Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): We welcome to the meeting Sharon Gallagher, who is the chief executive of Land and Property Services (LPS). Sharon, this is the first time that you have appeared before the Committee in your new role, so congratulations and welcome. From LPS, we also welcome Angela McGrath, commissioner of valuations; Andrew McAvoy, director of rating policy division; and Chris Rooney, director of revenues and benefits.

Sharon, please make a brief opening statement. In the nicest possible way, I always emphasise "brief", not because we do not want to hear from you but because we want to get to questions from members.

Ms Sharon Gallagher (Department of Finance): Thank you, Chair. It is probably slightly longer than it would normally be, given my newness to the role and just to set the context. I hope that nothing in there is overly —.

The Chairperson (Mr O'Toole): I will let you know. I will raise my eyebrow, as they used to say about the Governor of the Bank of England, if it is overrunning.

Ms Gallagher: Please do. Again, thank you for the opportunity to brief the Committee today on those aspects of Land and Property Services' work plan that will be of key interest to the Committee in the short term, including emerging plans for the revaluation of domestic rates. My predecessor, Sharon Magee, endeavoured to work positively and openly with you and, whilst I do not profess to have Sharon's significant years of experience in LPS, I am nonetheless committed to continuing in that vein.

You will have already met Andrew, McAvoy, the director of rating policy, who is leading the strategic review of rating policy, and also here today, as you have outlined, are Angela McGrath, director of valuation and commissioner for Northern Ireland, who will lead on the revaluation of domestic properties, and Chris Rooney, director of revenues and benefits, who will administer and arrange collection of rates and oversee administration of rates supports.

The span of the origination's work is wide-reaching and complex, but, at its core, is the aim to provide land and property services at the highest level, with the most prominent public face of that work being the design and administration of the rating and valuation system for the Executive's only devolved tax lever; the land registration service, which underpins our local conveyancing work; and the mapping skills and expert services provided by the staff in Ordnance Survey of Northern Ireland (OSNI). The fact that those services allow us to register property, value it, map it, administer a tax base and collect revenue, all within one organisation, provides opportunities for innovation and delivery beyond that which is easily accessible in other jurisdictions, where those functions are spread across different organisations.

You will have heard Minister Archibald set out, in a statement to the House on Monday, her aims and objectives for the rating system, moving forward. That will shape and determine the priorities, agenda and timing of LPS work plans in the months and years ahead. What I will outline today represents the most significant building blocks for achieving the Minister's ambition to generate much-needed income to support public service delivery in a way that is fair and equitable.

Turning first to rating policy, the next few weeks will focus on the progression of routine but important legislation to allow rates bills to be issued for 2025-26 and general maintenance of the statute base ahead of turn-of-year building. The Committee will be familiar with that process from last year, and, although there is a little more time to play with this year, this work always happens within a compressed time frame at the start of each calendar year. Andrew has been working and will continue to work with the departmental Assembly liaison officer (DALO) and the Committee team to ensure that as much material for that legislative process can come through to the Committee before Christmas. That is starting with an SL1 tabled today on small business rate relief (SBRR).

As regards work of a more strategic nature in line with the Minister's statement, we will be preparing to launch the consultation early next year for proposals on an uplift to the maximum capital value for rating and reduction of early payment discount. The team will lead the consultation, and the outworkings of that process will inform the Minister's position, which she will bring to the Executive for consideration and determination.

The Chairperson (Mr O'Toole): It is now too late for that to be in for 2025-26. Those changes cannot happen for 2025-26, even if the Executive were to agree to them.

Ms Gallagher: Indeed.

The Chairperson (Mr O'Toole): OK.

Ms Gallagher: The Committee will obviously play a key role in that process, and we are eager to support your understanding and scrutiny in whatever way that is helpful.

LPS will also support departmental colleagues in facilitating the cost of doing a business research project, which was also announced this week. The Minister has commissioned that work as a direct result of engagement with business groups in recent weeks, following the Chancellor's autumn statement. The scope and timescales of that work are to be agreed on and will be cognisant of the views of the business community.

As a next step in the Minister's 10-year strategic review cycle, we will be laying the groundwork for the reviews of small business rate relief and non-domestic vacant rating exclusion. Preliminary discussions have commenced, and we are particularly keen to work closely with councils to ensure an agreed and shared understanding of the work at hand. It is our intention to engage widely with all interested parties in gathering a robust evidence-base, upon which proposals can be based. Consultation on proposals for the small business rate relief and the non-domestic vacant rating exclusions will take place during 2025-26. Again, as the work develops, we will be happy to keep the Committee apprised.

As outlined by the Minister in her oral statement, the efficient and effective administration of the rates system is a significant lever in income generation and gives effect to policy decisions. Since 2014, the value of gross collectible rates that can be collected has increased by 32% from £1·49 billion to £1·97 billion in 2024. In part, that is attributable to rises in the annual rate poundage, but, importantly, it is also because of an increased tax base, with growth in the valuation list from £849,000 in 2014 to £919,000 in 2024.

The Chairperson (Mr O'Toole): Just to crystallise that number, for the purpose of anybody who is watching and is not totally inducted, the £1·97 billion — almost £2 billion, to round it up — is the sum that is raised in total and collected by LPS through the rates system. That is for domestic, non-domestic, regional and district.

Mr Chris Rooney (Department of Finance): It is the gross of all rates assessments.

The Chairperson (Mr O'Toole): OK, thanks.

Ms Gallagher: The departmental target on collection of gross collectible rates from 2024-25 is set at 93%, which translates to £1·8 billion by 31 March 2025. I am pleased to advise the Committee that, despite a challenging financial backdrop, we are on track to achieve that target. Whilst there are still some months to go, there are positive indicators on our progress. A total of £1·4 billion of rates have already been discharged, with 50% of rates bills already paid in full. Of that, £179 million in rate relief and exclusions has been provided. The remaining £500 million to be collected is subject to ongoing action, with 50% being paid by an agreed payment plan, and the remaining £250 million relates to approximately 60,000 properties, and, of those, nearly a third are already in payments.

There is a wide range of individual circumstances on rate accounts that have rates still to be paid, including ongoing monthly awards of rate relief. Where payments are not being made, each account is scrutinised, and, where appropriate, considered for legal actions. Collection rates for the current billing period is clearly important, but we also remain focused on the collection of all outstanding debt.

As you will know, the Northern Ireland Audit Office (NIAO) report that was published yesterday stated that, at March 2024, £180·5 million in unpaid rates was carried forward for collection in 2024-25. The Committee will be well aware of the challenges faced by ratepayers and by LPS during the pandemic. As a consequence, we are managing the impact of increased levels of unpaid rates that have resulted from that period.

The Chairperson (Mr O'Toole): On unpaid rates, there was reporting in September — I think in response to a question for oral answer, from Michelle McIlveen, perhaps — that £65 million was written off over the past five years.

Ms Gallagher: Three years.

The Chairperson (Mr O'Toole): Three years, was it? That is the stock. That is what has been written off. What is the flow? Roughly, how much are you adding to the stock each year of unpaid rates?

Mr Rooney: Last year's write-off rate was £16·9 million, of which £13·86 million was legal, and £3·28 million was administrative. What do you mean by "stock"?

The Chairperson (Mr O'Toole): Sorry, but can you first explain the difference between administrative and legal? I will then let you finish.

Ms Gallagher: I am going to come to some of that, Chair. I sense that you are getting impatient with the length of this but bear with me and I will —.

The Chairperson (Mr O'Toole): I am not. I just want to clarify a couple of points, almost for my own homework.

Ms Gallagher: I am very happy to do that, and when I run through it, if there are any points of clarification, clearly we will provide that detail.

Just to cover what I said: £1·4 billion in rates have already been discharged in full, so that is 50% of the rates bill. The remaining £250 million that is outstanding represents 60,000 properties, and a third are making payments. That is a relatively positive position at this time of year.

I then went on to the outstanding debt and the Audit Office report, and I was covering the progress that we have made there. The reported £180 million that was carried forward had been reduced to £119 million at 1 December.

Our general approach to legacy debt collection seeks to maximise revenue collection and reduce revenue loss. Agreeing repayment arrangements that are affordable and sustainable for ratepayers ensures that revenue is still collected, albeit at a slower pace, and revenue loss through write-off is reduced. That is to your point, Chair, about the writes-offs. That can be evidenced in a reduction of loss through write-off where the level of unpaid rates that were written off has reduced significantly from £31·6 million in 2014 to £16·9 million in 2024.

