21 July 2004 Minister Launches Governments Policy Paper On The Reform Of The Domestic Rating System
A new domestic rating system, due to come into effect from April 2007, means households in Northern Ireland will pay rates on a fairer basis, the Finance Minister, Ian Pearson MP, said today.
Launching the Government’s policy paper on the reform of the domestic rating system, the Minister said:
“Reform is a necessity. This was confirmed by the outcomes of the public consultation exercise launched by the Executive in 2002. The domestic sector was last re-valued nearly 30 years ago and is riddled with anomalies and inequities. Rental values no longer mean anything to householders, the majority of whom are now fortunate enough to own their home.
“Under the new arrangements, domestic rate bills in Northern Ireland will be calculated on the basis of each property’s assessed capital value rather than a banded system. This builds on the decision announced in 2002, in light of the outcomes of the consultation exercise, to change the basis of valuation from rental to capital values.”
The Minister also announced that regular revaluations will be carried out to ensure that the new system is up-to-date and reflects changes in the property market. In addition, a new appeal process will be established for householders unhappy with their property valuation.
Commenting on the redistributive impact of the proposals, Mr Pearson said:
“It is likely that there will be some significant shifts in rate bills, particularly at the top end of the market. It is only fair that those who can afford to pay do pay a fairer share as soon as possible, but there is also a need to manage the transition effectively. I have therefore decided that transitional arrangements will be introduced to assist those who may experience significant increases in their rate bill. These arrangements will be finalised when the revaluation exercise is completed and published well in advance of April 2007 when the first rate bills under the new system will be issued.”
On the issue of rate reliefs, Ian Pearson went on to say:
“It is critically important that we provide a safety net for those who can least afford to pay. Blanket reliefs, however, are not the answer. Instead, I am proposing to introduce a rate relief scheme that will provide targeted assistance to those ratepayers on low incomes who are just beyond the reach of the housing benefit system.
“This relief will not, however, be a state benefit. Like most other rating reliefs, it will be funded from the local tax base, which means that other ratepayers in Northern Ireland will pay a little bit more as a result.“
The new system will also cater for people with a disability who qualify for Disabled Person’s Allowance. New applicants will receive a standard 25% reduction in their rate bill to ensure they are not disadvantaged because of modifications made to their home.”
The Minister also expressed the Government’s desire that future decisions on rating reform would be taken forward by a restored Executive and Assembly. This will be taken into account in the legislation required to implement the Government’s reforms.
He said:
“At a policy level, I am also proposing that we build a number of legislative levers into this reform package to ensure that local Ministers, when they return, will be able to take fundamental decisions about the new system I am announcing today.
“
This will include the ability to define the scope and remit of the relief scheme and decide whether to introduce a deferment scheme for pensioners.
“
In addition, it is also my intention to make provision for a power to set a maximum and/or a minimum payment threshold. These measures may be needed under the new system to ensure that a disproportionate burden, either too high or too low, is not placed on particular households relative to their overall use, and the provision, of local services.”
Commenting on the Government’s decision not to introduce the rating of vacant domestic property, Ian Pearson said:
“While, as I have indicated previously, I think that it is right in principle that vacant property should be rated, the cost of extending it to the domestic sector would be excessive when compared with the revenue likely to be raised. Unlike the position in the non-domestic sector, the rating of vacant domestic property would be an inefficient measure and therefore I do not intend to introduce it at this stage. However, provision will also be made for an enabling power that would allow a future Executive to introduce it at a later date if circumstances were to change.”
The Minister also stated that the reform of the domestic rating system will need to take account of the outcomes of the ongoing Review of Public Administration in Northern Ireland and the Balance of Funding Review in England.
Concluding the announcement, the Minister said:
“There will now be a 16 week consultation period during which I hope as many interested parties as possible will consider the proposals and comment on them. The detailed analysis underpinning the proposals is contained in the policy paper. A shorter summary paper is also available. An explanatory leaflet will be issued to householders in September.
“Modernising the rating system to achieve ‘a fairer share’ is the aim of this reform package and I strongly believe that the new domestic rating system will achieve that aim for all ratepayers in Northern Ireland. A fairer system will also pave the way for a future Executive to opt to raise more from rates in order to fund significant infrastructure investment here. We are all acutely aware of the need for this investment and the unique opportunity we now have to address it through the Reinvestment and Reform Initiative. Should a future Executive decide to utilise this opportunity, the proposals I am announcing today will ensure that the costs to households in Northern Ireland are distributed in a much fairer way.”
NOTES TO EDITORS:
1. On 27 May 2002, the then devolved Finance Minister, Dr Seán Farren MLA, announced the Review of Rating Policy. It had been identified in the Executive’s Programme for Government in 2000 and its scope and terms of reference agreed in 2001.
2. Consultation on an initial policy paper lasted from May to October 2002 and involved a series of public consultation events and meetings with various interest groups.
3. A final Equality Impact Assessment (EQIA), on which consultation has already taken place and a summary of the Policy Paper is being published alongside the main Policy Paper.
4. The detail contained within the Policy paper will be subject to consultation, concluding on 12 November.
5. Both the main policy paper, summary document and final EQIA are available on the Rating Policy website: www.nics.gov.uk/ratingpolicy/. Other material relevant to the Review can also be accessed here.
