Robinson Delivers On Rates Pledge To Pensioners
The Finance Minister, Rt Hon Peter Robinson MP MLA, announced the outcomes of
the Executive’s Review of Domestic Rating today.
His
proposals address the plight of pensioners on low incomes and include:
- a 20% single pensioner discount for those ratepayers aged 70 and over, who live alone;
- an increase in the savings threshold from £16,000 to £50,000 for pensioners under the existing lower income relief scheme, and
- the introduction of a deferment scheme as a choice for pensioners who own their homes.
Other measures proposed include:
- a reduction in the rating cap from £500,000 to £400,000;
- measures to improve the take up of reliefs;
- the rating of empty homes;
- rebates to encourage energy efficiency measures in homes;
- further evaluation and consultation on rate relief for students and possible alternatives to the scheme with a view to abolishing it; and
- further work on the option of introducing a derelict land tax.
In a statement
to the Assembly, the Minister said that his proposals clearly demonstrate the Executive’s commitment
to make a real difference for householders in Northern Ireland, especially when considered alongside
the recent decision to freeze the domestic regional rate for the next three years:
“It
is only 194 days since I commissioned this Review and in that short time we have covered a lot of ground,
generated much debate, consulted broadly and ultimately have had to make difficult choices.
“I am confident that the
package of proposals is a balanced one that will lead to a more acceptable system and
a better distribution of the rating burden amongst householders in Northern Ireland.”
He
pointed out that the desire to make changes in time for next year presented all concerned with a challenging
task but also served to focus minds:
“This
process has confirmed that we have to be realistic and recognise that if we had been starting from square
one, things may have been different.
“Radical
change now will only lead to a different set of winners and losers and while I would be the first to
recognise the limitations of any property tax system, I do believe that with the right checks and balances
the current system based on capital values can be made fairer.
“Getting
the right checks and balances is therefore what I have focused on and is what I believe we have achieved.”
Mr
Robinson explained the steps he intends taking before bills issue next April:
“The
key changes for next year are the introduction of a single pensioner discount for those ratepayers living
alone, aged 70 and over, set at 20% and the proposed increase in the savings limit applied under the
low income rate relief scheme from £16,000 to £50,000 for pensioners.
“These
are targeted measures that I believe will have an immediate and positive impact for a relatively modest
cost. The cost will be borne by the regional rate rather than other ratepayers.
“The
increase in the current savings limit is in line with the ‘first step’ recommendations of the Lyons
report and also reflects the considerable support for such a change during the consultation.
However, in addition to this and the additional reliefs for pensioners secured during the St Andrews
negotiations last year, I also want to address the difficulties facing single pensioners in particular
as a result of the reforms introduced
in April this year.
“The responses received
during the consultation, many of which were from single pensioners, would seem to support this. Furthermore,
analysis undertaken with the help of experts within the Department for Social Development highlights
the low take-up levels of existing reliefs among this group as a major shortcoming. This is why I am
also proposing the introduction of a single pensioner discount for those over 70 years of age from April
2008.”
The Minister referred to the
debate conducted in the media last week about the absence of a general single person discount:
“It
is important that people fully understand that a discount given to any one particular group, whether
deserving or undeserving, in the long run has to be paid for by other ratepayers paying more. In the case of single person households, this is of the magnitude of around £30 million per year.
“It is difficult to argue
that single person households represent a vulnerable group requiring such a level of support. Indeed, I would pose the question, is it right that young families struggling with large mortgages should
be required to pay a supplement to fund all those who live alone?”
The
Minister then turned to the important issue of the take-up of relief and rebates, outlining the next
steps:
“I am proposing as a
matter of urgency to commission a study led by the voluntary and community sector to bring forward actions
that could be taken to support Government awareness and take-up strategies next year.
Outlining
his plans for the medium and longer term, Mr Robinson announced a proposed voluntary deferment scheme
for pensioners who own their homes:
“I
am also pleased to present to the Assembly a number of further proposals that will take slightly longer
to implement. The first of these is the introduction of a voluntary deferment scheme for home owning
pensioners - this will essentially involve rolling up rate payments at a concessionary rate of interest
until the sale of the house and securing the debt by creating a charge on the property.”
