Northern Ireland Fair Rates Campaign

Response to 2007 Executive Review of Domestic Rating Reform

The Northern Ireland Fair Rates Campaign is responding to this consultation having regard to the input we have received from the many public meetings we organised, the canvassing in shopping centres, the press articles, letters to newspaper editors, discussions with all shades of our politicians and the details obtained from those who signed our petition against the Single Capital Value (SCV) system.

This new system is not fair or equitable – just as the rent based rates system was unfair to some, so applying simply the SCV is also unfair.

We have at no time had any indication from the Department of Finance how the charge has been considered against the householders ability to pay or how have ‘’asset rich - income poor’’ been protected from what must become a Pensioners Savings Tax until they too reach the point where they are forced into a ‘’benefit’’ situation. Lyons in his report gives some recognition of this in advocating the Savings limit for pensioner relief be set at £50,000.

It is important to recognise that the Rate Charge could be a hybrid – for example a property tax and also a service charge. There needs to be a balance struck between these if fairness is to be achieved between those in expensive homes using minimal levels of services and those in smaller less expensive houses who may be consuming significantly greater levels of services.  Add to this the need to assess the occupant’s ability to pay these charges

We feel that this review should look at alternative systems in depth including a service charge model, local income tax, sales tax and land tax.   It is possible that an equitable system may include a package of complementary measures that will be progressively implemented over a number of years.  We realise that legislation may be required to permit some of these to be fully implemented.

Although we have the support of a wide breadth of the community, we do not have the resources to analyse these different systems, however, we have previously provided detailed information to the Programme for Government Committee on the problems of the single capital value system. The Department should refer to the report of these proceedings for the comments and contributions we made at that time.

This submission re-emphasises key points and principles from our earlier submission, however as we have considered the detailed work that has been done in England by the Lyons Inquiry into Local Government Finances we believe there are significant aspects which will now modify certain aspects of our submission to this Review.   

Presently throughout the rest of the UK the highest council tax bill is never more than three times the lowest. This ensures those in the lowest band pay a proportion of their tax as a service charge for services used and a proportion for the capital value of their home, but the mechanism exists to ensure that those in financial hardship receive assistance with their council tax. Similarly the higher band homeowner pays towards services used and property value.

We feel that the three times cost ratio used may be difficult to achieve in NI and would accept that recognition of low capital value and low income households would probably dictate a cost ratio of five times the lowest band being paid by the top band. This, however, must not be a mechanism used to increase revenue. 

An eight-band model may enable an equitable distribution of charges in N.Ireland similar to the English Council Tax system.

We believe from our public consultations that the other priorities of our earlier submission remain valid, they are

The reduction of the maximum Cap to £300k, a figure reflective of the economic circumstances of householders in NI. This would compare with £320,000 in England.

A 25% single person’s discount and second adult rebate must be included as this exists in the rest of the UK

Relief should be applicable to students and not landlords

Automatic relief for pensioners, not dependant on means testing

Relief for disabled persons should not be based on their homes being modified

The Fair Rates Campaign opposes double taxation in the form of the proposed new water charges. Householders here have always paid for their water through their rates, if water charges are to be included in the annual rates bill then it must be clear how much of the total is a water charge

As we have stated previously all measures must be generational i.e. be in place for a significant period of time to promote stability and certainty amongst property owners.

The department each year must set aside a significant amount of revenue for rebates to include pensioners and other mentioned groups.

We believe that there is limited public knowledge of the actual finance regime and a poor understanding of the cost of public services in Northern Ireland. Accountability should also be an outcome of this Review and the department should ensure that sufficient information flows to the public to show how the finances work and how the conclusions that follow from the Review were reached.

Then there must be clarity in the make up of the rates bill to show where it comes from and where it will be spent. There was much talk that the SCV would be transparent. It may be, however it has caused many people to dispute the valuation of their homes and there are a large proportion that did not dispute because their homes were undervalued. Of those who did dispute there are still sizeable percentages that have not had a resolution. Equally important to homeowners is having knowledge of why they are paying that amount of rates and where it is going.

The system should show who drives or makes the decisions, indicating any flexibility that the councils will have to vary the budgeting throughout the year.

We are greatly perturbed by the central pressure to spend on infrastructure using National Loan Fund money and PFI schemes yet without clear local involvement in the justification of the service need or formulation of suitable options. Infrastructure spending needs to be a mix of local and central strategic objectives and the local consultation on such schemes would demonstrate why the rates should be required to service the long term loans and 30 year (and more) commitments to PFI projects.

The Lyons Review shows that where cities (councils) are given more freedom and resources they responded by being more proactive, entrepreneurial and raised the economic prosperity of the area. All of these latter issues cause us to call for an early implementation of the Review of Public Administration, as this will enable a new certainty of roles to be defined for the householder and allow the many efficiencies of scale to significantly reduce the Rate Charge.

In conclusion we feel that the issues that we have identified may require you to test aspects of our submission and we would offer ourselves to assist in any way that we can with this Review.