The Chairperson (Mr O'Toole): OK.

Ms Gallagher: Whilst at this point in the year we are in a good position to meet the collection targets, continued and sustained effort will be required over the coming months to ensure that the amount of revenue raised is maximised. Although we are in a relatively good position on this, we are doubling down in our approach to the collection of rates. Chris and his team are thinking through a new debt collection strategy, which we will bring forward in 2025. I am more than happy to come back to the Committee to share the details of that.

Finally, turning to evaluation, in recent years, LPS has established a process of more-frequent revaluation exercises on non-domestic listings. As an approach supported by business, the use of more-timely information for rates assessment aligns with the Minister's ambition of a progressive rating system built on fairness and equity.

With non-domestic revaluations in 2015, 2020, 2023 and now 2026, we have established a three-yearly valuation cycle, which is more frequent than any other part of the UK or Ireland. The 2026 non-domestic revaluation process is well under way, and the team is in the process of engaging with business ratepayers, requesting rates and market information that will be used to assess the new valuation. These will take effect in April 2026, based on an April 2024 valuation date. The intention is to have all 75,000 non-domestic properties revalued to allow a draft list to be published at the end of 2025. That will give ratepayers the opportunity to see the draft valuation before it becomes live in April 2026.

For domestic properties, again the principle applies that more regular valuations restore fairness and support property taxation that is progressive. The last revaluation for rating purposes came into effect back in April 2007 and was based on values at 2005 — that is some 20 years ago. As you will appreciate, much has happened in that time. Current rates assessments are based on historical market values. The purpose of the domestic revaluation is to rebalance property taxation, based on current market values and shifts.

Whilst the decision on the timing of the domestic revaluation is a matter for the Executive, Minister Archibald has signalled her intention to bring a proposal recommending the year 2030. Whilst not pre-empting any decision of the Executive, if that date were to be agreed, up to three years lead-in would be required, with work commencing in 2027. That would be after the non-domestic revaluation in 2026.

The Chairperson (Mr O'Toole): That would be a domestic revaluation in 2030, so it would be —.

Ms Gallagher: The process would begin in 2027.

The Chairperson (Mr O'Toole): Does that mean that households would be billed on 2027 values in 2030?

Ms Angela McGrath (Department of Finance): On 2028 values. It is usually a two-year valuation date in advance of publication.

The Chairperson (Mr O'Toole): Yes, OK. In the same way that people started being billed on 2005 values in 2007, people will be billed in 2030 on 2028 values.

Ms McGrath: If that is the decision of the Executive.

The Chairperson (Mr O'Toole): Yes. OK.

Ms Gallagher: A point in time is selected, and then the work is done to consider all that.

The Chairperson (Mr O'Toole): Yes, you pick a date, and it is the values on that date.

Ms Gallagher: Exactly. I just want to make the point, Chair and members, that it is a significant piece of work because there are roughly 850,000 domestic properties. So, it is 10 times the resource requirement of work on the non-domestic stock.

Given the time lapse since the last exercise, well ahead of that stage — that is three years ahead — work will be required to put in place the appropriate resource, technology, technical requirements and training. So, although the timelines for decision-making are not yet finalised, given the scale and complexity of the project, an early decision from the Executive could be anticipated.

The final area that I wish to touch on before I close these opening remarks is in relation to the wider transformation project under way within LPS. The integration of services and systems has already enabled improvement. The flow of information and increased synergies between Land Registry, OSNI mapping, valuation and revenues and benefits has enabled a more responsive, customer-focused service offering, contributing to growth in the tax base and improvements in billing accuracy and legal recovery actions.

To deliver our Minister's and the broader Executive priorities in the longer term, LPS has embarked on a programme of change that will further integrate and modernise processes. The Minister's aims and objectives can only be achieved through underpinning organisational change across LPS, which includes digital transformation, new operational processes and the development of our capacity and capability. With that in mind, work is under way to develop a new strategic business plan for LPS. That will be developed in the next quarter and it will set out our direction for the next three years. Again, I look forward to sharing those plans with the Committee in due course.

The Chairperson (Mr O'Toole): OK. Thank you very much. That was a really helpful opening statement. Members, as always, several of you have already indicated that you wish to ask questions. Should anybody else wish to ask a question, please indicate. I have a few, and I think members have lots of questions. Thank you again, Sharon and team.

I want to ask about some of what was discussed by the Minister in her statement earlier this week. I recognise that some of these are still politically outstanding matters and there is not Executive agreement yet. Just so that I can understand where we are with those issues, is a paper going to go to the Executive? The paper has not gone to the Executive yet, so what was announced on Monday has not yet been discussed by the Executive. Is that right?

Ms Gallagher: The paper has been put forward, but it has not yet been possible to table it with the Executive. As the Minister announced, however, we are moving to consultation. As I said in my opening remarks, we will move to consultation early in the new year.

The Chairperson (Mr O'Toole): She has made the decision to proceed with consultation, subject to Executive agreement. She is giving an indication of what she would like to do. On the detail, she has indicated that she would like to proceed with two specific short-term measures. They are short-term measures, but they will not be so short term, because it is now legally impossible to do them in the next financial year, which is 2025-26. So, the earliest that they could be done, subject to Executive agreement, is 2026-27.

Ms Gallagher: That is correct.

The Chairperson (Mr O'Toole): That is not so short term. It would still meet some definitions of short term. Just so that I am clear on the numbers, my understanding from our discussions in the Chamber is that increasing the maximum capital value to £485,000 would raise about £4 million a year.

Mr Andrew McAvoy (Department of Finance): That is for the Executive and the councils combined, yes.

The Chairperson (Mr O'Toole): It is not just for the Executive; it is for the councils, too. The figure would be £4 million.

Mr McAvoy: That is correct.

The Chairperson (Mr O'Toole): And the early discount would be £2 million. Is that correct?

Mr McAvoy: It is £4 million for the 2% reduction, yes.

The Chairperson (Mr O'Toole): The 2% reduction would raise £4 million, but the two specific measures would collectively raise £6 million in the short term.

Mr McAvoy: For the Executive.

Ms Gallagher: That is correct.

The Chairperson (Mr O'Toole): It would be £6 million for the Executive, but there would be a bit extra for local councils.

Mr McAvoy: There would be a little bit extra for the councils on the cap. Again, due to the fact that the cap is not equally distributed across the 11 councils, some councils would be affected by that more than others.

The Chairperson (Mr O'Toole): Remind me of the annual amount in unpaid rates.

Mr Rooney: That finished on 31 March 2024 at £180·5 million.

The Chairperson (Mr O'Toole): Is that the stock figure for unpaid rates?

Mr Rooney: That is all unpaid rates: all rates that were uncollected, which includes some rates that were raised from January to March that the billing did not allow ratepayers to pay.

The Chairperson (Mr O'Toole): Allow me to make this observation: the fact that there is £180 million of unpaid rates puts that raising of £6 million in some context as an actual revenue-raising measure.

Just on the —

Ms Gallagher: I will make the point that the £180 million is a cumulative impact, so it covers many years, including —.

The Chairperson (Mr O'Toole): I know. I agree. It is stock.

Ms Gallagher: What I referred to earlier about the in-year collection is really important, because we are already moving towards our 93% target this year. We are trying to maximise our in-year collection every year. We have historical debt, which we are eating into, but we are in a process of doubling down on that. That is why so much energy and effort is going into getting in-year debt, which is a substantial amount of money. I appreciate that the £6 million sounds small in context, but we are at the start of a process.

The Chairperson (Mr O'Toole): I totally agree, but if £180 million is the stock figure, meaning that it is historical and contains lots of, presumably, decades-old unpaid rates, how much is the flow per year? If you are at 93%, the 7% will still be between £10 million and £15 million. Is that right? Do you know?

Mr Rooney: I do not understand your question.

The Chairperson (Mr O'Toole): Sorry. For example, what is the average unpaid amount in a year?

Mr Rooney: Last year and the current year, the amount unpaid was around £50 million, but I would need to confirm that figure.

The Chairperson (Mr O'Toole): Five, zero?

Mr Rooney: It is £50 million of the 2023-24 rates.

The Chairperson (Mr O'Toole): Did you say £50 million as in "five, zero", or £15 million as in "one, five"?

Mr Rooney: I said £50 million — five, zero — but I will need to confirm that figure.

