commission's final report until after the election. I hope that, after the election, we are all back here taking responsibility and doing our job and that we can prove that we can take more responsibility for more revenue raising in this place and can understand how effective the relief that we are extending today is at getting support to our high street.

It is also worth saying that the policy interventions that are needed to continue to support our high streets as they recover from the pandemic in the medium and long term need to be joined up. They cannot simply be about rates relief. They also need to look at the planning process. My party colleague the Infrastructure Minister has announced a thoroughgoing look at that. I am sure that Andrew Muir, who is a regular correspondent on the planning system, will have something to say about that too.

We need to understand the range of things that impacts on the viability of our high streets, and we need to understand how they interact. Going forward, it would be helpful to have a more robust evidence base for how well the relief is working. I say that in support of the order's extension, but I very much hope that, after the election, departmental officials will be able to provide some evidence as to how all that is working.

Photo of Andrew Muir Andrew Muir Alliance

I thank the Minister for bringing the order to the Assembly. In response to Mr O'Toole's remarks, the Alliance Party continues to support a full, independent review of our non-domestic rating system. It is long overdue.

From the examination that we have done to date, and whilst not having any members of the Finance Committee, it is our understanding that the order will allow new businesses occupying a long-term vacant property that is valued as a retail unit to pay rates at a 50% reduction for a two-year period, reinstating the Back in Business scheme that expired in 2017 owing to the absence of an Executive. From watching the Committee's proceedings, I am aware that it was waiting for correspondence from the Department on the definition of a "new business". I would be grateful if the Minister could clarify what that means for established businesses that open a second premises and whether they will be able to benefit from the reliefs in the order.

I welcome the order for the injection that it will give to our town centres and high streets, which need all the support that they can get in light of COVID-19. I think particularly of the support that Bangor town centre needs for its regeneration and renewal. I welcome the Minister for Infrastructure's recent decision, after 13 months' delay, to approve the Queen's Parade development in Bangor, which will, hopefully, help towards the revitalisation of the town.

It is important to recognise the impact of not having an Executive. It is great that today's motion could be tabled, given that, previously, not having an Executive inhibited that. We need an Executive to be able to deliver for people and businesses across Northern Ireland. I therefore support the order.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

There being no further notification of Members wishing to speak, anois glaoim ar an Aire Airgeadais le críoch a chur leis an díospóireacht ar an rún. I call the Minister of Finance, Conor Murphy, to conclude and make a winding-up speech on the motion.

Photo of Conor Murphy Conor Murphy Sinn Féin

Again, I thank Members for their useful comments during the discussion and debate. I believe that the scheme is worth reintroducing as an integral element of rebuilding the high street as we continue, hopefully, to emerge from the pandemic. Vacant commercial property is a blight on the appearance of high streets across the North. By reintroducing the scheme, we can ensure that more empty commercial properties start to be brought back into use. That will improve the appearance of towns and create jobs across the community.

A couple of points were raised. New businesses were raised by the Deputy Chair and Mr Muir. The scheme will apply to any new business or an existing business that wants to expand and occupy an additional premises. Both circumstances are covered by the scheme applying to businesses occupying a long-term vacant property — that is, one that is vacant for 12 months or more.

Matthew O'Toole mentioned the scheme's cost. Given that there would have been no income from the properties if they had remained vacant, the cost of the previous scheme was assessed as being in the region of £500,000 per annum during the years in which it operated. Some 550 properties were supported between 2012 and 2017.

Matthew O'Toole also made some points about the Fiscal Commission. He was right: we have very few other revenue-raising options or financial levers. Of course, we need to assess carefully how we use those and the evidence of how the intervention actually has an impact. We will continue to do that. Certainly, when I visited and talked to town centre organisations and business support organisations, they continuously raised the Back in Business scheme as one that they would like to see back in place. They feel that it is of significant benefit in encouraging the uptake of vacant properties, which, as Mr O'Toole and other Members know, blight the landscape of town centres. It is a disincentive for people to come into town if it looks as though half the properties are vacant. We will, of course, assess that in order to make sure that the evidence stacks up over the lifetime of the scheme.

As I said, I am very grateful to Members for the support that they offered, and I ask them to support the measure. I commend the order to the Assembly.

Question put and agreed to. Resolved:

That the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2022 be affirmed.