05 December 2002 The Price Of A House Will Be A Fairer Measurement Of Rates From 2006 - Pearson
A new rating system – expected to come into force in 2006 – will assess houses in Northern Ireland on their market value for the first time, the Parliamentary Under-Secretary of State with responsibility for Finance, Ian Pearson MP, told an audience in Belfast today.
The Minister announced his intention to proceed with the new system, which would assess homes by capital value rather than rental value, during the launch of the government’s Public Consultation Report on the Review of Rating Policy at a gathering of members of the valuation professions in Northern Ireland.
Mr Pearson said his decision took account of the aims and objectives of the Executive’s first Programme for Government in 2000. This had called for a Review of the Rating system on the grounds that it needed to be more transparent, fairer, and easier to understand by ratepayers. Allied to this was the need to consider the implications of raising additional local revenue to meet Northern Ireland’s investment needs, on a basis comparable with other regions of the UK:
“The domestic rating system here is still based on the rental values, when most of us are fortunate to own our homes. The rental values were last reviewed 25 years ago in 1976, and even then they were based on late 1960s rental evidence. So it is hardly surprising that net annual values are no longer understood by ratepayers, nor does it provide a fair way of distributing the rating burden amongst householders.
“The Executive issued a Consultation Paper on the Review of the Rating Policy earlier this year. The consultation process has been a thorough one and 105 written responses were received from ratepayers and organizations. Three of the main political parties and three assembly committees submitted detailed responses.”
The Minister said the consultation exercise had produced a substantial body of opinion in favour of a change to domestic rates charges being based on the value of a house. There was general agreement among respondents that this was a fairer method. No one had felt that the status quo was an option:
“I have concluded therefore that we should adopt capital values as the basis for the domestic rating system in Northern Ireland.
“It will involve a significant programme of work to establish a revised capital valuation for all domestic properties. It will take several years to complete and I have asked the Valuation and Lands Agency to begin work immediately on this, with the objective of having new valuations available to support the introduction of new arrangements during 2006.
“Linked to this is whether new rates charges for domestic households should be individually assessed on a property by property basis, or on the basis of banding where properties are grouped into different ranges of values. Information and analysis from the further work I have commissioned from VLA will provide key data on which to base final decisions on this issue.”
Mr Pearson said the question of a reliefs scheme for those of modest means, but beyond the reach of the benefits system, dominated much of the discussion at the public consultation seminars. The absence of such a scheme was seen as a key flaw in the current arrangements and one that needed to be addressed before any changes to rating take place.
“At the same time most people agreed about the need to target any reliefs carefully and effectively. They recognised that the value of rates reliefs given to one group or sector would have to be redistributed and recovered from other ratepayers.
“There were many opinions expressed on who should qualify for reliefs, but also a consensus that ability to pay should be a governing principle. Importantly, it was acknowledged that any rates reliefs provided should be consistent with the wider benefits system.
“Providing reliefs from rates is a complex issue, and I have commissioned further work on the various systems available. We have much to learn from experience elsewhere in the world.
“A feature of local property taxes internationally is the provision of reliefs for vulnerable groups who are not entitled to welfare support. My intention is to publish a further policy document for consultation on this and other aspects of the reform of the domestic rating system by the middle of next year.”
On the same topic, the Minister said that the public consultation had identified other potential areas for change, mainly around business and charitable reliefs. These ranged from arguments put forward for reliefs for small business, sustaining rural communities, through to changes to existing provisions for charity shops, universities and community halls.
There was agreement, he said, that any consideration of the removal of reliefs or any exemptions from rates should be consistent with government policy aims and complement other support measures. He confirmed that these issues will be addressed in the main policy paper on the review of rating to be published by the middle of next year.
On the non-domestic sector, which includes commercial property, Mr Pearson said the consultation had produced no evidence of a desire for change to the present arrangements, which were felt to work well.
He said that as most business people rent property there was a better understanding of the principle of basing the assessment on rental values. The sector also contributes levels of revenue on a par with their counterparts in the rest of the UK.
Turning to the question of water charging, which had also formed part of the consultation exercise, Mr Pearson echoed comments made yesterday by the Minister for Regional Development:
“My colleague Angela Smith has highlighted the need for major reinvestment in our water and sewerage infrastructure in the order of £3 billion over the next 20 years.
“There are no immediate plans to introduce water charges for domestic consumers, but the scale of the investment that must take place is likely to require water and sewerage services to be self-financing by the end of the decade.”
NOTES TO EDITORS:
The then devolved Minister, Dr Seán Farren MLA, announced the Review of Rating Policy on 27 May 2002. It had been identified in the Executive’s Programme for Government in 2000 and its scope and terms of reference agreed in 2001.
The formal consultation process took the form of a series of public consultation events and meetings with various interest groups between June and August. It concluded at a conference in Belfast on 23 September 2002.
The Consultation Paper was available on the Internet with the website being accessed on over 19,000 occasions, including 9,000 requests for downloading the document. More than 1,800 copies of the printed Consultation Paper were circulated to a variety of interest groups and individuals.
A total of 105 written responses were received from ratepayers, local councils, businesses, voluntary and community organisations and professional bodies. These responses and the Public Consultation Report are published in full on the Rating Policy website: www.nics.gov.uk/ratingpolicy/
A detailed list of respondents is included at Annex A to the Public Consultation Report and a full list of issues (both identified in the Consultation Paper and those that have emerged from the consultation process) is at Annex B.
The main issues arising from the Public Consultation Report are:
Industrial derating
Rating of vacant property
Domestic revaluation, coupled with relief for fix/low income individuals or couples
Small business relief
Water funding
