---

Rates (Amendment) (Northern Ireland) Order 2006

rose to move, That the Grand Committee do report to the House that it has considered the draft Rates (Amendment) Northern Ireland Order 2006. The noble Lord said: This will be the easiest of the three orders with which I shall have to deal. I suspect that noble Lords will have many questions about it, and that, one after another, they will in due course declare their interests because they live in Northern Ireland. The order is no surprise to anybody. We wish it were being carried through by the Assembly. I understand that the work started in the Assembly with a keynote speech in 2000 and a consultation paper in 2002. This draft order is the culmination of a four-year period of research, analysis and public consultation, and puts in place a legislative framework for the introduction, in April next year, of the new rating system in Northern Ireland. I am very well aware that the reforms contained in the draft order have raised a number of concerns and some controversy, and that some of those who responded to the legislative consultations were critical of the fact that they had only seven weeks in which to reply. That timetable was necessary to ensure that the legislation comes into effect in time to allow further subordinate legislation, and information technology systems and other procedures, to be introducedbefore the arrangements come into operation from1 April 2007. Within the past few days, an application challenging the timetable for consultation on this draft order has been lodged in the High Court in Northern Ireland. I can tell the Committee that the court concluded that the seven-week period of consultation on the draft order was not unreasonable given that the Department of Finance and Personnel had previously carried out extensive consultation over 32 weeks during the policy development stage. The application for leave was dismissed by the court, which found no arguable case to substantiate claims that the consultation process on this legislation was inadequate. That is not my view; it is the view of the court. Obviously, I can make points because I was involved as the relevant Minister for the period in 2005-06. The last of three Orders in Council associated with this process, the draft order will replace the current rating system based on outdated and inequitable rental values with one based on the individual capital value of property. I knew nothing about the system of local government finance and rating in Northern Ireland until I arrived there in May 2005. I was quickly informed that a massive amount of work was going on and had been going on for some time. I then had to remind myself of what the rates were all about. I had enough of a job doing that as a Member of Parliament for my constituents. My biggest shock was to learn that the rateable values on which the current rates are paid in Northern Ireland are based on late 1960s rental values, when the majority of properties were probably rented anyway. Today, the majority are owner-occupied. Over time, there have been—perhaps I may say—distortions. If all the properties in Northern Ireland since, say, 1968 had gone up the same percentage in value, there would be no difference in what people would pay. This is not a revenue-raising measure. It is revenue neutral: it is another way of raising the same amount of money. If the value of all properties had gone up by the same percentage, there would be no change. But the world is not like that. The value of some properties has gone up vastly more than others. Therefore, there is inequity and unfairness in the system, which can be shown. Our assessment is that, under the new rates system, 55 per cent of households will pay the same as or less than they do now. In fact, 68 per cent of the population will pay only £1 a week more, the same or less. So there are far more gainers than losers under this system, which is a key criterion for changing local government finance, as the Conservative Party found out when it brought in the poll tax with more losers than gainers. Northern Ireland did not ““benefit”” from the poll tax; that is why it has not benefited from the council tax. There has been no reform of local government finance or rating in Northern Ireland while these reforms have gone on in England, Wales and Scotland, which has made the situation incredibly unfair. The new system and process are about introducing a rating system that distributes the rating burden among Northern Ireland households in a fairer way than at present. It is not about raising more money from rates. I want to be absolutely clear on that. The new system will be fairer than the present arrangements, more transparent and more easily understood. How can one explain to people in 2006 that the fixing of their rates is based on the rental value of their property in the 1970s? It is designed to confuse people. Some people have a vested interest in confusing ordinary ratepayers about how difficultlife is. Generally speaking, people understand the market value of a property. There are exceptions, such as social rented housing, which I understand and will come back to. But, by and large, the buying and selling of property puts a value on it. It is not a question of saying, ““You’ve got to pay more because you’ve got a conservatory””, or, ““You’ve got to pay more because you’ve got a garage””, or, ““You’ve got to pay more because you have a nice view””. That happens anyway: people pay the price of a property because they like it and are prepared to pay a certain value as a willing buyer to a willing seller. The individual takes into account a whole gamut of things from the number, shape and size of the rooms, the size of the garden and all those things. It is not that these things are new; they are intrinsic in the value of a property that exchanges hands between a willing buyer and a willing seller. At the moment, 25 per cent of all households in Northern Ireland receive assistance with their rates bills, and 20 per cent of households—140,000 homes—pay no rates: one in five households pays no rates. Under the terms of this draft order, more families and individuals on low incomes will receive help than happens under the present system. There is more gain for low-income families and households. The order provides for a transitional relief scheme, new relief arrangements for those in full-time education and training, and an allowance for people with a disability whose home has been modified because of the disability. The work that is done by way of aids and adaptations can sometimes—not always—have the effect of increasing the value of the property. People with a disability should not suffer because of that, so there is an allowance, which is not means tested. The system also includes a number of non-domestic measures aimed at providing assistance to rural businesses for which there was generally widespread support through the consultation process. I do not propose in my opening remarks to list every provision contained in the draft order. I am sure that Members of the Committee have absorbed its content and, because they live there, will have had communications from the relevant government department about their own circumstances. But I will highlight some of the more important issues. On domestic reforms, Article 14 introduces a new rate relief scheme, providing assistance beyond that awarded through the statutory housing benefit system. Households will be able to earn more than at present and still be entitled to help with their rates. A power is included in the legislation to allow relief to be directed at particular groups