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11 February 2004 Minister Announces Next Steps On Industrial Derating And Vacant Rating Legislation And Plans For Hardship Relief

The Parliamentary Under-Secretary of State with responsibility for the Department of Finance and Personnel, Ian Pearson, MP, announced today that the draft legislation on the phasing out of industrial derating and the rating of vacant commercial property has been laid at Westminster.
Ian Pearson said: "These are sensible, modernising measures aimed at establishing a fairer rating system in Northern Ireland. They are clear examples of the Government's focus on reform and commitment to investing in our public service infrastructure. This is why I have decided to proceed to the next legislative stage and towards the implementation of these reforms."
Mr Pearson said: "These reforms were announced in April 2003 following an extensive consultation exercise and the draft legislation was published last October. Since then, there has been much debate about the impact of phasing out industrial derating in particular. Having considered all the comments received very carefully, I remain convinced that the proposals are fair and reasonable and that there are other more effective ways of supporting businesses than the retention of a blanket measure, such as derating, for which there is no supporting rationale. However, I have decided to make one significant amendment to the draft Order."
Explaining the amendment, Mr Pearson said: "If any business, including a manufacturer, has genuine difficulty paying rates, then we, as a responsible Government, need to look at ways in which we can respond in practical terms. This is why I have inserted an enabling provision into the draft legislation on hardship relief. I intend to publish proposals for a hardship scheme soon, after I have consulted further with councils and business organisations.
"My intention is to have the necessary regulations and administrative arrangements for hardship relief in place and ready for the start of the phasing out of industrial derating."
Mr Pearson emphasised that it is clearly a matter of regret that the Northern Ireland Assembly is not in place to take forward this important piece of reforming legislation: "The Government is heavily engaged in efforts to bring about the restoration of devolution to Northern Ireland. However, we would face considerable criticism if we deferred every key decision when the need for the reform of, and investment in, public services is so pressing. The reforms contained in this draft legislation are reasonable and they have in part made possible recent announcements on major infrastructure projects totalling £2.7 billion in value. This scale of investment will significantly enhance Northern Ireland's prospects for long-term prosperity and future business success."
NOTES TO EDITORS
  1. The draft Order aims to give effect to two key non-domestic rating reforms arising from a Review of Rating Policy in Northern Ireland. These reforms are: (1) the prolonged phasing out of industrial derating from 1 April 2005 and (2) the introduction of the rating of vacant non-domestic property from 1 April 2004. They were announced in April 2003 following an extensive consultation exercise in 2002 and detailed discussions with representatives of the business community in early 2003.
  2. The consultation exercise on the draft Order ended on 2 January 2004. In light of the outcomes, the Minister decided to amend the draft Order to give the Department a power to introduce a further rating reform measure by subordinate legislation: a hardship rate relief scheme that will apply to the non-domestic sector and in exceptional circumstances. The Department is currently examining policy options and it is intended to publish further proposals later this year after consulting with councils and business organisations.
  3. The key elements of the rating of vacant non-domestic (commercial) property proposals include a 50% rate liability, an initial 3-months exemption, the exclusion of certain property such as manufacturing premises and the introduction of a completion notice system for new buildings. These arrangements largely mirror those already in operation in the rest of the United Kingdom.
  4. The phasing out of industrial derating will begin in April 2005, with a low 15% liability in the first year increasing on a very gradual basis over the next six years until full 100% liability takes effect on 1 April 2011. Industrial derating was abolished in England and Wales in 1963 and phased out in Scotland by 1995.
  5. The additional revenue raised by these reform measures will help to fund major infrastructure projects under the Re-investment and Reform Initiative. Projects totalling £2.7 billion in value have already been announced.
  6. Copies of the draft Order and the accompanying Explanatory Memorandum may be purchased from the Stationery Office Bookshop, 16 Arthur Street, Belfast, BT1 4GD.
  7. The documents are available also on the Internet at: www.nics.gov.uk/ratingpolicy/