23 March 2005 - Pearson Outlines Way Forward On Domestic Rating

Launching the Consultation Report, the Minister said: “The aim of reform of the domestic rating system is to establish a fairer basis for raising local revenues, all of which are invested in public services within Northern Ireland”.

Setting out the Government’s final policy informed by the consultation, the Minister said. “The Government remains convinced that the adoption of a discrete capital value system will be fairer and easier for ratepayers to understand than a banded system and intends to proceed with its introduction in April 2007.”

He also noted: “ Particular concerns were raised by many during the consultation exercise about the need to provide adequate protection for those least able to pay under the new system, particularly pensioners living in high value houses but on a low fixed income. The Government recognises the impact that a property tax may have on individuals who are on fixed and modest incomes, as the recent announcement in the budget of a payment of £200 for pensioner households demonstrates. These payments will be made at the same time as the 2005 Winter Fuel Payment and before the reforms of the rating system take effect.”

The Minister also said: “The consultation showed that there was strong support for any assistance under the new rating system to be targeted carefully and effectively towards those most in need. Government strongly believes that this aim can be best achieved through a relief scheme that takes account of individual circumstances and needs rather than a series of blanket reliefs that take no account of ability to pay. We therefore intend to introduce a new rate relief scheme in April 2007 that will more effectively target those least able to pay.”

The Minister added: “The Government remains of the view that the possible targeting of the rate relief scheme would be best left to a future Executive. Further work will be commissioned to identify those groups that should be targeted through this scheme.”

The Government also believes that a key factor undermining the fairness of the domestic rating system has been the absence of regular revaluations. The Minister stated: “To rectify this, revaluations will be held at least every five years, with the next revaluation in 2012. Following this, the interval between revaluations will be reduced”.

The Minister also said: “The Government is keen to ensure that the new system is implemented in a fair and reasonable way. Transitional arrangements will therefore be introduced over three years, to provide assistance to those facing the largest increases as a result of reform and providing time to adjust.” Further details on these arrangements will be made available once revaluation data becomes available towards the end of this year.

The Minister stated that some concerns had been raised during the consultation exercise in relation to the possible introduction of a maximum payment. He said: “Once revaluation data becomes available, further detailed analysis will be under undertaken on how maximum and minimum payments would impact on ratepayers. In the meantime, an enabling power will be introduced in legislation to allow such measures to be introduced ”.

In respect of people with a disability the Government intends to introduce a standard 25% reduction for people whose property has been modified because of a disability. The Minister said: “This measure will simplify the application process and also ensure that a significant number of current recipients receive a greater reduction in their rate bill than at present”.

Other areas of reform on which the Government has set out its final policy include vacant rating and the appeals process. The Minister said: “Mixed views were expressed during the consultation exercise on the possible introduction of domestic vacant rating. Taking account of concerns expressed, consideration will be given to utilising the power to introduce it in the medium term.”

The Minister continued that the Government intends to introduce a revised valuation appeals system. He said: “Ratepayers will have access to transparent and informal mechanisms through which to challenge the valuation of their property under the new system. The current appeals process will be revised and an independent valuation tribunal established. This process will, as at present, remain free of charge to the ratepayer”.

In conclusion, the Minister said: “The Government believes that our policies for reform of the domestic rating system in Northern Ireland represent the best means of ensuring that the system is fairer, transparent and takes account of individual circumstances.”

NOTES TO EDITORS:

1. The Review of Rating Policy was commissioned in May 2000 by the Northern Ireland Executive. It had been identified in the Executive's Programme for Government in 2000 and its scope and terms of reference agreed in 2001. A public consultation exercise was launched on 27 May 2002 and sought views on a wide range of options for reform relating to both the domestic and non-domestic sectors.

2. Following on from the consultation, Ian Pearson, MP announced on 5 December 2002 the Government’s intention to introduce a capital value based system for the domestic sector. Following further research and analysis, a policy paper on reform of the domestic rating system was published for consultation on 21 July 2004. This set out the Government’s preferred approach in terms of the adoption of a discrete capital value system and a number of other key reforms. The consultation period ended on 12 November 2004.

3. The consultation report sets out the Government’s response to the views expressed during the consultation exercise and how it intends to proceed with reform of the domestic rating system in Northern Ireland. Legislation will now be drafted to give effect to these reforms and will be published later this year.

4. Further research will also be carried out on a number of issues such as the minimum and maximum payment, vacant rating and the nature of transitional arrangements, and on the targeting of the rate relief scheme.

5. The consultation report and other associated domestic rating reform publications are available on the Review of Rating Policy website: www.nics.gov.uk/ratingpolicy/