Policy and Resources Committee 15 October 2004

From Nigov

B3008

Policy and Resources Committee

Monday, 15th October, 2004

SPECIAL MEETING OF POLICY AND RESOURCES COMMITTEE

Members present: Councillor Hartley (Chairman); and Councillors D. Browne, M. Browne, Crooks, Lavery, McCann, C. McGimpsey, O’Reilly, Rodgers and H. Smyth.

Also attended: Councillors W. Browne, M. Clarke, Empey, P. Maskey, McCarthy, McClenaghan, Moore, Morgan, Stoker and Toan.

In attendance: Mr. P. McNaney, Chief Executive; Mr. R. Wilson, Assistant Chief Executive; Mr. L. Steele, Head of Committee and Members’ Services; Mr. D. Cartmill, Acting Head of Civic Buildings and Property Care; Mr. F. Maquire, Head of Financial Services; and Mr. J. Hanna, Senior Committee Administrator.

Reform of the Domestic Rating System in Northern Ireland

The Committee was reminded that, at its meeting on 24th September, it had agreed that a special meeting be held to receive a presentation from senior officials of the Department of Finance and Personnel in relation to the proposals for the reform of the Domestic Rating System in Northern Ireland.

It was reported that Mr. B. McClure was in attendance and he was admitted to the meeting and welcomed by the Chairman.

Mr. McClure informed the Committee that the last revaluation of the domestic sector had taken place in Northern Ireland in 1976 and had been based on evidence derived from the private rented sector during the late 1960s. Following a period of consultation, the Department of Finance and Personnel had published a policy paper entitled “Reform of the Domestic Rating System in Northern Ireland”, which proposed to change the basis of valuation in the domestic sector from rental to capital values. He outlined the objectives of the reform, which was to create a modern system which would distribute the local tax burden between businesses and the domestic sector by a fairer means, raise revenue to meet local needs and be consistent with social and economic policy.

Mr. McClure highlighted the impact which the proposed new system would have on ratepayers, which would require those living in higher-valued properties to pay a greater amount. He stated that the new system would provide transitional relief for those most affected by the revaluation, offer protection for those ratepayers who were asset rich but income poor and introduce a new appeals mechanism.

With regard to the impact on Local Authorities, Mr. McClure explained that a change to capital values would have a significant impact upon District Councils and their relative ability to raise revenue locally from the domestic rates. However, at this stage it was too early to assess the impact of the new capital-based system on Local Government revenues though reliable data in this regard would be available from September, 2005. The new system would also include enabling powers in order to allow any future Executive to set maximum and/or minimum payments, vary the scope and cost of the rate relief scheme to assist those on low incomes and introduce a deferment scheme for owners-occupiers of pension age.

In conclusion, Mr. McClure outlined the timetable for the introduction of the new system. He indicated that the closing date for the current consultation process was 12th November, with draft legislation being drawn up in mid-2005 and the first domestic rate bills under the new system being issued in April, 2007.

The view was expressed that vacant domestic properties caused major problems in the Belfast area. The proposal to introduce rates for such locations was to prevent landlords from leaving properties vacant and/or derelict, which would then have the effect of reducing the value of inhabited properties on either side of the vacant house, thus reducing the quality of life of those who lived in such areas and creating an adverse domino effect on properties in the general locality. The introduction of rates on these types of premises would provide an incentive for the landlords to either develop or sell. A Member stated that, rather than provision being made in the legislation for an enabling power, the rating of vacant domestic properties should be introduced as an integral part of the new system.

The point was made that the introduction of the new system would increase revenue to the Council from domestic rates. However, if the Council did not require the increased income in any financial year there was a possibility that it would be used to offset the regional rate, which would mean that Belfast ratepayers would be subsidising other District Councils and consideration needed to be given as to how this would be addressed. It was pointed out also that the reform of domestic rates should not be considered in isolation from the proposals to introduce water and sewerage charges, since both taxes would have a major effect on ratepayers and their ability to pay.

After further discussion, the Committee agreed that a report on the proposed Council response to the consultation document, incorporating the comments of the Members thereon, be submitted to the meeting of the Policy and Resources Committee scheduled to be held on 22nd October.

Chairman