The Chairperson (Mr O'Toole): OK. I am just making a point; I am not asking you guys to confirm it, but it is important to draw the contrast. This rates reform is being presented as a significant revenue-raising measure, and it is £6 million versus £50 million in unpaid rates. The public need to have that context —.

Mr McAvoy: I think that the Minister said that it is not significant in revenue terms. Her wider aim for the strategic review cycle that she is starting into is to make the whole system more progressive. To be fair —.

The Chairperson (Mr O'Toole): Exactly. I want to come onto that before —.

Mr McAvoy: In the context of the £6 million, we have measures in the system that are seen as important, such as sport and recreation relief, which costs £4·7 million. With the £6 million that you save in one area, you can do significant adjustments —.

The Chairperson (Mr O'Toole): Lots of those things are important. The early payment discount thing is sensible. On the strategic review cycle, the statement is not clear — this is always an interesting philosophical question — about when the cycle ends. It is a review cycle, but I did not see an end date.

Mr McAvoy: She said that it is a 10-year cycle.

The Chairperson (Mr O'Toole): There is a 10-year cycle. That is a long cycle. Does that mean it will be 10 years before there is fundamental reform? Explain what that 10-year cycle means.

Mr McAvoy: The rationale behind the 10-year cycle is the Minister's wanting to do a really deep dive on every rating policy measure that is in place as a support mechanism. As that process evolves and is prioritised, adjustments can be made elsewhere in the system, whether that be to an individual measure or, if there are savings to be made, by applying a measure throughout the system, which the Minister said in the Chamber that she would be keen to do. As we progress towards the end of the 10-year cycle and as more reliefs are added to the review process, you will see considerable change throughout the system.

Ms Gallagher: As Andrew said, the 10 year-cycle is to allow an in-depth review of all the rates reviews. How radical that will be is a matter for the Executive. What we want to do is to take it forward in a considered way. The Minister's announcement was to signal her intention to look at every part of rates relief. As you will know, with the pressures and challenges faced by civic society, businesses and others, there are many calls on rates and rates relief. It is the Minister's intention that the review be done in a sustained and deliberate way. She was saying, "This will take time". How radical it is will ultimately come down to the Executive's decisions on a case-by-case basis. I would not like you to think that it will take 10 years for the radical nature of it to land. Along the way, it will depend on what is considered and on the nature of the decisions.

The Chairperson (Mr O'Toole): I appreciate that. I am still slightly unclear as to what a 10-year cycle means. With the possible exception of Martin McGuinness as First Minister, I think, no Executive Minister has lasted 10 years in a job. It is pretty uncommon for senior people in Departments to last 10 years in a job. My question is about the viability of saying that it is a 10-year process. In the cycle analogy, the review is a thing that goes round in a circle rather than being a thing that starts here and finishes there. I am asking you to explain where we are going with this rather than just round in a circle.

Ms Gallagher: It is a reasonable question. I have been in public service a long time, and I do not think that I have lasted long enough in a job to go through a cycle of anything — a lot less than 10 years. However, the Minister is clear that there needs to be a process. She has put a time frame on that. The ambition is to look at all the elements of rating relief. That is important to say.

The Chairperson (Mr O'Toole): OK. It still feels like a very long period to me. Speaking of long periods, I have asked quite a few questions, so I will now bring in the Deputy Chair, Diane Forsythe.

Ms Forsythe: Thanks very much for coming. Welcome, Sharon, and congratulations on the appointment.

Ms Gallagher: Thank you.

Ms Forsythe: I have just a couple of questions. You mentioned the 93% target for collection every year. How is that target set, and how often is it reviewed?

Ms Gallagher: That is a new process, as I understand it. That target is for this year, which is a stretch target based on the year before. In the new year, we will start to speak to the Minister and Department about an appropriate level for 2025-26 that is challenging but achievable. I am happy to come back to the Committee and engage on that.

Ms Forsythe: It is good to know that it is not just set at a level —

Ms Gallagher: It is not static by any means.

Ms Forsythe: — but is aspirational. That is great to hear.

I tabled a couple of questions for written answer about the national fraud initiative (NFI). The answers have probably come from you via the Minister. The 2024 exercise identified 103 cases of rates avoidance, compared with eight cases in the previous cycle, of a total value of over £270,000. A good bit of that has been recovered, but there is still quite a bit outstanding. In light of the fact that it took the national fraud initiative to come in and do the data matching for that, does LPS do anything to investigate or detect rates avoidance as part of its normal processes, or does it do so only when the external audit comes in?

Ms Gallagher: It is absolutely not only when external audit comes in: you would not expect me to say anything different from that. We welcome the work with the national fraud initiative, and we have responded positively to that. I will ask Chris to cover, in broad terms, what we are doing on the fraud piece more generally.

Mr Rooney: We have engaged with the NFI for a number of years. Last year, we provided the NFI with in and around 840,000 records from our database to go into its database to do that data matching. We engage thereafter and identify areas of highest risk and those cases in which we have struggled to get ratepayer information and details to allow us to bill accurately. That is where the national fraud initiative has added to and supplemented the work that we do. We very much welcome what it brings to the table.

At the next round, we will look at trying to refine that work further for the even more difficult cases. The national fraud initiative can data match against a number of databases to which we do not have access. It can data match to the like of the full electoral register. Simply being on the electoral register does not determine your liability for rates, but it gives us a good indication of a person who is residing in a property whom we could bill correctly. That is the benefit of having the national fraud initiative investigations and data matching supplement what we do. We also look at benefit fraud and any frauds against our reliefs. The NFI does that work for us. We use it as a third-party source. It is not that we are waiting for the NFI to come in and find stuff; we are proactive in using it.

Ms Forsythe: That is good to hear. The Chair outlined the high levels of unpaid debt and write-offs. It is good to have confidence that LPS is taking every step possible to make sure that those who are due to pay are being billed.

In the Minister's statement, she said that we will see:

Have you any more information on that intention?

Ms Gallagher: I will let Andrew cover in more detail the engagement that we have had already and what is planned. Clearly, the SBRR covers many sectors, and there is a call from all those businesses for additional support. Part of the consideration is how we engage with each sector to understand its particular pressures and challenges and how that will impact on the potential for policy changes.

Mr McAvoy: It is a process that has accelerated since the autumn Budget and the impact of that. At the moment, the small business rate relief scheme is a blanket application that applies to an NAV level of under £15,000 and every property class. In the autumn Budget at Westminster, the Chancellor announced that, for April 2026, she is looking at transforming business rates and, as part of that process, separate multiplier categories — the poundage multiplier that is applied to the property value for different sectors of the economy — are being looked at. She mentioned retail, hospitality and leisure as three that will fall within that process. All the detail on that is not yet available, as it is quite a way off.

On the structural issue with the poundage, a uniform business rate is applied in GB. We do not have that here — we collect the district rate and the regional rate combined as one — so we will not have that option open to us. Part of the scope of the small business rate review will be to look at whether the small business rate relief could allow for a similar process to the poundage reductions that are being applied on a sectoral basis in GB. We have engaged in quite a lot of detail with the sector representatives over the past few weeks. I know that they were in front of the Committee, with your party colleague, just last week, and I think that a joint meeting between the hospitality sector and the Economy Minister and the Finance Minister has been arranged for the new year. At official level, we have already met the sector representatives to look at the challenges that are unique to that sector. Scotland decided to target hospitality but not retail and leisure.

On process, we hope that the research into the cost of doing business, to which the Minister referred, will be up and running pretty sharpish. Then, we will get into the structural review of small business rate relief to build on that straight away.

Ms Forsythe: Thank you. When you go forward with sectoral targeting, is there an engagement list of which sectors there are, or are they just the ones to which you have referred: hospitality, retail and leisure? Obviously, there are other sectors such as childcare.

Mr McAvoy: Exactly.

Ms Forsythe: There are different ones. I am keen to know which sectors you are considering targeting, so that I am able to feed back on that.

Ms Gallagher: Thirty thousand businesses across many sectors benefit from SBRR. Our clear intention, on behalf of the Minister, is to engage as broadly and deeply as possible, Diane.

Ms Forsythe: OK. Thanks very much. I have just one final question. Do the EU state aid rules have any bearing on the levels of support that could, in theory, be provided?

