Minister's Statement to the Assembly - 11th June 2007

"I would like to make a statement about the further review of the domestic rating system which I announced during the debate in the Assembly on Tuesday 15th May 2007 which considered the new system introduced by Direct Rule Ministers in April this year.

Today, I am publishing the Terms of Reference for this review which have been agreed by the Executive. I have provided Assembly Members with the Terms of Reference along with their copies of this statement and a copy has been placed in the Assembly Library. I have also written to the Chairman of the Committee for Finance and Personnel.

The Terms of Reference reflect my intention to examine a wide range of options for change in the short and longer term and to do so in a focused and accelerated fashion rather than engage in yet another process of prolonged analysis and review. This issue has already been subjected to a lengthy review over the past few years. What is needed, in the first instance, is a process which can deliver changes by next April.

I am also launching a twelve week consultation which will run until the end of August. The purpose of the consultation will be to seek views on what improvements can be made to the recently introduced system within the terms of existing primary legislation in time for next year’s rates bill. This is my immediate priority.

Obviously nothing we do will impact on ratepayers this year but we would be failing in our responsibilities as political leaders if we did not introduce changes which seek to make a real difference for householders next year. This is why the consultation must close at the end of August to allow us sufficient time to implement the necessary changes.

My officials will now begin to examine the options for change that could be delivered by next April - these are set out in the Terms of Reference. In the longer term there may be other improvements which we can make beyond next year that would require new primary legislation. Nothing has been ruled out, or in, at this stage. I am genuinely open to consider all options and new ideas.

I also want to focus on the evidence and hear the views of all interested parties, including ratepayers themselves, about the impact the new system is having and, critically, how we can ensure that help is provided in the best and most effective way possible. I would therefore urge Members to encourage people to respond to the consultation as it is only through engagement with, and listening to, those who are directly affected by the rating system that we can achieve a satisfactory outcome to this review.

As I said during the debate on 15 May, there is no point in pretending that there are easy answers queuing up to be adopted. Difficult choices will have to be made, particularly when we come to consider possible alternatives to the existing system. This is the second strand to the review I have commissioned which broadens its scope well beyond that of the review that led to the introduction of the capital value system in April this year.

A local income tax for example, which has been mentioned frequently by some as a possible alternative, would produce a completely different set of winners and losers than those under the current system. While the review is open to examine all options, I would be surprised if proposals such as a local income tax or a poll tax emerged as the favoured way forward.

Even the less radical options of providing new, or extending existing, reliefs to particular groups must be considered in the knowledge that they will shift the burden onto other ratepayers or reduce the amount available to fund public services. Finding a balance between the different interests and reaching a consensus will therefore be crucial. Any analysis or further insight that people can share with us on these issues, during the consultation process, will be very much welcomed.

I know that the Committee for Finance and Personnel will be taking a keen interest in this review and both my officials and I will facilitate the important role that they will want to play in this process. When the consultation has ended, I would share the responses with the Committee and I would intend to report back to the Committee on my intentions before finalising my proposals. I expect to be in a position to bring these proposals to the Executive and the Assembly in the early autumn.

None of us will want to consider the outcome of this review in isolation. The conclusions from the review that the Minister for Regional Development will detail later, concerning water charging, will be extremely relevant. I anticipate that the anxiety of ratepayers will have some correlation with the magnitude of their overall household bills.

My Executive colleagues and I are fully aware that this review of the rating system is one of the key challenges facing us in what are still early days for this Assembly. Each of our parties made commitments to the people of Northern Ireland on these matters. Each of us will want to make good our promises. The public will be watching and expecting action from us and rightly so. The Terms of Reference set out how we plan to take this matter forward. Now the hard work begins and I am confident that the approach we have published today will help us to achieve our overall objective of securing a fairer deal for householders in Northern Ireland."