On
the question of a ‘cap’ or maximum capital value for rating domestic dwellings, he suggested that there
was a strong case for lowering the current £500,000 threshold:
“I
am attracted to a lower level of £400,000. While the number of households that would directly benefit
from such a move would be fairly low – about 5,000 in total – it would bring the highest bills under
the rating system in Northern Ireland into line with the average bills within the highest band under
the Council Tax system.
“I
believe is a fairer comparator than the absolute highest Council Tax Bill which was the rationale behind
the initial cap level. I shall, of course, consult further on this issue as I am keen to take account
of developments on water charging and in particular what cap, if any will be proposed there.
“Bearing
this in mind I am therefore proposing to reduce the cap in April 2009 with final confirmation of its
level to be made following consultation.”
The
Minister was keen to press forward with the rating of empty homes as quickly as possible, describing
the measure as not just a device for raising revenue, but something that can also assist with wider
policy objectives such as housing affordability:
“Given
its clear benefits, I am proposing that this measure is introduced at the earliest possible opportunity,
most likely April 2009, at a rate of 100%. This later date will give us time to consider the outcomes
of the work currently being undertaken by the University of Ulster, the Northern Ireland Housing Executive
and the Department for Social Development’s working group on Housing Affordability.”
He
said that the review had also looked at the longer term and considered options as alternatives or supplements
to the current rate system:
“One
such option that I believe should be carefully considered is the taxing of derelict or vacant land. This would be a complementary measure to the taxing of vacant houses. While this measure could bring
in much needed additional revenue to help fund our public services, it could also help satisfy other
wider policy considerations, such as ensuring that there is a sufficient supply of development land
available, thus assisting two twin policy aims: that of affordable housing and economic growth.”
The Minister also outlined two ways
in which the domestic rating system would work to improve the environment:
“Firstly,
I wish to provide a rate rebate to existing homes that make energy efficiency improvements, such as
cavity wall and loft insulation. Secondly, I am proposing an initial rate exemption for the first purchase of new homes which are zero
carbon rated.”
He said that these measures
would replicate similar schemes already operated by some local authorities in England.
Mr
Robinson then outlined his thinking on the rates exemption scheme for students, introduced this year
under direct rule:
“The scheme
attracted much criticism during the consultation process, in that many of the respondents thought that
the benefit of the relief was going into the pockets of landlords rather than students. Others questioned the effectiveness of the relief and a number questioned whether this particular group
was a priority in terms of the provision of rate relief.
“The
review also considered the number of applications for this relief received so far this year which is
less than 500. This in itself draws into question the effectiveness of the policy. I am therefore minded to revoke the scheme, providing we can reasonably protect those who have already
applied. However, before doing so I think an evaluation of the policy and consultation with key stakeholders
on the outcome of that evaluation is necessary.”
On the question of local income tax,
the Minister thought it best to wait and see:
“I
do not think we need to close the door on it entirely at this stage, in that we can learn the lessons
from elsewhere and in particular, from Scotland, where the Scottish Government has recently decided
to abolish council tax and replace it with a local income tax.
“I understand that this
is to be the subject of a public consultation in the coming months. As Scotland is proceeding at pace with this, it is my view, shared by the Committee for Finance &
Personnel, that it may be best to maintain a watching brief on developments there for the time being.”
Mr
Robinson finished his statement to the Assembly with an update on progress in relation to water charging.
He confirmed that single billing, with rates and water identified separately, is to be examined by the
Departments of Finance & Personnel and Regional Development.
He
said he was anxious that the rating reforms announced today should not be placed in jeopardy by the
substantial work on IT systems and possible legislative change that such a step may require. He promised
to report back to the Assembly in the New Year on progress made.
Notes for Editors:
- The Minister’s statement will be published in full on the Rating Reform website at http://www.ratingreviewni.gov.uk/
- DFP will be publishing a paper within the next few days that will set out the outcomes of the Rating Review in detail – including the options considered and those not recommended. It will also be published on the Rating Reform website.
