Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2024

Executive Committee Business – in the Northern Ireland Assembly am 3:00 pm ar 14 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin 3:00, 14 Mai 2024

I beg to move

That the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2024 be affirmed.

Photo of Edwin Poots Edwin Poots DUP

The Business Committee has agreed that there should be no time limit on the debate. I call the Minister to open the debate.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

Before I deal with the statutory rule (SR), I will set out some background to the measure. The scheme was designed by my Department as an amendment to the Rates (Amendment) Act 2012, following a proposal by Belfast Chamber of Commerce. At that time, the economy was coming out of the global downturn, and the Executive introduced a package of measures to help town and city centres. Sadly, many of the issues facing the high street then have become prevalent again, with many households and businesses facing increased costs as a result of geopolitical events and their impact on energy costs and inflation.

The "Back in Business" scheme, as it was later branded, aims to provide key support through a 50% reduction for businesses that move into properties that have been vacant for one year or more. The scheme's introduction here inspired similar schemes in England, Scotland and Wales before my predecessor, Minister Murphy, extended the measure in 2022 to provide a 24-month rates reduction at 50%, helping new businesses to adjust to rates liability in those difficult opening years of trading.

The purpose of today's legislation is to reinstate the Back in Business scheme, which lapsed in March 2023 as a result of the absence of a functioning Assembly. The statutory rule makes no change to the policy in place previously. It simply reintroduces the measure until the end of the rating year, after which I will consider aligning its operation with any multi-year Budget settlement that can be agreed at Executive level.

Many of you will be familiar with the sad sight of vacant properties on our high streets. Empty properties undermine civic pride and confidence. They send out a negative perception of our towns and cities. I know that all of us in the Chamber are passionate about the need to reinvigorate our towns and cities. That is why, when we returned in February, I advised the Assembly that I would reintroduce the scheme to support our high streets. When I took up office, one of the first things that business representatives requested of me was the reintroduction of the scheme to help boost the creation of new businesses and drive footfall for existing businesses in towns and cities. I am, therefore, delighted to be in a position to bring the order before the Assembly so quickly after the immediate priority of setting the regional rate for 2024-25 has been legislated for.

Today's order reimplements the scheme, which will become operative this week. The reintroduction of the Back in Business scheme will incentivise the occupation of retail units on the high street that have sat vacant for 12 months.

As has always been the case, the scheme will be subject to ongoing monitoring over the next year to assess its roll-out.

Today's extension will allow Land and Property Services (LPS) to receive new applications for the scheme until 31 March 2025, and LPS will also undertake publicity for the scheme to attempt to maximise uptake. It will help to provide new businesses with some certainty on overheads and help them to adjust to budgeting for their business. When they adjust to full rates liability in due course, the Executive and councils will then benefit from the growth in tax base. In my first few months as Minister, I have stressed the importance of growing our tax base by encouraging new businesses and business growth.

Importantly, in the first two years of business, the Department still generates the same revenue as it would have raised had the property simply remained as a long-term vacant unit. The scheme is, therefore, one of those rare things in the rating system: a win-win, providing support to new businesses while growing revenue in the longer term. While the scheme has operated for a number of years in different guises, there have been no instances of it being misused, nor has there been any evidence of displacement. That was true of the most recent iteration of the scheme where the recipients were largely sole traders occupying lower-value units as they started or expanded their businesses.

Members of the Finance Committee have already been advised of the detail of the statutory rule. Members indicated at SL1 stage that they were content for the scheme to be reintroduced and run to 31 March 2025. That was confirmed following the making of the rule and the Committee's associated clearance on 17 April.

On the substantive details of the order, article 1 sets out the citation and commencement, and article 2 provides for the amendment of article 31D of the Rates (Northern Ireland) Order 1977, substituting the old date with the new end date of 31 March 2025. The prior legislation — the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2022 — is then revoked by virtue of article 3.

In conclusion, I look forward to hearing what Members have to say about the measure. I commend the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2024 to the House.

Photo of Matthew O'Toole Matthew O'Toole Social Democratic and Labour Party 3:15, 14 Mai 2024

In the first instance, I will speak on the statutory rule as Chair of the Finance Committee. I very much thank the Minister for her comments. The Committee has given extensive consideration to the statutory rule to reinstate the Back in Business scheme, which allows any new business that occupies a long-term vacant property valued as a retail unit to pay rates at the vacant rating level for a two-year period.