Mr McAvoy: Not technically. The small business rate relief scheme is more likely to fall within the new UK subsidy rules, but, yes, there will be subsidy control conditions there. I have been speaking to officials in the Department for the Economy who lead on the guidance in that area, as well as to policy counterparts in GB. If you want to target a specific sector, there are issues with specificity of support. We need to abide by the rules on that. For other sectors that are outside the small business rate relief, there are slightly different considerations. Manufacturing is more likely to still fall within the old state aid rules because it is more likely to impact on competition between member states.

Ms Forsythe: Thank you.

Dr Aiken: Thanks very much. I have two issues. How important is NOVA for Reval2030? We have heard a lot about digital transformation, where NOVA sits within that and all the rest of it. I know that Neil Gibson, the permanent secretary, is keen to deal with concerns about Ordnance Survey, LPS and Land Registry not being able to talk to each other and have the same digital space. Project NOVA has had a bit of a chequered career so far. Where are we on that? How essential is it for your delivery of Reval2030?

Ms Gallagher: It is not essential for delivery of the transformation process. Clearly, it is important that we maximise the benefits of the disparate parts of LPS coming together. The digital piece is a key enabler of that. NOVA is the overarching name: it has a number of different aspects. You probably know this, so stop me if I am repeating what you already know.

Dr Aiken: We always get very nervous when anybody talks about LPS —

Ms Gallagher: And digital.

Dr Aiken: — digital, contracts and so on. We have been here. We wear the battle scars, although not as much as you do.

Ms Gallagher: Yes. When I looked at the LPS strategy and what was supposed to be delivered in line with that, I started to get nervous as well. We want to ensure that we are clear about our programme management and better contract management and that we manage our delivery partners well. Things happen that are outside our control. Recently, you have heard about delivery partners and how things can go wrong, but it is incumbent on us — me, in particular, as the head of LPS — to ensure that we manage that position well.

Dr Aiken: If we were looking at a traffic light scheme, what colour would it be at the moment?

Ms Gallagher: On a project basis, it would certainly not be green.

Dr Aiken: It would be amber or red.

Ms Gallagher: It would certainly not be green for some of the contract arrangements that we are working through, but that is a positive piece because we have recognised the challenges and are finding a way through them. On the benefits to be realised, we are clear that we will continue with contracts only if they will deliver on the benefits that we have set out. There is no point in investing the money if we will end up with the same arrangements at the end of it.

Dr Aiken: OK. Thanks for that. We will take a very close interest as this goes forward. We have had your predecessors in front of us, and we have all been in this whole digital space piece.

Ms Gallagher: I look forward to that.

Dr Aiken: We are here to help.

Ms Gallagher: Indeed.

Dr Aiken: We can be critical friends on this. We realise what the problems are. This seems to be crucial to the way in which LPS will do its business in the future. Concerns are already being raised, and we are beginning to see concerns about the project.

Ms Gallagher: I appreciate that and welcome your offer of help. We are excited about the change. We want to deliver on this, and we are frustrated that it has not moved as quickly as it could have.

Ms McGrath: On NOVA being tied closely to the delivery of revaluations, it will, in the future, be a game changer for us, but the fact that it is not yet in place does not prevent us from delivering on revaluations at this point. We have already delivered four non-domestic revaluations without NOVA. We will do the next one in 2026, and we will be able to do one in 2030 whether or not NOVA is there. We do these things —.

Dr Aiken: It is just that Neil Gibson put a lot of emphasis on how they need the digital transformation across the Department of Finance, and particularly in LPS, to be able to achieve the aims.

Ms McGrath: That will optimise things, but an awful lot of work already goes on in the existing systems, including the use of Ordnance Survey and Land Registry data. That goes on day and daily as it is. NOVA will change things, but its not being there does not prevent good cross-working, which is taking place already.

Dr Aiken: Are there are no concerns about Land Registry and the digitisation process matching with the Office for National Statistics (ONS)? Have those problems been solved?

Ms McGrath: I am talking about revaluations. We do not use Land Registry data for that.

Ms Gallagher: Each project is at a different stage. There are concerns about some of the projects, which we are working through, but the integration that Neil refers to will be the game changer for us in the medium to long term.

Dr Aiken: With the Chair's indulgence, the Committee could maybe get an update on where the various projects are.

Ms Gallagher: We are happy to do a separate briefing on that.

Dr Aiken: Brilliant. Thanks very much.

The Chairperson (Mr O'Toole): OK. We will keep a note of that for our round-up at the end.

Dr Aiken: Thanks very much, Chair.

Mr Brett: Thank you, all. Sharon, congratulations on your appointment. Your predecessors were excellent public servants, and I have no doubt that you will be in the role as well.

I want to pick up on a couple of things. Was the statement that you read at the start approved by the Department? Was that drafted by the Department of Finance or by you?

Ms Gallagher: It was drafted by me.

Mr Brett: OK. You mentioned aligning with the Minister's priorities on the reform of rates based on "fairness and equity". Do you think that it is fair and equitable that we give discount to people in Northern Ireland who can afford to pay their rates bills early, using public money to subsidise that, when there are many constituents in North Belfast who do not have the money to pay their rates off in one go? They are penalised financially and have to pay more than those who have the financial ability to pay their rates in one go.

Ms Gallagher: That is a reasonable question, Phillip. Until we undertake the review of each of the rate reliefs, we will not know how fair and equitable it is for anyone. That is why we are looking at every single relief on a single deep-dive basis. We will engage with this Committee, with your constituents and with as many stakeholders as possible to come to an informed view about how we can make the system more fair and equitable.

Mr Brett: There will be a 10-week consultation on the initial reduction from a 4% discount to a 2% discount.

Ms Gallagher: The Minister has not decided on whether it will be 10 weeks; it will be 10 or 12 weeks.

Mr McAvoy: We were originally thinking 10 weeks, but she might be tempted to go for a 12-week period.

Ms Gallagher: A little bit longer rather than —.

Mr Brett: Was there not something in the statement about that?

Mr McAvoy: She did say 10 weeks in the statement, yes, but she is thinking that we might go for 12 weeks in the new year.

To answer your question, the previous consultation closed earlier this year. That was on the early payment discount and the full removal of it. We got both views back. The view that you referred to was prevalent in the consultation responses. Other people framed it around the fact that they budget for it all year round and save up in advance to avail themselves of the discount. Those are the types of issues on which we want to do the supplementary consultation, and certainly the impact assessment work. We want to try to work with some of the sectoral organisations and so on to dive a little deeper into that before any final decisions are made in that area.

Mr Brett: The consultation is only on reducing it by 2%, not on completely removing it, so we will continue to subsidise it.

Mr McAvoy: That is the preferred policy option, but, while we are doing that, we are to going to look at some suboptions within that.

Mr Brett: So, regardless of the outcome, the Minister's preferred policy position is that we will continue to subsidise, using public money, those who can afford to pay the rates off at once.

Mr McAvoy: It is a reduction in the first instance but with a view to seeing how that plays out in ratepayer behaviour. It is maybe prudent of the Minister to take that view to reduce it in the first instance and take it from there.

Mr Brett: A lot of figures were bandied about, so apologies that I have been slow in trying to pick them up. The Chair referenced that a figure of £180 million on the balance sheet is what is historically owed to LPS. Maybe I picked you up wrong, Sharon, but did you quote a figure of £148 million? What is on the current balance sheet in outstanding payments?

Ms Gallagher: The £180 million was the carried-forward figure at the turn of the 2024-25 year. At 1 December, that had reduced to £119 million.

Mr Brett: That is the current outstanding figure.

Ms Gallagher: That is the figure for legacy debt, including this year.

Mr Rooney: Approximately £500 million is still to be collected this year. That includes the carried-forward rates from previous years, which is approximately £119 million in total. We do not collect it differently; we collect as a collective. Everything is subject to collection from the start of April. There is roughly £500 million still to collect.

Mr McAvoy: There are all the instalment payments.

Mr Rooney: There are the instalment payments, and there are awards of relief that get paid monthly and are still to be attributed.

Mr Brett: That may be so, but how did you get to the figure of £119 million? The historical figure was £180 million, and the paper states that prior year rates have been reduced by £34·1 million, so £34 million can be taken from the £180 million. Where does the rest of the income come from to take it down to £119 million?

Mr Rooney: The briefing paper was written at a point in time, and we have moved on from there. As of 1 December, the position is that the £180 million that was there at 1 April has reduced to £119 million through our collection activities.

Mr McAvoy: Presumably, the December payment lifts came in during that time.

Mr Brett: So, the December payment lift has brought us from £148 million down to £119 million.

