Northern Ireland Assembly
Monday 22 January 2001 (continued)
Mr Close: If we are going to continue with a rating system then, on principle, revaluation should be as often as humanly practical so as to avoid the type of distortions that resulted from the 21-year gap prior to the last one. If we are going to continue with the rating system - and I understand from the Minister's comments that the whole system would, and should, be subject to an early review - I would question the timing of this revaluation. If we are to embark on a review of the overall rating system, could those resources be used to restructure the system to provide something more effective? I accept that the purpose of revaluation is to remove distortions and give better equity between properties. Domestic properties were ignored in the last revaluation. Is there not an opportunity here? If we are to continue with rating, why were domestic properties excluded again? The level of distortion will be aggravated because of the 30-year gap since revaluation was last carried out on domestic properties. I sympathise with Mr Shannon's comments about how we protect the lifeblood of the smaller shopkeeper, rural post offices and so forth throughout Northern Ireland. I would extend this to our towns and cities. High street retail was one of the sectors that suffered most dramatically from the last revaluation. As has been mentioned, the result was that many premises were vacated. We do not want our towns to turn into ghost towns or huge office blocks. We must do our utmost to encourage people to have a proper retail mix in our towns and city centres; otherwise we may destroy the entire fabric of society in Northern Ireland. Unfortunately, over a number of years we have been slipping towards that. Drive through any of our main provincial towns, say Lisburn, which is the jewel in the crown of Northern Ireland's shopping centres, and what you see are numerous "for let" and "for sale" signs. This is solely due to excessive rents and excessive rates. The offshoot of this is that a proper retail mix is gradually being eroded from our towns and cities. Over the past five years food stores have suffered the greatest change in their history. We now have the Sainsburys and the Tescos in Northern Ireland. Presumably, they escaped the last dramatic shift. There was no real basis to hang their rentals on, so this time there will be a considerable battle with the large superstores. The impact that this will have on shopping is something that must be seriously considered. We must try to expedite the rates evaluation. Is it the best way to attract income? We need to eliminate the current distortions, and I question whether rates are the best way to do this. Mr Savage: Mr Close referred to Lisburn as the premier shopping town, but surely Lurgan and Portadown are in the same category. Many shops in our towns are lying empty, and empty shops are of no use to towns or to ratepayers. We must try to encourage our shopkeepers. If we burden them with high rates, it becomes impossible for them to exist. 4.30 pm I represent a rural area, and this has highlighted for me the fact that people in those areas must travel to towns to get what they need. For example, our small post office has closed - it is very difficult for small branches to compete with the bigger post offices in the town that have so many services to offer their customers. I welcome the statement that there will be a review every five years. That is long overdue. It worries me that people in rural areas are being deprived of many of the services that are available in towns. I hope that the various authorities will take this point on board. There are many derelict shops and houses across the country, and this is of grave concern. This is a sore point and a big drawback to any society. I hope that in the coming months and years a rebate will be introduced to encourage people to renovate derelict properties so that they are fit to be lived in again. Peace has taken its grip on our community, but these areas have endured a good deal of torment and turmoil over the last 10 or 15 years, and due consideration must be given to the houses there. Mr P Robinson: Any subject matter brought to the House by the Minister of Finance that touches on the issue of rates will get the attention not only of Assembly Members but, more importantly, of a very large section of our community. Few people are not impacted in one way or another by the level of their rates bills. Over recent days the intention to have a substantial increase in the regional rate has brought stories to many of us, particularly from shopkeepers and small businesses. They face very real hardship as a result of what will be small changes to the Northern Ireland Budget overall but which will mark very large changes to their normal business cash flow. When we talk about reviewing the valuation list, we talk about the potential to put people out of work. I am not sure how the Minister's Colleague managed to summon the view that there is a good-news story here. In reality, as a result of this valuation list review, every one of us will have constituents coming to tell us that their rates have been hiked up very considerably. Of one thing we can be certain - those who benefit as a result of the review will not be coming to tell us about it. We will hear the sad stories in this case, and there are bound to be many. I want to make a particular case - and not for jewels in the crown. Those who come to the Assembly and tell us how swimmingly things are going in Lisburn, Portadown and Lurgan obviously require less sympathy from the Minister than those of us who talk about substantial difficulties in our constituencies. Therefore the Minister needs to pay some attention to the areas where there is no glitter and very few jewels. I draw the Minister's attention, in particular, to the difficult task faced by shopkeepers in the periphery of Belfast. They are competing against large stores and businesses in Belfast city centre. Traditional shopping patterns are changing - people are going more often to out-of-town stores to pick up the week's groceries. The corner shop is under great pressure, yet it is a vital part of the vibrancy and integrity of the local community. The Minister should give some guidance to those who will determine the valuation and say that there must be some allowance for those who are trying to keep that part of the retail community alive in these difficult circumstances. If smaller stores are treated in the same way as Marks & Spencer, Sainsburys, Tesco, or Safeway, they will not get a fair deal. The whole community will have cause for regret if small corner stores go out of business, causing that part of the life of our community to die off. I agree with the Minister that there should be regular reviews. There is case for regular review since this does not, in itself, set the amount that people will pay for rates - it decides the formula which will determine the apportionment of the overall rates burden that each will eventually pay. However, I agree with Colleagues that there is a good reason for holding a review of the domestic sector. There have been some occasions when constituents have voiced to me their objections to their rates bill because of a change that has taken place in their area. The valuer, sent out to visit the property, has sometimes concluded that, because of a garage, extension or improvement that was not included on the original valuation, the occupant should be paying a higher rates bill. If this small number of cases is indicative of the situation in the community as a whole, significant changes are required. The rating of domestic properties would be an enormous job to undertake. Businessmen, in