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Rates (Amendment) (Northern Ireland) Order 2006

I have seen some of the figures in some of the areas relating to communities and their housing, but some communities are living in lower value housing than other communities, and they will gain, because their houses have not gone up as much as the average. If that is the case in pockets of communities, someone might claim that we are being beneficial to one tradition rather than another. We are not. It just happens to be that the dwellings that they are living in have not gone up as much as the dwellings that others are living in. Noble Lords cannot defend, I hope, the fact that there has been no revaluation in the past 40 years. If there had been rateable value revaluations—as is supposed to happen and did so before, every 10 years or so—you would catch up. It is all very well the noble Baroness saying ““Yes, I agree””, but because there has been no revaluation, hundreds of thousands of people have lost out. They are paying more rates than they should because their houses have not increased by as much rateable or saleable value as others. Why should they lose out? They become the gainers under this system. They happen to be the majority of households in Northern Ireland. One can always make a case out of where people live, but we are not taxing people on where they live but on the value of the properties they are in. Because they have not all increased by the same amount, some people have gained more than others. Others have lost more than others. That is what we are trying to put right with a fairer system, so that we are on a level playing field. The noble Lord, Lord Rogan, asked, since we would be willing to introduce a cap on the higher values following the return of devolution, why not now? We have put forward a fairer system, taking account of ability to pay. If devolution is restored, and we hope it is, a cap will be introduced. This reflects the concerns of local politicians about the impact of the reforms on certain groups. If we get devolution back, it will be local politicians effectively making the decisions. Until they are back, the status quo as planned in the order will apply. However, relief to one group will have to be paid for by other groups. That is the reality under the system in England. I was also asked about introducing a cap at the same level as Wales. Lowering the threshold after 2006-07 would simply increase the impact on other ratepayers. It is revenue neutral for the year in which it is introduced, but if you change things afterwards and the pot of money to be raised remains the same from the same dwellings, and you then distort the system to give relief to some groups, you must raise the level on everybody else. The noble Lord, Lord Glentoran, thought that collecting data by photographs was criminally wrong. It may be a difference between the devolved admin of Northern Ireland and England, but I was surprised that the information about housing in Northern Ireland held by the Valuation Agency is much greater than that held about English homes by local authorities. We did not need property information for the poll tax; it was irrelevant and sort of abandoned. Because the Valuation Agency has a comprehensive database, constantly refreshed since the 1970s, it did not use aerial photographs to produce these figures; it did not need to. The information they have about dwellings in Northern Ireland is astonishing. The photographs, by the way, are already in the public domain; it is nothing to do with the rates. Anyone can go on to a website and check properties anywhere around the world. This has been approached in an open and transparent fashion, but the Valuation Agency already held enough information to make these valuations because of its normal processes over the past 30 or 40 years. The noble Baroness asked me about relief measures to ensure that there is maximum take-up. I accept that the minute you start means testing anything, you must ensure that people understand it. The Rate Collection Agency is looking at a range of measures that will make it easier to claim housing benefits, and looking at working more closely with the voluntary and community sectors. It will also use the media and information seminars. I accept that this is a big change for Northern Ireland. It is a cultural change, which affects every household in Northern Ireland. Whether they pay rates or not, it is a big change. Therefore, the maximum possible publicity and information has to be given. I have given figures relating to pensioners and this is not an attack on them. More people will gain than lose under the new system. The noble Baroness asked me about local income tax, on which I am serious. Obviously, it is very seductive to have a local income tax, but that is not government policy. Her party was completely unable to explain it at the last election. The Northern Ireland Act 1998 prevents a local income tax and some other taxation matters being introduced. There was very little support for that measure during the extensive consultation exercise. There would also be concerns about the potential to evade it compared with a property tax. As I say, it is a lot cheaper to collect a property tax than it is to collect from individuals. It would certainly have a disproportionate impact on employees. The noble Lord, Lord Glentoran, asked me whether people in rural areas benefit from the same level of service provision. It is true that distances are greater. It is for the community ““kitty”” to collect the money to pay for services and for a small proportion of public expenditure in Northern Ireland. It is not as though a massive amount is collected for that and most it—I will be corrected on this—comes from general taxation rather than local rates. There is no question that Northern Ireland has got a dispersed population. It is so dispersed that