Mr McAvoy: What was your first figure there?

Mr Brett: We are saying that the figure was £148 million. The paper says that that was brought down by £34·1 million. I am trying to work out how we got down to £119 million.

Mr Rooney: As of 1 December, a total of £505 million is still due for collection. Of that, £386 million is from the current year and £119 million is from prior years.

Mr Brett: Can you write to the Committee with updated figures on that? It is maybe that my brain is unable to compute.

Ms Gallagher: Phillip, it is difficult. It has taken me some time to get my head around it, so I am more than happy to clarify any point.

Mr Brett: My final question is on non-domestic vacant rating. That discount is helping to encourage blight on high streets and town centres across Northern Ireland, in my opinion. The Minister made passing reference to that in her statement, and I believe that she recognises the impact that it is having on high streets and town centres. What work are you doing on that, Andrew?

Mr McAvoy: There are two elements to non-domestic vacant rating. There is the liability level, which is 50%, and then there is the exclusion level. I will take them one at a time. On the percentage liability level, the Minister has outlined that she is tempted to increase the liability level. As part of the previous consultation, we got feedback that, since the pandemic, there is a lot of office space and retail space that is difficult to let out due to changes in consumer behaviour and property use.

She is working to couple the increase in liability and time it alongside regeneration initiatives and capital grant funding in other areas, including partnership working with councils, so that it is not a case of an increase in the liability hitting the people who own those properties cold. They will at least be afforded the opportunity to try to bring the property up to spec for the current rental market.

As for the exclusion side of things, it is a review of things such as the three-month rule, where you a get a grace period before the liability kicks in, listed buildings and where occupation of a particular premises is prohibited and tightening up the legislation around that. Those two things will probably move forward in tandem, but the strategic review element of it is on the NDVR exclusions in the first instance. The increase in liability will probably be a slightly longer-term thing as that capital grant funding starts to come on stream.

Mr Brett: So, there will be no immediate move on that?

Mr McAvoy: No, no immediate moves on that. If you brought that in, there is an equal risk that you could increase the blight, because you might have either deliberate dereliction of a property or people just throwing away the keys to the property because it is not valuable to them in any way at that point. Therefore, it is something that we want to manage carefully.

Mr Brett: Is there no such discount in liability for domestic vacant properties?

Mr McAvoy: No, none for domestic. There is full liability for domestic, at the moment. On the wider work, I am working with some of the district councils and trying to get it across all 11. Certainly, quite a lot of work is going on at district council level to couple up their regeneration powers and grant funding at a small level; to try to pair up the small grant funding that they can get with the Back in Business scheme and put the two together to maximise the value from the two. That work started with Belfast City Council and Mid and East Antrim. I am going to Newry, Mourne and Down in the new year to do the same there. I hope to get round all 11. There is quite a lot of potential for using the two things together.

Mr Brett: Finally, from me, Chair, obviously, there is a housing crisis right across Northern Ireland. Has the Minister given any thought to increasing the rates liability on empty domestic properties to try to encourage those who have allowed empty or derelict properties that families could move into to lie vacant not to do so?

Mr McAvoy: Increasing the level beyond 100% presumably?

Mr Brett: Yes.

Mr McAvoy: It has been looked at in the past. We have two concerns with that, which are similar to the second home issue and increasing the liability on second homes. Chris will know about this from the operational end, but people would just tell you that the property was occupied and throw furniture in there or something. That is the main response to the increased charge on the empty side. On the second home side, which would also potentially increase the housing supply, it has been tried in Wales. It has not been a complete success in that it had some effect on the property market there. We are watching that carefully, but there might be some scope for that. Chris, do you agree with that comment?

Mr Rooney: Absolutely. The property would just become occupied. A property does not have to be occupied by a person; it can be occupied by personal possessions — so we would find people starting to furnish empty properties.

Mr McAvoy: As long as there is a benefit to it.

The Chairperson (Mr O'Toole): Would it not be possible to draft a law in such a way as to make it clear that there had to be a test for —? I do not know. Perhaps it is not for you to answer, but I suppose that you could, theoretically, change the law to ensure that, as Mr Brett said, there is a liability for a property that was empty for a certain period or after a certain date. That would be possible.

Mr McAvoy: It would definitely be possible to pass a law. I do not know how it would be possible to enforce it.

Ms Gallagher: It is the enforcement.

The Chairperson (Mr O'Toole): OK.

Before I bring in Nicola Brogan, I have one quick question. We have talked about the easing or the reforms to do with vacant property on the non-domestic side and how it fits in with other work around regeneration. We were talking about one aspect of that. Indeed, we talked about it before, with LPS, specifically in relation to Tribeca and other areas of dereliction or the places that are languishing. In some cases — certainly in the case of Tribeca — properties have received rates relief, and some places have been off the ratings list for a while. I get the sense that work is going on in LPS on that stuff. You have just talked about it. The AERA Minister is due to introduce a dilapidation Bill. We were due to have it already. Are you looking at that? Is there any work going on with the team and DAERA?

Mr McAvoy: I have primarily been doing work with the councils. In Belfast, in particular, we are looking at the main thoroughfare: Donegall Place and Royal Avenue. Belfast City Council is surveying the use of units that are above ground-floor commercial units. It is surveying the owners of those properties using the LPS data. It has been able to approach owners and say, "What are the main barriers to you occupying those properties and bringing them back into use as residential units?". I do not think that anyone will be surprised to hear that, at the moment, the issue is the water element of things and planning. We are exploring with Belfast City Council whether any new rating policy could be put in place. As the Minister referenced in her statement, that could be developer exclusions after they develop the property but before it becomes occupied. If they were to build the property, that would de-risk the holding period for them until it becomes occupied. The other thing is to have first-occupier discount to incentivise people to occupy it.

The Chairperson (Mr O'Toole): You say "water", but they are existing properties, so they must be connected to the mains.

Mr McAvoy: It does not necessarily mean that.

Mr Rooney: It is a change of use.

Mr McAvoy: There was quite an extensive Infrastructure Committee session on that issue with the Construction Employers Federation, which might be worth looking at.

The Chairperson (Mr O'Toole): Every day is a school day.

Miss Brogan: Thank you, everybody, for your presentation. Sharon, congratulations to you on your new role. It is certainly a very busy and interesting time for you to come on board, especially with the Minister's announcements this week. Will you outline your priorities, given that you have taken on the chief executive role for LPS?

Ms Gallagher: Thanks, Nicola. You are right; it is a very interesting time at which to join LPS. I probably covered my priorities in my opening remarks. Clearly, with the Minister's announcement, my priority will be leading the team to bring forward a programme of work that allows consultation on the rate reliefs that is as broad-ranging and collaborative as we can make it in order to bring evidence-based proposals to the Minister and, ultimately, the Executive for decision. That will be a key priority for me.

Equally, as I just discussed in relation to transformation, it is important that I lead LPS into the next phase of its organisational journey. We are excited about the possibilities for LPS. It has been a challenging number of years. I understand that staff and others, as I outlined, are frustrated by the stop-start nature of the transformation, but we want to breathe some light into it again and some air into its lungs. Part of that will be looking at a revised strategic plan for the next three years, which will steer the work of this team and the broader LPS team moving forward. There is a lot to do, but we very much look forward to it all.

Miss Brogan: Thank you for that, Sharon. It will be a very busy time for you, but I wish you all the best.

In your opinion, how radical is the Minister's programme for reviewing rate reliefs? You just spoke about consultation and collaborative working, but how will you bring about those proposals and ensure that they are evidence-based and that you take stakeholders' views into account when you develop them?

Ms Gallagher: It is a very ambitious programme of work. We have talked about the fact that the time frame will be 10 years. Who is to say whether it will take 10 years or more? Our clear determination is to bring the considerations forward as quickly as possible. As I said when I set out my priorities, I can support the process in a considered way by looking at the broader engagement, not just the loud voices that we hear but those that are not heard through our normal engagements. There is huge interest in that area, and any change is impactful. There will be potential winners and losers in anything that you look at. We are very clear about our responsibilities, as civil servants, to advance it in a way that is considered, collaborative and evidence-based. We will look at research, other jurisdictions and the broadest range of options that you could expect.

As I discussed with the Chair earlier, how radical it is depends very much on Executive decisions and the timeliness of them. All that we can do is to bring the proposals, with the evidence base, to the Executive for consideration.

Miss Brogan: Thank you for that, Sharon.