particular, will say that they want to have the same degree of scrutiny on all properties on the valuation list, rather than just on the non- domestic properties. I trust that the Minister will look at all of these points and recognise that there is a case for small businesses, particularly shopkeepers, who have a difficult job to make ends meet in present circumstances. Mr Durkan: I thank everyone who contributed to the debate. The motion relates to a short statutory rule, but the subject of rates and revaluation always generates great interest among Members, who are constantly alert to the interests of their constituents. I have listened with interest to the points made. They were informative and challenging, and I will try to respond to as many of them as I can. Mr Byrne said that the need for timely revaluations to avoid the significant gaps and excessive changes that we have seen in the past is a key reason for supporting a revaluation now. It will mean that we will have had a revaluation after six years, rather than five. I believe that we should be moving to regular revaluation on a five-year basis. The Order does not of itself put us onto a five-year revaluation cycle; it is simply about the next revaluation. People might have had wider questions about us pre-empting the rating policy review if we had been committing ourselves fully and deliberately to a five-year cycle now. That is an issue that will obviously come up as part of the wider rating policy review, but I note the thoughts that Members have already expressed in that regard. Joe Byrne is also correct in saying that the revaluation rates are based on rental values. That is something that people have views on. Many people seem to be questioning the accuracy and adequacy of the last revaluation. Independent appeals mechanisms are available. There is a common recognition that many of the valuations arising from the last revaluation have been overtaken. There have been changes in the retail geography of many towns; there are new players; and the market has changed. As a result, trading practices and customer preferences have also changed. We recognise that. Again, that is an argument for revaluation rather than against it. The last time around, transitional arrangements were made when variations emerged on revaluation, and those arrangements reflected the very significant changes that some ratepayers faced. We really do not know the scale of the variations that we are going to face this time. It would be premature to say that there will be a transitional relief scheme. That is something that will need to be reviewed in light of what the revaluation yields. Jim Shannon raised points that touched, in particular, on businesses in rural areas - especially post offices. He also highlighted the point that provision is being made in Great Britain for 50% rate relief for certain properties and businesses falling into a particular category. This is another area that we want to consider realistically. Legislation was passed before devolution that would provide for such a scheme here. As I indicated in a previous written answer to Sean Neeson - and I referred to it in an answer to Joan Carson as well - work has been done in relation to that legislation. There are issues in relation to defining the relevant areas and the businesses that would qualify. There are still a number of outstanding points, in relation to implementing the legislation, which I want to consider. Members are aware that I have announced - it is in the Programme for Government - that there will be a wider rating policy review, the details of which I will be bringing forward soon. I am not convinced that it would be fair to simply leave the question of making targeted relief available until the rating policy review, because the rating policy review will itself take some time to bring forward results. I will be considering the matter further to see what we can do in relation to the existing legislative provisions. Seamus Close raised a number of points. He stressed his belief that if we are going to have rates, and therefore revaluations, those revaluations should be as regular as is practicable. He also raised the point that a general rating review would perhaps be preferable to the revaluation. We are having a wider review of rating policy, but, because it might take a number of years for results and decisions to come through from that review, it would be advisable to proceed with non-domestic revaluation now. 4.45 pm If people recognise timely revaluation as important, we should not delay it simply because we are having the wider review. It makes sense to proceed with the revaluation and the wider review. The wider review may confirm that we will still have non-domestic rates - just as there was when changes were made to the rates systems elsewhere. For instance, when domestic rates where abolished in the South, non-domestic rates were retained. Equally, across the water, when rates gave way to the poll tax - quickly followed by the council tax - non- domestic rates were retained. It would not be appropriate to suspend any move on revaluation until we had the wider review, not least because many Members are saying that current revaluations are out of sync with current rental values and real market factors. If that adjustment is needed, and revaluation needs to take place, then we should not be making excuses to avoid it. If I were delaying revaluation pending the review, more questions would have been raised about that approach than the one we are currently adopting. Mr Close referred to the impact on the retail sector, particularly by the big multiples that have come here. There has been a significant change in retail geography since the last revaluation, which, again, underpins the case for such a revaluation - a point further reinforced by Mr Peter Robinson. While not taking issue with those who emphasised the needs of people in small towns and rural areas, this also served to highlight some of what are regarded as urban discrepancies in relation to current valuation patterns. Many small shops and businesses in urban areas, particularly those in the penumbra of the bigger cities, face particular difficulties and challenges. That is why revaluation should be seen as a positive exercise. If people feel that they are suffering under excessive valuations at present, then they should welcome a revaluation. Mr Robinson said that the point of a revaluation is not to set about increasing the overall yield from rates - that yield is determined by our spending needs. It redistributes the overall rates burden in line with current property values. In that way it is actually a re-balancing exercise. Revaluation should address the imbalances that people tell me are already building up as a result of differential levels of rental growth, and, it is to be hoped, prevent other imbalances arising. The revaluation will come into force on 1 April 2003, and the new rateable values will be based on rental values as at 1 April 2001. I should point out that in the last revaluation, the overall increase in total value was 630%, with a corresponding reduction in average rate poundage from £2·50 to £0·40. Other things being equal, an average increase in total value of 25% should see average rate poundages falling back to around the £0·40 mark again. I hope that that clarifies for Members that this exercise is not about trying to increase the rate burden overall on small businesses, or anyone else, it is about trying to achieve a more equitable distribution of that rate burden. Question put and agreed to. Resolved: That this Assembly approves the New Valuation List Order (Northern Ireland) 2000. Assembly: Ad Hoc Committee on Life
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