The policy proposal was considered first at the Committee meeting on 6 March 2024. At that time, members agreed to seek clarification from the Department of Finance on a number of issues related to the policy proposal, including confirmation that it was not possible for businesses to avail themselves of the Back in Business scheme at the same time as being in receipt of any other rate relief, information on the recipients most likely to benefit from the scheme and any data to support that information. Members also agreed to ask whether officials had examined potential adjustments to the scheme in the context of the recent consultations on additional revenue raising.

The Committee, at its meeting on 20 March, noted additional information from the Department indicating that the enabling power used for the rule expressly prevents the award of additional rate support in the rating system, as per article 31D of the Rates Order 1977. Members also noted that the majority of recipients in the last active period of the scheme were small, independent enterprises occupying units with low rateable values.

Finally, the Committee noted that adjustments to the scheme on foot of the recent consultation on additional revenue raising had not been considered. However, the Department indicated that the scheme was extended in its last iteration to provide support for 24 months, as opposed to the original 12 months. That was done on foot of the findings of the business rates review in 2019. Since then, stakeholders have not made vocal calls for a revision of the scheme, but they did publicly request that the scheme be reintroduced by the Assembly when it returned. That was also requested at a ministerial meeting with stakeholders on 22 February 2024.

The SR was, subsequently, formally laid in the Assembly Business Office on 4 April as SR 2024/87. At the Committee meeting on 17 April, members noted that the Examiner of Statutory Rules (ESR) had not drawn any issues with the rule to the Committee's attention. Therefore, the Committee agreed to recommend that the rule be affirmed by the Assembly. The Finance Committee supports the motion to affirm it.

I will make some brief remarks in a political capacity as leader of the Opposition and leader of the SDLP group in the Assembly. We support the reintroduction of the Back in Business scheme. I welcome that, upon her appointment, the Minister moved swiftly to do that. It is an important, albeit, in scale, relatively modest, incentive in the rates system to get businesses, particularly microenterprises, back into vacant properties on the high street. It is worth saying that that can only be one part of the effort: we need something much broader. I know that she is looking at the rates system, more broadly, and taking advice from her officials, including on foot of the review that was first ordered by the Secretary of State, I think, before Christmas.

I also want to point out one other slight anomaly. Perhaps, it is not an anomaly, but something for us to think about: vacant property relief, more broadly. I strongly suspect that the Minister may already be thinking about it. Obviously, the scheme is linked to vacant property relief, because when businesses take up vacant properties, the property is no longer vacant and is occupied by going concerns and operating businesses, which hold on to 50% of the vacant property relief for a period afterwards. We know that the vacant property relief, generally, as opposed to the Back in Business scheme, which keeps hold of the vacant property relief, is, in Northern Ireland, very generous. That is not to say that it should not exist, but it is much more generous than schemes in any neighbouring jurisdiction. Statistics contained in the Minister's response to a question for written answer in the past couple of weeks show that nearly 6,000 of the businesses that claim vacant property relief have been doing so for more than 10 years, and almost 9,000 have been claiming it for more than five years. That suggests, at the most generous, that there is a little bit of dead weight in that tax incentive. It also suggests that there is space to better target vacant property relief and to better do what the Minister is trying to do with the Back in Business scheme, which is incentivise people back into business rather than have them avail themselves of a never-ending tax relief on a property that, in some cases, it seems, they have no realistic desire to let or reoccupy. If someone is claiming vacant property relief for more than a decade, I do not think that they are doing their best to get that property let. We should, therefore, think about that, and I encourage the Minister to look at it. I am sure that that is one of the things that she is looking at.

More broadly, the SDLP supports the reintroduction of the scheme. It is useful, albeit relatively modest, and we welcome it being brought to the Assembly.

Photo of Diane Forsythe Diane Forsythe DUP

I thank the Minister for her prompt action in bringing this to the House. We welcome the reinstatement of the Back in Business rate support scheme. The scheme was created to incentivise business ratepayers to consider empty retail premises when looking for a business property, and it allows any new business that is occupying a long-term vacant property that has been valued as a retail unit to pay rates at the vacant rating level for two years. We all know that our high streets are under incredible pressure, with shops and restaurants closing regularly. The knock-on effect that that has on our towns is felt widely and is often devastating.