Andrew, you said that the Minister is proposing to consult on the early payment discount and the max cap for, hopefully, 12 weeks. When will that consultation be open to the public?

Mr McAvoy: We want to get that up and running by the middle of January. As part of that process, we also want to make sure that we engage with the Committee.

Miss Brogan: Fair enough.

Finally, Sharon, you said that the most recent domestic revaluation was carried out in 2007. How important is it that we have a revaluation now? What impact will it have? There have been many changes since 2007, including, obviously, huge economic changes. Will you outline the potential impact that that will have?

Ms Gallagher: I will let Angela, who leads on that, cover it in a little bit more detail. Clearly, it is an Executive decision, so we cannot get ahead of that, but, from my perspective, having up-to-date, relevant information that is as timely as possible absolutely underpins taxation that is fair and equitable. There has been a 20-year lapse, including in a post-COVID environment. We are in a very different world from what came before.

Angela, do you want to add to that?

Ms McGrath: That is, essentially, the purpose of revaluation. The legislation allows for ongoing maintenance of the current valuation list, but it also allows for revaluations. The purpose of the revaluations is to rebase the values that are used for a tax that is raised on historical values. As you get further away from the valuation date, anomalies start to creep in when it comes to distribution and where the fairness sits in the current values. The very purpose of a revaluation is to rebase those values so that the tax is raised on current, up-to-date values. We have moved in the direction of having more frequent revaluations on the non-domestic side. That tends to happen less frequently on the domestic side, but that does not take away from the fact that it should be carried out more frequently than once every 20 years. However, we are where we are. It is necessary in a progressive and fair rating system.

Ms Gallagher: Previous to 2007, I think that the most recent one was conducted in 1976, so the time frame is getting a little bit shorter.

Miss Brogan: Thanks very much; I appreciate that.

Mr Tennyson: Sharon, I add my congratulations to you on the new post.

The Minister outlined short-term changes on Monday. Was it always the intention to consult on those short-term measures, or is consultation happening in lieu of a paper's being tabled for decision at the Executive?

Ms Gallagher: There is always the intention to consult. The Executive paper was to engage with the broader Executive, given the nature of the change and the impact right across the Executive. It was not necessary, but it is part of that broader collaboration and engagement that the Minister wants. However, to be clear, consultation on any change was always planned and will be required for any of the changes.

Mr Tennyson: You said that it is required. Is it required legally, given that consultation happened under the direction of the Secretary of State on the total removal of the reliefs?

Ms Gallagher: The consultation was broader under the Secretary of State, and it gave us a level of information. We are now moving to proposals that we want to test broader views on. It would have been wrong to move ahead with decisions or firm proposals for Executive decision on the basis of the first consultation, which was very helpful in informing our Minister's first view on how to move forward. We need to explore that in more detail.

Mr Tennyson: Fair enough. Thank you, Sharon.

You covered some of this ground with the Chair in his initial questions. On the 10-year strategic review cycle, at a very basic level, why will it take 10 years? Is that a political decision? Is it based on advice about capacity in LPS? What is the driving force behind that 10-year timescale?

Ms Gallagher: You need to look at the range of rate reliefs that we have. We had a consultation that was finalised at the start of this year, and we are bringing forward another consultation. We have to take account of the range and breadth of the evidence and views in order to put forward proposals. Part of it is to do with capacity; part of it is to do with the extensive nature of the work. There is also a piece about how much in-depth engagement can be carried out on each of those reliefs at any point in time. As I said, 10 years is the Minister's stated time frame. If we can do it quicker, we will. It is our clear ambition to support the Minister in advancing that as quickly as possible. However, at this point, the planning assumption is that it will take some time to work through all those complex matters in order that we come out with proposals and policy decisions that work.

Mr Tennyson: OK. This is not a direct comparison, because it looked at a slightly narrower set of reliefs, but the Barclay review in Scotland, which looked specifically at non-domestic reliefs, reported in under two years or in and around a year. If we sought to set up an independent review, would such a review potentially get it done more quickly? From your perspective, is there merit in that as opposed to the approach that is being undertaken?

Ms Gallagher: Andrew will maybe cover that in more detail. We had independent reviews in 2007, 2012, 2016, 2017 and 2019, and there was the broader review this year. The cycle that the Minister referred to will involve specific, in-depth reviews of each of the rate reliefs that is in place at the minute, so it is a slightly different piece of work. It will look specifically at extant rate reliefs and policy decisions. We made some changes in the past to broader rate reliefs. For example, the frequency of non-domestic revaluations was referred to. We now have that in a three-year cycle. This is a different level of consultation that we are undertaking.

Mr Tennyson: I accept that, because previous reviews looked at the rating system, whereas this will look specifically at rate reliefs, and there is a distinction there. However, my understanding is that the Barclay review in Scotland looked at rate reliefs. My concern is that — I am interested in your view on this, Sharon — if you consider the past 10 years, you see that the socio-economic environment in 2014 was very different from the environment today. We could be in a position where you review two or three reliefs in a year, and by the time you get to the end of the cycle, you are reviewing reliefs that those same businesses are potentially interacting with or are affected by, but the environment is completely different. I am concerned about how holistic a review can be if it happens over a 10-year cycle rather than being short and sharp. I suggest that a better way to divide up the work is to look at non-domestic rates over a period and then look separately at domestic rates, because they affect different subsets of society. I am concerned, and I have to put on record the fact that the long timescale may not be effective. We, on the Committee, are told often that the rating system has been reviewed many times before. Clearly, if the Minister believes that a 10-year review cycle is necessary, none of those previous reviews has been sufficient.

Ms Gallagher: I am not sure that I agree that none of the previous reviews has been sufficient. To your point: things change, and things need to be kept under constant review. What was agreed in previous policy decisions was right at that time. To look at all the rate reliefs at one time would be a significant and complex piece of work. The first consultation looked at that in broad terms, but these are very complex matters. I absolutely accept your point, Eóin, that, by the time you get around to reviewing again, things will have changed significantly. As we move forward with this work, we will need to be cognisant of change and to keep under review what we look at. We have not set out a clear programme for those 10 years, and, at the start of every year or throughout the year, we will need to consider what we do and how we do it.

Mr Tennyson: I appreciate that. I have one final question. Sorry, Andrew, did you want to come in?

Mr McAvoy: I was just going to say that the 10-year cycle is being undertaken, but it does not preclude us from doing other work alongside it, if there were interventions to be made through the system. You have acknowledged that the big bang approach, looking at all non-domestic and all domestic, has been done before. The issue that we face is that it is starting to yield the same results, and we want to do a more evidenced-based, deep dive into individual policies.

You referred to the Barclay review. We undertook a rating review in 2018-19 on all non-domestic. It was a very thorough process. A lot of the recommendations from the Barclay review were then implemented on the foot of that. Although it was looking at business rates, it also looked at things such as how to have uniform billing across the different council areas in Scotland. To tie in with the transformation and the unique nature of LPS, because we have a lot of those integrated services already, it meant that a lot of the recommendations from the Barclay review were already in place here.

Mr Tennyson: I appreciate that answer. That is helpful, thank you.

I have one final question. When I speak to businesses, they always raise it with me, so it would be remiss of me not to put it to LPS. It is the perception that this is the Department and LPS marking their own homework. What assurance can you give that there will be sufficient independent analysis and input to the strategic review cycle?

Ms Gallagher: I hope that I have covered that to some degree in talking about the process that I will oversee. It is my job, as a civil servant, to be impartial, to engage as broadly as I can, and to bring to our Minister evidence-based recommendations that take the fullest account of the views that we have heard in order for the Minister and, ultimately, the Executive to take a view. I have no agenda in this, nor has LPS. It is in our interest to bring forward policy changes or policy recommendations that best meet the needs of the broader public; otherwise, we will continue to be in this cycle.

Mr Tennyson: Thank you. I appreciate that, Sharon.

Mr Frew: On Eóin's question about the previous consultation on revenue raising, I take the point that the revenue-raising consultation was picking on relief and the seven aspects of that. Sharon, you said that it was helpful, but what we now have is that, in one year of a 10-year plan, you have picked on the two reliefs that energise the public the most. When you look at the submissions, you see that they had the most support for retention. On the early payment discount, 985 supported the retention and 210 were opposed. On the maximum capital value, 967 supported retention and 232 were opposed. How was it helpful when you picked on the two that gained the most support?

