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Rates (Amendment) (Northern Ireland) Order 2006

My Lords, I shall get a figure for that, but I am not using a different figure from that used in Grand Committee. The figure that I have just given is different, because I was making a different assessment. Fifty-five per cent of people gain or pay the same; in other words, they pay lower rates or pay the same. The figure that I have just used is 68 per cent of people, who will gain, pay the same or pay less than £1 extra. That is what I have just said, and it is completely consistent with what I said in Grand Committee. These are two separate assessments. I have now used a figure that also includes people who will pay less than £1 extra. Sixty-eight per cent will gain—that is, they will pay lower rates—will pay the same or will pay less than £1 a week extra. That gives a scale. One in five people in Northern Ireland pay no rates anyway. Under this system, more than one in five will pay no rates. The rebate system will be more generous than it is under the present system. As I said, a pensioner couple living in a house worth £500,000 on the state pension will pay no rates. I also gave a figure in Grand Committee for a couple living in a house worth £500,000. That couple would have to have an income of £35,000 a year or £16,000 in savings before they were taken out of the rebate system. So it is not true that we have not considered the people on the margins who are asset-rich and income-poor. We have tried to devise a system that is fairer and more up to date. In other words, it is a system that people understand because houses are bought and sold every week. It is the same all over the country. I challenge any noble Lord to explain rateable values based on notional rental values to people today. My eyes would glaze over, let alone those of the person to whom I was talking. They would not understand what I was on about. People understand a capital value, however. The assessment that was made was necessarily a snapshot of the position in January 2005. Generally, people would have sold a house for less then than they could in November 2006. It is important to start the system a reasonable amount of time after the snapshot was taken in January 2005. In other words, it should be started by April 2007 so that the figures are reasonably realistic. Obviously one needs to revalue properties over time. In Northern Ireland, the Rate Collection Agency of the Department of the Environment knows much more about properties because of what it has been doing over the years than we do in England. The whole point is that what is happening in Northern Ireland is fit for Northern Ireland. It is not a test bed. The people of Northern Ireland are not being used as an experiment. As I have said repeatedly, and notwithstanding the Lyons review and all the material that has been in the press in the past few days, it is a fairer system that takes account of the ability to pay. However, the ability to pay is not the prime factor in a dwelling that has been adapted because of the owner’s disability. There will be a reduction in the valuation of their rates irrespective of their income. That valuation is therefore not related to that person’s ability to pay. The concession for people whose dwelling has been adapted because of their disability may therefore have increased in value because various factors have been incorporated. That concession is made irrespective of their income. It does not matter whether they are poor, on a medium income, on a pension or whatever their income is; that concession is available. It is true that it is not related to the ability to pay. We wanted a scheme that was related as closely as possible to the ability to pay but that was also property-based. Property-based taxes are much easier to collect, as are people-based taxes, as we discovered when the unwise poll tax was instituted. In terms of value for money, you do not want to spend a lot of money collecting rates. I fully accept—we can discuss this—that Northern Ireland’s system for water charges is different from that in the rest of Great Britain. Water charges need to be up front and levied in a way in which more income comes into Northern Ireland to be spent in Northern Ireland and so that a borrowing capacity can be created that is not there under the current arrangements. I realise that the cost of living and incomes and earnings are somewhat lower in Northern Ireland than they are elsewhere in the United Kingdom, and that public expenditure per head is higher than anywhere else in the United Kingdom. Even now, a cap is possible—we have discussed this issue, and I will conclude on this point—so that no one in Northern Ireland would pay a rate that was greater than the highest rate in England. As I have said, we need to introduce the new system because we will simply not be able to operate the present rating system from next April. I accept that that is not a fait accompli because it is subject to parliamentary approval. Given the time that we have taken over this, we freely admit that it would be incredibly difficult to operate the present rating system because the IT systems and all the procedures are in place to operate the new system. That is why the amendment tabled by the noble Lord, Lord Smith, is not really tenable or practical in the present circumstances. It would cause the utmost chaos in the collection of local government revenues in Northern Ireland next year. On the other hand, the amendment in the name of the noble Lord, Lord Glentoran, is seductive in that I want to hear him make a robust case for it. I will think about it while he is speaking and make an assessment, because we are prepared to be flexible. The Ministers in charge of this day to day have already said so. We need the consent of Parliament to introduce this system in the absence of the Assembly, although we would much prefer it to be the Assembly. The Executive and the Assembly started this process. They have at least identified something that needed to be done. I am not blaming them for choosing capital values. They considered 12 options. They were disbanded in, I think, October 2002, and direct-rule Ministers decided the way to go in December 2002. The four years since have been spent planning in the most meticulous detail. We are confident that the system will work. It is modern and fairer, and it creates more gainers than losers. That is very necessary when one is changing the tax system, although the gainers do not always thank you for it. The losers are easily identified, as they can be quite vociferous. As I said in Grand Committee, one cannot defend the present system, which asks people on low incomes living in low-value properties to pay a disproportionately higher share than a fairer system would ask them to pay, compared with those living in the high-value properties. The idea that there are no high-value properties in Northern Ireland can be dispelled by driving around Northern Ireland for a few hours. It is a fairer system designed for Northern Ireland and nowhere else. As I have said, there will be more gainers than losers, and it has the necessary concessions to make it work and to make it as closely based on the ability to pay as possible, bearing in mind that it is a property-based tax. I beg to move. Moved, That the draft order laid before the House on 9 October be approved.—(Lord Rooker.)