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Standing Committee Debates

Draft Rates (Amendment) (Northern Ireland) Order 2006

The Committee consisted of the following Members:

Chairman: Mr. Christopher Chope
Brown, Mr. Nicholas (Newcastle upon Tyne, East and Wallsend) (Lab)
Cooper, Rosie (West Lancashire) (Lab)
Dodds, Mr. Nigel (Belfast, North) (DUP)
Durkan, Mark (Foyle) (SDLP)
Foster, Mr. Michael (Worcester) (Lab)
Fraser, Mr. Christopher (South-West Norfolk) (Con)
Gilroy, Linda (Plymouth, Sutton) (Lab/Co-op)
Hanson, Mr. David (Minister of State, Northern Ireland Office)
Hermon, Lady (North Down) (UUP)
Holloway, Mr. Adam (Gravesham) (Con)
Kaufman, Sir Gerald (Manchester, Gorton) (Lab)
Kidney, Mr. David (Stafford) (Lab)
McCarthy-Fry, Sarah (Portsmouth, North) (Lab/Co-op)
Neill, Robert (Bromley and Chislehurst) (Con)
Raynsford, Mr. Nick (Greenwich and Woolwich) (Lab)
Reid, Mr. Alan (Argyll and Bute) (LD)
Robertson, Mr. Laurence (Tewkesbury) (Con)
Rosindell, Andrew (Romford) (Con)
Waltho, Lynda (Stourbridge) (Lab)
Watson, Mr. Tom (West Bromwich, East) (Lab)
Wright, David (Telford) (Lab)
Glenn McKee, Committee Clerk
† attended the Committee

Second Standing Committee on Delegated Legislation

Wednesday 25 October 2006

[Mr. Christopher Chope in the Chair]