Ms Gallagher: Andrew will maybe cover that in more detail. It was the Minister's ambition to bring forward change as quickly as possible. Reference was made earlier to early changes. Had we been able to go out to consultation earlier in this year, it would have been the Minister's ambition to think about implementation from next year. In many ways, those two measures were ones that the Minister could bring forward to start the change process. We have to start somewhere, and those, as you have pointed out, were relatively welcomed in the consultation.

Mr Frew: Yes, but most respondents to the consultation supported their retention.

Mr McAvoy: As you said, the consultation was looking at revenue raising. Had the choice been a binary one between the reliefs' removal or their retention, there was a majority in favour of their retention. The two options that the Minister has proposed are not removal and retention but a preferred option with sub-options underneath it in the planned consultation. In principle, out of a consultation, you look at the substantive content that you get back and at the points that people are raising. You then take that away and look at other evidence sources and do comparisons with other jurisdictions. It is not always based on just a majority vote, with the greater number winning the day. Rather, you are looking at the substantive issues.

Mr Frew: The substantive issues are quite stark.

Mr McAvoy: They are, but, with all the domestic issues, people are inclined to get more incensed about things that, they feel, are being removed from them, and thus they respond. There are 800,000-odd properties included in the domestic tax base, 8,000 of which fall into the cap bracket, so it is 1% of people who are affected.

Mr Frew: How many households avail themselves of the early payment discount?

Mr McAvoy: It was 163,000 last year, which amounts to 18·7% of the payment.

Mr Frew: I take a different view from that of my colleague about the reward for early payment. I think that the Department is aiming for the low-hanging fruit, as it is an easy £4 million to raise. That £4 million is far better in people's savings than in an inefficient Department for it to spend. Would it not be better for LPS to energise itself to tackle the 73,500 households that do not pay any rates, or all their rates, rather than going after prompt payers?

Ms Gallagher: I will answer that, Paul. As I hope that I covered in my opening remarks and in the earlier discussion, we are absolutely interested in collecting rates to the full value. We are equally energised and determined to collect the legacy debt. That is one part of it. We have no view on the policy changes, as such matters are for the Minister and the Executive. What I will do in LPS, through Andrew and the team, is develop the proposals for the Executive's determination. While the proposals are coming together, I want to be very clear that debt collection remains paramount and will continue regardless. The policy changes and rate reliefs will be a matter for the Executive, and we will administer and collect rates and make those functions as efficient as possible once the decisions are made.

Mr Frew: You talked about the £180·5 million of unpaid rates, which is down, if I have read it right, to £109 million.

Mr McAvoy: It is £119 million.

Mr Frew: It is down to £119 million. You talked about a figure of £50 million. The Chair asked you about that. Is that an in-year amount?

Mr Rooney: That is the amount that we have been collecting. Through our billing and collection activities, we have reduced by that amount the value of the debt that was carried forward.

Mr Frew: OK.

Mr Rooney: It is all part of our collection function.

Mr Frew: You can understand the angst that people will feel when there is that massive amount of unpaid rates yet we are hitting prompt payers for the sake of the £4 million that will be raised. You talk about having a radical 10-year plan. If we go by the first year, and you therefore raise, cumulatively, £6 million a year, that is not really radical, is it?

Ms Gallagher: I will recap the points that we made earlier, Paul. We will bring the proposals to the Minister for her consideration, and the Executive will then make a determination. There are no policy decisions being taken at this point. The consultation will take account of all the views expressed, after which the evidence will be set out, and a balanced decision will then be made by the Executive. I emphasise again the debt position, because I deliberately brought that issue and that of the collection of rates to the Committee today in order to show you our ambition to drive down the level of unpaid rates. Doing that is a priority for LPS. Although the situation could be better, good progress has been made, and we are determined to double down on that progress.

Mr Frew: There are seven reliefs that you could target across the 10-year plan. If you do two a year, that accounts for five years. What happens in the other 10 years?

Mr McAvoy: From where are you getting the "seven" figure?

Mr Frew: That is the number of reliefs on which you consulted for revenue raising.

Mr McAvoy: That is not the total number of reliefs in the system.

Mr Frew: Is that not all of them?

Mr McAvoy: No. That number was requested by the Secretary of State. The reliefs come under what the Treasury calls super-parity measures, which are measures that are not in place in GB but are in place here. The Secretary of State wanted to look at those measures in particular in the context of the financial situation facing any incoming Executive. That is why they were selected in the first instance, but there are many more reliefs in the system.

One aspect of the 10-year cycle is that there are also smaller rate reliefs, or rate reliefs that are not as high profile as industrial derating and suchlike, which get quite an outing at times. Those reliefs have sat in the system for years, and they need to be looked at. We want to make sure that every single relief gets looked at in order to make sure that all are fit for purpose.

Mr Frew: Are you talking about housing benefit?

Mr McAvoy: No. For starters, housing benefit is a social security provision. Rate rebate, which has been the replacement for housing benefit for rates since universal credit (UC) was rolled out, is a fairly new policy. I think that that would have to come towards the back end of the 10-year cycle, because UC is still being rolled as we speak.

Mr Frew: Do you anticipate any of the reliefs going up as opposed to coming down?

Mr McAvoy: The Minister was quite clear that review does not mean removal. Whether they go up depends on an element of the sectoral targeting that we talked about. If we were to target them more closely and make things less blunt in their application, we could potentially target them, provided that our doing so was compliant with the subsidy rules.

Mr Frew: If I am right in saying that LPS still covers housing benefit aspect — it is very complicated, and we witness the confusion over that in our constituency offices — the Audit Office has down an amount of £3·6 million as being as a result of fraud and error. Can you break that figure down for me into what is fraud and what is error? Where it is error, I take it that it is error on the part of the organisation.

Mr Rooney: Yes. The administration of housing benefit for owner-occupiers transferred to the Housing Executive in 2021. LPS and the Department no longer administer that relief, but we are the statutory body responsible for its administration. It sits in our accounts and is therefore within our jurisdiction, but its actual administration lies with the Housing Executive. The Northern Ireland Audit Office has broken down the figure, but I do not have the breakdown to hand.

Mr Frew: The Housing Executive estimated it at £12·7 million, while LPS estimated it at £3·6 million.

Mr Rooney: Yes, and the Northern Ireland Audit Office has broken down the £3·6 million figure further. It breaks it down by official error, which is where people key in the wrong numbers; by customer fraud, which are claims that are made fraudulently; and by claims that are made in error, which is where the customer has made a genuine application but may not have been entitled to apply.

Mr Frew: Yes. We hear that in our constituency offices all the time. There is also, however, the issue that the two organisations' data does not match up.

Mr Rooney: The purpose of the transfer of function to the Housing Executive is to alleviate that issue. In the past, that was an issue for us, because the Housing Executive administered housing benefit for the tenant and the rental sector, while LPS administered it for owner-occupiers. We had crossover, with some customers going to the wrong place to make their application.

Rate rebate is separate. LPS is responsible for the administration of rate rebate in its entirety. I think that that is where there is a difference of views on where people go for help with rates. Rate rebate is for working-age claimants who are in receipt of universal credit or housing benefit or for those who are not entitled to or eligible to apply for universal credit.

Mr Frew: Thank you for that. This is my last question. There have been only three revaluations in my lifetime, should this one go ahead. How will it affect the 73,500 people who have yet to pay their rates? How do you see a revaluation changing that demographic? I imagine that, of the people who do not pay their rates, a lot of them cannot pay them, while some of them will not pay them. How do you guys game that out to determine how it will affect the percentage of property owners — 8% — who have not paid all their rates? How do you see a revaluation changing that percentage?

Ms Gallagher: The revaluation will not change the percentage. What it will do, as a starting point, is make sure that the rates liability is more equitable and fair. You may be right that those people who are not paying them now may not pay them the future, but, regardless of the bill that someone gets, we need to collect rates. We need to double down on collection. The revaluation itself therefore will not have an impact on whether people pay their rates. A team of people in Chris's team in LPS do outreach work to support people. They do so in order to ensure that they understand the reliefs and supports of which they can avail themselves. As I pointed out earlier, our general approach to debt collection, and even for our account maintenance, is more to work with people to get sustainable agreements for them to pay something in order that some collection continues rather than have rates payments fall into complete abeyance. Those are therefore two slightly different things, Paul.

Mr Frew: I am just interested in how it would game out. Some people do not pay their rates because the bill is too high. If there were a revaluation that reduced that burden on them, they might be able to pay.

