Revaluation and convergence fund key to lower rate bills

Finance Minister Simon Hamilton has announced the introduction of a £30 million support scheme to help keep rate bills down when the new councils are formed in April.

The scheme will deliver £30 million of direct support to both domestic and non-domestic ratepayers who would otherwise have faced sudden and excessive increases in their rate bills because of the differences that currently exist between the rates set by the existing councils. Discounts will be automatically applied to the district rate, therefore Councils have been told not to apply for reductions.

However, Environment Minister Mark H Durkan remains sceptical as to whether all of that £30 million will be available to Councils, given the draft budget agreed by Stormont’s two largest parties (which he opposed). He tells The Impartial Reporter: “I am fearful that Stormont will flick the cuts over to Councils.” Announcing the rates convergence fund, the Finance Minister said: “This rate support will be phased over the four year term of the council, with an 80 per cent reduction on the increased portion of your bill next year, followed by a subsidy of 60 per cent, 40 per cent, and 20 per cent in the remaining years of the scheme.” His department will monitor the costs of the scheme carefully for the mid-term review planned in advance of the 2017/18 rating year, to establish if any “adjustment to the scheme” will be required at that point. “Councils, however, must also play their part to manage their affairs and act responsibly when striking their district rates,” said the Finance Minister.

The Department of the Environment’s budget has been cut by 11 per cent to 1.1 million. Mr. Durkan contends that this reduction “will have a devastating impact on councils”, telling The Impartial Reporter: “As it stands my department hosts and then distributes grants to Councils. There’s the general grant which goes to less well off councils, generally Councils in the West. There’s also the de-rating grant which subsidises government for their implementation of other government policies e.g. the small business rates relief, which is rates relief for manufacturing and industry. I would be worried that the cuts to that grant could jeopardise those schemes. They clearly will have an impact on Councils’ budgets and therefore on Councils’ ability to deliver services.” The Finance Minister confirmed this week that the £20 million Small Business Rates Relief Scheme is “under active consideration.” Revaluation The results of Reval 2015 were published recently; the new values will be used to calculate business rate bills from 1 April 2015 and mean that ratepayers will contribute to the funding of services relative to their 2013 rental value, instead of 2001 values as at present.

Business rates are charged on most non-domestic premises including shops, offices, warehouses, factories, hotels and pubs as well as utilities such as gas, electricity and wind farms. LPS is releasing the figures early so that business ratepayers can see the new valuations well before rates are struck, with final values published in February, and business rate bills issued in April 2015.

The full schedule can now be viewed online at: www.reval2015ni.gov.uk The results show an eight per cent growth in the total value of the new Valuation List when compared to the current List, which is based on 2001 values. Some preliminary outcomes of the revaluation include: • many high street shops and some shopping centres will see a decrease in rateable values; • many of the edge of town retail parks will see an increase in value; • the largest food stores show an increase in rateable value of 40 per cent; • the office sector shows little change, although with some increases outside of Belfast; • the pub trade will see considerable variation in values with notable decreases in some pubs and significant increases in some pubs in busy urban areas; and • major infrastructure investment, over the last 13 years, will be reflected in the rise in rateable values for utilities such as gas, wind farms and power distribution.

The Finance Minister stated: “There has been growth in the value of some sectors since 2001, so those business ratepayers are likely to see an increase in their rate bill; some rateable values are substantially lower and this will probably be translated into lower rate bills.”