Draft Rates (Amendment) (Northern Ireland) Order 2006

2.30 pm
The Minister of State, Northern Ireland Office (Mr. David Hanson): I beg to move,
That the Committee has considered the draft Rates (Amendment) (Northern Ireland) Order 2006.
The order was laid before the House on 9 October.
I begin by welcoming you to the Chair, Mr. Chope. We have briefly discussed the fact that you were once a local government Minister yourself, dealing with many matters relating to local government finance. I know that you will enjoy observing and chairing this sitting, perhaps more than you would if you were a participant in the debate. To make the point that I usually make on these occasions, let me say that I very much hope that this type of event in the House of Commons dealing with Northern Ireland matters will soon come to an end. We hope that the Northern Ireland Executive will be restored very soon. My right hon. Friends the Secretary of State for Northern Ireland and the Prime Minister and I have been seeking to support the parties in securing that restoration in the very near future.
Lady Hermon (North Down) (UUP): I am delighted to sit under your chairmanship for the first time, Mr. Chope, and I am most grateful to the Minister for taking such an early intervention. Given that he sets great stock by the restoration of devolution in Northern Ireland—we hope to meet that 24 November deadline—why on earth are the Government bulldozing through this Order in Council through Committee this afternoon, within weeks of the restoration of devolution?
Mr. Hanson: If the hon. Lady had borne with me for a few moments more, she would have heard the end of my comment. I certainly hope that the Northern Ireland Assembly is restored very shortly to deal with these matters but, unfortunately at the moment the Assembly is not restored. I hope that it will be restored but it may not be. If it is not and if we do not deal with this order here today, we will find ourselves even further behind the United Kingdom in terms of rating policy. The subject of the order has been under consideration for four years, commencing with the Assembly consultation document in 2002. We need to progress the matter as a matter of urgency.
We have had at least 39 weeks of formal consultation to date. The reason I answer the hon. Lady in the way that I do is to emphasise that we are not bulldozing the measure through the Committee. A 39-week, four-year consultation period strikes me as being eminently reasonable.
Lady Hermon: Throughout that period of consultation, which political parties in Northern Ireland actually supported the proposed change?
Mr. Hanson: There have been a number of elements of support. Individual members of all parties have said that they want a capital value system. It has the support of a number of organisations in Northern Ireland, including the Northern Ireland Council for Voluntary Action, the trade unions and local councils, including some controlled by the hon. Lady’s own party. My point is that the process was started by the Assembly and by the directly elected Ministers, and we have continued the process to date.
Lady Hermon: The Minister will recognise that that was a very elaborate answer to a question that I did not ask. Would he answer the question directly? Which political parties in Northern Ireland support this change?
Mr. Hanson: As I said before, my hon. Friend the Member for Foyle (Mark Durkan), on behalf of the Social Democratic and Labour party, has indicated that a capital value system would be preferable to many other systems. I accept that the Ulster Unionist party, her own party, has been critical of the system all along. Different views have been expressed formally. The Democratic Unionist party, represented by the hon. Member for Belfast, North (Mr. Dodds), did not formally, as a party, submit evidence to the consultation. The Alliance party has expressed a desire for a fair local income tax proposal, but it has already said that in the absence of such a tax, it is happy to consider capital valuation. Sinn Fein, as one of the major parties, has not expressed opposition to the proposal in broad terms. There are different views on the proposals.
I say to the hon. Lady that our consultations in 2002 and 2004 highlighted overwhelming general support for the proposal to replace the present rating system with the capital value system. I stand by both consultations.
Mr. Hanson: I say to the hon. Gentleman that I have in front of me a consultation on the review of rating policy, which was produced in May 2002, when directly elected Assembly Members were in charge, and when Mr. Shaun Farren, a member of the Social Democratic and Labour party, was the Finance Minister who produced the consultation paper. There are a number of elements of support for these changes in Northern Ireland. I agree with the hon. Member for Tewkesbury (Mr. Robertson) that there are differing views, but several bodies have supported and still support the implementation of the proposal before us.
The proposal is not about raising any extra money from the rates in Northern Ireland; it is about how we distribute the burden of those rates among the population of Northern Ireland. Nobody in the consultations wanted to continue the old system of rates, but if the Committee or another place defeats the order before us, that system will continue. The rating reforms in the draft order have raised concerns and, as is already evident in the Committee, elements of controversy. Some of those who responded to the proposed legislation were critical of the fact that the last consultation lasting only seven weeks. In fact, in the past couple of days, a judicial review of the consultation procedures was undertaken in court in Belfast. I am pleased to inform the Committee that within the past few days, that application lodged in the High Court in Northern Ireland was concluded and the draft order was proved to be not unreasonable, given that the Department of Finance and Personnel had previously carried out extensive consultation over 32 weeks. The Court also dismissed the application to stop today’s sitting in the House.
The new system will be much fairer than the present one. For the benefit of members of the Committee, let me say that if the new system is operational next year, on current bill levels, 55 per cent. of households in Northern Ireland will either see their bill reduced or pay the same as they do now. If the system is operational next year, 68 per cent. of household rate bills will either stay the same, decrease or increase by no more than £1 a week. Many more houses will receive rate relief under the new scheme than under the present scheme: currently, 175,000 properties receive benefit under the rate relief scheme, whereas under the new scheme, 185,000 properties will receive that benefit. To emphasise the point, an extra 30,000 properties in that 175,000 would receive enhanced benefit on rate relief under the new scheme. In total, 40,000 more properties will receive either benefit for the first time or enhanced benefit.
Lady Hermon: The Minister’s language causes confusion. He has said that an increased number of households will receive enhanced benefit. Does that mean that they will receive it automatically, or will there be an obligation to apply? If so, will the Minister explain the low take-up in Northern Ireland of benefits of all kinds, particularly among the elderly?
Mr. Hanson: An application will have to be made, but in our estimation the households in question will qualify for benefit. For example, in the council area of North Down, in the hon. Lady’s constituency, 53 per cent. of the population will be winners as a result of the scheme. People will have to apply for rate relief, and I want to see a good take-up of that relief. Our estimate is that 175,000 people receive benefit now and that next year 185,000 will receive benefit under the new scheme, and of the 175,000 current recipients, 30,000 will receive a higher level of benefit than before. That is an important point. I would welcome and encourage a benefit uptake scheme. Just this Wednesday I put a half-page article in The Belfast Telegraph to encourage people to become aware of benefits so that they can take up the ones appropriate to them.
Mark Durkan (Foyle) (SDLP): Will the Minister help us further with the figures by telling us how many of those who will benefit under the proposed scheme will get transitional relief rather than the long-term relief provided for?
Mr. Hanson: The figures that I have given relate purely to the rate relief benefit. The figures on transitional relief will be additional. I shall come on to the matter of individuals who face larger increases than those who qualify for benefit, but I have been putting in place a transitional relief scheme that will allow people to spread over a longer period the burden of the large increases that some householders will face. I assure the hon. Member for North Down (Lady Hermon) that the Rate Collection Agency is considering a range of measures to ensure that ratepayers claim housing benefits. We wish to work with the community and voluntary sector to ensure the good take-up that the hon. Lady and I both want.
To continue with the theme of benefits, there is a new rate relief scheme in place for students in full-time education and for people leaving care. It will ensure that households in Northern Ireland that are completely occupied by students will not face the same rate burden as other households as part of their contribution to society. The transitional relief scheme mentioned by my hon. Friend the Member for Foyle will be in place for those who are hit hard by the scheme, and we have also put in place help for people with disabilities whose properties have been modified.
I know that the order is controversial. You will already have gathered, Mr. Chope, that the proposals are not universally welcomed in Northern Ireland. However, I believe that the system will be an improvement and distribute the rate burden among households more fairly. It should therefore be welcomed by the Committee.
Let me make clear what we are proposing clear. The order will replace the old rates system with a new capital value-based system, placing a charge on the value of a property as at January 2005. The new system will bring up to date the valuations on which rates are charged and introduce for the first time a new range of reliefs, which I have described. It will also extend the assistance available to those on low incomes. It will make the system easier to understand and, if agreed to by both Houses, it will operate from April 2007.
The draft order provides for the individual capital value system, and it is important for me to focus on some of its articles so that the Committee can examine it in detail. Article 4 will give powers subject to the devolution of policing functions, which may happen in due course. It sets out that part of the regional rate may be specified for funding police services if the Executive so wishes. [Interruption.] I hear a gentlemanly cough from the hon. Member for Belfast, North. He will know that the devolution of policing is a difficult issue. There are a number of steps to be taken, but we are simply putting in place a power so that, if that devolution happens, by consent of the Assembly, Her Majesty’s Government and the House of Commons, the restored Assembly will be able to levy rates for policing purposes if it so wishes. It could not currently do so. That is a technical matter, but will be important in the event of future changes.
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Prepared 27 October 2006