Mr Rooney: It is exactly the same on the non-domestic side. The non-domestic revaluation has the same impact. The businesses that do not pay rates are of that percentage that you quoted. Despite the fact that the revaluation may have increased neither their property's valuation nor their rates in comparison with others, they still do not pay. That happens. We have processes in place, as Sharon has said, whereby we reach out to people and try to contact them to make arrangements. We try to facilitate them in every way in which we can to get payment. Sometimes, that means that the year-end figure, which was high at the end of March 2024, will be high, because we are not collecting as much as the assessments that were done suggest that we should. That does not mean to say that rates are not being collected, however. They are still being collected. Their collection is just spread out over a longer period.

Mr Frew: Thank you very much. Sharon, I wish you all the best for the future in your new role with LPS.

Miss Hargey: Thank you very much for your presentation. Congrats, Sharon, and good luck. Andrew, let me know when you have done the work. Engagement with councils is very important. Councils are often at the coalface, and they are an early warning system for you. I am keen to get an update on the work that is being done, particularly above the shops, to determine, as you say, how it can align with other support schemes that the councils are looking to provide. I know that they are in the middle of their rate-setting process at the moment.

Mr McAvoy: Yes, that is right.

Miss Hargey: I want to know what additional spend councils can put into revenue and capital schemes over the next couple of years. For each council area, it would be good to get a sense of what type of work or types of programmes you are working on collectively. A bit more detail would be useful.

Mr McAvoy: On Monday, Sharon and I, along with the Minister, met the chair and the vice chair of the Society of Local Authority Chief Executives (SOLACE). We want the process that was announced on Monday to operate as a rebooting of the relationship with councils in order to put them right at the heart of policy development.

Miss Hargey: It would be good for the Committee to get an update.

On the issue of early payment, it is about getting a fair system. I am waiting on Phillip Brett to pull out his copy of 'The Little Red Book' and for Paul to throw it away. [Laughter.]

That is a new dynamic. I have not seen that before.

You said that the work is being done over a 10-year cycle. The revaluation needs to be done again for domestic properties. It depends on how you look at it. There have been a lot of financial and societal shocks over the period. Cost of living is a big issue, as we can see from the levels of debt. You said that you can do reviews within the 10-year cycle to mitigate potential future shocks. What can you do through the lens of deprivation and dereliction, where there are links to be made? Are there interventions or new, innovative approaches to the rating system that we can adopt that may not previously have been rolled out across these islands? Is there best practice from elsewhere at which we can look, particularly for areas with high rates or inflated property valuations, meaning that people cannot afford to live there. We do not want to have such a scenario, because a lot of the councils' local development plans (LDPs) contain plans for growth as a result of populations moving into town and city centres. In doing that, however, you do not want to push sections of the population out of an area because they can no longer afford to live there. My concern is that we may segregate on the basis of social class, as we have seen with the Tribeca scheme in Belfast city centre. Are there therefore things that we can do through the rating system, or by working with other Departments with responsibilities, to ensure that areas are not made more unaffordable for sections of our population?

On the non-domestic rates issue, the link with the Department for the Economy on the regional balance strategy is important in order to identify the sectors that will grow in the future, such as technology and automation, and to future-proof the 10-year cycle. Are we doing constant reviews to gain foresight so we can amend as we go along? Will you give me a sense of the cross-departmental work that is going on? I am also keen to know when the debt strategy will be reviewed in order to understand where the debt sits. What percentage of people are struggling financially? What supports can be put in? Perhaps it will be for the Department for Communities to devise longer-term, sustainable repayment plans for people so that they do not fall at the first hurdle. I am keen to know how flexible the system can be over the next period.

Ms Gallagher: I will speak in general terms. Andrew can give a lot more detail on the work that he has done and will continue to do.

Policy development is about horizon scanning, about understanding the Government's priorities, about working across government and all sectors and about listening to the voice of the public on what needs to happen. In the short time that I have been in LPS, Andrew has been very up front in his approach to engagement. He has just referred to councils, and we met the councils on Monday. We also met the business and manufacturing community on the same day. We are therefore constantly in listening mode in order to make the right interventions at the right time that will make a difference. Andrew, do you want to provide more detail?

Mr McAvoy: I will follow up on a couple of points that the member raised. Looking at the policies and the support measures individually will give us more scope to drill down into the evidence base. Having the comparative evidence from other jurisdictions, as well as the rich data that we get from the Northern Ireland Statistics and Research Agency (NISRA), will afford us the time to do that, because we are looking at each measure as it comes along.

The rating system and the potential for societal shifts came up in the context of the max cap consultation that closed in February. A lot of ratepayers expressed concern about the removal of the cap. With a completely uncapped system, there would be areas in Northern Ireland where only some people could afford to live. One of the consultees referred to "golden ghettos", where only people who could afford high rate bills would be able to live. That informed our thinking on the policy approach to the maximum cap.

Cross-departmental working on the business side has been quite prevalent in the past couple of weeks. Ian Snowden, the permanent secretary at the Department for the Economy, and I met the hospitality sector and its economist to look at the specific issues that the sector was facing. It is not just that sector that is affected, by any means. It has, however, gone through COVID and, owing to the impact of inflation on its whole supply chain, the cost-of-doing-business crisis. After COVID, the sector was also dealing with resourcing and staffing issues. The latest thing that it is facing stems from the autumn Budget. Businesses in the parts of Northern Ireland that border the Republic of Ireland have concerns that the cost of doing business as a result of the Budget's regional growth strategy could have a displacement effect on them. There is that type of thing. Technically, the Department for the Economy is the lead Department for the hospitality sector, which has the majority of the tourism offering here, but we want to row in behind it to determine at what point rating measures should stop and other measures kick in.

Mr Rooney: I will address the debt issue. I recently met my counterpart in the Department for Communities. We discussed best practice and learning that LPS could adopt from the approaches that the Department for Communities takes to managing debt. We will hopefully build on that relationship.

Paul mentioned people who cannot pay. We are willing to try to help those people as much as we can, but we need to understand what they can and cannot pay. The rates system does not means-test. We do not do that. If we have a better understanding of what is affordable to them, we can put in place better payment plans for them to deal with rate arrears and thus get them back on track to paying in the current year.

Miss Hargey: For what quarter, roughly, will your 2025 strategy be ready?

Mr Rooney: We will try to tie it in with our billing cycle. Our billing cycle will run from the beginning of April, when fresh bills will go out. In and around the summer — towards September — we will start our engagement and our processes, on which we will build. We will contact customers who have not agreed payment plans. Our new strategies are very much at an early stage. Even now, we are testing to see whether things can work. We are adopting new approaches, but, hopefully in the early stages of next year, we will develop the action plan and the strategy in a bit more detail.

The Chairperson (Mr O'Toole): No other members have indicated that they wish to ask a question. In order that we understand where things are, I will recap. It is specifically the short-term measures that are being consulted on, not the broader, strategic issues. We have had the consultation that the Secretary of State announced prior to restoration. You have all its findings, which you said are useful. There will now be a 10-week consultation on the short-term measures. Will that process finish at the start of March?

Mr McAvoy: Mid-March.

The Chairperson (Mr O'Toole): There is then an undetermined period in which the Minister will look at the responses. She will then decide whether to bring a paper to the Executive for agreement on those changes for 2026-27.

Ms Gallagher: That is correct.

The Chairperson (Mr O'Toole): I will simply say, on mature reflection, that that is rather a long time for us to get to a point.

There were three Executive meetings at which the matter was not put on the table. The story was trailed in the media. There is a 10-week consultation. There is an undetermined period in which for the Minister to consider whether to go to the Executive for the purposes of raising £6 million in the context of £120 million of uncollected rates and an overall take of £2 billion. Very talented officials are in front of me, and I am not directing criticism at you in particular, but I am saying that it is important to put all of this in context. From some of the reporting, you would think that we were radically reviewing how we do rates and that we are raising loads of revenue in Northern Ireland —

Mr Rooney: Six million quid.

The Chairperson (Mr O'Toole): — because the Treasury, or whatever, has made us do so. I say this not to diminish the importance of the measures, but we are taking a very long time to decide whether to raise what is, in effect, a rounding error. I just wanted to make that point.

Thank you very much. That was a really useful briefing session. Thank you, Sharon. I hope that you come back to the Committee on many occasions.

Ms Gallagher: Thank you.