there is a bungalow in almost every field, but I do not want to start another debate. There is no doubt that service provision tends to be more expensive where that is the case and the problem is exacerbated. It is no different in rural areas of Wales. Services are not just for the local council, they are also for the region and one has to make a judgment over everything. I have already refuted the allegation that Northern Ireland is being used as a test bed for reforms in Great Britain. It is not. We deliberately adopted specific systems for Northern Ireland that take account of local circumstances and avoided a one-size-fits-all approach. The Lyons Inquiry is reviewing local government financing and funding, and I would not want to pre-empt discussions. Clearly, anyone interested in local government reform will have a look at what is happening in England, Scotland, Wales, Northern Ireland and elsewhere in the world. It is a very sensitive issue. Local government tax is probably the single biggest up-front tax that most people pay, which is why council tax is so unpopular in England. When you pay PAYE, VAT and excise duty, you do not notice them up front. When you get the bill for council tax, you know about it, which makes it very unpopular. The noble Lord also asked me about the miscellaneous powers that justify fining people who refuse to give government officers entry to their property. The power of entry provided in the order would be used only in exceptional circumstances. I understand that this power is less intrusive, rather than more. As far as I know, it has not been used in collecting the values for the 700,000 dwellings in Northern Ireland. We need people to co-operate as neighbours and we need to take action against those who opt out of providing part of the kitty. There has been no need to use the powers of entry in order to collect the information. Our view is that first-time buyers will benefit. The properties that have risen less than average tend to be those that first-time buyers go for. First-time buyers will gain because their rates will be less than they are today. So the new system will benefit first-time buyers. If you are a first-time buyer going in for a £300,000 house, perhaps that will not apply, but the vast majority of first-time buyers buy houses that are less than the average price and that have gone up, by and large, by less than the average over the past 40 years. Therefore, under this system, they will pay less in council tax than they do in rates. First-time buyers will gain, most people will gain and most pensioners will gain. I cannot believe that people will not want this new system. Why are we rushing this order through in time for the November Privy Council? That is assuming it gets parliamentary approval, and I take nothing for granted. This has been a lengthy process, and it is part of a wider reform. We cannot simply leave this matter alone and say that, because the process has taken so long and is revenue neutral, we do not need to do it. The work has been done, the consultations have taken place, the information technology is in place and the preparatory work has been substantial. It is a fairer system and because there are more gainers than losers—the figures back us up on that—why should we hold back? We want to get more aid to the low paid, faster. That is why we have introduced the order rather than delayed it. I have dealt with the cap and restoration. Not introducing a cap affects less than 0.5 per cent ofrate payers, about 3,000 dwellings out of 700,000 dwellings, but I accept that a small number of people are affected by that. I have dismissed the bullying charge. I am not saying that I do not take it seriously, but I do not think that noble Lords took the view that we had been bullying; as I said, powers of entry have not been used. The equality impact assessment found that Protestants and people in the ““other religion”” category are likely to face an above-average increase in their rates bill in the new system, but, in many cases, that is linked to affordability, and where that is not the case, assistance will be provided for those on low incomes. The initial analysis undertaken on the basis of the new capital values published early this year shows that the difference on the basis of religion in average rates bills under the new system will virtually disappear once the other factors are controlled. Once we can control for ability to pay and other matters, the difference on religion disappears, which is a good thing. The difference is because in some areas, people live in community blocks and values have gone up at different rates; the distortion has not been caused by religion but by the increase in valuation. We have to make that clear. We accept that certain councils have a higher percentage of households that will pay more, but often very little is being paid. For example, the noble Lord mentioned Newry and Mourne. I accept that averages can be very misleading, but one has to use a figure. The current average bill is £660 a year, and the new average bill will be £713 a year. In Cookstown, the current average bill is £601 a year, and the new average bill will be £642. That works out at about 75p a week. I do not think I would go to jail for that. The noble Baroness, Lady Harris, asked whether this order is inconsistent with the policy to increase revenue. The noble Baroness must appreciate that reforms we are talking about today and the level of future rate increases are separate issues. This reform is designed to raise the same amount of money, but that is not to say that year on year more money will not be needed to pay for wage increases for public servants and for progress in the services provided, but we can separate that out. None of the increases will come about because of this change. This change is revenue neutral. It is not a change designed to bring in more money to start with.