and to adjust the level of assistance provided, which will be an important mechanism to allow local politicians to tailor the system as they see fit. I was part of the collective team that made these decisions and we all had personal views on what kind of allowances there should be for special groups. We took the view that we should not create a complicated system, but legislate sufficiently to allow locally elected politicians, if they wished, to introduce different reliefs for different groups, be they single people living alone or pensioners or whatever. That should be left to local decision-making; it should not be done by direct rule Ministers. We have therefore created the legislative power and designed a system that operates from day one, gives more help to low-income households, and allows people to earn more money than at present and still be entitled to help with their rates. We regret that this debate is not taking place at Stormont, but that is where we are at the moment. I commend the efforts of everybody who has been involved in this massive process. It has been coupled with the peace process, which has brought us to the verge of the reinstitution of the Assembly—we sincerely hope that that will take place. I hope that the determination to get a grip on the situation and send the direct rule, part-time, commuting Ministers packing is so strong in politicians of Northern Ireland that they will grasp the opportunity to take back power and then make the decisions that are implicit in this order. In the detail of the agreement that was made atSt Andrews is a commitment from the Government to introduce a maximum cap on rates and to examine the possibility of providing further relief for pensioners on low incomes. However, I repeat that this will be subject to the restoration of the devolved Assembly. A further carrot is therefore on offer for the people of Northern Ireland if their own elected politicians take the opportunity that was offered atSt Andrews. The draft order makes provision for the measures to be introduced, so there would not be any legal and parliamentary delay. If the Assembly fails to be restored, the Government will take forwardreform in these areas as they see fit. That is our responsibility; if the Assembly is not restored, we will have to do it. Article 15 provides for full relief from rates where a property is solely occupied by someone under 18, for young people leaving care or those in full-time training and education. This reflects our commitment to strengthen and develop opportunities for young people to continue in full-time education. Articles 16 and 17 modify the current definition of disability and allow, as I have said, a 25 per cent reduction in rates where a property is occupied by a person with a disability and it has been modified because of that. Current recipients will retain their current allowance if it is higher than the 25 per cent under the new system, so there will be no losers. Article 18 enables relief to be awarded where rate bills increase by more than 33 per cent over and above what they would otherwise have been. The package of relief measures is not a scattergun attempt at appeasement; it is the result of exhaustive and careful analysis. It follows robust discussions among Ministers about what we should do about certain reliefs—whether we should introduce some, but leave others for the Assembly to decide to introduce. Let us be clear; any extra reliefs will cost money. They will be paid for by other ratepayers. The money is finite in that sense. This is a no-cost operation; it is not designed to raise more money. Therefore, reliefs for one group will be paid for by another group of ratepayers. That decision comes with the responsibility of elected office. I emphasise that the measures have been designed specifically to assist those most in need, reflecting our aim that the focus should be on ability to pay. That was central to our plans. The only exception throughout the system is the 25 per cent reductionin rates for households where there has been modification due to disability. That is not based on ability to pay. These relief measures will become operational in April 2007, once the new systemgoes live. In addition to the reform of the domestic rates, there are some non-domestic provisions that will assist businesses in rural areas. The agricultural sector will be given support through the introduction of a farm diversification relief scheme that will operate along similar lines to schemes in Great Britain. The Government are hopeful that this measure will reduce dependency on agriculture and sustain the economies of declining rural areas by granting relief for new enterprises that were previously agricultural. The draft order gives effect to this through Article 24. It is universally accepted by all knowledgeable people—I was going to say, by all right-thinking people—that the current rating system in Northern Ireland needs to be replaced. It needs replacing because that is how to get more help for the low-paid families. There is no question about that. We want a fairer system. It is true that there will be some people who will pay more, including those people who live in those great big mansions that I have seen in parts of Belfast—which I must say I was quite astonished to see, as I travelled around. Not everybody is income rich, even though they might be asset rich; I understand that. But our arrangements for relief go beyond housing benefit, so some of the people who would not at the moment qualify for housing benefit because they are a bit too wealthy will be brought into the system, which enables us to give more relief to people on low incomes. The new system is more transparent and easier to understand, based as it is on capital values set at January 2005. For some people, those capital values will look a bit low as houses change hands now, in October 2006. But there has to be a particular day when the values of 700,000-odd houses are considered. There is a range of reliefs for ratepayers, which, as I have said, will benefit many more families on low incomes than is currently the case. That reflects the decision of the previous Northern Ireland Executive to introduce a relief scheme based on ability to pay. That is not a scheme invented by direct rule Ministers. It is true that we have processed it over the past few years with research and consultation. The idea that the old system, if I can call it that, needed looking at came from the Northern Ireland Executive when it was in place. We have just taken it forward rather than ossifying everything at a particular date. It is a much fairer system for the people of Northern Ireland. The people of Northern Ireland are not being used as guinea pigs. I have heard it said that they are and I have seen it in the press—I keep up to date as much as I can. There is no plan in that regard. The system has been designed for Northern Ireland; it is a system that works elsewhere in the world, so it is not as though we have invented the wheel. It is much fairer than the council tax in England—there is no question about that—and it is certainly fairer than the poll tax. Above all, it is a lot fairer than the present way in which people in Northern Ireland pay their rates. That is the central point, and it is the duty of elected representatives to put over the fact that it is a fairer and more transparent system, which is easy to understand and which provides more help for people on low incomes. I am proud to move this Motion. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the draft Rates (Amendment) Northern Ireland Order 2006.—(Lord Rooker.)