On review of the scheme, the Finance Committee learned that the majority of recipients in the most recent active period of the scheme were small, independent enterprises that were occupying units with low rateable values. The scheme made a significant difference to those businesses, which tended to be smaller and local. I welcome that incentive to help small, local businesses make a good start. A return to the initiative will support the regeneration of our high streets, while facilitating new businesses to move into their first premises and providing opportunities for existing businesses to expand. It is a welcome boost as we strive to grow our economy in Northern Ireland, especially in the current climate, when the cost of doing business poses significant challenges. We support the motion.

Photo of Eóin Tennyson Eóin Tennyson Alliance

I echo the support for the order and the reinstatement of the Back in Business scheme. As others have said, it is a relatively small but, nonetheless, significant policy intervention that will help to support the reinvigoration of our high streets and town centres into busy and vibrant hubs. It should, of course, be built upon and supported through a cross-Executive approach involving the regeneration responsibilities of the Department for Communities, with a role for the Department for the Economy and local councils.

Our business community has been hampered by political uncertainty in recent years, and the Back in Business scheme is, perhaps, a tangible example of that. Despite the widespread support for the scheme and the consensus on its value that is apparent in the Chamber today, it was suspended following the collapse of the Assembly in 2017 and again in March last year. During its previous period in operation, the scheme helped to support 101 new businesses, and so it begs the question about the scale of lost opportunities due to the absence of the Assembly.

There is no doubt that having the assurance of a two-year discounted rate relief will encourage new and expanding businesses to take that important next step. It is particularly important following the turbulence of the pandemic and the inflationary pressures and energy costs bearing down on our high street. However, the lead-in time for a new business is often longer than a year, and so I welcome the Minister's commitment that she will look to include this relief in a rolling multi-year Budget to give our business community the stability and certainty that it desires and requires.

The Minister is probably tired of hearing me say this in debates, but we need a fundamental root-and-branch review of rate reliefs, as agreed to by the Assembly yesterday, in order to encapsulate just some of the issues that the Chair of the Finance Committee has raised already. That is the best way to ensure that our rating system responds to business demands and to ensure that it is fair, progressive, equitable and fit for purpose in challenging economic times.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

I thank the Chair of the Finance Committee and the Members who contributed to the debate.

This scheme is worth reintroducing because it can breathe new life into our high streets, after what has been a difficult time for many businesses, while, at the same time, helping traders old and new deal with the cost of doing business. Vacant commercial property is a blight on the appearance of our high streets. It undermines our towns and cities, which is something that the Assembly and Executive should address. This measure can go some way towards addressing that. Back in Business is also a good example of what we should try to do more of: strategic low-cost interventions that make a critical difference to businesses, especially in a climate of fiscal restraint.

I will pick up on a couple of the comments that Members made. Matthew O'Toole made some observations that the Committee had raised queries about and had some responses on the fact that businesses receiving this rate relief are unable to also avail themselves of other rate reliefs. Recipients have been evaluating the outworkings of the previous iteration of it, mostly small, independent businesses. He also mentioned the rate revenue-raising consultation, the responses to which I am considering at the moment. Some 1,400 people took the time to reply to that consultation, so it is well worthwhile to consider what those people had to say about our rating system. As Mr Tennyson said, I am undertaking a strategic assessment of our rating system. It is important that it aligns with our economic vision.

Mr O'Toole specifically referenced the non-domestic vacant property rating relief, which was one of the measures that was considered as part of the rate revenue-raising consultation. We will be looking at the responses as part of the feedback on that broader piece of work. Also, Mr Tennyson commented on how this scheme fits into the broader regeneration of the high street. I agree that a cross-departmental effort is required there and that it should also involve local government. The high street task force reported back in 2022, and its recommendation relevant to the Department of Finance was in respect of the Back in Business scheme, so we have undertaken to ensure that that is put back in place.

I ask Members to support this measure and I commend the order to the Assembly.

Question put and agreed to. Resolved:

That the Rates (Temporary Rebate) (Amendment) Order (Northern Ireland) 2024 be affirmed.